Congressional Record United States Th of America PROCEEDINGS and DEBATES of the 108 CONGRESS, SECOND SESSION

E PL UR UM IB N U U S Congressional Record United States th of America PROCEEDINGS AND DEBATES OF THE 108 CONGRESS, SECOND SESSION

Vol. 150 WASHINGTON, WEDNESDAY, MARCH 3, 2004 No. 26 House of Representatives The House met at 10 a.m. and was PLEDGE OF ALLEGIANCE spector, gave an interview on the called to order by the Speaker pro tem- The SPEAKER pro tempore. Will the Today Show on January 27. Let me pore (Mr. SHAW). gentleman from Arkansas (Mr. quote from what he said: ‘‘Iraq was a country that had the ca- f BOOZMAN) come forward and lead the House in the Pledge of Allegiance. pabilities in weapons of mass destruc- DESIGNATION OF THE SPEAKER Mr. BOOZMAN led the Pledge of Alle- tion areas and in which terrorists, like PRO TEMPORE giance as follows: ants to honey, were going after it. We found that the Iraqi government, par- The SPEAKER pro tempore laid be- I pledge allegiance to the Flag of the ticularly Saddam Hussein and his sen- fore the House the following commu- United States of America, and to the Repub- ior leadership, had an intention to con- nication from the Speaker: lic for which it stands, one nation under God, indivisible, with liberty and justice for all. tinue to pursue their WMD activities; WASHINGTON, DC, that they, in fact, had a large number March 3, 2004. f of weapons of mass destruction pro- I hereby appoint the Honorable E. CLAY MESSAGE FROM THE SENATE SHAW, Jr., to act as Speaker pro tempore on gram-related activities.’’ this day. A message from the Senate by Mr. Some in this body must have a hear- J. DENNIS HASTERT, Monahan, one of its clerks, announced ing problem. To say that the President Speaker of the House of Representatives. that the Senate has passed a bill of the and the administration have misled the American people in building the case f following title in which the concurrence of the House is requested: for the war with Iraq is wrong. Dr. Kay, PRAYER S. 2136. An act to extend the final report like many others, is confident that The Chaplain, the Reverend Daniel P. date and termination date of the National Iraq possessed weapons of mass de- Coughlin, offered the following prayer: Commission on Terrorist Attacks Upon the struction and the ability to produce United States, to provide additional funding weapons of mass destruction. In fact, How blessed is the just one. Truly for the Commission, and for other purposes. happy and free is the one who fears the Saddam Hussein even used these weap- Lord. All the demands of life and love The message also announced that ons of mass destruction on his own peo- are embraced with ease. pursuant to Public Law 93–642, the ple. The dawn of a new day fills the just Chair, on behalf of the Vice President, I hope the American voters see with energy to do what is right and to appoints the Senator from Montana through the false charges against the risk everything in the cause of justice. (Mr. BAUCUS) to be a member of the President of the United States. Wealth and power seem throwaway Harry S Truman Scholarship Founda- f tion Board of Trustees, vice the Sen- items to the generous heart concerned URGING MEMBERS TO JOIN BIKE- ator from Washington (Mrs. MURRAY). for others. PARTISAN BICYCLE CAUCUS The details of a job well done are The message also announced that (Mr. BLUMENAUER asked and was worth remembering for the one whose pursuant to section 104(c)(1)(A), of Pub- given permission to address the House heart is steadfast. There is no fear of lic Law 108–199, the Chair, on behalf of for 1 minute.) an evil report or the manipulation of the Majority Leader, appoints the fol- Mr. BLUMENAUER. Mr. Speaker, others in the heart of the one com- lowing individual to serve as a member the general election for President is mitted to the Lord. of the Abraham Lincoln Study Abroad basically starting this week. The For the just, communion in the Lord Fellowship Program: Democrats have selected their nomi- is real every day and lasts forever. Dr. Steven Trooboff of Portland, nee. The President is out campaigning. Amen. Maine. f But I hope that we will be able this f week to take a pause before the action DAVID KAY AND WEAPONS OF gets too heated to deal with the hun- THE JOURNAL MASS DESTRUCTION dreds of volunteers who are visiting The SPEAKER pro tempore. The (Mr. STEARNS asked and was given Capitol Hill who are advocates for bi- Chair has examined the Journal of the permission to address the House for 1 cycling. last day’s proceedings and announces minute and to revise and extend his re- These are people from all over the to the House his approval thereof. marks.) country, small businesspeople, commu- Pursuant to clause 1, rule I, the Jour- Mr. STEARNS. Mr. Speaker, Dr. nity activists, all here with a message nal stands approved. David Kay, former Iraqi weapons in- of how activity dealing with cycling in

b This symbol represents the time of day during the House proceedings, e.g., b 1407 is 2:07 p.m. Matter set in this typeface indicates words inserted or appended, rather than spoken, by a Member of the House on the floor.

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VerDate jul 14 2003 01:19 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00001 Fmt 4634 Sfmt 0634 E:\CR\FM\A03MR7.000 H03PT1 H756 CONGRESSIONAL RECORD — HOUSE March 3, 2004 America can make our communities Really? What a fascinating take. In dress the House for 1 minute and to re- healthier, cycling can be a dramatic the last 3 years, $3 trillion have been vise and extend his remarks.) opportunity for economic development added to the Nation’s debt and 3 mil- Mr. WILSON of South Carolina. Mr. for thousands of small businesses, and lion Americans have lost their jobs. Speaker, President Bush took office 3 it is, after all, the most efficient form And they want to make credibility an years ago facing the challenge of man- of urban transportation ever devised. issue. Since 5 months when he an- aging a recession that began under the It is an opportunity for us, in a small nounced the creation of a manufac- prior administration. Soon other fac- but important way, to reduce our en- turing czar, which has not been ap- tors bogged down our economy, includ- ergy dependence on foreign oil from pointed, 250,000 additional manufac- ing the attacks of September 11, cor- unstable regions, to improve air qual- turing jobs have been lost. And they porate scandals and the ensuing stock ity, and to reduce the traffic conges- want to make credibility an issue. market decline. Despite all of these tion that is costing American families They have an economic report that negative events, President Bush and dozens of extra hours that they cannot says outsourcing is good for American the Republican Congress have worked afford every month. workers. And they want to make credi- together to strengthen the economy in I urge my colleagues to join our bike- bility an issue. It is a fascinating take America. Due to the President’s poli- partisan Bicycle Caucus; to support ro- on the economy. Today we have a job- cies of tax relief, we have seen an in- bust transportation funding that in- less economy with a wage recession in crease of 366,000 jobs. And, according to cludes things like safe routes to school America. In fact, flipping hamburgers the American Shareholders Associa- and enhancements; and integrate cy- is now a manufacturing job in America. tion, the stock market is on pace to cling into your life and your commu- And they want to make credibility an generate an astonishing $6.3 trillion of nity. We will be healthier, happier and issue. new resources since October 2002 for the country will be better off. Mr. Speaker, the President and the America’s families. Additionally, un- Vice President think everything is just employment has fallen below the aver- f fine in America. What we need is a new age of each of the last three decades. BROADCAST INDECENCY direction to put American workers, However, more work is needed which (Mr. PITTS asked and was given per- American families and their values at the President has outlined. We must mission to address the House for 1 the center of our agenda and for some- make tax relief for all taxpayers per- minute and to revise and extend his re- body to wake up every morning think- manent, reduce regulation, ensure af- marks.) ing about their jobs, their children and fordable health care for families and Mr. PITTS. Mr. Speaker, families are their future. small businesses, and enact a sound na- tired of having to cover their children’s f tional energy policy. In conclusion, may God bless our eyes and ears every time they turn on EXPRESSING OUTRAGE AT CALI- the television. Many parents’ standards troops and we will never forget Sep- FORNIA COURT RULING REQUIR- tember 11. of common decency are repeatedly of- ING CATHOLIC CHARITY TO fended and their parenting is under- COVER BIRTH CONTROL IN EM- f mined by the onslaught of indecent PLOYEE HEALTH INSURANCE THE NOBLE MISSION OF THE 39TH material on television and radio. PLANS BRIGADE COMBAT TEAM Frankly they have been outraged re- (Mr. MURPHY asked and was given (Mr. BOOZMAN asked and was given cently by the examples of filth per- permission to address the House for 1 permission to address the House for 1 mitted on the airwaves by the FCC. minute and to revise and extend his re- minute and to revise and extend his re- Just as the majority leader said yester- marks.) marks.) day, if the industry cannot police Mr. MURPHY. Mr. Speaker, I rise to Mr. BOOZMAN. Mr. Speaker, I rise itself, Congress must step in. express my outrage at a recent decision today to express my support for the The FCC has been entrusted with en- by the California Supreme Court. This brave men and women of the 39th Bri- forcing our Federal decency laws and decision requires a Catholic charity to gade combat team as they deploy to should be expected to do so. There are cover birth control in its employees’ Iraq. The 39th Brigade includes Na- plenty of laws on the books regarding health insurance plans despite the tional Guardsmen from 10 States but is this matter and the FCC just needs to church’s position on contraception. mostly made up of Arkansas National enforce them. Today the Committee on This decision infringes on the prin- Guardsmen, including the Russellville- Energy and Commerce will mark up a ciples of any faith-based charity choos- based 206th Field Artillery Unit. bill which allows the FCC to enforce ing to help all the needy and not just Last weekend I had an opportunity to tougher penalties on broadcasters for those of a similar faith. As a result of visit with many of the soldiers of the violations of the law. The privilege of this decision, society as a whole suf- 39th Brigade during their colors casing conducting business over the airwaves fers. Faith-affiliated charities fre- ceremony at Fort Polk. They are some should always be conditional on their quently provide help and hope to the of America’s finest. They are a diverse willingness to adhere to standards of least among us without religious dis- group, including doctors, teachers, law- common decency. crimination, but this decision is a step yers, people from all walks of life, men Broadcast airwaves belong to the backward. We are left to wonder what and women who are ready to put their American people, not to the networks. effect it will have on the social min- Guard training and professional skills It is time for Congress to defend and istry of these organizations. Some may to work establishing democracy in a protect America’s parents and children be forced to choose between adhering country where oppression was once the and pass a tough bill to ensure decency to their beliefs and serving those in norm. on the airwaves. need. Mr. Speaker, their mission is noble f This decision represents an inten- and of great importance. I ask my colleagues to remember them and their THE PRESIDENT’S CREDIBILITY tional, purposeful intrusion into a reli- families in their thoughts and prayers DEFICIT gious organization’s practice of its religious tenets and sense of mission and it as we continue to support our troops (Mr. EMANUEL asked and was given could reach far beyond Catholic char- and their efforts to fight terror and permission to address the House for 1 ities and affect other faith-based hos- bring back democracy to Iraq. minute.) pitals and charities throughout the f Mr. EMANUEL. Mr. Speaker, Presi- country. dent Bush has decided to make credi- THANKING THE PRESIDENT FOR f bility an election year issue. Yesterday IDENTIFYING AMERICA’S PRIOR- the Vice President announced if the PRESIDENT BUSH’S POLICIES ARE ITIES IN HIS BUDGET Democratic policies had been pursued CREATING JOBS AND SPURRING (Mr. BARRETT of South Carolina over the last 2 or 3 years, we would not THE ECONOMY asked and was given permission to ad- have had the kind of job growth that (Mr. WILSON of South Carolina dress the House for 1 minute and to re- this economy experienced. asked and was given permission to advise and extend his remarks.)

VerDate jul 14 2003 01:19 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00002 Fmt 4634 Sfmt 0634 E:\CR\FM\K03MR7.020 H03PT1 March 3, 2004 CONGRESSIONAL RECORD — HOUSE H757 Mr. BARRETT of South Carolina. Thomas, who has dedicated 34 years to mystery for over 130 years until 1995 Mr. Speaker, I rise today to thank the the defense of freedom, deserves the re- when the submarine was found. It was President for clearly identifying Amer- spect of all of us in the House, and I placed under the care of the Warren ica’s priorities in his fiscal year 2005 thank him for his devoted service to Lasch Conservation Center in North budget. There is no doubt that we are the people of West Virginia and his Charleston in my district. Through the in a time of war and I am pleased country. efforts of the Hunley Commission and President Bush’s budget sent a clear f the Friends of the Hunley, the vessel signal that our Nation’s defense and will be preserved for generations to THE PROSPECT OF PEACE IN homeland security must remain the come. All eight crew members’ bodies CYPRUS top priority of the Federal Govern- have been recovered and will receive a ment. However, I believe we can and (Mr. KIRK asked and was given per- military burial on April 17, 2004, at must do more. mission to address the House for 1 Magnolia Cemetery in Charleston. I That is why last week I introduced minute and to revise and extend his re- welcome all Americans to take the op- an updated version of legislation that I marks.) portunity to marvel at this archeo- introduced last year, the Common Mr. KIRK. Mr. Speaker, after decades logical wonder. of intercommunal violence between Sense Spending Act. This legislation f will continue to fund nondefense, non- Turkey and Greece, there is now hope homeland security and hold discre- for peace on Cyprus. HAITI tionary spending at fiscal year 2004 lev- On February 3, President Bush met (Ms. JACKSON-LEE of Texas asked els for the next year, then increase at with U.N. Secretary-General Annan to and was given permission to address the rate of inflation over the next 4 restart the peace process. Following the House for 1 minute and to revise years. It is all common sense. The talks between the Greek and Turkish and extend her remarks.) spending act will slow the growth of Cypriot leaders on February 13, Annan Ms. JACKSON-LEE of Texas. Mr. mandatory spending by 1 percent, hold- announced the resumption of negotia- Speaker, yesterday was Texas Inde- ing Social Security harmless, and reau- tions, saying, ‘‘I really believe that, pendence Day, March 2. This Nation thorizes PAYGO requiring offsets for after 40 years, a settlement is at last in and our people value both independence direct spending. It also tightens the reach.’’ and democracy. But it is sad to note definition of emergency spending. Since February 19, the two sides have that a small nation by the name of Again, it is all common sense. been discussing a U.N. peace plan in Haiti has not received the same Mr. Speaker, if Members are serious Cyprus. Despite predictably difficult amount of respect, collegiality, and as- about getting control of Federal spend- negotiations, the Annan blueprint is sistance that this country could be ing, then I ask them to join me in sup- secure. If there is no agreement by the called to do. It is shameful that we port of the Common Sense Spending two parties by March 22, Turkey and have in the dark of night the question Act. It is time to limit our spending to Greece will join the negotiations to of whether or not a duly elected demo- reflect the priorities we have set. broker a deal. If there is still no agree- cratic President, President Aristide, ment by March 29, Annan will ‘‘fill in f was taken away from his home without the blanks,’’ and Greek and Turkish HONORING COLONEL JESSE THOM- his free will. Cypriots will then vote on this plan in People are dying in the streets of AS, COMMANDER, 167TH AIRLIFT separate referenda in April. If all goes WING, WEST VIRGINIA AIR NA- Haiti. The question becomes what hap- well, a reunited Cyprus will enter the pened to President Aristide and why he TIONAL GUARD, ON HIS RETIRE- European Union on May 1. MENT FROM THE MILITARY was removed against his will. The ques- Having long supported peace efforts tion becomes whether or not this Na- (Mrs. CAPITO asked and was given in Cyprus, the United States must now tion will engage with insurgents and permission to address the House for 1 extend a helping hand to the Cypriots thugs and drug dealers, as the opposi- minute and to revise and extend her re- as they confront the difficulties of im- tion represents; whether or not we will marks.) plementing an agreement. In 1984, Con- tolerate the continued pillaging and Mrs. CAPITO. Mr. Speaker, I rise gress authorized President Reagan’s the loss of life; whether or not we will today in honor of Colonel Jesse A. $250 million Cyprus Peace and Recon- grant temporary protective status for Thomas, the Commander of the 167th struction Fund. The money was not Haitians who are here in fear of their Airlift Wing of the West Virginia Air provided because we did not reach a life; and whether or not we respect National Guard based in Martinsburg, settlement. Europe is home to the last those who are fleeing from persecution West Virginia. ‘‘Berlin-style’’ wall in Cyprus. Let us by granting individual asylum hear- make this the year that it comes down b 1015 ings. forever. Colonel Thomas is retiring after 33 Mr. Speaker, this Nation can do bet- f years in our Armed Forces. Colonel ter. We can do better with our allies Thomas began his military service as a THE ‘‘H.L. HUNLEY’’ and friends. Why are we not doing bet- T–37 instructor pilot in 1971. He then (Mr. BROWN of South Carolina asked ter for Haiti? joined the West Virginia Air National and was given permission to address f Guard when he became a C–130 aircraft the House for 1 minute and to revise ANNOUNCEMENT BY THE SPEAKER commander. Colonel Thomas has and extend his remarks.) PRO TEMPORE logged approximately 11,000 flight Mr. BROWN of South Carolina. Mr. hours as a command pilot, including Speaker, this year marks the 140th an- The SPEAKER pro tempore (Mr. 5,000 hours as an instructor. niversary of the final voyage of the SHAW). Pursuant to clause 8 of rule XX, During Operation Desert Shield, H.L. Hunley. On February 17, 1864, the the Chair will postpone further pro- Thomas deployed to Europe as an air- Hunley embarked on a dangerous mis- ceedings today on motions to suspend crew member and unit commander. He sion when Lieutenant George Dixon led the rules on which a recorded vote or also flew airdrop and air defense mis- his crew to do what no other submarine the yeas and nays are ordered, or on sions in Yugoslavia and Central Amer- had ever done before, successfully sink which the vote is objected to under ica and Southwest Asia. another ship in combat. That night in clause 6 of rule XX. Mr. Speaker, in our current war on Charleston Harbor, the Hunley rammed Record votes on postponed questions terror, the National Guard has been her spar torpedo into the hull of the will be taken later today. called upon to fight in Iraq and Af- USS Housatonic. The ship sunk shortly f ghanistan, and thousands of brave men thereafter, forever securing the and women have answered that call. I Hunley’s place in history. CHARLES ‘‘PETE’’ CONRAD thank all of the men and women of the The crew, however, never returned ASTRONOMY AWARDS ACT National Guard who give so much in and vanished into the harbor. The loca- Mr. ROHRABACHER. Mr. Speaker, I service to our Nation. Colonel Jesse tion of the crew and ship remained a move to suspend the rules and pass the

VerDate jul 14 2003 02:25 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00003 Fmt 4634 Sfmt 0634 E:\CR\FM\K03MR7.004 H03PT1 H758 CONGRESSIONAL RECORD — HOUSE March 3, 2004 bill (H.R. 912) to authorize the Admin- bers may have 5 legislative days within spacecraft and space transportation istrator of the National Aeronautics which to revise and extend their re- systems. An interesting aside, analysis and Space Administration to establish marks and include extraneous material of an orbiting object identified by an an awards program in honor of Charles on H.R. 912, as amended, the bill now amateur astronomer suggests that it is ‘‘Pete’’ Conrad, astronaut and space under consideration. the remains of a Saturn V rocket, third scientist, for recognizing the discov- The SPEAKER pro tempore. Is there stage, which most likely came from eries made by amateur astronomers of objection to the request of the gen- Pete Conrad’s Apollo mission. asteroids with near-Earth orbit trajec- tleman from California? So I find no better way to honor Pete tories, as amended. There was no objection. Conrad than to establish an annual as- The Clerk read as follows: Mr. ROHRABACHER. Mr. Speaker, I tronomers award for future asteroid H.R. 912 yield myself such time as I may con- discoveries in his name. He always Be it enacted by the Senate and House of Rep- sume. wanted people to be looking up. He was resentatives of the United States of America in Mr. Speaker, as chairman of the Sub- a positive ‘‘can-do’’ American. He ex- Congress assembled, committee on Space and Aeronautics emplified the American spirit, and he SECTION 1. SHORT TITLE. of the Committee on Science, I have was often remembered, of course, for This Act may be cited as the ‘‘Charles ‘Pete’ made the threat posed by near-Earth not only his own walk on the Moon but Conrad Astronomy Awards Act’’. objects one of my top priorities. The his historic description of the landing SEC. 2. DEFINITIONS. hearings of our subcommittee have re- on the Moon. For the purposes of this Act— vealed that monitoring and tracking Of course, the threat of an asteroid (1) the term ‘‘Administrator’’ means the Ad- near-Earth objects, that is, NEOs, such hitting the world is a serious matter, ministrator of the National Aeronautics and as comets and asteroids, not only ad- and the idea of a catastrophic asteroid Space Administration; vance astronomy, but are critical in or comet impacting on the Earth has, (2) the term ‘‘amateur astronomer’’ means an individual whose employer does not provide any identifying the near-Earth objects that of course, gained the attention of the funding, payment, or compensation to the indi- may threaten the Earth. media and the popular culture in films vidual for the observation of asteroids and other Mr. Speaker, recent press accounts of like ‘‘Armageddon’’ and ‘‘Deep Impact’’ celestial bodies, and does not include any indi- asteroids passing close to Earth have of a few years ago, but it is vital for all vidual employed as a professional astronomer; raised public awareness of the possi- of us to realize this is not just for the (3) the term ‘‘Minor Planet Center’’ means the bility that one day one of these objects movies. This is not science fiction. We Minor Planet Center of the Smithsonian Astro- could hit the Earth with potential cat- all know that the Earth’s moon and physical Observatory; astrophic consequences. Given the vast (4) the term ‘‘near-Earth asteroid’’ means an many other planetary bodies in our asteroid with a perihelion distance of less than number of asteroids and comets that solar system are covered with impact 1.3 Astronomical Units from the Sun; and inhabit the Earth’s neighborhood, craters. Most people have heard of the (5) the term ‘‘Program’’ means the Charles greater efforts for tracking and moni- dinosaur extinction theory or perhaps ‘‘Pete’’ Conrad Astronomy Awards Program es- toring these objects are critical. seen pictures of the meteor crater in tablished under section 3. This is why I rise in support of the Arizona. However remote the possi- SEC. 3. PETE CONRAD ASTRONOMY AWARD PRO- amendment to H.R. 912, the Charles bility of a near-Earth object striking GRAM. ‘‘Pete’’ Conrad Astronomy Awards Act. the Earth and causing a worldwide ca- (a) IN GENERAL.—The Administrator shall es- This amendment does not alter the in- tablish the Charles ‘‘Pete’’ Conrad Astronomy lamity, no matter how obscure or how Awards Program. tent of the original bill, but clarifies remote that is, there is a threat, a cal- (b) AWARDS.—The Administrator shall make what the awards program is and the culable threat. awards under the Program based on the rec- role and responsibility of NASA and And while the asteroid that killed ommendations of the Minor Planet Center. the Smithsonian’s Minor Planet Cen- the dinosaurs is estimated to occur (c) AWARD CATEGORIES.—The Administrator ter. We have worked with NASA, the only once every 100 million years, shall make one annual award, unless there are Smithsonian Institution, and our col- smaller, yet still hazardous, asteroids no eligible discoveries or contributions, for each leagues across the aisle to make these impact the Earth much more fre- of the following categories: (1) The amateur astronomer or group of ama- improvements; and I thank them for quently. For example, the destructive teur astronomers who in the preceding calendar all their help and support. H.R. 912 au- force of the 1908 asteroid strike in Sibe- year discovered the intrinsically brightest near- thorizes the NASA administrator to ria was roughly equal to a 10-megaton Earth asteroid among the near-Earth asteroids give one award each year to the ama- blast of TNT. The asteroid that hit that were discovered during that year by amateur astronomer or to the group of South America in the 1930s was of simi- teur astronomers or groups of amateur astrono- amateur astronomers who discovered lar magnitude. The asteroid that mers. the intrinsically brightest near-Earth struck Central Asia in the 1940s was a (2) The amateur astronomer or group of ama- asteroid among the near-Earth aster- large impact. In 1996, satellites de- teur astronomers who made the greatest contribution to the Minor Planet Center’s mission oids discovered during that preceding tected a high-altitude burst over of cataloguing near-Earth asteroids during the year by amateur astronomers and an- Greenland involving an asteroid which preceding year. other award to the amateur astron- would have had the destructive force (d) AWARD AMOUNT.—An award under the omer or group of amateur astronomers measuring 100 kilotons of TNT. Program shall be in the amount of $3,000. who made the greatest contribution Ironically, if we look at asteroids (e) GUIDELINES.—(1) No individual who is not during the preceding year to the Minor from the perspective of our national a citizen or permanent resident of the United Planet Center’s catalogue of known as- goals in space, they also offer us not States at the time of his discovery or contribu- teroids. The recipients of the awards in just a threat but also unique opportu- tion may receive an award under this Act. (2) The decisions of the Administrator in mak- the amount of $3,000 are limited to U.S. nities. In terms of pure science, aster- ing awards under this Act are final. citizens and, yes, also permanent resi- oids are geological time capsules from (f) AUTHORIZATION OF APPROPRIATIONS.— dents. the era when our solar system was From sums otherwise authorized to be appro- This bill is a tribute to Pete Conrad formed. Even better, they are orbiting priated, there are authorized to be appropriated for his tremendous contributions to mines of metals, of minerals, and other such sums as may be necessary to carry out this our country, to the world, and to the resources that can be possibly used to Act. aerospace community over the last 4 build large structures in space without The SPEAKER pro tempore. Pursu- decades. Pete Conrad was a pilot, an having to carry up the material to ant to the rule, the gentleman from explorer, and an entrepreneur of the build those structures from Earth. So California (Mr. ROHRABACHER) and the highest caliber. He commanded Apollo far NASA has surveyed 600 asteroids, gentleman from Tennessee (Mr. GOR- XII, and during that mission he became but this is a fraction of the projected DON) each will control 20 minutes. the third man to walk on the Moon. He total population of asteroids and near- The Chair recognizes the gentleman saw space as a place to get to, to ex- Earth objects. What needs to be done from California (Mr. ROHRABACHER). plore, and to do business. Space explo- now is to fully understand near-Earth GENERAL LEAVE ration and commercialization is what objects and the potential threat and, Mr. ROHRABACHER. Mr. Speaker, I he did. It was his job to explore the yes, the potential use that they could ask unanimous consent that all Mem- Moon. He then worked to develop new pose to the world.

VerDate jul 14 2003 01:19 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00004 Fmt 4634 Sfmt 0634 E:\CR\FM\K03MR7.007 H03PT1 March 3, 2004 CONGRESSIONAL RECORD — HOUSE H759 In closing, asteroids deserve a lot they bring diverse viewpoints and perspec- The Chair recognizes the gentle- more attention from the scientific tives. They enrich the experience of our own woman from Pennsylvania (Ms. HART). community and from the American students. GENERAL LEAVE people. The first step is through track- As the bill is written, only U.S. citizens and Ms. HART. Mr. Speaker, I ask unani- ing all sizable near-Earth objects, and permanent residents are eligible for an award. mous consent that all Members may H.R. 912 is a modest step toward this This is fair, since we are trying to encourage have 5 legislative days within which to goal. Americans to get interested in space and revise and extend their remarks and in- I urge my colleagues to vote for H.R. science. However, these awards also offer an clude extraneous material on H.R. 3389. 912, which will encourage young people opportunity to foster collaborations and inter- The SPEAKER pro tempore. Is there in particular to start looking into the national partnerships that will be valuable for objection to the request of the gentle- stars and get involved personally in all parties in the future. We have therefore woman from Pennsylvania? America’s space program. agreed on report language for this bill that will There was no objection. Mr. Speaker, I reserve the balance of foster collaborative efforts. Ms. HART. Mr. Speaker, I yield my- my time. If a group of amateur astronomers makes a self such time as I may consume. Mr. Speaker, the Malcolm Baldrige b 1030 great discovery, deemed worthy of a Pete Conrad Award, and if that group has inter- National Quality Award was established by Congress and signed into law Mr. GORDON. Mr. Speaker, I yield national students in it—the Administrator of in August of 1987. The first awards were myself such time as I may consume. NASA will be able to give those foreign stu- Mr. Speaker, I want to express my presented in 1988. dents a certificate or other token of apprecia- This award was established because support for the bill presented by the tion. Although the monetary reward will be re- gentleman from California (Chairman many industry and government leaders served for the Americans in the group, at least saw that a renewed emphasis was a ne- ROHRABACHER), H.R. 912. the foreign students will be recognized for I know that my good friend the gen- cessity for doing business in an expand- their contributions. This seems only fair. ing, competitive world market. But tleman from California (Mr. ROHR- Again, I thank the Chairman for working with ABACHER) has had a long interest in many American businesses either did me on this issue. I support the bill and urge not believe quality mattered for them Near Earth Objects and the potential my colleagues to do the same. threat they could pose to our civiliza- or did not know where to begin. The Mr. GORDON. Mr. Speaker, I yield Baldrige Award was envisioned as a tion at some point in the future. More- back the balance of my time. over, the Committee on Science has standard of excellence that would help Mr. ROHRABACHER. Mr. Speaker, I United States organizations achieve been active on a bipartisan basis since have no further requests for time, and at least the early 1990s in trying to world class quality. I yield back the balance of my time. Mr. Speaker, the award is named draw attention to this issue. At that The SPEAKER pro tempore. The time, former Chairman George Brown, after Malcolm Baldrige, who was Sec- question is on the motion offered by retary of Commerce to President Ron- Jr., held a series of hearings and draft- the gentleman from California (Mr. ed legislation to establish a NEO detec- ald Reagan from 1981 until his tragic ROHRABACHER) that the House suspend death in July of 1987. Malcolm Baldrige tion and cataloging within NASA. the rules and pass the bill, H.R. 912, as H.R. 912 recognizes that amateur as- thought the keys to this country’s amended. prosperity and long-term strength was tronomers also can play a significant The question was taken. role in the detection of Earth orbit quality management. He was involved The SPEAKER pro tempore. In the with the creation of the act and his crossing asteroids and comets and pro- opinion of the Chair, two-thirds of vides a constructive way to reward name was added after his death. those present have voted in the affirm- The Baldrige Award is given by the their efforts. ative. President of the United States to busi- A previous version of the bill passed Mr. ROHRABACHER. Mr. Speaker, nesses, manufacturing and service busi- the House last Congress, so I do not be- on that I demand the yeas and nays. nesses, both small and large, and to lieve this legislation should be at all The yeas and nays were ordered. education and health care organiza- controversial. I urge the adoption by The SPEAKER pro tempore. Pursu- tions. Applicants prepare detailed as- the House, and look forward to its ant to clause 8 of rule XX and the sessments of their management sys- speedy enactment. Chair’s prior announcement, further tems. The criteria are built upon a set Ms. JACKSON-LEE of Texas. Mr. Speaker, proceedings on this motion will be of 11 interrelated core values and con- I rise in strong support of the Pete Conrad As- postponed. cepts. The seven criteria categories tronomy Act, and commend the Chairman of f provide a system essential to achieving the Space Subcommittee for his creativity and performance excellence, leadership, PERMITTING MALCOLM BALDRIGE leadership in promoting space exploration. strategic planning, customer and mar- NATIONAL QUALITY AWARDS TO This Act will reward individuals who through ket focus, information and analysis, NONPROFIT ORGANIZATIONS their hard work and dedication have made fun- human resource focus, process manage- damental contributions to our knowledge of Ms. HART. Mr. Speaker, I move to ment and business results. the universe. This Act will stimulate interest in suspend the rules and pass the bill Baldrige applicants receive detailed space exploration—a field that helps keep this (H.R. 3389) to amend the Stevenson- written feedback about their strengths nation on the cutting edge of technology and Wydler Technology Innovation Act of and opportunities for improvement captivates young minds. Discoveries made by 1980 to permit the Malcolm Baldrige from a team of independent Baldrige amateur astronomers have helped with the National Quality Awards to be made to examiners. A panel of judges deter- enormous task of cataloguing the many aster- nonprofit organizations. mines which organizations will be fi- oids and small bodies that share the solar sys- The Clerk read as follows: nalists for the award and those organi- tem with us. Those amateur astronomers de- H.R. 3389 zations receive site visits to verify and serve to be rewarded. It is a valuable service Be it enacted by the Senate and House of Rep- clarify their applications. to this nation and to the world, and should be resentatives of the United States of America in Two such businesses in my district encouraged. This Act will do both. Congress assembled, have been recipients of the Malcolm I would like to thank Chairman ROHR- SECTION 1. AMENDMENT. Baldrige Award. This year’s awardee, ABACHER for working with me to address one Section 17(c)(1) of the Stevenson-Wydler the 2003 manufacturing recipient, was small concern that I had when this bill went Technology Innovation Act of 1980 (15 U.S.C. Medrad, Inc., of Indianola, Pennsyl- through markup in the Science Committee. 3711a(c)(1)) is amended by adding at the end vania. They are a leading provider of People come from around the world to study the following: medical devices that enhance medical at our great colleges and universities. They ‘‘(F) Nonprofit organizations.’’. imaging procedures of the human body are often some of the best and brightest from The SPEAKER pro tempore. Pursu- and also of injector systems. their home countries. They pay high tuitions ant to the rule, the gentlewoman from The first manufacturing recipient in as international students. They often bring Pennsylvania (Ms. HART) and the gen- 1988 was also in my district, Westing- money into our communities. But the most im- tleman from North Carolina (Mr. MIL- house Electric Corporation’s Commer- portant reason they are invited is because LER) each will control 20 minutes. cial Nuclear Fuel Division.

VerDate jul 14 2003 02:48 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00005 Fmt 4634 Sfmt 0634 E:\CR\FM\K03MR7.008 H03PT1 H760 CONGRESSIONAL RECORD — HOUSE March 3, 2004 Our amendment today will make one business and the businesses that have Likewise, our crime control and pub- simple change to the Malcolm Baldrige competed for the awards, including the lic safety agencies are demonstrating Awards. It will adds the words ‘‘non- businesses that have not won the the value of a systematic quality and profit organization’’ to those who are award, have achieved higher produc- performance excellence approach eligible to receive the award. Currently tivity, greater customer satisfaction, grounded in Baldrige criteria. only manufacturers, service businesses, better employee relations, increased The North Carolina State Highway small businesses, education organiza- market share and improved profit- Patrol, a recipient of our State Quality tions and health care organizations are ability. The awards have made quality Award, has achieved important im- eligible for the Baldrige Award. a national priority and have dissemi- provements in all of its key perform- Baldrige-based State award programs, nated nationally the best practices for ance effectiveness measures. The Com- however, have added additional cat- achieving it. mander of the Highway Patrol, Chief R. egories that include nonprofits and A recent study of the Baldrige W. Holden, said that our State government agencies. Awards by Professor Albert Link of the Baldrige-based award process allowed However, there are three types of University of North Carolina at us to direct our self-improvement ef- nonprofit organizations that are not el- Greensboro, one of my district’s out- forts to the most effective areas of our igible to apply for the Baldrige Award. standing academic institutions, and by organization. These organizations account for a sig- Professor John Scott of Dartmouth The Carolina Blood Services Region nificant portion of the U.S. economy, College, a college in New England, esti- of the American Red Cross is another and cannot benefit from the assess- mated the benefits of the award and State Quality Award winner that has ment and feedback process of the the competition for the award at $24.65 achieved stellar results. Baldrige Award. They are public agen- billion. That is an astounding sum. These public agencies are dem- cies of the Federal, State and local The Baldrige Awards now have five onstrating excellence in management government; independent, private not- categories: Manufacturing, service, every day. The keys to their continued for-profit organizations; for example, small business, and, since 1999, health improvement are the ability to be recognized for their good work and the human service organizations, religious care and education. But many other or- ability to measure their performance organizations, cultural or professional ganizations cannot participate: Not- against proven standards in order to organizations; and also quasi-public or- for-profit, service organizations, government agencies at the Federal, State become even better. ganizations created by legislative au- These worthy organizations affect and local level, independent sector or- thority are also not eligible; for exam- our daily lives and our communities’ ganizations, such as human services, ple, public utilities, mutual insurance well-being, and, like so many other religious, cultural or trade and profes- companies or credit unions. not-for-profit service organizations, sional organizations, and private quasi- In 1999, it was recognized that the they cannot benefit from the Baldrige public organizations created by legisla- Baldrige Award’s performance stand- Award process today. ards can help stimulate improvement tive authority, such as public utilities, It is time to remedy this, and this efforts in other sectors vital to the cooperatives, mutual insurance compa- bill proposes that the Baldrige Awards U.S. economy and the areas of edu- nies and credit unions. be opened up to allow participation by cation and health care were added to These organizations represent a sig- not-for-profit organizations, including that criteria. Since then, a total of 66 nificant part of the American economy, government agencies. Support for this applications have been submitted in but they are now unable to benefit proposed expansion is widespread. The the education category and 61 in the from the assessment and the feedback Foundation for the Malcolm Baldrige health care category, obviously giving that are a vital part of the Baldrige Award, the Baldrige Board of Over- these organizations an opportunity to Awards and the award process. seers, the Secretary of Commerce and improve their systems. Let me say a special word about gov- the President have endorsed expansion As it has for current eligible U.S. ernment agencies. The gentlewoman to include not-for-profit service organi- businesses, the Baldrige Award pro- from Pennsylvania and I may disagree zations. gram can help nonprofit organizations about what government should do, but The Baldrige National Quality Pro- improve their performance and also to there should be no disagreement about gram is a public-private partnership. It foster communications, sharing of how government should do it. There is managed by the National Institute ‘‘best practices’’ and partnerships should be no disagreement how govern- for Standards and Technologies, NIST, among schools, health care organiza- ment should be managed. Government an agency of the Commerce Depart- tions and businesses. agencies should be managed as well as ment, and is supported by the private Mr. Speaker, I reserve the balance of the best managed private businesses. sector Baldrige Foundation. These or- my time. Managers in government must respect ganizations raise funds to support Mr. MILLER of North Carolina. Mr. the people they serve and they must re- Baldrige’s many activities so that the Speaker, I yield myself such time as I spect the taxpayers who pay for what Federal investment in this program is may consume. they do. Managers in government leveraged many times over, not only by (Mr. MILLER of North Carolina should be consumed with achieving ex- this private sector funding, but also by asked and was given permission to re- cellence in performance and in achiev- the efforts of hundreds of largely pri- vise and extend his remarks.) ing efficiency. vate sector volunteers and voluntary Mr. MILLER of North Carolina. Mr. I fervently hope that government sector organizations, such as the Amer- Speaker, I also rise in support of H.R. agencies will focus on what constitutes ican Red Cross. 3389. Since 1987, the Malcolm Baldrige excellence and how to achieve it, and I would be very proud to tell the National Quality Awards have recog- that we will save billions as a result, folks in North Carolina, in the North nized excellence for quality in manage- just as private businesses have saved Carolina Treasurer’s Office, in the ment. The Baldrige Awards quickly be- billions, as a result of competing for State Patrol and in the Blood Bank, came America’s highest honor for ex- the Baldrige Awards. that they too will be eligible to receive cellence and performance, and the ben- In my district in North Carolina, the recognition that goes with the efits of the award exceeded any expec- there are many important organiza- Baldrige Awards, and to share their tation. tions that are left out of the Baldrige best practices with other organizations To recognize excellence, the Depart- experience. Let me tell you about just across the country. ment of Commerce first had to decide a couple of them. Mr. Speaker, I reserve the balance of what excellence in management was Our State Treasurer’s Office and De- my time. and then how to achieve it. That re- partment of Revenue have made great Ms. HART. Mr. Speaker, I yield my- quired that businesses see their per- strides in applying sound management self such time as I may consume. formance through the eyes of their cus- quality practices by increasing accu- Mr. Speaker, I also would like to tomers and their employees. The cri- racy and by cutting telephone hold commend the gentleman from North teria for excellence that developed as a times, freeing my State’s citizens from Carolina (Mr. MILLER) for his sponsor- result have transformed American voice mail jail. ship of the legislation.

VerDate jul 14 2003 01:19 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00006 Fmt 4634 Sfmt 0634 E:\CR\FM\K03MR7.011 H03PT1 March 3, 2004 CONGRESSIONAL RECORD — HOUSE H761 Mr. Speaker, I yield 3 minutes to the means to be a world-class manufac- (Mr. BOEHLERT) for his involvement gentleman from Michigan (Mr. turing or service company, has honored and support for the Baldrige Awards, as EHLERS). companies that attained that status, I understand he was involved with the b 1045 and has helped other companies under- Baldrige Awards at their inception. I stand the most important steps they also would like to thank former rank- Mr. EHLERS. Mr. Speaker, today I must take if they are to improve their ing member of the Committee on rise in support of H.R. 3389, which quality. Science, the gentleman from Texas amends the Malcolm Baldrige National The financial results, customer and (Mr. HALL), for his support for this leg- Quality Awards to include a category supplier relations, and the labor rela- islation and for the Baldrige Awards, for nonprofit organizations. On the tions of winning companies have been and also our current ranking member, Committee on Science I serve as chair- quite impressive. the gentleman from Tennessee (Mr. man of the Subcommittee on Environ- In the late 1990s, Congress extended GORDON), for his hard work and biparti- ment, Technology and Standards, with the Baldrige Award categories to in- sanship in working to grow the jurisdiction over the National Institute clude education and health care fields. Baldrige Awards and give others the of Standards Technology, which admin- I am very proud that Caterpillar Fi- opportunity to participate in that won- isters the Baldrige Awards program. In nancial Services Corporation located in derful process. that role I am most pleased to support Nashville, Tennessee, won in the serv- Mr. Speaker, I reserve the balance of this bill. ice category. I also want to congratu- my time. When the Baldrige award was first late Stoner Inc., located in Quarryville, Mr. MILLER of North Carolina. Mr. announced many years ago, my first Pennsylvania, for winning the small Speaker, I yield myself such time as I thought was, well, what is another business category. This is a small man- may consume. award? But this has turned out to be a ufacturer of more than 300 specialized Mr. Speaker, I also want to thank very outstanding action on the part of cleaners, lubricants, and coatings. It the gentleman from Tennessee (Mr. the Congress and by the Department of has 45 full-time and five part-time em- GORDON), who is now the ranking mem- Commerce. It has become one of the ployees. Stoner proves that small man- ber of the Committee on Science for most important awards in America. It ufacturers can successfully compete in his work on this and for his support as is highly sought after, and it is a tre- the face of world competition. well as his kind words just a few min- mendous honor to receive the Baldrige This year’s Baldrige Award also utes ago. Award. shows the importance of the Depart- Mr. BOEHLERT. Mr. Speaker, I rise today in However, the Baldrige Award pro- ment of Commerce MEP program. support of H.R. 3389, and I want to thank Ms. gram is much more than an honor. The Stoner used services of the Mid-Penn- HART and Mr. MILLER for bringing it before the criteria of the award are used by com- sylvania Manufacturing Extension Science Committee. panies and organizations nationwide to Partnership in this modernization ef- I’m especially pleased to be able to support evaluate their own performance. Also, fort. I mention this because up until this bill because I was co-author of the law many State quality awards programs the FY 2005 request, the administration that created the Baldrige National Quality use a national Baldrige criteria. For has always proposed eliminating the Award, and that measure has succeeded be- example, in my district last year, the MEP program. This year the adminis- yond our wildest dreams. The Baldrige National Quality Program is so Michigan Quality Council using tration has requested funding but at much more than an award. It is an entire phi- Baldrige criteria for evaluation recog- only a one-third level, which essen- losophy that has helped—and continues to nized the Grand Rapids Community tially guts this very important pro- help make our companies and our nation College for its vision and service to the gram. This is short-sighted and a more productive and competitive. community. wrong budget decision. Companies all across the organiza- The Baldrige Program has been described I am pleased to support this change by CEOs as ‘‘the most important catalyst for to the Malcolm Baldrige National tion like Stoner show that small manufacturers can compete in the global transforming American business,’’ and the Quality Award. Including nonprofit or- publication containing the Baldrige criteria has ganizations will open the competition marketplace. They also use MEP services to meet the competitive chal- been hailed as ‘‘probably the single most influ- to groups that have expressed strong lenges and to be successful. ential document in the modern history of support for the opportunity to be rec- I want to use this example to remind American business.’’ ognized for their efforts at the national my colleagues of the importance of Opening the Malcolm Baldrige Quality level. Many States already include MEP to our small- and medium-sized Award to non-profits will not only enable them nonprofits as a category, and including manufacturing community. I want to to compete against for the coveted Quality them in the national program will help urge all Members in joining me in re- Award, but it will allow non-profits to partici- strengthen the Baldrige quality cri- storing funding for the Manufacturing pate in the Baldrige Quality process. This will teria. Extension Partnership. help all of the non-profits that compete for the I thank the gentlewoman from Penn- I also want to congratulate the gen- award assess themselves scientifically, be- sylvania (Ms. HART) and the gentleman tlewoman from Pennsylvania (Ms. come more innovative, make the best use of from North Carolina (Mr. MILLER) for HART) for the work she has done on their employees, serve their customers better, their work in bringing this bill to the this excellent legislation. And I want and hold their enterprises to a higher stand- floor today, and I urge all of my col- to congratulate the gentleman from ard. leagues to support it. North Carolina (Mr. MILLER) on his ef- Non-profits play a significant role in Amer- Mr. MILLER of North Carolina. Mr. fort to extend the Baldrige Award to ican society. When they improve, we are all Speaker, I yield myself such time as I the nonprofit sector including govern- better off. I’m pleased to note that my own may consume. ment. This is the last sector of our state of New York has already instituted a Mr. Speaker, I also want to acknowl- economy that is not currently covered non-profit category in its Governor’s Award for edge the gentlewoman from Pennsylva- by the Baldrige Award. The gentleman Excellence. The Empire State Advantage, nia’s (Ms. HART) work and thank her from North Carolina (Mr. MILLER) has which runs the state-level quality program, for working so well on this and for her become a leader on the Committee on strongly supports this bill. leadership on this issue. After hearing Science on a variety of economic It gives me great pleasure to join with my the strongly partisan 1-minutes this issues, including technology transfer colleagues Ms. HART and Mr. MILLER in open- morning, I am very glad we found some and quality. ing up the competitive process to non-profits. common ground between the parties. I also want to thank, finally, the gen- I urge passage of this bill. Mr. Speaker, I yield 4 minutes to the tleman from New York (Mr. BOEHLERT) Mr. MILLER of North Carolina. Mr. gentleman from Tennessee (Mr. GOR- for seeing that this bill moved quickly Speaker, I have no further requests for DON). to the floor. time, and I yield back the balance of Mr. GORDON. Mr. Speaker, I thank Ms. HART. Mr. Speaker, I yield my- my time. the gentleman for yielding me time. self such time as I may consume. Ms. HART. Mr. Speaker, I have no Beginning in 1987, the Baldrige Mr. Speaker, I also would like to further requests for time, and I yield Award process has defined what it thank the gentleman from New York back the balance of my time.

VerDate jul 14 2003 01:19 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00007 Fmt 4634 Sfmt 0634 E:\CR\FM\K03MR7.013 H03PT1 H762 CONGRESSIONAL RECORD — HOUSE March 3, 2004 The SPEAKER pro tempore (Mr. ‘‘(B) To afford the copyright owner a fair tions Commission with respect to syndicated SHAW). The question is on the motion return for his or her creative work and the and sports program exclusivity after April offered by the gentlewoman from Penn- copyright user a fair income under existing 15, 1976, the rates established by section economic conditions. 111(d)(1)(B) may be adjusted to assure that sylvania (Ms. HART) that the House ‘‘(C) To reflect the relative roles of the such rates are reasonable in light of the suspend the rules and pass the bill, copyright owner and the copyright user in changes to such rules and regulations, but H.R. 3389. the product made available to the public any such adjustment shall apply only to the The question was taken. with respect to relative creative contribu- affected television broadcast signals carried The SPEAKER pro tempore. In the tion, technological contribution, capital in- on those systems affected by the change. opinion of the Chair, two-thirds of vestment, cost, risk, and contribution to the ‘‘(D) The gross receipts limitations estab- those present have voted in the affirm- opening of new markets for creative expres- lished by section 111(d)(1)(C) and (D) shall be ative. sion and media for their communication. adjusted to reflect national monetary infla- ‘‘(D) To minimize any disruptive impact on tion or deflation or changes in the average Ms. HART. Mr. Speaker, on that I de- the structure of the industries involved and mand the yeas and nays. rates charged cable system subscribers for on generally prevailing industry practices. the basic service of providing secondary The yeas and nays were ordered. ‘‘(2) To make determinations concerning The SPEAKER pro tempore. Pursu- transmissions to maintain the real constant the adjustment of the copyright royalty dollar value of the exemption provided by ant to clause 8 of rule XX and the rates under section 111 solely in accordance such section, and the royalty rate specified with the following provisions: Chair’s prior announcement, further therein shall not be subject to adjustment. ‘‘(A) The rates established by section proceedings on this motion will be ‘‘(3)(A) To authorize the distribution, 111(d)(1)(B) may be adjusted to reflect— postponed. under sections 111, 119, and 1007, of those roy- ‘‘(i) national monetary inflation or defla- alty fees collected under sections 111, 119, f tion; or and 1005, as the case may be, to the extent ‘‘(ii) changes in the average rates charged COPYRIGHT ROYALTY AND DIS- that the Copyright Royalty Judges have cable subscribers for the basic service of pro- TRIBUTION REFORM ACT OF 2004 found that the distribution of such fees is viding secondary transmissions to maintain not subject to controversy. Mr. SENSENBRENNER. Mr. Speak- the real constant dollar level of the royalty ‘‘(B) In cases where the Copyright Royalty er, I move to suspend the rules and fee per subscriber which existed as of the Judges determine that controversy exists, date of October 19, 1976, pass the bill (H.R. 1417) to amend title the Copyright Royalty Judges shall deter- 17, United States Code, to replace copy- except that— mine the distribution of such fees, including right arbitration royalty panels with a ‘‘(I) if the average rates charged cable sys- partial distributions, in accordance with sec- Copyright Royalty Judge, and for other tem subscribers for the basic service of pro- tion 111, 119, or 1007, as the case may be. purposes, as amended. viding secondary transmissions are changed ‘‘(C) the Copyright Royalty Judges shall The Clerk read as follows: so that the average rates exceed national make a partial distribution of such fees dur- monetary inflation, no change in the rates H.R. 1417 ing the pendency of the proceeding under established by section 111(d)(1)(B) shall be subparagraph (B) if all participants under Be it enacted by the Senate and House of Rep- permitted; and section 803(b)(2) in the proceeding that are resentatives of the United States of America in ‘‘(II) no increase in the royalty fee shall be entitled to receive those fees that are to be Congress assembled, permitted based on any reduction in the av- partially distributed— SECTION 1. SHORT TITLE. erage number of distant signal equivalents ‘‘(i) agree to such partial distribution; This Act may be cited as the ‘‘Copyright per subscriber. ‘‘(ii) sign an agreement obligating them to Royalty and Distribution Reform Act of The Copyright Royalty Judges may consider return any excess amounts to the extent nec- 2004’’. all factors relating to the maintenance of essary to comply with the final determina- SEC. 2. REFERENCE. such level of payments, including, as an ex- tion on the distribution of the fees made Except as otherwise expressly provided, tenuating factor, whether the industry has under subparagraph (B); and whenever in this Act an amendment or re- been restrained by subscriber rate regulating ‘‘(iii) file the agreement with the Copy- peal is expressed in terms of an amendment authorities from increasing the rates for the right Royalty Judges. to, or repeal of, a section or other provision, basic service of providing secondary trans- ‘‘(D) The Copyright Royalty Judges and the reference shall be considered to be made missions. any other officer or employee acting in good to a section or other provision of title 17, ‘‘(B) In the event that the rules and regula- faith in distributing funds under subpara- United States Code. tions of the Federal Communications Com- graph (C) shall not be held liable for the pay- SEC. 3. COPYRIGHT ROYALTY JUDGE AND STAFF. mission are amended at any time after April ment of any excess fees under subparagraph (a) IN GENERAL.—Chapter 8 is amended to 8, 1976, to permit the carriage by cable sys- (C). The Copyright Royalty Judges shall, at read as follows: tems of additional television broadcast sig- the time the final determination is made, nals beyond the local service area of the pri- calculate any such excess amounts. ‘‘CHAPTER 8—PROCEEDINGS BY mary transmitters of such signals, the roy- ‘‘(4) To accept or reject royalty claims COPYRIGHT ROYALTY JUDGES alty rates established by section 111(d)(1)(B) filed under section 111, 119, and 1007, on the ‘‘Sec. may be adjusted to insure that the rates for basis of timeliness or the failure to establish ‘‘801. Copyright Royalty Judges; appoint- the additional distant signal equivalents re- the basis for a claim. ment and functions. sulting from such carriage are reasonable in ‘‘(5) To accept or reject rate adjustment ‘‘802. Copyright Royalty Judgeships; staff. the light of the changes effected by the petitions as provided in section 804 and peti- ‘‘803. Proceedings of Copyright Royalty amendment to such rules and regulations. In tions to participate as provided in section Judges. determining the reasonableness of rates pro- 803(b)(1) and (2). ‘‘804. Institution of proceedings. posed following an amendment of Federal ‘‘(6) To determine the status of a digital ‘‘805. General rule for voluntarily negotiated Communications Commission rules and regu- audio recording device or a digital audio agreements. lations, the Copyright Royalty Judges shall interface device under sections 1002 and 1003, ‘‘§ 801. Copyright Royalty Judges; appoint- consider, among other factors, the economic as provided in section 1010. ment and functions impact on copyright owners and users; ex- ‘‘(7)(A) To adopt as the basis for statutory ‘‘(a) APPOINTMENT.—The Librarian of Con- cept that no adjustment in royalty rates terms and rates or as a basis for the distribu- gress shall appoint 3 full-time Copyright shall be made under this subparagraph with tion of statutory royalty payments, an Royalty Judges, and shall appoint one of the respect to any distant signal equivalent or agreement concerning such matters reached three as the Chief Copyright Royalty Judge. fraction thereof represented by— among some or all of the participants in a In making such appointments, the Librarian ‘‘(i) carriage of any signal permitted under proceeding at any time during the pro- shall consult with the Register of Copy- the rules and regulations of the Federal ceeding, except that— rights. Communications Commission in effect on ‘‘(i) the Copyright Royalty Judges shall ‘‘(b) FUNCTIONS.—Subject to the provisions April 15, 1976, or the carriage of a signal of provide to the other participants in the proof this chapter, the functions of the Copy- the same type (that is, independent, net- ceeding under section 803(b)(2) that would be right Royalty Judges shall be as follows: work, or noncommercial educational) sub- bound by the terms, rates, distribution, or ‘‘(1) To make determinations and adjust- stituted for such permitted signal; or other determination set by the agreement an ments of reasonable terms and rates of roy- ‘‘(ii) a television broadcast signal first car- opportunity to comment on the agreement alty payments as provided in sections 112(e), ried after April 15, 1976, pursuant to an indi- and object to its adoption as the basis for 114, 115, 116, 118, 119 and 1004. The rates appli- vidual waiver of the rules and regulations of statutory terms and rates or as a basis for cable under sections 114(f)(1)(B), 115, and 116 the Federal Communications Commission, as the distribution of statutory royalty pay- shall be calculated to achieve the following such rules and regulations were in effect on ments, as the case may be; and objectives: April 15, 1976. ‘‘(ii) the Copyright Royalty Judges may ‘‘(A) To maximize the availability of cre- ‘‘(C) In the event of any change in the rules decline to adopt the agreement as the basis ative works to the public. and regulations of the Federal Communica- for statutory terms and rates or as the basis

VerDate jul 14 2003 01:19 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00008 Fmt 4634 Sfmt 0634 E:\CR\FM\K03MR7.016 H03PT1 March 3, 2004 CONGRESSIONAL RECORD — HOUSE H763 for the distribution of statutory royalty payable to perform his or her duties, the Librar- adopts regulations under subsection (h) re- ments, as the case may be, if any other par- ian of Congress may appoint an interim lating to the sanction or removal of a Copy- ticipant described in subparagraph (A) ob- Copyright Royalty Judge to perform such right Royalty Judge and such regulations rejects to the agreement and the Copyright duties during the period of such incapacity. quire documentation to establish the cause Royalty Judges find, based on the record be- ‘‘(e) COMPENSATION.— of such sanction or removal, the Copyright fore them, that the agreement is not likely ‘‘(1) JUDGES.—The Chief Copyright Royalty Royalty Judge may receive an appraisal re- to meet the statutory standard for setting Judge shall receive compensation at the rate lated specifically to the cause of the sanc- the terms and rates, or for distributing the of basic pay payable for level AL–1 for ad- tion or removal. royalty payments, as the case may be. ministrative law judges pursuant to section ‘‘(g) INCONSISTENT DUTIES BARRED.—No ‘‘(B) License agreements voluntarily nego- 5372(b) of title 5, and each of the other two Copyright Royalty Judge may undertake du- tiated pursuant to section 112(e)(5), 114(f)(3), Copyright Royalty Judges shall receive com- ties inconsistent with his or her duties and 115(c)(3)(E)(i), 116(c), or 118(b)(2) that do not pensation at the rate of basic pay payable for responsibilities as Copyright Royalty Judge. result in statutory terms and rates shall not level AL–2 for administrative law judges pur- ‘‘(h) STANDARDS OF CONDUCT.—The Librar- be subject to clauses (i) and (ii) of subpara- suant to such section. The compensation of ian of Congress shall adopt regulations re- graph (A). the Copyright Royalty Judges shall not be garding the standards of conduct, including ‘‘(c) RULINGS.—The Copyright Royalty subject to any regulations adopted by the Of- financial conflict of interest and restrictions Judges may make any necessary procedural fice of Personnel Management pursuant to against ex parte communications, which or evidentiary rulings in any proceeding its authority under section 5376(b)(1) of title shall govern the Copyright Royalty Judges under this chapter and may, before com- 5. and the proceedings under this chapter. mencing a proceeding under this chapter, ‘‘(2) STAFF MEMBERS.—Of the staff mem- ‘‘(i) REMOVAL OR SANCTION.—The Librarian make any such rulings that would apply to bers appointed under subsection (b)— of Congress may sanction or remove a Copy- the proceedings conducted by the Copyright ‘‘(A) the rate of pay of one staff member right Royalty Judge for violation of the Royalty Judges. The Copyright Royalty shall be not more than the basic rate of pay standards of conduct adopted under sub- Judges may consult with the Register of payable for GS–15 of the General Schedule; section (h), misconduct, neglect of duty, or Copyrights in making any rulings under sec- ‘‘(B) the rate of pay of one staff member any disqualifying physical or mental dis- tion 802(f)(1). shall be not less than the basic rate of pay ability. Any such sanction or removal may ‘‘(d) ADMINISTRATIVE SUPPORT.—The Li- payable for GS–13 of the General Schedule be made only after notice and opportunity brarian of Congress shall provide the Copy- and not more than the basic rate of pay pay- for a hearing, but the Librarian of Congress right Royalty Judges with the necessary ad- able for GS–14 of such Schedule; and may suspend the Copyright Royalty Judge ministrative services related to proceedings ‘‘(C) the rate of pay for the third staff during the pendency of such hearing. The Li- under this chapter. member shall be not less than the basic rate brarian shall appoint an interim Copyright ‘‘(e) LOCATION IN LIBRARY OF CONGRESS.— of pay payable for GS–8 of the General Royalty Judge during the period of any such The offices of the Copyright Royalty Judges Schedule and not more than the basic rate of suspension. and staff shall be in the Library of Congress. pay payable for GS–11 of such Schedule. ‘‘§ 803. Proceedings of Copyright Royalty ‘‘§ 802. Copyright Royalty Judgeships; staff ‘‘(f) INDEPENDENCE OF COPYRIGHT ROYALTY JUDGE.— Judges ‘‘(a) QUALIFICATIONS OF COPYRIGHT ROY- ‘‘(1) IN MAKING DETERMINATIONS.— ‘‘(a) PROCEEDINGS.— ALTY JUDGES.—Each Copyright Royalty ‘‘(1) IN GENERAL.—The Copyright Royalty Judge shall be an attorney who has at least ‘‘(A) IN GENERAL.—Subject to subparagraph Judges shall act in accordance with this 7 years of legal experience. The Chief Copy- (B), the Copyright Royalty Judges shall have title, and to the extent not inconsistent with right Royalty Judge shall have at least 5 full independence in making determinations this title, in accordance with subchapter II years of experience in adjudications, arbitra- concerning adjustments and determinations tions, or court trials. Of the other two Copy- of copyright royalty rates and terms, the of chapter 5 of title 5, in carrying out the right Royalty Judges, one shall have signifi- distribution of copyright royalties, the ac- purposes set forth in section 801. The Copy- cant knowledge of copyright law, and the ceptance or rejection of royalty claims, rate right Royalty Judges shall act in accordance other shall have significant knowledge of ec- adjustment petitions, and petitions to par- with regulations issued by the Copyright onomics. An individual may serve as a Copy- ticipate, and in issuing other rulings under Royalty Judges and on the basis of a fully right Royalty Judge only if the individual is this title, except that the Copyright Royalty documented written record, prior decisions free of any financial conflict of interest Judges may consult with the Register of of the Copyright Royalty Tribunal, prior under subsection (h). In this subsection, ‘ad- Copyrights on any matter other than a ques- copyright arbitration royalty panel deter- judication’ has the meaning given that term tion of fact. Any such consultations between minations, rulings by the Librarian of Con- in section 551 of title 5, but does not include the Copyright Royalty Judges and the Reg- gress before the effective date of the Copy- mediation. ister of Copyright on any question of law right Royalty and Distribution Reform Act ‘‘(b) STAFF.—The Chief Copyright Royalty shall be in writing or on the record. of 2004, prior determinations of Copyright Judge shall hire 3 full-time staff members to ‘‘(B) NOVEL QUESTIONS.—(i) Notwith- Royalty Judges under this chapter, and deci- assist the Copyright Royalty Judges in per- standing the provisions of subparagraph (A), sions of the court in appeals under this chap- forming their functions. in any case in which the Copyright Royalty ter before, on, or after such effective date. ‘‘(c) TERMS.—The terms of the Copyright Judges in a proceeding under this title are Any participant in a proceeding under sub- Royalty Judges shall each be 6 years, except presented with a novel question of law con- section (b)(2) may submit relevant informa- of the individuals first appointed, the Chief cerning an interpretation of those provisions tion and proposals to the Copyright Royalty Copyright Royalty Judge shall be appointed of this title that are the subject of the pro- Judges. to a term of 6 years, and of the remaining ceeding, the Copyright Royalty Judges shall ‘‘(2) JUDGES ACTING AS PANEL AND INDIVID- Copyright Royalty Judges, one shall be ap- request the Register of Copyrights, in writ- UALLY.—The Copyright Royalty Judges shall pointed to a term of 2 years, and the other ing, to submit a written opinion on the reso- preside over hearings in proceedings under shall be appointed to a term of 4 years. An lution of such novel question. The Register this chapter en banc. The Chief Copyright individual serving as a Copyright Royalty shall submit and make public that opinion Royalty Judge may designate a Copyright Judge may be reappointed to subsequent within such time period as the Copyright Royalty Judge to preside individually over terms. The term of a Copyright Royalty Royalty Judges may prescribe. Any con- such collateral and administrative pro- Judge shall begin when the term of the pred- sultations under this subparagraph between ceedings, and over such proceedings under ecessor of that Copyright Royalty Judge the Copyright Royalty Judges and the Reg- paragraphs (1) through (5) of subsection (b), ends. When the term of office of a Copyright ister of Copyrights shall be in writing or on as the Chief Judge considers appropriate. Royalty Judge ends, the individual serving the record. The opinion of the Register shall ‘‘(3) DETERMINATIONS.—Final determina- that term may continue to serve until a suc- not be binding on the Copyright Royalty tions of the Copyright Royalty Judges in cessor is selected. Judges, but the Copyright Royalty Judges proceedings under this chapter shall be made ‘‘(d) VACANCIES OR INCAPACITY.— shall take the opinion of the Register into by majority vote. A Copyright Royalty ‘‘(1) VACANCIES.—If a vacancy should occur account in making the judges’ determination Judge dissenting from the majority on any in the position of Copyright Royalty Judge, on the question concerned. determination under this chapter may issue the Librarian of Congress shall act expedi- ‘‘(ii) In clause (i), a ‘novel question of law’ his or her dissenting opinion, which shall be tiously to fill the vacancy, and may appoint is a question of law that has not been deter- included with the determination. an interim Copyright Royalty Judge to serve mined in prior decisions, determinations, ‘‘(b) PROCEDURES.— until another Copyright Royalty Judge is ap- and rulings described in section 803(a). ‘‘(1) INITIATION.— pointed under this section. An individual ap- ‘‘(2) PERFORMANCE APPRAISALS.— ‘‘(A) CALL FOR PETITIONS TO PARTICIPATE.— pointed to fill the vacancy occurring before ‘‘(A) IN GENERAL.—Notwithstanding any (i) Promptly upon the filing of a petition for the expiration of the term for which the other provision of law or any regulation of a rate adjustment or determination under predecessor of that individual was appointed the Library of Congress, and subject to subsection 804(a) or 804(b)(8), or by no later than shall be appointed for the remainder of that paragraph (B), the Copyright Royalty Judges January 5 of a year specified in section 804 term. shall not receive performance appraisals. for the commencement of a proceeding if a ‘‘(2) INCAPACITY.—In the case in which a ‘‘(B) RELATING TO SANCTION OR REMOVAL.— petition has not been filed by that date, the Copyright Royalty Judge is temporarily un- To the extent that the Librarian of Congress Copyright Royalty Judges shall cause to be

VerDate jul 14 2003 01:19 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00009 Fmt 4634 Sfmt 0634 E:\CR\FM\A03MR7.008 H03PT1 H764 CONGRESSIONAL RECORD — HOUSE March 3, 2004 published in the Federal Register notice of Judges in proceedings under this chapter to alty Judges in connection with the resolu- commencement of proceedings under this determine royalty rates may decide, sua tion of motions, orders and disputes pending chapter calling for the filing of petitions to sponte or upon motion of a participant, to at the end of such period. participate in a proceeding under this chap- determine issues on the basis of initial fil- ‘‘(v) Any participant under paragraph (2) in ter for the purpose of making the relevant ings in writing, initial responses by any op- a proceeding under this chapter to determine determination under section 111, 112, 114, 115, posing participant, and one additional re- royalty rates may, upon written notice, seek 116, 118, 119, 1004 or 1007, as the case may be. sponse by each such participant. Prior to discovery of information and materials rel- ‘‘(ii) Petitions to participate shall be filed making such decision to proceed on such a evant and material to the proceeding. Any by no later than 30 days after publication of paper record only, the Copyright Royalty objection to any such discovery request shall notice of commencement of a proceeding, Judges shall offer to all parties to the pro- be resolved by a motion or request to compel under clause (i), except that the Copyright ceeding the opportunity to comment on the discovery made to the Copyright Royalty Royalty Judges may, for substantial good decision. The procedure under this para- Judges. Each motion or request to compel cause shown and if there is no prejudice to graph— discovery shall be determined by the Copy- the participants that have already filed peti- ‘‘(A) shall be applied in cases in which right Royalty Judges, or by a Copyright tions, accept late petitions to participate at there is no genuine issue of material fact, Royalty Judge when permitted under sub- any time up to the date that is 90 days before there is no need for evidentiary hearings, section (a)(2), who may approve the request the date on which participants in the pro- and all participants in the proceeding agree only if the evidence that would be produced ceeding are to file their written direct state- in writing to the procedure; and is relevant and material. A Copyright Roy- ments. ‘‘(B) may be applied under such other cir- alty Judge may refuse a request to compel ‘‘(B) PETITIONS TO PARTICIPATE.—Each peti- cumstances as the Copyright Royalty Judges discovery of evidence that has been found to tion to participate in a proceeding shall de- consider appropriate. be relevant and material, only upon good scribe the petitioner’s interest in the subject ‘‘(6) REGULATIONS.— cause shown. For purposes of the preceding matter of the proceeding. Parties with simi- ‘‘(A) IN GENERAL.—The Copyright Royalty sentence, the basis for ‘good cause’ may only lar interests may file a single petition to Judges may issue regulations to carry out be that— participate. their functions under this title. Not later ‘‘(I) the discovery sought is unreasonably ‘‘(2) PARTICIPATION IN GENERAL.—Subject to than 120 days after Copyright Royalty cumulative or duplicative, or is obtainable paragraph (4), a person may participate in a Judges or interim Copyright Royalty Judges, from another source that is more conven- proceeding under this chapter, including as the case may be, are first appointed after ient, less burdensome, or less expensive; through the submission of briefs or other in- the enactment of the Copyright Royalty and ‘‘(II) the participant seeking discovery has formation, only if— Distribution Reform Act of 2004, such judges had ample opportunity by discovery in the ‘‘(A) that person has filed a petition to par- shall issue regulations to govern proceedings action to obtain the information sought; or ticipate in accordance with paragraph (1) (ei- under this chapter. ‘‘(III) the burden or expense of the pro- ther individually or as a group under para- ‘‘(B) INTERIM REGULATIONS.—Until regula- posed discovery outweighs its likely benefit, graph (1)(B)), together with a filing fee of tions are adopted under subparagraph (A), taking into account the needs and resources $150; the Copyright Royalty Judges shall apply of the participants, the importance of the ‘‘(B) the Copyright Royalty Judges have the regulations in effect under this chapter issues at stake, and the importance of the not determined that the petition to partici- on the day before the effective date of the proposed discovery in resolving the issues. pate is facially invalid; and Copyright Royalty and Distribution Reform ‘‘(vi) The rules in effect on the day before ‘‘(C) the Copyright Royalty Judges have Act of 2004, to the extent such regulations the effective date of the Copyright Royalty not determined, sua sponte or on the motion are not inconsistent with this chapter, ex- and Distribution Reform Act of 2004, relating of another participant in the proceeding, cept that functions carried out under such to discovery in proceedings under this title that the person lacks a significant interest regulations by the Librarian of Congress, the to determine the distribution of royalty fees, in the proceeding. Register of Copyrights, or copyright arbitra- shall continue to apply to such proceedings ‘‘(3) VOLUNTARY NEGOTIATION PERIOD.— tion royalty panels that, as of such date of on and after such effective date. ‘‘(A) IN GENERAL.—Promptly after the date enactment, are to be carried out by the ‘‘(vii) The Copyright Royalty Judges may for filing of petitions to participate in a pro- Copyright Royalty Judges under this chap- issue subpoenas requiring the production of ceeding, the Copyright Royalty Judges shall ter, shall be carried out by the Copyright evidence or witnesses, but only if the evi- make available to all participants in the pro- Royalty Judges under such regulations. dence requested to be produced or that would ceeding a list of such participants and shall ‘‘(C) REQUIREMENTS.—Regulations issued be proffered by the witness is relevant and initiate a voluntary negotiation period under subparagraph (A) shall include the fol- material. among the participants. lowing: ‘‘(viii) The Copyright Royalty Judges shall ‘‘(B) LENGTH OF PROCEEDINGS.—The vol- ‘‘(i) The written direct statements of all order a settlement conference among the untary negotiation period initiated under participants in a proceeding under paragraph participants in the proceeding to facilitate subparagraph (A) shall be 3 months. (2) shall be filed by a date specified by the the presentation of offers of settlement ‘‘(C) DETERMINATION OF SUBSEQUENT PRO- Copyright Royalty Judges, which may be no among the participants. The settlement con- CEEDINGS.—At the close of the voluntary ne- earlier than four months, and no later than ference shall be held during a 21-day period gotiation proceedings, the Copyright Roy- five months, after the end of the voluntary following the end of the discovery period. alty Judges shall, if further proceedings negotiation period under paragraph (3). Not- ‘‘(c) DETERMINATION OF COPYRIGHT ROY- under this chapter are necessary, determine withstanding the preceding sentence, a par- ALTY JUDGES.— whether and to what extent paragraphs (4) ticipant in a proceeding may, within 15 days ‘‘(1) TIMING.—The Copyright Royalty and (5) will apply to the parties. after the end of the discovery period speci- Judges shall issue their determination in a ‘‘(4) SMALL CLAIMS PROCEDURE IN DISTRIBU- fied in clause (iii), file an amended written proceeding not later than 11 months after TION PROCEEDINGS.— direct statement based on new information the conclusion of the 21-day settlement con- ‘‘(A) IN GENERAL.—If, in a proceeding under received during the discovery process. ference period under subsection (b)(3)(C)(vi), this chapter to determine the distribution of ‘‘(ii)(I) Following the submission to the but, in the case of a proceeding to determine royalties, a participant in the proceeding as- Copyright Royalty Judges of written direct successors to rates or terms that expire on a serts that the contested amount of the claim statements by the participants in a pro- specified date, in no event later than 15 days is $10,000 or less, the Copyright Royalty ceeding under paragraph (2), the judges shall before the expiration of the then current Judges shall decide the controversy on the meet with the participants for the purpose of statutory rates and terms. basis of the filing in writing of the initial setting a schedule for conducting and com- ‘‘(2) REHEARINGS.— claim, the initial response by any opposing pleting discovery. Such schedule shall be de- ‘‘(A) IN GENERAL.—The Copyright Royalty participant, and one additional response by termined by the Copyright Royalty Judges. Judges may, in exceptional cases, upon mo- each such party. The participant asserting ‘‘(II) In this chapter, the term ‘written dition of a participant under subsection (b)(2), the claim shall not be required to pay the fil- rect statements’ means witness statements, order a rehearing, after the determination in ing fee under paragraph (2). testimony, and exhibits to be presented in a proceeding is issued under paragraph (1), ‘‘(B) BAD FAITH INFLATION OF CLAIM.—If the the proceedings, and such other information on such matters as the Copyright Royalty Copyright Royalty Judges determine that a that is necessary to establish terms and Judges determine to be appropriate. participant asserts in bad faith an amount in rates, or the distribution of royalty pay- ‘‘(B) TIMING FOR FILING MOTION.—Any mo- controversy in excess of $10,000 for the pur- ments, as the case may be, as set forth in tion for a rehearing under subparagraph (A) pose of avoiding a determination under the regulations issued by the Copyright Royalty may only be filed within 15 days after the procedure set forth in subparagraph (A), the Judges. date on which the Copyright Royalty Judges Copyright Royalty Judges shall impose a ‘‘(iii) Hearsay may be admitted in pro- deliver their initial determination con- fine on that participant in an amount not to ceedings under this chapter to the extent cerning rates and terms to the participants exceed the difference between the actual deemed appropriate by the Copyright Roy- in the proceeding. amount distributed and the amount asserted alty Judges. ‘‘(C) PARTICIPATION BY OPPOSING PARTY NOT by the participant. ‘‘(iv) Discovery in such proceedings shall REQUIRED.—In any case in which a rehearing ‘‘(5) PAPER PROCEEDINGS IN RATEMAKING be permitted for a period of 60 days, except is ordered, any opposing party shall not be PROCEEDINGS.—The Copyright Royalty for discovery ordered by the Copyright Roy- required to participate in the rehearing.

VerDate jul 14 2003 01:19 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00010 Fmt 4634 Sfmt 0634 E:\CR\FM\A03MR7.008 H03PT1 March 3, 2004 CONGRESSIONAL RECORD — HOUSE H765

‘‘(D) NO NEGATIVE INFERENCE.—No negative ‘‘(d) JUDICIAL REVIEW.— from the filing fees collected under sub- inference shall be drawn from lack of partici- ‘‘(1) APPEAL.—Any determination of the section (b) for a particular proceeding under pation in a rehearing. Copyright Royalty Judges under subsection this chapter the reasonable costs incurred by ‘‘(E) CONTINUITY OF RATES AND TERMS.—(i) (c) may, within 30 days after the publication the Librarian of Congress, the Copyright Of- If the decision of the Copyright Royalty of the determination in the Federal Register, fice, and the Copyright Royalty Judges in Judges on any motion for a rehearing is not be appealed, to the United States Court of conducting that proceeding, other than the rendered before the expiration of the statu- Appeals for the District of Columbia Circuit, salaries of the Copyright Royalty Judges and tory rates and terms that were previously in by any aggrieved participant in the pro- the 3 staff members appointed under section effect, in the case of a proceeding to deter- ceeding under subsection (b)(2) who fully 802(b). mine successors to rates and terms that ex- participated in the proceeding and who ‘‘(B) AUTHORIZATION OF APPROPRIATIONS.— pire on a specified date, then— would be bound by the determination. If no There are authorized to be appropriated such ‘‘(I) the initial determination of the Copy- appeal is brought within that 30-day period, sums as may be necessary to pay the costs of right Royalty Judges that is the subject of the determination of the Copyright Royalty proceedings under this chapter not covered the rehearing motion shall be effective as of Judges shall be final, and the royalty fee or by the filing fees collected under subsection the day following the date on which the determination with respect to the distribu- (b). All funds made available pursuant to rates and terms that were previously in ef- tion of fees, as the case may be, shall take this subparagraph shall remain available fect expire; and effect as set forth in paragraph (2). until expended. ‘‘(II) in the case of a proceeding under sec- ‘‘(2) EFFECT OF RATES.— ‘‘(2) POSITIONS REQUIRED FOR ADMINISTRA- tion 114(f)(1)(C) or 114(f)(2)(C), royalty rates ‘‘(A) EXPIRATION ON SPECIFIED DATE.—When TION OF COMPULSORY LICENSING.—Section 307 and terms shall, for purposes of section this title provides that the royalty rates and of the Legislative Branch Appropriations 114(f)(4)(B), be deemed to have been set at terms that were previously in effect are to Act, 1994, shall not apply to employee posi- those rates and terms contained in the ini- expire on a specified date, any adjustment or tions in the Library of Congress that are re- tial determination of the Copyright Royalty determination by the Copyright Royalty quired to be filled in order to carry out sec- Judges that is the subject of the rehearing Judges of successor rates and terms for an tion 111, 112, 114, 115, 116, 118, or 119 or chap- motion, as of the date of that determination. ensuing statutory license period shall be ef- ter 10. ‘‘(ii) The pendency of a motion for a re- fective as of the day following the date of ex- ‘‘§ 804. Institution of proceedings hearing under this paragraph shall not re- piration of the rates and terms that were lieve persons obligated to make royalty pay- previously in effect, even if the determina- ‘‘(a) FILING OF PETITION.—With respect to ments who would be affected by the deter- tion of the Copyright Royalty Judges is ren- proceedings referred to in paragraphs (1) and mination on that motion from providing the dered on a later date. (2) of section 801(b) concerning the deter- statements of account and any reports of ‘‘(B) OTHER CASES.—In cases where rates mination or adjustment of royalty rates as use, to the extent required, and paying the and terms do not expire on a specified date provided in sections 111, 112, 114, 115, 116, 118, royalties required under the relevant deter- or have not yet been established, successor and 1004, during the calendar years specified mination or regulations. or new rates or terms shall take effect on the in the schedule set forth in subsection (b), ‘‘(iii) Notwithstanding clause (ii), when- first day of the second month that begins any owner or user of a copyrighted work ever royalties described in clause (ii) are after the publication of the determination of whose royalty rates are specified by this paid to a person other than the Copyright Of- the Copyright Royalty Judges in the Federal title, or are established under this chapter fice, the entity designated by the Copyright Register, except as otherwise provided in before or after the enactment of the Copy- Royalty Judges to which such royalties are this title, and the rates and terms previously right Royalty and Distribution Reform Act paid by the copyright user (and any suc- in effect, to the extent applicable, shall re- of 2004, may file a petition with the Copy- cessor thereto) shall, within 60 days after the main in effect until such successor rates and right Royalty Judges declaring that the peti- motion for rehearing is resolved or, if the terms become effective. tioner requests a determination or adjust- motion is granted, within 60 days after the ‘‘(C) OBLIGATION TO MAKE PAYMENTS.—(i) ment of the rate. The Copyright Royalty rehearing is concluded, return any excess The pendency of an appeal under this sub- Judges shall make a determination as to amounts previously paid to the extent nec- section shall not relieve persons obligated to whether the petitioner has such a significant essary to comply with the final determina- make royalty payments under section 111, interest in the royalty rate in which a deter- tion of royalty rates by the Copyright Roy- 112, 114, 115, 116, 118, 119, or 1003, who would mination or adjustment is requested. If the alty Judges. be affected by the determination on appeal, Copyright Royalty Judges determine that ‘‘(3) CONTENTS OF DETERMINATION.—A deter- from providing the statements of account the petitioner has such a significant inter- mination of the Copyright Royalty Judges (and any report of use, to the extent re- est, the Copyright Royalty Judges shall shall be accompanied by the written record, quired) and paying the royalties required cause notice of this determination, with the and shall set forth the facts that the Copy- under the relevant determination or regula- reasons therefor, to be published in the Fed- right Royalty Judges found relevant to their tions. eral Register, together with the notice of determination. Among other terms adopted ‘‘(ii) Notwithstanding clause (i), whenever commencement of proceedings under this in a determination, the Copyright Royalty royalties described in clause (i) are paid to a chapter. With respect to proceedings under Judges may specify notice and recordkeeping person other than the Copyright Office, the paragraph (1) of section 801(b) concerning the requirements of users of the copyrights at entity designated by the Copyright Royalty determination or adjustment of royalty issue that apply in lieu of those that would Judges to which such royalties are paid by rates as provided in sections 112 and 114, dur- otherwise apply under regulations. the copyright user (and any successor there- ing the calendar years specified in the sched- ‘‘(4) CONTINUING JURISDICTION.—The Copy- to) shall, within 60 days after the final reso- ule set forth in subsection (b), the Copyright right Royalty Judges may amend the deter- lution of the appeal, return any excess Royalty Judges shall cause notice of com- mination or the regulations issued pursuant amounts previously paid (and interest there- mencement of proceedings under this chap- to the determination in order to correct any on, if ordered pursuant to paragraph (3)) to ter to be published in the Federal Register as technical errors in the determination or to the extent necessary to comply with the provided in section 803(b)(1)(A). respond to unforeseen circumstances that final determination of royalty rates on ap- ‘‘(b) TIMING OF PROCEEDINGS.— preclude the proper effectuation of the deter- peal. ‘‘(1) SECTION 111 PROCEEDINGS.—(A) A peti- mination. ‘‘(3) JURISDICTION OF COURT.—If the court, tion described in subsection (a) to initiate ‘‘(5) PROTECTIVE ORDER.—The Copyright pursuant to section 706 of title 5, modifies or proceedings under section 801(b)(2) con- Royalty Judges may issue such orders as vacates a determination of the Copyright cerning the adjustment of royalty rates may be appropriate to protect confidential Royalty Judges, the court may enter its own under section 111 to which subparagraph (A) information, including orders excluding con- determination with respect to the amount or or (D) of section 801(b)(2) applies may be filed fidential information from the record of the distribution of royalty fees and costs, and during the year 2005 and in each subsequent determination that is published or made order the repayment of any excess fees, the fifth calendar year. available to the public, except that any payment of any underpaid fees, and the pay- ‘‘(B) In order to initiate proceedings under terms or rates of royalty payments or dis- ment of interest pertaining respectively section 801(b)(2) concerning the adjustment tributions may not be excluded. thereto, in accordance with its final judg- of royalty rates under section 111 to which ‘‘(6) PUBLICATION OF DETERMINATION.—The ment. The court may also vacate the deter- subparagraph (B) or (C) of section 801(b)(2) Librarian of Congress shall cause the determination of the Copyright Royalty Judges applies, within 12 months after an event de- mination, and any corrections thereto, to be and remand the case to the Copyright Roy- scribed in either of those subsections, any published in the Federal Register. The Li- alty Judges for further proceedings in ac- owner or user of a copyrighted work whose brarian of Congress shall also publicize the cordance with subsection (a). royalty rates are specified by section 111, or determination and corrections in such other ‘‘(e) ADMINISTRATIVE MATTERS.— by a rate established under this chapter be- manner as the Librarian considers appro- ‘‘(1) DEDUCTION OF COSTS OF LIBRARY OF fore or after the enactment of the Copyright priate, including, but not limited to, publica- CONGRESS AND COPYRIGHT OFFICE FROM FILING Royalty and Distribution Reform Act of 2004, tion on the Internet. The Librarian of Con- FEES.— may file a petition with the Copyright Roy- gress shall also make the determination, ‘‘(A) DEDUCTION FROM FILING FEES.—The Li- alty Judges declaring that the petitioner re- corrections, and the accompanying record brarian of Congress may, to the extent not quests an adjustment of the rate. The Copy- available for public inspection and copying. otherwise provided under this title, deduct right Royalty Judges shall then proceed as

VerDate jul 14 2003 01:19 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00011 Fmt 4634 Sfmt 0634 E:\CR\FM\A03MR7.008 H03PT1 H766 CONGRESSIONAL RECORD — HOUSE March 3, 2004 set forth in subsection (a) of this section. ‘‘(II) the decision shall take effect as pro- mination, except that the Copyright Royalty Any change in royalty rates made under this vided in subsections (c)(2) and (d)(2) of sec- Judges shall adjust the rates pursuant to the chapter pursuant to this subparagraph may tion 803 and section 114(f)(4)(B)(ii) and (C). voluntary negotiations to reflect national be reconsidered in the year 2005, and each ‘‘(iv) The rates and terms shall remain in monetary inflation during the additional pe- fifth calendar year thereafter, in accordance effect for the period set forth in section riod the rates remain in effect.’’. with the provisions in section 801(b)(3)(B) or 114(f)(1)(C) or 114(f)(2)(C), as the case may be. (b) CONFORMING AMENDMENT.—The table of (C), as the case may be. A petition for adjust- ‘‘(4) SECTION 115 PROCEEDINGS.—A petition chapters for title 17, United States Code, is ment of rates under section 11(d)(1)(B) as a described in subsection (a) to initiate pro- amended by striking the item relating to result of a change is the rules and regula- ceedings under section 801(b)(1) concerning chapter 8 and inserting the following: tions of the Federal Communications Com- the adjustment or determination of royalty rates as provided in section 115 may be filed ‘‘8. Proceedings by Copyright Royalty mission shall set forth the change on which Judges ...... 801’’. the petition is based. in the year 2006 and in each subsequent fifth SEC. 4. DEFINITION. ‘‘(C) Any adjustment of royalty rates calendar year, or at such other times as the under section 111 shall take effect as of the parties have agreed under section 115(c)(3)(B) Section 101 is amended by inserting after first accounting period commencing after and (C). the definition of ‘‘copies’’ the following: the publication of the determination of the ‘‘(5) SECTION 116 PROCEEDINGS.—(A) A peti- ‘‘A ‘Copyright Royalty Judge’ is a Copy- Copyright Royalty Judges in the Federal tion described in subsection (a) to initiate right Royalty Judge appointed under section Register, or on such other date as is specified proceedings under section 801(b) concerning 802 of this title, and includes any individual in that determination. the determination of royalty rates and terms serving as an interim Copyright Royalty as provided in section 116 may be filed at any Judge under such section.’’. ‘‘(2) CERTAIN SECTION 112 PROCEEDINGS.— Proceedings under this chapter shall be com- time within 1 year after negotiated licenses SEC. 5. TECHNICAL AMENDMENTS. authorized by section 116 are terminated or menced in the year 2007 to determine reason- (a) CABLE RATES.—Section 111(d) is amend- able terms and rates of royalty payments for expire and are not replaced by subsequent ed— the activities described in section 112(e)(1) agreements. (1) in paragraph (2), in the second sentence, relating to the limitation on exclusive rights ‘‘(B) If a negotiated license authorized by by striking ‘‘a copyright arbitration royalty specified by section 114(d)(1)(C)(iv), to be- section 116 is terminated or expires and is panel’’ and inserting ‘‘the Copyright Royalty come effective on January 1, 2009. Such pro- not replaced by another such license agree- Judges.’’; and ceedings shall be repeated in each subse- ment which provides permission to use a (2) in paragraph (4)— quent fifth calendar year. quantity of musical works not substantially (A) in subparagraph (A), by striking ‘‘Li- smaller than the quantity of such works per- ‘‘(3) SECTION 114 AND CORRESPONDING 112 PRO- brarian of Congress’’ each place it appears formed on coin-operated phonorecord players CEEDINGS.— and inserting ‘‘Copyright Royalty Judges’’; during the 1-year period ending March 1, ‘‘(A) FOR ELIGIBLE NONSUBSCRIPTION SERV- (B) in subparagraph (B)— 1989, the Copyright Royalty Judges shall, ICES AND NEW SUBSCRIPTION SERVICES.—Pro- (i) in the first sentence, by striking ‘‘Li- ceedings under this chapter shall be com- upon petition filed under paragraph (1) with- brarian of Congress shall, upon the rec- menced as soon as practicable after the ef- in 1 year after such termination or expira- ommendation of the Register of Copyrights,’’ fective date of the Copyright Royalty and tion, commence a proceeding to promptly es- and inserting ‘‘Copyright Royalty Judges Distribution Reform Act of 2004 to determine tablish an interim royalty rate or rates for shall’’; reasonable terms and rates of royalty pay- the public performance by means of a coin- (ii) in the second sentence, by striking ‘‘Li- ments under sections 114 and 112 for the ac- operated phonorecord player of nondramatic brarian determines’’ and inserting ‘‘Copy- tivities of eligible nonsubscription trans- musical works embodied in phonorecords right Royalty Judges determine’’; and mission services and new subscription serv- which had been subject to the terminated or (iii) in the third sentence— ices, to be effective for the period beginning expired negotiated license agreement. Such (I) by striking ‘‘Librarian’’ each place it on January 1, 2006, and ending on December rate or rates shall be the same as the last appears and inserting ‘‘Copyright Royalty 31, 2010. Such proceedings shall next be com- such rate or rates and shall remain in force Judges’’; and menced in January 2009 to determine reason- until the conclusion of proceedings by the (II) by striking ‘‘convene a copyright arbi- able terms and rates of royalty payments, to Copyright Royalty Judges, in accordance tration royalty panel’’ and inserting ‘‘con- become effective on January 1, 2011. There- with section 803, to adjust the royalty rates duct a proceeding’’; and after, such proceedings shall be repeated in applicable to such works, or until superseded (C) in subparagraph (C), by striking ‘‘Li- each subsequent fifth calendar year. by a new negotiated license agreement, as brarian of Congress’’ and inserting ‘‘Copy- provided in section 116(b). ‘‘(B) FOR PREEXISTING SUBSCRIPTION AND right Royalty Judges’’. ‘‘(6) SECTION 118 PROCEEDINGS.—A petition SATELLITE DIGITAL AUDIO RADIO SERVICES.— (b) EPHEMERAL RECORDINGS.—Section 112(e) Proceedings under this chapter shall be com- described in subsection (a) to initiate pro- is amended— menced in January 2006 to determine reason- ceedings under section 801(b)(1) concerning (1) in paragraph (3)— able terms and rates of royalty payments the determination of reasonable terms and (A) by amending the first sentence to read under sections 114 and 112 for the activities rates of royalty payments as provided in sec- as follows: ‘‘Voluntary negotiation proof preexisting subscription services, to be ef- tion 118 may be filed in the year 2006 and in ceedings initiated pursuant to section 804(a) fective during the period beginning on Janu- each subsequent fifth calendar year. for the purpose of determining reasonable ary 1, 2008, and ending on December 31, 2012, ‘‘(7) SECTION 1004 PROCEEDINGS.—A petition terms and rates of royalty payments for the and preexisting satellite digital audio radio described in subsection (a) to initiate pro- activities specified by paragraph (1) shall services, to be effective during the period be- ceedings under section 801(b)(1) concerning cover the 5-year period beginning on January ginning on January 1, 2007, and ending on De- the adjustment of reasonable royalty rates 1 of the second year following the year in cember 31, 2012. Such proceedings shall next under section 1004 may be filed as provided in which the proceedings are commenced, or be commenced in 2011 to determine reason- section 1004(a)(3). such other period as the parties may agree.’’; able terms and rates of royalty payments, to ‘‘(8) PROCEEDINGS CONCERNING DISTRIBUTION and become effective on January 1, 2013. There- OF ROYALTY FEES.—With respect to pro- (B) in the third sentence, by striking ‘‘Li- after, such proceedings shall be repeated in ceedings under section 801(b)(3) concerning brarian of Congress’’ and inserting ‘‘Copy- each subsequent fifth calendar year. the distribution of royalty fees in certain right Royalty Judges’’; ‘‘(C)(i) Notwithstanding any other provi- circumstances under section 111, 116, 119, or (2) in paragraph (4)— sion of this chapter, this subparagraph shall 1007, the Copyright Royalty Judges shall, (A) by amending the first sentence to read govern proceedings commenced pursuant to upon a determination that a controversy ex- as follows: ‘‘In the absence of license agree- sections 114(f)(1)(C) and 114(f)(2)(C) con- ists concerning such distribution, cause to be ments negotiated under paragraphs (2) and cerning new types of services. published in the Federal Register notice of (3), the Copyright Royalty Judges shall com- ‘‘(ii) Not later than 30 days after a petition commencement of proceedings under this mence a proceeding pursuant to chapter 8 to to determine rates and terms for a new type chapter. determine and publish in the Federal Reg- of service that is filed by any copyright ‘‘§ 805. General rule for voluntarily negotiated ister a schedule of reasonable rates and owner of sound recordings, or such new type agreements terms which, subject to paragraph (5), shall of service, indicating that such new type of ‘‘Any rates or terms under this title that— be binding on all copyright owners of sound service is or is about to become operational, ‘‘(1) are agreed to by participants to a pro- recordings and transmitting organizations the Copyright Royalty Judges shall issue a ceeding under section 803(b)(2), entitled to a statutory license under this notice for a proceeding to determine rates ‘‘(2) are adopted by the Copyright Royalty subsection during the 5-year period specified and terms for such service. Judges as part of a determination under this in paragraph (3), or such other period as the ‘‘(iii) The proceeding shall follow the chapter, and parties may agree.’’; schedule set forth in such subsections (b), ‘‘(3) are in effect for a period shorter than (B) by striking ‘‘copyright arbitration roy- (c), and (d) of section 803, except that— would otherwise apply under a determina- alty panel’’ each subsequent place it appears ‘‘(I) the determination shall be issued by tion pursuant to this chapter, and inserting ‘‘Copyright Royalty Judges’’; not later than 24 months after the publica- shall remain in effect for such period of time (C) in the fourth sentence, by striking ‘‘its tion of the notice under clause (ii); and as would otherwise apply under such deter- decision’’ and inserting ‘‘their decision’’; and

VerDate jul 14 2003 01:19 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00012 Fmt 4634 Sfmt 0634 E:\CR\FM\A03MR7.008 H03PT1 March 3, 2004 CONGRESSIONAL RECORD — HOUSE H767 (D) in the last sentence, by striking ‘‘Li- year in which the proceedings are comments negotiated under subparagraphs (B) brarian of Congress’’ and inserting ‘‘Copy- menced, except where different transitional and (C), the Copyright Royalty Judges shall right Royalty Judges’’; periods are provided in section 804(b)(3)(A), commence proceedings pursuant to chapter 8 (3) in paragraph (5), by striking ‘‘or deci- or such other period as the parties may to determine and publish in the Federal Reg- sion by the Librarian of Congress’’ and in- agree.’’; and ister a schedule of rates and terms which, serting ‘‘, decision by the Librarian of Con- (ii) in the third sentence, by striking ‘‘Li- subject to subparagraph (E), shall be binding gress, or determination by the Copyright brarian of Congress’’ and inserting ‘‘Copy- on all copyright owners of nondramatic mu- Royalty Judges’’; right Royalty Judges’’; sical works and persons entitled to obtain a (4) by striking paragraph (6) and redesig- (B) in subparagraph (B)— compulsory license under subsection (a)(1) nating paragraphs (7), (8), and (9), as para- (i) by amending the first sentence to read during the period specified in subparagraph graphs (6), (7), and (8), respectively; and as follows: ‘‘In the absence of license agree- (C) or such other period as may be deter- (5) in paragraph (6)(A), as so redesignated, ments negotiated under subparagraph (A), mined pursuant to subparagraphs (B) and by striking ‘‘Librarian of Congress’’ and in- the Copyright Royalty Judges shall com- (C), or such other period as the parties may serting ‘‘Copyright Royalty Judges’’. mence a proceeding pursuant to chapter 8 to agree.’’; (c) SCOPE OF EXCLUSIVE RIGHTS IN SOUND determine and publish in the Federal Reg- (B) in the third sentence, by striking RECORDINGS.—Section 114(f) is amended— ister a schedule of rates and terms which, ‘‘copyright arbitration royalty panel’’ and (1) in paragraph (1)— subject to paragraph (3), shall be binding on inserting ‘‘Copyright Royalty Judges’’; and (A) in subparagraph (A)— all copyright owners of sound recordings and (C) in the last sentence, by striking ‘‘Li- (i) by amending the first sentence to read entities performing sound recordings af- brarian of Congress’’ and inserting ‘‘Copy- as follows: ‘‘Voluntary negotiation pro- fected by this paragraph during the period right Royalty Judges’’; ceedings initiated pursuant to section 804(a) specified in subparagraph (A), or such other (5) in subparagraph (E)— for the purpose of determining reasonable period as the parties may agree.’’; and (A) in clause (i)— terms and rates of royalty payments for sub- (ii) by striking ‘‘copyright arbitration roy- (i) in the first sentence, by striking ‘‘the scription transmissions by preexisting sub- alty panel’’ each subsequent place it appears Librarian of Congress’’ and inserting ‘‘a scription services and transmissions by pre- and inserting ‘‘Copyright Royalty Judges’’; copyright arbitration royalty panel, the Li- existing satellite digital audio radio services and brarian of Congress, or the Copyright Roy- shall cover the 5-year period beginning on (C) by amending subparagraph (C) to read alty Judges’’; and January 1 of the year following the second as follows: (ii) in the second sentence, by striking year in which the proceedings are com- ‘‘(C) The procedures under subparagraphs ‘‘(C), (D) or (F) shall be given effect’’ and in- menced, except where differential transi- (A) and (B) shall also be initiated pursuant serting ‘‘(C) or (D) shall be given effect as to tional periods are provided in section to a petition filed by any copyright owners digital phonorecord deliveries’’; and 804(b)(3), or such other period as the parties of sound recordings or any eligible non- (B) in clause (ii)(I), by striking ‘‘(C), (D) or may agree.’’; and subscription service or new subscription (F)’’ each place it appears and inserting ‘‘(C) (ii) in the third sentence, by striking ‘‘Li- service indicating that a new type of eligible brarian of Congress’’ and inserting ‘‘Copy- nonsubscription service or new subscription or (D)’’; and right Royalty Judges’’; service on which sound recordings are per- (6) by striking subparagraph (F) and redes- (B) in subparagraph (B)— formed is or is about to become operational, ignating subparagraphs (G) through (L) as (i) by amending the first sentence to read for the purpose of determining reasonable subparagraphs (F) through (K), respectively. as follows: ‘‘In the absence of license agree- terms and rates of royalty payments with re- (e) COIN-OPERATED PHONORECORD PLAY- ments negotiated under subparagraph (A), spect to such new type of service for the pe- ERS.—Section 116 is amended— the Copyright Royalty Judges shall com- riod beginning with the inception of such (1) in subsection (b), by amending para- mence a proceeding pursuant to chapter 8 to new type of service and ending on the date graph (2) to read as follows: determine and publish in the Federal Reg- on which the royalty rates and terms for pre- ‘‘(2) CHAPTER 8 PROCEEDING.—Parties not ister a schedule of rates and terms which, existing subscription digital audio trans- subject to such a negotiation may have the subject to paragraph (3), shall be binding on mission services or preexisting satellite dig- terms and rates and the division of fees de- all copyright owners of sound recordings and ital radio audio services, as the case may be, scribed in paragraph (1) determined in a pro- entities performing sound recordings af- most recently determined under subpara- ceeding in accordance with the provisions of fected by this paragraph during the 5-year graph (A) or (B) and chapter 8 expire, or such chapter 8.’’; and period specified in subparagraph (A), or such other period as the parties may agree.’’; (2) in subsection (c)— other date as the parties may agree.’’; and (3) in paragraph (3), by striking ‘‘or deci- (A) in the subsection heading, by striking (ii) in the second sentence, by striking sion by the Librarian of Congress’’ and in- ‘‘COPYRIGHT ARBITRATION ROYALTY PANEL ‘‘copyright arbitration royalty panel’’ and serting ‘‘, decision by the Librarian of Con- DETERMINATIONS’’ and inserting ‘‘DETER- inserting ‘‘Copyright Royalty Judges’’; and gress, or determination by the Copyright MINATIONS BY COPYRIGHT ROYALTY JUDGES’’; (C) by amending subparagraph (C) to read Royalty Judges’’; and and as follows: (4) in paragraph (4), by striking ‘‘Librarian (B) by striking ‘‘a copyright arbitration ‘‘(C) The procedures under subparagraphs of Congress’’ each place it appears and in- royalty panel’’ and inserting ‘‘the Copyright (A) and (B) also shall be initiated pursuant serting ‘‘Copyright Royalty Judges’’. Royalty Judges’’. to a petition filed by any copyright owners (d) PHONORECORDS OF NONDRAMATIC MUSI- of sound recordings, any preexisting sub- CAL WORKS.—Section 115(c)(3) is amended— (f) USE OF CERTAIN WORKS IN CONNECTION scription services, or any preexisting sat- (1) in subparagraph (A)(ii), by striking WITH NONCOMMERCIAL BROADCASTING.—Sec- ellite digital audio radio services indicating ‘‘(F)’’ and inserting ‘‘(E)’’; tion 118 is amended— that a new type of subscription digital audio (2) in subparagraph (B)— (1) in subsection (b)— transmission service on which sound record- (A) by striking ‘‘under this paragraph’’ and (A) in paragraph (1)— ings are performed is or is about to become inserting ‘‘under this section’’; and (i) in the first sentence, by striking ‘‘Li- operational, for the purpose of determining (B) by striking ‘‘subparagraphs (B) through brarian of Congress’’ and inserting ‘‘Copy- reasonable terms and rates of royalty pay- (F)’’ and inserting ‘‘this subparagraph and right Royalty Judges’’; and ments with respect to such new type of subparagraphs (B) through (E)’’; (ii) by striking the second and third sen- transmission service for the period beginning (3) in subparagraph (C)— tences; with the inception of such new type of serv- (A) by amending the first sentence to read (B) in paragraph (2), by striking ‘‘the Li- ice and ending on the date on which the roy- as follows: ‘‘Voluntary negotiation pro- brarian of Congress:’’ and all that follows alty rates and terms for subscription digital ceedings initiated pursuant to a petition through the end of the sentence and insert- audio transmission services most recently filed under section 804(a) for the purpose of ing ‘‘a copyright arbitration royalty panel, determined under subparagraph (A) or (B) determining reasonable terms and rates of the Librarian of Congress, or the Copyright and chapter 8 expire, or such other period as royalty payments for the activities specified Royalty Judge, if copies of such agreements the parties may agree.’’; by this section shall cover the period begin- are filed with the Copyright Royalty Judges (2) in paragraph (2)— ning with the effective date of such terms within 30 days of execution in accordance (A) in subparagraph (A)— and rates, but not earlier than January 1 of with regulations that the Copyright Royalty (i) by amending the first sentence to read the second year following the year in which Judges shall issue.’’; and as follows: ‘‘Voluntary negotiation pro- the petition is filed, and ending on the effec- (C) in paragraph (3)— ceedings initiated pursuant to section 804(a) tive date of successor terms and rates, or (i) in the second sentence— for the purpose of determining reasonable such other period as the parties may agree.’’; (I) by striking ‘‘copyright arbitration roy- terms and rates of royalty payments for pub- and alty panel’’ and inserting ‘‘Copyright Roy- lic performances of sound recordings by (B) in the third sentence, by striking ‘‘Li- alty Judges’’; and means of eligible nonsubscription trans- brarian of Congress’’ and inserting ‘‘Copy- (II) by striking ‘‘paragraph (2).’’ and insert- missions and transmissions by new subscrip- right Royalty Judges’’; ing ‘‘paragraph (2) or (3).’’; tion services specified by subsection (d)(2) (4) in subparagraph (D)— (ii) in the last sentence, by striking ‘‘‘Li- shall cover the 5-year period beginning on (A) by amending the first sentence to read brarian of Congress’’ and inserting ‘‘Copy- January 1 of the second year following the as follows: ‘‘In the absence of license agree- right Royalty Judges’’; and

VerDate jul 14 2003 01:19 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00013 Fmt 4634 Sfmt 0634 E:\CR\FM\A03MR7.008 H03PT1 H768 CONGRESSIONAL RECORD — HOUSE March 3, 2004

(iii) by striking ‘‘(3) In’’ and all that fol- (1) ROYALTY PAYMENTS.—Section 1004(a)(3) against a party to a proceeding under this lows through the end of the first sentence is amended by striking ‘‘Librarian of Con- section shall, on application of one of the and inserting the following: gress’’ each place it appears and inserting parties to the proceeding, be stayed until ‘‘(3) Voluntary negotiation proceedings ini- ‘‘Copyright Royalty Judges’’. completion of the proceeding. tiated pursuant to a petition filed under sec- (2) ENTITLEMENT TO ROYALTY PAYMENTS.— ‘‘(d) PROCEEDING.—The Copyright Royalty tion 804(a) for the purpose of determining a Section 1006(c) is amended by striking ‘‘Li- Judges shall conduct a proceeding with re- schedule of terms and rates of royalty pay- brarian of Congress shall convene a copy- spect to the matter concerned, in accordance ments by public broadcasting entities to right arbitration royalty panel which’’ and with such procedures as the Copyright Roy- copyright owners in works specified by this inserting ‘‘Copyright Royalty Judges’’. alty Judges may adopt. The Copyright Roy- subsection and the proportionate division of (3) PROCEDURES FOR DISTRIBUTING ROYALTY alty Judges shall act on the basis of a fully fees paid among various copyright owners PAYMENTS.—Section 1007 is amended— documented written record. Any party to the shall cover the 5-year period beginning on (A) in subsection (a), by amending para- proceeding may submit relevant information January 1 of the second year following the graph (1) to read as follows: and proposals to the Copyright Royalty year in which the petition is filed. The par- ‘‘(1) FILING OF CLAIMS.—During the first 2 Judges. The parties to the proceeding shall ties to each negotiation proceeding shall months of each calendar year, every inter- each bear their respective costs of participa- bear their own costs. ested copyright party seeking to receive roy- tion. ‘‘(4) In the absence of license agreements alty payments to which such party is enti- ‘‘(e) JUDICIAL REVIEW.—Any determination negotiated under paragraph (2) or (3), the tled under section 1006 shall file with the of the Copyright Royalty Judges under sub- Copyright Royalty Judges shall, pursuant to Copyright Royalty Judges a claim for pay- section (d) may be appealed, by a party to chapter 8, conduct a proceeding to determine ments collected during the preceding year in the proceeding, in accordance with section and publish in the Federal Register a sched- such form and manner as the Copyright Roy- 803(d) of this title. The pendency of an appeal ule of rates and terms which, subject to alty Judges shall prescribe by regulation.’’; under this subsection shall not stay the de- paragraph (2), shall be binding on all owners and termination of the Copyright Royalty of copyright in works specified by this sub- (B) by amending subsections (b) and (c) to Judges. If the court modifies the determina- section and public broadcasting entities, re- read as follows: tion of the Copyright Royalty Judges, the gardless of whether such copyright owners ‘‘(b) DISTRIBUTION OF PAYMENTS IN THE AB- court shall have jurisdiction to enter its own have submitted proposals to the Copyright SENCE OF A DISPUTE.—After the period estab- decision in accordance with its final judg- Royalty Judges.’’; lished for the filing of claims under sub- ment. The court may further vacate the de- (2) by striking subsection (c) and redesig- section (a), in each year, the Copyright Roy- termination of the Copyright Royalty nating subsections (d) through (g) as sub- alty Judges shall determine whether there Judges and remand the case for proceedings sections (c) through (f), respectively; exists a controversy concerning the distribu- as provided in this section.’’. (3) in subsection (c), as so redesignated, in tion of royalty payments under section (B) The item relating to section 1010 in the the matter preceding paragraph (1)— 1006(c). If the Copyright Royalty Judges de- table of sections for chapter 10 is amended to (A) by striking ‘‘(b)(2)’’ and inserting termine that no such controversy exists, the read as follows: ‘‘(b)(2) or (3)’’; Librarian of Congress shall, within 30 days ‘‘1010. Determination of certain disputes.’’. (B) by striking ‘‘(b)(3)’’ and inserting after such determination, authorize the dis- ‘‘(b)(4)’’; and tribution of the royalty payments as set SEC. 6. EFFECTIVE DATE AND TRANSITION PRO- VISIONS. (C) by striking ‘‘a copyright arbitration forth in the agreements regarding the dis- (a) EFFECTIVE DATE.—This Act and the royalty panel’’ and inserting ‘‘the Copyright tribution of royalty payments entered into amendments made by this Act shall take ef- Royalty Judges’’; pursuant to subsection (a). The Librarian of fect 6 months after the date of the enact- (4) in subsection (d), as so redesignated— Congress shall, before such royalty payments ment of this Act, except that the Librarian (A) by striking ‘‘in the Copyright Office’’ are distributed, deduct the reasonable ad- and inserting ‘‘with the Copyright Royalty ministrative costs incurred by the Librarian of Congress shall appoint interim Copyright Judges’’; and under this section. Royalty Judges under section 802(d) of title (B) by striking ‘‘Register of Copyrights’’ ‘‘(c) RESOLUTION OF DISPUTES.—If the Copy- 17, United States Code, as amended by this and inserting ‘‘Copyright Royalty Judges’’; right Royalty Judges find the existence of a Act, within 90 days after such date of enact- and controversy, the Copyright Royalty Judges ment to carry out the functions of the Copy- (5) in subsection (f), as so redesignated, by shall, pursuant to chapter 8 of this title, con- right Royalty Judges under title 17, United striking ‘‘(d)’’ and inserting ‘‘(c)’’. duct a proceeding to determine the distribu- States Code, to the extent that Copyright (g) SECONDARY TRANSMISSIONS BY SAT- tion of royalty payments. During the pend- Royalty Judges provided for in section 801(a) ELLITE CARRIERS.—Section 119(b) is amend- ency of such a proceeding, the Copyright of title 17, United States Code, as amended ed— Royalty Judges shall withhold from distribu- by this Act, have not been appointed before (1) in paragraph (3), by striking ‘‘Librarian tion an amount sufficient to satisfy all the end of that 90-day period. of Congress’’ and inserting ‘‘Copyright Roy- claims with respect to which a controversy (b) TRANSITION PROVISIONS.— alty Judges’’; and exists, but shall, to the extent feasible, au- (1) IN GENERAL.—Subject to paragraph (2), (2) in paragraph (4)— thorize the distribution of any amounts that the amendments made by this Act shall not (A) in subparagraph (A), by striking ‘‘Li- are not in controversy. The Librarian of Con- affect any proceedings commenced, petitions brarian of Congress’’ each place it appears gress shall, before such royalty payments are filed, or voluntary agreements entered into and inserting ‘‘Copyright Royalty Judges’’; distributed, deduct the reasonable adminis- before the enactment of this Act under the and trative costs incurred by the Librarian under provisions of title 17, United States Code, (B) by amending subparagraphs (B) and (C) this section.’’. amended by this Act, and pending on such to read as follows: (4) DETERMINATION OF CERTAIN DISPUTES.— date of enactment. Such proceedings shall ‘‘(B) DETERMINATION OF CONTROVERSY; DIS- (A) Section 1010 is amended to read as fol- continue, determinations made in such pro- TRIBUTIONS.—After the first day of August of lows: ceedings, and appeals taken therefrom, as if each year, the Copyright Royalty Judges ‘‘§ 1010. Determination of certain disputes this Act had not been enacted, and shall continue in effect until modified under title 17, shall determine whether there exists a con- ‘‘(a) SCOPE OF DETERMINATION.—Before the troversy concerning the distribution of roy- date of first distribution in the United United States Code, as amended by this Act. alty fees. If the Copyright Royalty Judges States of a digital audio recording device or Such petitions filed and voluntary agree- determine that no such controversy exists, a digital audio interface device, any party ments entered into shall remain in effect as the Librarian of Congress shall, after deduct- manufacturing, importing, or distributing if this Act had not been enacted. ing reasonable administrative costs under such device, and any interested copyright (2) EFFECTIVE PERIODS FOR CERTAIN RATE- this paragraph, distribute such fees to the party may mutually agree to petition the MAKING PROCEEDINGS.—Notwithstanding copyright owners entitled to receive them, Copyright Royalty Judges to determine paragraph (1), terms and rates in effect under or to their designated agents. If the Copy- whether such device is subject to section section 114(f)(2) or 112(e) of title 17, United right Royalty Judges find the existence of a 1002, or the basis on which royalty payments States Code, for new subscription services, controversy, the Copyright Royalty Judges for such device are to be made under section eligible nonsubscription services, and serv- shall, pursuant to chapter 8 of this title, con- 1003. ices exempt under section 114(d)(1)(C)(iv) of duct a proceeding to determine the distribu- ‘‘(b) INITIATION OF PROCEEDINGS.—The par- such title for the period 2003 through 2004, tion of royalty fees. ties under subsection (a) shall file the peti- and any rates published in the Federal Reg- ‘‘(C) WITHHOLDING OF FEES DURING CON- tion with the Copyright Royalty Judges re- ister under the authority of the Small TROVERSY.—During the pendency of any pro- questing the commencement of a proceeding. Webcaster Settlement Act of 2002 for the ceeding under this subsection, the Copyright Within 2 weeks after receiving such a peti- years 2003 through 2004, shall be effective Royalty Judges shall withhold from distribution, the Chief Copyright Royalty Judge until the first applicable effective date for tion an amount sufficient to satisfy all shall cause notice to be published in the Fed- successor terms and rates specified in sec- claims with respect to which a controversy eral Register of the initiation of the pro- tion 804(b)(2) or (3)(A) of title 17, United exists, subject to any distributions made ceeding. States Code, or until such later date as the under section 801(b)(3).’’. ‘‘(c) STAY OF JUDICIAL PROCEEDINGS.—Any parties may agree. Any proceeding com- (h) DIGITAL AUDIO RECORDING DEVICES.— civil action brought under section 1009 menced before the enactment of this Act

VerDate jul 14 2003 01:19 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00014 Fmt 4634 Sfmt 0634 E:\CR\FM\A03MR7.008 H03PT1 March 3, 2004 CONGRESSIONAL RECORD — HOUSE H769 pursuant to section 114(f)(2) and chapter 8 of The bill also addresses the complaint and my staff, Alec French, in drafting title 17, United States Code, to adjust or de- that the process is unnecessarily ex- this bill and its various iterations. termine such rates and terms for periods fol- pensive by eliminating the costs of ar- The chairmen are also to be com- lowing 2004 shall be terminated upon the en- bitration upon private parties. It does mended for ensuring that the bill rem- actment of this Act and shall be null and void. so by creating a specific process de- edies the procedural effects of the (c) EXISTING APPROPRIATIONS.—Any funds signed to give small claimants a more CARP process without straining into made available in an appropriations Act be- balanced ability to participate. The substantive copyright law issues that fore the date of the enactment of this Act to bill discourages persons or entities would surely doom its prospects for carry out chapter 8 of title 17, United States from disrupting the process at the 11th passage. Code, shall be available to the extent nec- hour by requiring potential partici- H.R. 1417 focuses on a narrow, but essary to carry out this section. pants to show that they have a signifi- complex, goal. It significantly reforms The SPEAKER pro tempore. Pursu- cant interest in the proceedings. In fur- the system for copyright arbitration ant to the rule, the gentleman from therance of marketplace negotiations, royalty panels. The U.S. copyright law Wisconsin (Mr. SENSENBRENNER) and the measure establishes a cooling-off contains a half dozen statutory li- the gentleman from California (Mr. period during which time parties are to censes that require copyright owners BERMAN) each will control 20 minutes. focus on reaching their own agree- to make their works available to cer- The Chair recognizes the gentleman ments. tain users under government-set rates from Wisconsin (Mr. SENSENBRENNER). Finally, Mr. Speaker, the substitute and terms. For instance, the section GENERAL LEAVE before us incorporates certain non- 114 statutory license allows Webcasters Mr. SENSENBRENNER. Mr. Speak- controversial amendments written to to perform sound recordings under gov- er, I ask unanimous consent that all accommodate legitimate concerns that ernment-set rates and terms. The roy- Members may have 5 legislative days evolve after our committee reported alty rates and terms are established by within which to revise and extend their the bill out. CARPs, which also determine the ap- remarks and include extraneous mate- Mr. Speaker, H.R. 1417 was painstak- propriate distribution of royalties rial on H.R. 1417. ingly negotiated among the various among copyright owners. The SPEAKER pro tempore. Is there congressional, executive, and industry There is widespread agreement objection to the request of the gen- stakeholders. We worked in a bipar- among copyright owners and users tleman from Wisconsin? There was no objection. tisan manner and developed a con- alike that the CARP process is broken. Mr. SENSENBRENNER. Mr. Speak- sensus product that will effectively ad- The costs involved are often so high er, I yield myself such time as I may dress an arcane, but important, man- that parties cannot either afford to consume. ner. I urge its adoption. participate or find that the costs out- Mr. Speaker, I rise in strong support Mr. Speaker, I reserve the balance of weigh any potential royalties or effi- of H.R. 1417, legislation to reform the my time. ciencies. The decisions often take too rate-making and royalty distribution Mr. BERMAN. Mr. Speaker, I yield long to issue and thus create uncer- system for compulsory and statutory myself such time as I may consume. tainty and confusion among licensers licenses. (Mr. BERMAN asked and was given and licensees alike. Finally, even when Mr. Speaker, I would like to take permission to revise and extend his re- decisions do issue, they are often over- this time to thank the ranking member marks.) turned or modified, are inconsistent of the Committee on the Judiciary, the Mr. BERMAN. Mr. Speaker, I rise in with precedents, and cannot be effec- gentleman from Michigan (Mr. CON- strong support of H.R. 1417, and I ask tively implemented until cor- YERS), as well as the gentleman from all of my colleagues to support what I responding rule-makings are com- Texas (Mr. SMITH) and the gentleman think is fundamentally noncontrover- pleted. sial legislation. from California (Mr. BERMAN), the b 1100 chairman and ranking minority mem- H.R. 1417 has been subjected to an ex- ber of the Subcommittee on the Courts, haustive review process. It emerged H.R. 1417 will go a long way to rem- the Internet and Intellectual Property, from a hearing before the Sub- edying the defects of the CARP proc- for their support in making CARP re- committee on the Courts, the Internet, ess. While the changes are too copious form a priority. and Intellectual Property during the to list in total, I would like to high- By way of background, with the cre- 107th Congress and from a series of light a few of the improvements made ation of three copyright compulsory li- open roundtable discussions convened by the bill. censes in 1976, Congress contemplated at the U.S. Copyright Office. Early The primary flaw of the CARPs is the need for an administrative body drafts were shaped by several rounds of they are conducted by private arbitra- that would be responsible for adjusting written comments from all affected tors who often have no prior experience the rates of the statutory licenses from stakeholders. in conducting a statutory license rate- time to time, as well as acting as the After introduction of H.R. 1417 early setting or distribution, much less any distributors of the royalties subject to this Congress, the subcommittee held prior familiarity with the substantive these licenses. another hearing. The subcommittee law or industry economics involved. The resulting entity was the Copy- then reported by voice vote a substan- Because the CARP arbitrators have right Royalty Tribunal or the CRT. In tially refined amendment, and the full neither the experience nor authority to 1993, in response to criticisms voiced Committee on the Judiciary made fur- do so, the Copyright Office is often against the CRT, Congress reassessed ther significant revisions before also called on to issue regulations resolving the rate-making and royalty distribu- reporting its amendment by voice vote. substantive legal issues that arise dur- tion system and created the current Thus, the version of H.R. 1417 before us ing CARPs, and all too often, as we saw system, the Copyright Royalty Arbi- today has been forged through an ex- in the 2002 webcasting CARP, the Copy- tration Panel, otherwise known as tensive and open process. right Office is called upon to overturn CARPs. Both the chairman of the Committee a CARP decision. Among other things, H.R. 1417 ad- on the Judiciary, the gentleman from H.R. 1417 replaces the part-time arbi- dresses the uniform complaints that Wisconsin (Mr. SENSENBRENNER), and trators with a panel of three full-time the CARP decisions are unpredictable the chairman of the Subcommittee on copyright royalty judges. These three and inconsistent by changing the the Courts, the Internet, and Intellec- CRJs will be appointed by the Librar- structure from ad hoc arbitration pan- tual Property, the gentleman from ian of Congress to serve staggered 6- els to three permanent copyright roy- Texas (Mr. SMITH), are to be com- year terms. Each panel will bring at alty judges. To justify the need for mended for pushing H.R. 1417 forward. least 6 years of experience to every these full-time judges, as well as to al- They have devoted significant time and rate-setting and distribution pro- leviate the overwhelming workloads at energy to crafting both the substance ceeding. Further, the Librarian is re- given periods of time, the bill staggers of this bill and organizing the wide- quired to appoint CRJs with a breadth the timing at which the three various spread support behind it. I thank both of experience in copyright law, eco- statutory licenses can be heard. of them for working so closely with me nomics and adjudications.

VerDate jul 14 2003 01:19 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00015 Fmt 4634 Sfmt 0634 E:\CR\FM\A03MR7.008 H03PT1 H770 CONGRESSIONAL RECORD — HOUSE March 3, 2004 Mr. Speaker, rather than list a num- lish royalty rates are long, laborious Both the chairman of the Judiciary Com- ber of the key changes in this bill, I re- and costly. They harm our economy mittee and the chairman of the Intellectual serve the balance of my time. and take a tremendous toll on the busi- Property Subcommittee are to be commended Mr. SENSENBRENNER. Mr. Speak- nesses and persons involved. Congress for pushing H.R. 1417 forward. They have de- er, I yield such time as he may con- must reform this broken system, which voted significant time and energy to crafting sume to the gentleman from Texas (Mr. is exactly what this bill does. both the substance of this bill and the wide- SMITH), the chairman of the sub- I urge my colleagues to support a spread support behind it. I thank them both for committee. balanced and fair process that will, for working so closely with me in drafting this bill Mr. SMITH of Texas. Mr. Speaker, I example, help songwriters and bring a and its various iterations. thank the gentleman from Wisconsin, little more melody into the lives of the The chairmen are also to be commended the chairman of the Committee on the American people. for ensuring that the bill remedies the proce- Judiciary, for yielding time. Mr. BERMAN. Mr. Speaker, I yield dural defects of the CARP process without Mr. Speaker, our country has long myself such time as I may consume. straying into substantive copyright law issues worked to support and protect copy- (Mr. BERMAN asked and was given that would surely doom its prospects for pas- right holders to ensure they receive permission to revise and extend his re- sage. fair compensation for their creative marks.) H.R. 1417 focuses on a narrow but complex works. Mr. BERMAN. Mr. Speaker, I am not goal: It significantly reforms the system for Over the last 20 years, Congress has going to detail all the different provi- Copyright Arbitration Royalty Panels—or attempted to develop the appropriate sions contained in this bill. There are CARP. mechanism to govern royalties; that is, many and they are important. They U.S. copyright law contains a half-dozen how to distribute royalties to those deal with a problem in the past of set- statutory licenses that require copyright own- who create and how to adjust royalties ting rates retroactively and how under ers to make their works available to certain when necessary. In other words, we these reforms rates will be set prospec- users under Government-set rates and terms. have tried to find a compromise that tively, and they deal with the integra- For instance, the section 114 statutory license allows for the fair distribution of roy- tion of the Copyright Office and its role allows webcasters to perform sound record- alties when two parties cannot agree in providing advice and opinions on ings under Government-set rates and terms. on the value of a creative work. matters of law into the process. The royalty rates and terms are established by When I say ‘‘fair distribution of roy- They create mechanisms for small CARPs, which also determine the appropriate alties’’ that could mean many things participants to participate at much distribution of royalties among copyright own- to different parties, particularly the less cost than they now participate ers. creators of copyrighted works them- through all paper rate-setting pro- There is widespread agreement among selves. It is a major reason why this ceedings, make some changes in evi- copyright owners and users alike that the issue is again before Congress. dentiary rules and discovery rules, and Congress established the first entity at the same time, they enable the CARP process is broken. The costs involved to deal with this in 1976. Ten years ago, copyright owners to negotiate vol- are often so high that parties either cannot af- that system was abolished to create untary agreements rather than go ford to participate, or find that the costs out- the current Copyright Arbitration Roy- through the whole full blown rate-set- weigh any potential royalties or efficiencies. alty Panel, or CARP, system. ting and distribution proceedings. The decisions often take too long to issue, This legislation that I authored ad- I do want to call the attention of the and thus create uncertainty and confusion dresses the main problem: frivolous body to one particular provision which among licensors and licensees alike. Finally, royalty claims, which is a growing I think is very important. We ration- even when decisions do issue, they are often trend, as well as decisions made by the alize in this bill, H.R. 1417, the ability overturned or modified, are inconsistent with copyright panel that are unpredictable of the parties to engage in voluntary precedents, and cannot be effectively imple- and inconsistent. negotiations in the context of the Sec- mented until corresponding rule-makings are Much like another intellectual prop- tion 115 statutory license for reproduc- completed. erty rights bill that reforms the Patent tions of musical compositions. The H.R. 1417 will go a long way to remedying and Trademark Office, this legislation Section 115 license currently provides the defects of the CARP process. While the is critical to the entertainment indus- copyright owners and users a limited changes are too copious to list in total, I would try and a growing economy. It is of antitrust exemption to collectively ne- like to highlight a few of the improvements great importance to artists, song- gotiate rates and terms for Digital made by this bill. writers, music publishers and Phonorecord Deliveries of musical The primary flaw with CARPs is that they webcasters. compositions. With the acquiescence of are conducted by private arbitrators who often For example, take the case of a song- the Justice Department, H.R. 1417 ex- have no prior experience in conducting a stat- writer and a webcaster. If a songwriter tends this narrow antitrust exemption utory license rate-setting or distribution, much cannot reach an agreement with a to all of Section 115, so that it now cov- less any prior familiarity with the substantive webcaster about the value of a song in ers similar negotiations for mechanical law or industry economics involved. Because the marketplace, the matter is brought reproductions of musical compositions, the CARP arbitrators have neither the exper- to the copyright royalty and distribu- as well as the digital deliveries. tise nor authority to do so, the Copyright Of- tion system. The private parties in- Mr. Speaker, I rise in strong support of H.R. fice is often called on to issue regulations revolved, of course, pay for the process. 1417. I ask all my colleagues to support this solving substantive legal issue that arise dur- What happens now is the songwriter non-controversial legislation. ing CARPs. And all too often, as we saw in or the webcaster, or both, often are not H.R. 1417 has received exhaustive process. the 2002 webcasting CARP, the Copyright Of- left with much of a royalty payment It emerged from a hearing before the Intellec- fice is called upon to overturn a CARP deci- because the process is too lengthy and tual Property Subcommittee during the 107th sion. too costly. If the songwriter cannot Congress, and from series of open roundtable H.R. 1417 replaces the part-time arbitrators make enough on his creations to sup- discussions convened at the U.S. Copyright with a panel of three full-time Copyright Roy- port himself, then he will no longer be Office. Early drafts were shaped by several alty Judges. These three CRJs will be ap- able to create, and our economy and rounds of written comments from all affected pointed by the Librarian of Congress to serve our society will be the loser. stakeholders. After introduction of H.R. 1417 staggered 6-year terms. Thus, each panel will This is the central reason why we are early this Congress, the subcommittee held bring at least 6 years of collective experience here today: to ensure that the song- another hearing. The subcommittee then re- to every rate-setting and distribution pro- writer has the incentive to create and ported by voice vote a substantially refined ceeding. Further, the Librarian is required to the webcaster has the benefit of dis- amendment, and the full Judiciary Committee appoint CRJs with a breadth of experience in tributing enjoyable musical creations. made further significant revisions before also copyright law, economics, and adjudications. Unfortunately, American songwriters reporting its amendment by voice vote. Thus, The bill contains a number of other provi- and webcasters today are caught up in the version of H.R. 1417 before us today has sions that further consolidate and strength the a royalty system that is anything but been forged through an extensive and open authority of the CRJs. For instance, the bill fair. The current proceedings to estab- process. gives CRJs continuing jurisdiction to ensure

VerDate jul 14 2003 01:19 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00016 Fmt 4634 Sfmt 9920 E:\CR\FM\K03MR7.021 H03PT1 March 3, 2004 CONGRESSIONAL RECORD — HOUSE H771 that they have the ability ‘‘to respond to un- cative, easily obtainable from another source, failed private negotiations between parties that foreseen circumstances that preclude the the burden or expense outweighs its likely fail to establish rates or to distribute royalties proper effectuation of the determination.’’ benefit, and other circumstances. regarding the commercial use of movies, The continuity, experience, and enhanced H.R. 1417 clarifies the rules regarding par- music and other specified copyrighted works. authority of the CRJs should lead to decisions ticipation on CARP proceedings. It also en- For years, the CARP system has been criti- that are quicker, more consistent, more likely sures that only parties who have fully partici- cized for rendering unpredictable and incon- to withstand appeal, and in the long run, far pated in the proceeding, and are bound by its sistent decisions, employing arbitrators lacking less expensive to secure. determination, will have the right to appeal the expertise to render sound decisions, and While the new CRJs will have requisite au- that determination. for being unnecessarily expensive. thority and expertise to make good decisions, H.R. 1417 also retains the ability of copy- H.R. 1417 is a reasonable bill to cure these H.R. 1417 ensures they will be able to draw right owners and users, under a number of concerns and is based on the input and recon, and benefit from, from the substantial ex- statutory licenses, to negotiate voluntary ommendations of Government and industry pertise of the Copyright Office in this area. agreements rather than suffer through full- experts. H.R. 1417 requires that the Librarian consult blown rate-setting and distribution pro- H.R. 1417 addresses the problem of lack of with the Register of Copyrights when appoint- ceedings. While H.R. 1417 maintains the abil- arbitrator expertise by appointing a ‘‘Copyright ing CRJs. Furthermore, the bill requires the ity of various statutory licensors and licensees Judge’’ to preside over the new process. The CRJs to solicit the written opinion of the Copy- to agree to out-of-cycle rate determinations Copyright Judge will be appointed by the Li- right Office on novel questions of law, and al- through voluntary agreements adopted by the brarian of Congress, have full adjudicatory re- lows the CRJs to consult—on the record—with CRJs, it allows the CRJs to reject such out-of- sponsibility, and have the authority to make the Register of Copyrights on all matters other cycle determinations if workload concerns so rulings on both the law and rates. The Copy- than questions of fact. merit. right Judge will select two professional staff H.R. 1417 addresses another major flaw of H.R. 1417 also rationalizes the ability to en- members with knowledge of economics, busi- the current CARP process—the fact that the gage in voluntary negotiations in the context of ness, and finance. These staff qualifications rates for several statutory licenses are set the section 115 statutory license for reproduc- will also improve the quality of the decisions retroactively. The webcasting CARP con- tions of musical compositions. The section 115 rendered. cluded in 2002 demonstrates the problems license currently provides copyright owners H.R. 1417 redefines the role of the Copy- with retroactive rate-setting. When rates were and users a limited antitrust exemption to col- right Office. Presently, acts as an intake agen- set in 2002 for webcasting that occurred be- lectively negotiate rates and terms for Digital cy answering initial case intake questions, as tween 1998 and 2002, many small webcasters Phonorecord Deliveries of musical composi- well as an appellate court for CARP decisions found their viability threatened because they tions. With the acquiescence of the Justice by advising the Librarian on cases. This dual had not set aside enough money to defray the Department, H.R. 1417 extends this narrow role forces the Copyright Office to often de- royalty obligations they had already incurred. antitrust exemption to all of section 115, so cline to answer threshold intake questions for H.R. 1417 addresses this problem through a that it now covers similar negotiations for me- fear of having to review its own decisions at series of interrelated changes to the various chanical reproductions of musical composi- the appellate stage. Under H.R. 1417, the statutory licenses. H.R. 1417 ensures that all tions. Copyright Office’s appellate responsibilities will rates and terms for statutory licenses will be A comprehensive description of this sev- be removed and the Office will only act in an set prospectively, and eliminates the possibility enty-page bill would take more time than I am administrative and advisory capacity by coun- that a time period covered by a statutory li- allotted, so I will leave off there. However, I seling the Copyright Judge on substantive cense will commence before the establishment will note that adoption of the CARP reform bill issues as requested. of rates and terms. is not the end of the story for reforming the H.R. 1417 also addresses a variety of con- CARP system. For small claimants who participate in the cerns about how CARPs gather evidence, Unlike the current CARP system, the bill re- CARP process, the substantial expenses are conduct hearings, determine participation, requires appropriated funds to pay for the new practically preclusive. H.R. 1417 contains pro- quires parties to present their cases, and treat CRJ process. Since Congress has decided the visions to make the process more accessible. negotiated settlements. In addressing these public interest is served by the creation of First, claimants must declare an ‘‘amount in concerns, H.R. 1417 hews closely to the over- compulsory licenses in certain instances, it is controversy’’ during a distribution determina- all objective of promoting expeditious, well- entirely appropriate that Congress should pro- tion phase of the proceedings. If the dollar fig- reasoned, and widely-supported outcomes. vide the funds necessary to make the licenses ure is $500 or less, the claimant will be as- The bill substantially improves the CARP work. CARP costs should not dissipate the signed to the small claims process which is a process from the perspective of small partici- meager Government-set royalties received by less expensive, ‘‘all-paper’’ claim resolution pants. H.R. 1417 allows CRJs to conduct an copyright owners, nor make participation by li- method. all-paper, rate-setting proceeding, which in censees uneconomical. However, if adequate Another provision of H.R. 1417, that benefits many circumstances, should substantially re- appropriations are not secured, this legislation both large and small claimants requires the fil- duce the barriers to participation for small will only create further chaos. In this time of ing of a ‘‘notice of intent to participate’’ in ei- copyright owners and users. H.R. 1417 also record budget deficits, it will take a concerted ther a rate-making or distribution proceeding. creates an expedited small-claims process to effort by all interested parties to ensure suffi- This notice requirement will discourage entities facilitate the distribution of royalties to small cient appropriations are forthcoming. from disrupting the process by participating at claimants. In conclusion, Mr. Speaker, I think H.R. the last minute. If a party failure to file in a The bill substantially alters some evidentiary 1417 will substantially improve the CARP timely manner or fails to pay the required fee, rules, while retaining others used by previous process, and I ask my colleagues to support they will be an exclusion of either written or CARPs. It allows admission of hearsay ‘‘to the it. oral participation in that determination. Those extent deemed appropriate’’ by the CRJs, Ms. JACKSON-LEE of Texas. Mr. Speaker, exempted as small claimants would not be af- rather than according to the Federal Rules of I rise in support of this legislation, H.R. 1417, fected by this requirement. Evidence, and allows CRJs to issue sub- the Copyright Royalty and Distribution Reform H.R. contains several procedural changes to poenas for relevant and material information. It Act. In September 2003, I offered my support make the claim resolution process more con- directs the CRJs to conduct discovery con- during a full Judiciary Committee markup venient for the parties. H.R. 1417 expands the ferences for the purpose of setting a schedule hearing. Mr. SMITH, Mr. BERMAN, and Ranking duration of the discovery phase from 45 to 60 for completing discovery. Member CONYERS are to be commended for days to give parties more time to file their The bill retains the discovery rules currently their hard work in crafting this legislation. claims. Additionally, the 180-day time-frame used in CARP distribution proceedings be- The bill would replace the existing adminis- for completing the CARP hearing process is cause distribution participants expressed gen- trative procedures within the U.S. Copyright amended to require parties complete the hear- eral satisfaction with those rules. In rate-set- Office that determine copyright royalty rates ing phase of a rate-making or distribution de- ting proceedings, the amendment limits dis- and the distribution of related royalties under termination in six months. The Copyright covery to relevant and material information, various compulsory licenses. Judge, at their discretion, could extend this and allows the CRJs to deny discovery for Under the Copyright Royalty Tribunal Re- period up to a maximum of 6 additional good cause. The circumstances that constitute form Act of 1993, the Librarian of Congress months. ‘‘good cause’’ include where the discovery re- has the authority to convene Copyright Arbitra- Mr. Speaker, H.R. 1417 will make changes quests are unreasonably cumulative or dupli- tion Royalty Panels, or ‘‘CARPs,’’ to resolve to the CARP system that promise to benefit

VerDate jul 14 2003 01:19 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00017 Fmt 4634 Sfmt 9920 E:\CR\FM\A03MR7.017 H03PT1 H772 CONGRESSIONAL RECORD — HOUSE March 3, 2004 the parties as well as the agents of the copy- proceedings on this motion will be Resolved, That the House of Representa- right adjudication system. I support H.R. 1417, postponed. tives— (1) congratulates the DEA on the occasion and I urge my colleagues to do likewise. f Mr. CONYERS. Mr. Speaker, I rise in sup- of its 30th Anniversary; MESSAGE FROM THE PRESIDENT (2) honors the heroic sacrifice of those of port of this legislation. In the past 2 years, the its employees who have given their lives or Committee has held two hearings on concerns A message in writing from the Presi- been wounded or injured in the service of our with the CARP, the system that sets royalty dent of the United States was commu- Nation; and rates for copyrighted content. People on both nicated to the House by Ms. Wanda (3) thanks all the men and women of the sides, the owners and buyers, agree that the Evans, one of his secretaries. DEA for their past and continued efforts to defend the American people from the scourge current system needs changes. Based on that, f subcommittee Chairman SMITH, subcommittee of illegal drugs. Ranking Member BERMAN, and I introduced HONORING THE MEN AND WOMEN The SPEAKER pro tempore. Pursu- legislation, H.R. 1417, that would make sub- OF THE DRUG ENFORCEMENT ant to the rule, the gentleman from stantial procedural changes. ADMINISTRATION ON ITS 30TH Wisconsin (Mr. SENSENBRENNER) and We heard the current system is costly be- ANNIVERSARY the gentleman from Virginia (Mr. cause the copyright owners and users have to Mr. SENSENBRENNER. Mr. Speak- SCOTT) each will control 20 minutes. pay for the arbitrators. Because copyright law er, I move to suspend the rules and The Chair recognizes the gentleman subjects copyright owners and users to a com- agree to the resolution (H. Res. 412) from Wisconsin (Mr. SENSENBRENNER). pulsory process, we believe the law should not honoring the men and women of the Mr. PAUL. Mr. Speaker, I want to in- place this additional financial burden on them. Drug Enforcement Administration on quire on whether or not the gentleman Our bill creates three Copyright Royalty the occasion of its 30th anniversary. on the other side is in opposition to the Judges who would be paid from appropriated The Clerk read as follows: bill. The SPEAKER pro tempore. The funds to set royalty rates and distribute royalty H. RES. 412 Chair asks the gentleman from Vir- fees. Whereas the Drug Enforcement Adminis- ginia (Mr. SCOTT), is he opposed to the Another complaint was that the CARP does tration (DEA) was first created by executive motion? not have adequate rules on how to address order on July 6, 1973, merging the previously Mr. SCOTT of Virginia. Mr. Speaker, hearsay evidence. This bill explicitly requires separate law enforcement and intelligence I am not opposed to the motion. that the Judges treat hearsay evidence in the agencies responsible for narcotics control; Whereas the first Administrator of the Mr. PAUL. In that case, Mr. Speaker, same manner that it is treated in Federal I request the time in opposition. court. This will bring uniformity to the pro- DEA, John R. Bartels, Jr., was confirmed by the Senate on October 4, 1973; The SPEAKER pro tempore. Under ceedings for parties on both sides of royalty Whereas since 1973 the men and women of clause 1(c) of rule XV, the Chair recog- disputes. the DEA have served our Nation with cour- nizes the gentleman from Texas (Mr. This bill also alters the terms for which cer- age, vision and determination, protecting all PAUL) to control the time in opposition tain royalty rates are in effect. Rates that are Americans from the scourge of drug traf- to the motion. determined by the Judges will be in effect for ficking, abuse, and related violence; The Chair now recognizes the gen- 5 years. This should create some predictability Whereas between 1986 and 2002 alone, DEA tleman from Wisconsin (Mr. SENSEN- agents seized over 10,000 kilograms of heroin, and uniformity for those who rely on the BRENNER). 900,000 kilograms of cocaine, 4,600,000 kilo- Judges’ determinations. GENERAL LEAVE Finally, parties on both sides argued that grams of marijuana, 113,000,000 dosage units of hallucinogens, and 1,500,000,000 dosage Mr. SENSENBRENNER. Mr. Speak- the substantive standards that the CARP uses units of methamphetamine, and made over er, I ask unanimous consent that all to set royalty rates should be changed some- 443,000 arrests of drug traffickers; Members may have 5 legislative days how. In an effort to reach a compromise and Whereas DEA agents continue to lead task within which to revise and extend their pass a bill that does not alter any substantive forces of Federal, State, and local law en- remarks and include extraneous mate- rights, this bill changes only the procedure for forcement officials throughout the Nation, rials on H. Res. 412, the resolution cur- rate settings and distributions. in a cooperative effort to stop drug trafficking and put drug gangs behind bars; rently under consideration. There will be a substitute amendment to the The SPEAKER pro tempore. Is there bill that was worked out by the majority, minor- Whereas throughout its history many DEA employees and members of DEA task forces objection to the request of the gen- ity, and all groups interested in the CARP have given their lives in the defense of our tleman from Wisconsin? process. I hope we can continue to work on Nation, including: Emir Benitez, Gerald Saw- There was no objection. resolving any outstanding issues and moving yer, Leslie S. Grosso, Nickolas Fragos, Mary Mr. SENSENBRENNER. Mr. Speak- this bill through the other body. M. Keehan, Charles H. Mann, Anna Y. er, I yield 10 minutes, half my time, to I urge my colleagues to vote ‘‘yes’’ on this Mounger, Anna J. Pope, Martha D. Skeels, the gentleman from Virginia (Mr. bill as amended. Mary P. Sullivan, Larry D. Wallace, Ralph SCOTT), and I ask unanimous consent Mr. BERMAN. Mr. Speaker, seeing no N. Shaw, James T. Lunn, Octavio Gonzalez, that he be allowed to yield portions of other speakers seeking recognition on Francis J. Miller, Robert C. Lightfoot, that time as he sees fit. my side of the aisle, I yield back the Thomas J. Devine, Larry N. Carwell, Marcellus Ward, Enrique S. Camarena, The SPEAKER pro tempore. Is there balance of my time. James A. Avant, Charles M. Bassing, Kevin objection to the request of the gen- Mr. SENSENBRENNER. Mr. Speak- L. Brosch, Susan M. Hoefler, William Ramos, tleman from Wisconsin? er, I have no further requests for time, Raymond J. Stastny, Arthur L. Cash, Terry There was no objection. and I yield back the balance of my W. McNett, George M. Montoya, Paul S. Mr. SENSENBRENNER. Mr. Speak- time as well. Seema, Everett E. Hatcher, Rickie C. Finley, er, I yield myself such time as I may The SPEAKER pro tempore (Mr. Joseph T. Aversa, Wallie Howard, Jr., Eu- consume. SHAW). The question is on the motion gene T. McCarthy, Alan H. Winn, George D. Mr. Speaker, on July 6, 1973, Presi- offered by the gentleman from Wis- Althouse, Becky L. Dwojeski, Stephen J. dent Richard Nixon first created the Strehl, Richard E. Fass, Juan C. Vars, Jay consin (Mr. SENSENBRENNER) that the Drug Enforcement Administration. The W. Seale, Meredith Thompson, Frank S. Wal- agency was created to address a grow- House suspend the rules and pass the lace, Jr., Frank Fernandez, Jr., Kenneth G. bill, H.R. 1417, as amended. McCullough, Carrol June Fields, Rona L. ing drug problem in the United States. The question was taken. Chafey, Shelly D. Bland, Carrie A. Lenz, The DEA was the merger of separate The SPEAKER pro tempore. In the Shaun E. Curl, Royce D. Tramel, Alice Faye law enforcement and intelligence agen- opinion of the Chair, two-thirds of Hall-Walton, and Elton Armstead; cies that shared responsibility for en- those present have voted in the affirm- Whereas many other employees and task forcing controlled substance laws. At ative. force officers of the DEA have been wounded the time, Congress and the administra- Mr. SENSENBRENNER. Mr. Speak- or injured in the line of duty; and tion recognized an increase in the use Whereas in its 173 domestic offices and 78 and the availability of illegal drugs in er, on that I demand the yeas and nays. foreign offices worldwide the over 8,800 em- The yeas and nays were ordered. ployees of the DEA continue to hunt down this country. According to DEA statis- The SPEAKER pro tempore. Pursu- and bring to justice the drug trafficking car- tics in 1960, only 4 million Americans ant to clause 8 of rule XX and the tels that seek to poison our citizens with had ever tried drugs. That number is Chair’s prior announcement, further dangerous narcotics: Now, therefore, be it currently over 74 million.

VerDate jul 14 2003 01:19 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00018 Fmt 4634 Sfmt 0634 E:\CR\FM\A03MR7.019 H03PT1 March 3, 2004 CONGRESSIONAL RECORD — HOUSE H773 The DEA continues to defend our Na- that the point and try to get some of us One other point is that as a physician tion from the scourge of illegal drugs. to think that there may be another I have come to the firm conclusion It not only enforces the controlled sub- way to fight the war on drugs. that the war on drugs has been very stances laws and regulations of the I do not know of anybody who likes detrimental to the practice of medicine United States, but the agency also rec- drugs and advocates the use of drugs. I and the care of patients. The drug cul- ommends and supports nonenforcement as a physician am strongly opposed to ture has literally handicapped physi- programs aimed at reducing the avail- the use of drugs. It is just that the cians in caring for the ill and the pain ability of illicit controlled substances techniques make a big difference. We that people suffer with terminal ill- on the domestic and international mar- are talking about bad habits, and yet nesses. I have seen doctors in tears kets. we are resorting to the use of force, lit- coming to me and saying that all his This mission is as relevant today as erally an army of agents and hundreds wife had asked me for was to die not in it was 30 years ago when the DEA was of billions of dollars over a 30-year pe- pain; and even he, as a physician, could created. The families and communities riod, in an effort to bring about not get enough pain medication be- affected by drug abuse recognize the changes in people’s habits. Someday we cause they did not want to make her important work that the DEA per- are going to have to decide how suc- an addict. So we do have a lot of unin- forms. The DEA’s steadfast commit- cessful we have been. Was it a good intended consequences. ment to bringing drug traffickers to vestment? Have we really accom- We have civil liberty consequences as justice is crucial to protecting our plished anything? well. We set the stage for gangsters and communities. Another reason why I am taking this terrorists raising money by making The DEA leads task forces of Federal, time to express an opposition is that weeds and wild plants and flowers ille- State and local law enforcement offi- the process has been flawed. After gal. If someone could say and show me cials throughout the Nation in a coop- World War I, there was a movement in all of a sudden that the American peo- erative effort to stop drug trafficking. this country that believed that too ple use a lot less drugs and kids are However, these partnerships are not many Americans had bad habits of never tempted, it would be a better limited to our borders, as evidenced by drinking too much alcohol, and of case; but we do not have the evidence. the more than 70 field offices world- course, if we really want to deal with a We have no evidence to show that 30 wide. bad drug, alcohol is it. Many, many years of this drug war has done very The efforts of the DEA domestically more die from alcoholism and drunken much good. Matter of fact, all studies and abroad are vital to our national se- driving and all kinds of related ill- of the DARE program show that the curity. The war on terrorism is fought nesses, but the country knew it and DARE program has not encouraged on many fronts, including drug traf- they recognized how one dealt with kids to use less illegal drugs. So there ficking. It is apparent that there have those problems. is quite a few reasons why we ought The one thing that this country rec- been connections between the drug not to just glibly say to the DEA it’s ognized was that the Congress had no trade and terrorist activities. The DEA been a wonderful 30 years and encour- authority to march around the country will continue this fight in an effort to age more of it. and tell people not to drink beer, and remove another avenue of financing for The second part of the resolution what did they do? They resorted to terrorism. talks about the sacrifice of these men. amending the Constitution, a proper Today, this Congress recognizes the To me, it is a tragedy. Why should we procedure, and of course, it turned out important work of this agency and ever have a policy where men have to to be a failed experiment. After 12 thanks its employees, both past and sacrifice themselves? I do not believe it years, they woke up and the American present, for their continued efforts to is necessary. We gave up on the prohi- people changed it. block the flow of drugs into America’s bition of alcohol. I believe the drug war We have gone 30 years and we have ought to be fought, but in a much dif- cities and towns. This resolution also not even reconsidered a new approach ferent manner. acknowledges that the war on drugs is to the use of drugs and the problems Mr. Speaker, I reserve the balance of not without loss and gives special rec- that we face. my time. ognition to those who have lost their Another thing that is rather astound- Mr. SCOTT of Virginia. Mr. Speaker, life or who have been injured in pursuit ing to me, is that not only have we lost I yield myself such time as I may con- of this noble cause. the respect for the Constitution to say sume, and I thank the gentleman from I urge my colleagues to support this that the Federal Government can be Wisconsin for the courtesy of yielding resolution to honor the men and involved in teaching habits, but we lit- me this time. women who have served, and continue erally did this not even through con- Mr. Speaker, I rise in support of this to serve, our country as a part of the gressional legislation. resolution and urge my colleagues to Drug Enforcement Administration. b 1115 support it. House Resolution 412 com- Mr. Speaker, I reserve the balance of memorates the 30th anniversary of the my time. The DEA was created by an executive Federal Drug Enforcement Agency and Mr. PAUL. Mr. Speaker, I yield my- order. Imagine the size of this program recognizes the contributions and self such time as I may consume. created merely by a President signing achievements of its current 8,800 em- (Mr. PAUL asked and was given per- an executive order. Of course, the ulti- ployees working in 173 domestic offices mission to revise and extend his re- mate responsibility falls on the Con- and 78 foreign offices worldwide. marks.) gress because we acquiesce and we vote The resolution also specifically rec- Mr. PAUL. Mr. Speaker, I rise in op- for all the funding. The DEA has re- ognizes the sacrifices of those employ- position to the resolution but obvi- ceived over $24 billion in the past 30 ees who have given their lives in the ously not because we should not honor years, but the real cost of law enforce- line of duty and those who have been the men who were asked to do their ment is well over $240 billion when we wounded or injured. duty and lost their lives. It is for an- add up all the costs. So I am pleased to join my colleagues other reason. And then if we look at the prison sys- in recognizing the dedicated hard work I would like to call attention to my tem, we have created a monstrosity. and sacrifice of the men and women of colleagues and to the Congress the lack Eighty-four percent, according to one the DEA on this occasion commemo- of success on the war on drugs. The war study, 84 percent of all Federal pris- rating the 30th anniversary of this has been going on for 30 years. The suc- oners are nonviolent drug prisoners. agency. cess is not there, and I think we are de- They go in and they come out violent. Mr. Speaker, I reserve the balance of ceiving ourselves if we think that ev- We are still talking about a medical my time. erything is going well and that we have problem. We treat alcoholism as a med- Mr. SENSENBRENNER. Mr. Speak- achieved something, because there is ical problem, but anybody who smokes er, I yield 3 minutes to the gentleman really no evidence for that. Not only a marijuana cigarette or sells some- from Indiana (Mr. SOUDER). that, there have been many unintended thing, we want to put them in prison. I Mr. SCOTT of Virginia. Mr. Speaker, consequences that we fail to look at, think it is time to stop and reevaluate I yield 2 minutes to the gentleman and I want to take this time to make this. from Indiana (Mr. SOUDER).

VerDate jul 14 2003 01:19 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00019 Fmt 4634 Sfmt 0634 E:\CR\FM\K03MR7.025 H03PT1 H774 CONGRESSIONAL RECORD — HOUSE March 3, 2004 (Mr. SOUDER asked and was given ment agencies, and no agency is more This is Police Investigator Wallie permission to revise and extend his re- dedicated to that struggle than the Howard of the Syracuse, New York, Po- marks.) DEA. lice Department. He was a 9-year vet- Mr. SOUDER. Mr. Speaker, today we Thirty years ago, on July 6, 1973, eran who worked for DEA’s central of- honor the men and women of the Drug President Nixon signed the executive fice in New York and was shot during Enforcement Administration on the oc- order creating the DEA from several an undercover operation in Brooklyn casion of its 30th anniversary. I would previously separate agencies, more effi- when they attempted to rob him. He like to thank the House leadership and cient government, including the Jus- was only 31. the chairman of the Committee on the tice Department’s Bureau of Narcotics This is Special Agent Meredith Judiciary, the gentleman from Wis- and Dangerous Drugs, the Office of Thompson, who joined DEA in 1985 and consin (Mr. SENSENBRENNER), for bring- Drug Abuse Law Enforcement, the Of- was a tireless worker. At the age of 33, ing this resolution to the floor; and I fice of National Narcotics Intelligence, she was one of five special agents would particularly like to thank all the White House’s Narcotics Advanced killed in 1994 in a special reconnais- those who have cosponsored my resolu- Research Team, and the Drug Inves- sance mission in Peru. tion, especially the gentleman from tigations branch of the U.S. Customs These people died. And these are just Maryland (Mr. CUMMINGS), the ranking Service. On October 4, 1973, the Senate five who have died trying to protect us, member of the Subcommittee on confirmed the first administrator of our children, and our families from the Criminal Justice, Drug Policy and the DEA, John R. Bartels, Jr., inau- wreck of cocaine, of heroin, and of Human Resources of the Committee on gurating a new era in the Nation’s marijuana that does incredible dam- Government Reform, and the gen- fight against drug abuse. age. And were they not on the streets tleman from Georgia (Mr. DEAL), the The DEA has carried on that fight on and were they not sacrificing their vice chairman of that subcommittee. I every front: at the borders, in our cit- lives, so many more than the 20,000 am pleased we were able to introduce ies and small towns and rural areas would have died. this legislation on a bipartisan basis, across the country. As the Federal Mr. Speaker, today we honor the men and emphasizing our shared goal of pre- Government’s only single-mission women of the Drug Enforcement Administra- venting drug abuse. agency dedicated to narcotics control, tion on the occasion of its 30th anniversary. I’d If I may just briefly comment on a the DEA has taken the lead in break- like to thank the House leadership and Chair- few of the remarks of my friend, the ing the international cartels that bring man SENSENBRENNER of the Judiciary Com- gentleman from Texas (Mr. PAUL), our cocaine, heroin, ecstasy, methamphet- mittee for assisting us in bringing this resolu- libertarian conscience in the House. He amine precursors and marijuana into tion to the floor; and I’d particularly like to is an eloquent spokesman for limited the U.S. In partnership with other Fed- thank all those who co-sponsored the resolu- Federal Government and votes against eral, State, and local law enforcement tion, especially Mr. CUMMINGS, the ranking most resolutions here, and he works as agencies, the DEA has organized task member of the Drug Policy Subcommittee that our conscience. However, he is deeply forces that investigate, penetrate, and I chair, and Mr. DEAL, the vice-chairman. I am wrong on this issue. We have, in fact, bust the street gangs and other dis- very pleased that we were able to introduce made progress on drug abuse this past tribution networks selling drugs on the this resolution on a bipartisan basis, empha- year, 10 percent reduction. We have had streets. sizing our shared goal of preventing drug The numbers speak volumes about a dramatic reduction. But it is hard to abuse. the DEA’s success. But these numbers, battle addiction across America, just Mr. Speaker, in the aftermath of September impressive as they are, cannot fully as it is in child abuse, spousal abuse, 11, we have often recognized and honored the convey what the DEA has done for our and other things that the gentleman men and women responsible for preventing Nation. We are also here to remember and responding to terrorist attacks on our from Texas would oppose the Federal the personal sacrifices of thousands of country, and rightly so. But we should never Government being involved in. men and women who have served We have a philosophical difference, forget the terrible toll that drug abuse con- America as DEA agents and members but the gentleman should not dispar- tinues to take on America, nor those who of DEA task forces. I would like to age the efforts of the DEA and the hard bravely seek to stop it. According to the Cen- highlight just a few of these agents. work so many people do in trying to Special Agent Benitez was shot. He ters for Disease Control, every year about prevent the 20,000 deaths per year that was a Customs officer, and then he 20,000 American lives are lost as a direct con- occur because of drug abuse in Amer- worked as one of the first Special sequence of illegal drug use. The Office of ica. Agents in DEA. In 1973, he was fatally National Drug Control Policy estimates that Mr. Speaker, in the aftermath of Sep- shot during an undercover investiga- the annual economic cost of drug abuse to the tember 11, we have often recognized tion of cocaine dealers. He was only 28 U.S.—in lost productivity, health care costs, and honored the men and women re- and is survived by his wife and daugh- and wasted lives—is now well over the $150 sponsible for preventing and respond- ter. billion mark. Every year, drug traffickers seek ing to terrorist attacks on our country, Special Agent Ward of Baltimore, further profit from this misery by importing, and rightly so; but we should never for- Maryland, was assigned to DEA in Bal- manufacturing, and selling these poisons on get the terrible toll that drug abuse timore. He was the husband and father our streets and in our communities. It is a traf- continues to take on America, nor of two, and was a 13-year police depart- fic in death as devastating as anything the those who bravely seek to stop it. Ac- ment veteran who had earned numer- more visible terrorists have done. cording to the Center for Disease Con- ous medals and commendations. On De- The task of stopping this falls on our law en- trol, every year 20,000 American lives cember 3, 1984, at the age of 36, he was forcement agencies, and no agency has been are lost as a direct consequence of ille- shot and killed while working on an more dedicated to that struggle than the DEA. gal drug use, and much more devasta- undercover assignment. Thirty years ago, on July 6, 1973, President tion beyond those 20,000 in indirect loss Special Agent Enrique Camarena was Nixon signed the executive order creating the of life. a Marine, a husband, and the father of DEA from several previously separated agen- The Office of National Drug Control three children. He received two Sus- cies, including the Justice Department’s Bu- Policy estimates that the annual eco- tained Superior Performance Awards, a reau of Narcotics and Dangerous Drugs, the nomic cost of drug abuse to the U.S. in Special Achievement Award, and the Office of Drug Abuse Law Enforcement, the lost productivity, health care costs, Administrator’s Award of Honor, the Office of National Narcotics Intelligence, the and wasted lives is now well over $150 highest award granted by the DEA. On White House’s Narcotics Advance Research billion. Every year, drug traffickers February 7, 1985, he was kidnapped, Team, and the Drug Investigations branch of seek further profit from this misery by tortured, and eventually killed by the U.S. Customs Service. On October 4, importing, manufacturing, and selling Mexican drug traffickers while work- 1973, the Senate confirmed the first Adminis- these poisons on our streets and in our ing in Mexico. trator of the DEA, John R. Bartels, Jr., inau- communities. It is a traffic in death as These people died trying to defend us gurating a new era in our nation’s fight against devastating as anything the more visi- and our children on the streets of the drug abuse. ble terrorists have done. The task of United States from the scourge of The DEA has carried on that fight on every stopping this falls on our law enforce- drugs. front—at the borders, in our cities, and in

VerDate jul 14 2003 01:19 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00020 Fmt 4634 Sfmt 9920 E:\CR\FM\K03MR7.028 H03PT1 March 3, 2004 CONGRESSIONAL RECORD — HOUSE H775 small towns and rural areas across the coun- nized. Throughout her career, she received drugs were not illegal. The first mari- try. As the federal government’s only single- numerous letters of appreciation and com- juana law was in 1938. And they got mission agency dedicated to narcotics control, mendation from both within and outside DEA. around that on the constitutional as- the DEA has taken the lead in breaking the At the age of 33, she was one of five Special pect by just putting a tax on it. So international cartels that bring cocaine, heroin, Agents killed on August 27, 1994, in a plane there is a lack of respect for how we ecstasy, methamphetamine precursors and crash during a reconnaissance mission near solve our problems, a lack of wisdom marijuana into the U.S. In partnership with Santa Lucia, Peru. This mission was being on what we ought to do, and a lack of other federal, state and local law enforcement flown as part of Operation Snowcap, DEA’s concern; and this is my deep concern as agencies, the DEA has organized task forces cocaine suppression program in Latin Amer- a physician, a lack of concern for see- that investigate, penetrate and bust the street ica. ing people dying and suffering. gangs and other distribution networks selling Mr. Speaker, these are only five of the Just think of the people who claim drugs on the streets. Through entities like the names that are listed on the DEA’s memorial and are believable that they get some El Paso Intelligence Center (EPIC), DEA also to its fallen agents and task force officers. relief from marijuana, the paraplegics gathers, analyzes and shares drug trafficking They are a permanent reminder of the cost in and those who have cancer and receiv- intelligence with its law enforcement partners. human life imposed on us by the Drug traf- ing chemotherapy. And in our arro- The numbers speak volumes about DEA’s fickers and their collaborators. Today, as we gance, we, at the national level, write success: between 1986 and 2002 alone, DEA thank the DEA and its employees for over 30 laws that send the DEA in to cancel agents seized over 10,000 kilograms of her- years of courage, service, and sacrifice, I out the States that have tried to oin, 900,000 kilograms of cocaine, 4,600,000 hope that we will draw strength from their exchange the law and show a little bit of kilograms of marijuana, 113,000,000 dosage ample and rededicate ourselves to their compassion for people that are dying. units of hallucinogens, and 1,500,000,000 dos- cause—the fight against drug abuse. We are constitutionally wrong, we age units of methamphetamine, and made Mr. PAUL. Mr. Speaker, how much are medically wrong, we are economically wrong, and we are not achieving over 443,000 arrests of drug traffickers. time do I have remaining? But these numbers, impressive as they are, The SPEAKER pro tempore (Mr. anything. We have no faith and con- cannot fully convey what the DEA has done SHAW). The gentleman from Texas has fidence in our constitutional system. for our nation. We are also here to remember 14 minutes remaining. We have no faith and confidence that the personal sacrifices of the thousands of Mr. PAUL. Mr. Speaker, I yield my- we change moral and personal habits men and women who have served America as self such time as I may consume. through persuasion, not through armed DEA agents and members of DEA-led task Regarding the loss of lives, whether might. This is a choice. Nobody is for the forces. I’d like to talk about just a few of those it is 3,000 that some report, or 20,000, use of drugs that I know of. But there men and women who made the ultimate sac- many of those would be preventable if we did not have the drug wars going on. is a big difference if you casually and rifice in the fight against illegal drug abuse. carelessly resort to saying, oh, it is Emir Benitez was one of the first Special The drug wars go on because people are good that you do not do drugs, to let us Agents to serve at the DEA. As a Customs of- fighting for turf and then the police create a drug army to prance around ficer, he was so successful at finding mari- have to go in and try to stop them be- the country, and then lo and behold juana that he received three awards for supe- cause prices are artificially high. We houses are invaded, mistakes are made, rior performance. On August 9, 1973, he was have created the incentive for drug vio- innocent people are killed, and it does fatally shot during an undercover investigation lence. We take something worthless and make it worth billions of dollars. not add up. of cocaine dealers in Ft. Lauderdale, Florida. It is still astounding to me to find We set the stage for terrorists. He was only 28 when he died, survived by his out that the DEA was not even created Right now, because of the policies in wife and his daughter. by congressional legislation. It was Afghanistan, 80 percent of Afghanistan Detective Marcellus Ward of the Baltimore, created by an executive order. We have now has been returned to the drug Maryland, Police Department, was assigned to gone a long way, colleagues, from lords. If the drugs were worthless, the Drug Enforcement Administration’s Balti- where the respect for the Constitution there would be no incentive to promote more District Office Task Force. A husband existed and that at least the Congress them. But they are worth a lot of and father of two, Detective Ward was a thir- should legislate. Even in the 1920s, money, so inadvertently our drug war teen-year police department veteran, who when we attacked alcohol, we had pushes the prices up, and we create the earned numerous medals and commendations enough respect for the Constitution to incentive for the Taliban and others to for his work. On December 3, 1984, at the age amend the Constitution. of 36, he was shot and killed while working on raise the poppies and send the drugs an undercover assignment. over here. Then they finance the ter- b 1130 Special Agent Enrigue S. Camarena joined rorists. So it is an unintended con- Mr. Speaker, I think we are deceiving DEA in June 1974. During his 11 years with sequence that does not make any ourselves if we think the war on drugs DEA, this former Marine, husband and father sense. It does not have to happen. is being won, and the failure to look at of three children received two Sustained Su- The big challenge is will anybody the unintended consequences, the real perior Performance Awards, a Special ever be willing to raise the questions cost. As a matter of fact, this resolu- Achievement Award and posthumously, the and suggest another way. Could we tion brings up the real cost, this long Administrator’s Award of Honor, the highest have made a mistake, such as we did list, this long tragic list of individuals award granted by DEA. On February 7, 1985, with the prohibition of alcohol? This who have been killed over this war. Camarena was kidnapped, tortured and even- does not mean that everybody has ev- So I am asking once again not so tually killed by Mexican drug traffickers while erything they want. Alcohol is legal, much to be in opposition to this resolu- he was assigned to the DEA’s Guadalajara, but kids get marijuana and other drugs tion, but this resolution is to praise 30 Mexico office. He was 37 years old. easier on the street than they get their years of the DEA and to praise an Police Investigator Wallie Howard Jr., of the alcohol, because there is such a tre- agency that really has no authority be- Syracuse, New York Police Department, was mendous incentive. cause it comes only from the executive a nine-year veteran and the recipient of three During prohibition it was very well branch, but for us to someday seriously bureau commendations for his work on sev- known that because alcohol was ille- think about the problems that have eral undercover drug investigations. A hus- gal, the more concentrated it is and come from the war on drugs. band and father of two, Office Howard was the higher price it is because you can Let me tell Members, there is a po- killed on October 30, 1990, while serving on move it about and because it is contra- litically popular position in this coun- the DEA’s Central New York Drug Enforce- band. So there is a tremendous incen- try that many are not aware of: The ment Task Force. Officer Howard was shot tive to do that. And then, when it is il- tragedy of so many families seeing during an undercover operation when drug legal, it becomes more dangerous. That their loved ones die and suffer without traffickers from Brooklyn, New York, attempted is exactly what happens on drugs. adequate care, 90-year-old people dying to rob him. He was 31 years old. One hundred years ago, you could of cancer and nurses and doctors in- Special Agent Meredith Thompson joined buy cocaine in a drugstore. Most Amer- timidated and saying we cannot make DEA in 1985. She was characterized as a tire- icans would be tremendously surprised them a drug addict. This drug war cul- less worker—innovative, motivated and orga- to realize that for most of our history ture that we live with has done a lot of

VerDate jul 14 2003 01:19 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00021 Fmt 4634 Sfmt 0634 E:\CR\FM\A03MR7.010 H03PT1 H776 CONGRESSIONAL RECORD — HOUSE March 3, 2004 harm in the practice of medicine. At- for putting this on the floor. Perhaps lingual drug information hotline. They tacking the physicians who prescribe this is not the time, but when is the have worked with the anti-gang office pain medicine and taking their licenses time? I appreciate that. of the Houston Police Department from them is reprehensible. I ask Mem- Foreign policy does impact illicit Gang Task Force established in 1994. bers to please reconsider, not so much drug use. We know it is coming out of They have worked with the After what we do today, but in the future, Afghanistan, a lawless country. When School Achievement Program and Op- maybe we will wake up and decide the American people find out what is eration Renaissance, a collaborative ef- there is a better way to teach good going on in Afghanistan, they are not fort by the police department, other habits to American citizens. going to be very happy, are they? We city departments and the DEA in work- Mr. SCOTT of Virginia. Mr. Speaker, appreciate that. But this is not the ing in the inner city. I yield 41⁄2 minutes to the gentleman time for the debate so much on policy We have been gratified by the fact in from New Jersey (Mr. PASCRELL), a or whether medical marijuana is some- late 2000 the Houston field division re- former mayor of Paterson, New Jersey, thing that we can consider as a Nation. ported two seizures of suspected SA who worked very closely with the DEA. This is a time that we focus on an heroin. Nearly 2 kilograms were sized Mr. PASCRELL. Mr. Speaker, I agency who has done what we have at a bus terminal in Houston from a thank the gentleman from Virginia asked them to do. They have done what Colombian female. In the other in- (Mr. SCOTT) for yielding me this time, we have asked them to do, and they stance, four Venezuelans, in possession and I want to also congratulate the have put themselves in harm’s way. of 1.4 kilograms of heroin, were ar- gentleman from Indiana (Mr. SOUDER) We have heard the word ‘‘terror’’ rested at a local hotel. We have done and the gentleman from Wisconsin (Mr. used many times. We have heard it well with the DEA in south Texas. We SENSENBRENNER). I think this is an im- used in State of the Union addresses by know the trials and tribulations that portant resolution, and let us get back many Presidents, but there is no great- we are engaged in. to the focus of what the resolution er terror than the terror of illicit drug The good news of the DEA is they says. The Drug Enforcement Agency use and sales in this country or any have put life into the phrase ‘‘Just say offers countless examples of heroic ac- other country. It saps our energy and it no.’’ They put their lives on the front tion and achievement. I am honored to saps our will, but it must begin in our line. They are committed to making offer my whole-hearted support and homes. I salute the DEA. I wish I could sure our children do not fall victim to thanks to the men and women of this say, Mr. Speaker, the same for many of the tribulations of drug, and in par- extraordinarily important Federal our homes. ticular methamphetamines that are agency. Mr. SCOTT of Virginia. Mr. Speaker, plaguing the rural South. That has Our Nation is constantly under I yield 3 minutes to the gentlewoman been another area where we have seen threat from the scourge of illegal from Texas (Ms. JACKSON-LEE), a mem- the DEA working so diligently. drugs, and with every strata of our so- ber of the Committee on the Judiciary. Mr. Speaker, I have more than one cial structure victimized in some way (Ms. JACKSON-LEE of Texas asked reason to come to the floor of the by the hazards of narcotics, the work and was given permission to revise and House to thank the DEA and all of its formed by the DEA is absolutely vital. extend her remarks.) fine personnel across the Nation, its 173 It is many times a thankless, grueling Ms. JACKSON-LEE of Texas. Mr. divisions, but I am particularly proud work performed by public servants who Speaker, I thank the gentleman from to thank the Houston division for the oftentimes put themselves in harm’s Virginia (Mr. SCOTT), the gentleman grand work they have done, arming way for the public’s good. Throughout from Wisconsin (Chairman SENSEN- themselves with their commitment and its history the Drug Enforcement BRENNER) and the gentleman from their vision to protect the Nation’s Agency employees have given their Michigan (Mr. CONYERS), the ranking children and to make this Nation drug lives in defense of their Nation. Many member. free. other employees have been wounded or Mr. Speaker, I rise enthusiastically injured in the line of duty. to support and to honor the 30 years of Mr. Speaker, I rise in strong support of H. My mind flashes back to the late service of the Drug Enforcement Agen- Res. 412, honoring the Men and Women of 1980s when an agent from North Jersey, cy, and particularly emphasize those the Drug Enforcement Administration on the Everett Hatcher, was assassinated in who have worked with me and worked Occasion of Its 30th Anniversary. I also sup- Staten Island in a horrendous, heinous in the south Texas region. I applaud ported this bill when it was marked up before crime defending his country addressing the achievements of 8,800 employees the full Judiciary Committee last month. the terror. Talk about terror, let us who work in 173 domestic offices and 78 This resolution commemorates the 30th an- talk about the terror of drugs. Every foreign offices worldwide. niversary of the Federal Drug Enforcement American owes these men and women a I join my colleagues and the gen- Agency (DEA) and recognizes the contribu- debt of extreme thanks, especially in tleman from New Jersey (Mr. tions and achievements of its 8,800 employ- light of the success DEA has accom- PASCRELL) to acknowledge the hard ees who now work in 173 domestic offices plished. work and the depth of commitment of and 78 foreign offices worldwide, and recog- Between 1986 and 2002 alone, DEA these men and women. And frankly, as nizes the sacrifices of those employees who agents seized over 10,000 kilograms of an aside, I might say maybe if we had have given their lives in the line of duty and heroin, 900 kilograms of cocaine, 4.6 a few good DEA officers advising us in those who have been wounded or injured in million kilograms of marijuana, 113 Haiti, we would not be negotiating the line of duty. million dosage units of hallucinogens, with thugs, drug dealers and others In Houston, particularly, I would like to ap- and 1.5 billion dosage units of who certainly do not have the good in- plaud the DEA on the stellar performance of methamphetamines, and made over tentions of the Haitians in mind. its initiatives: 443,000 arrests of drug traffickers. Of I particularly want to add my ap- Monitoring of the High Intensity Drug Traf- course, where there is no market, there plause to the DEA agents who work in ficking Area (HIDTA)—Designated in 1990, the is no sale, I say to the gentleman from my community who have been moni- Houston HIDTA encompasses the city of Texas. We know that. The war on drugs toring the High Intensity Drug Traf- Houston and the surrounding areas of Aran- starts in our homes. The war on drugs ficking Area. Designated in 1990, they sas, Brooks, Galveston, Hardin, Harris, Jeffer- starts in our own medicine cabinets have been working throughout Harris, son, Jim Wells, Kennedy, Kleberg, Liberty, and our own liquor cabinets. There is Jefferson, Jim Wells, Kennedy and Lib- Nueces, Orange, Refugio, San Patricio and no denying that. It does not start in erty Counties, who have been working Victoria counties. the offices of my Federal agency. with the Governor’s Office of Public Governor’s Office of Public Safety and Drug Law enforcement is only part of the Safety and Drug Policy and working on Policy—This office develops public policy and answer. There is not a person in this programs in schools. They have worked works to implement prevention, intervention, Chamber who does not agree with that, with Houston Crackdown, and we have and suppression strategies to stop gang vio- but that is a given. Solutions are wor- seen a difference in the number of drug lence and assist crime victims. The office also thy for study of debate, and I salute users in our area. They have helped coordinates and supports volunteer projects the gentleman from Texas (Mr. PAUL) Houston Crackdown run a 24-hour bi- dealing with alcohol and drug abuse.

VerDate jul 14 2003 03:46 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00022 Fmt 4634 Sfmt 9920 E:\CR\FM\K03MR7.031 H03PT1 March 3, 2004 CONGRESSIONAL RECORD — HOUSE H777 Examples of programs in Houston include: nonviolent drug offenders. Many go Mr. CASE. Mr. Speaker, I rise today in Houston Crackdown, which coordinates and into prison, and they come out hard- strong support of H. Res. 412, which honors supports volunteer projects in the areas of ened criminals, and the problem is the men and women of the Drug Enforcement drug prevention, treatment, and law enforce- made much worse. Because of over- Administration (DEA) on the occasion of its ment. Houston Crackdown also runs a 24-hour crowding, we have the release of vio- 30th Anniversary and recognizes the sacrifices bilingual Drug Information Hotline that pro- lent prisoners because the prisons are of those who have given their lives in the line vides access to treatment and recovery re- too full. Also, the rules on mandatory of duty. sources, drug information for youth and par- sentencing of non-violent offenders In Hawaii, we are fortunate that such a co- ents, a means to report illegal drug activity, have not been a good idea and have hesive law enforcement community exists, and ideas for getting involved in community ef- contributed to the problems that we with the strong working relationship between forts. face. the DEA, the United States Attorney’s Office, The Anti Gang Office and the Houston Po- Another thing which I have not men- the Federal Bureau of Investigation, our four lice Department Gang Task Force, both estab- tioned before but is worth thinking county police departments, and the 14 Fed- lished in 1994. They provide a balanced ap- about is the inequity in the enforce- eral, State, and local agencies which support proach, combining prevention and suppression ment of laws. If one happens to be a the Hawaii High Intensity Drug Trafficking tactics focused toward reduction of street gang wealthy, white-collar worker caught Area. All work together to pursue and dis- growth and development. using cocaine, the odds of that indi- mantle domestic and international criminal or- The After School Achievement Program vidual serving time in prison is very re- ganizations that produce, transport, and dis- (ASAP), a community-based program offering duced, compared to if you are caught in tribute illegal substances. youths constructive and positive activities be- the inner city. It seems there is less Under the leadership of Briane M. Grey, As- tween 3 p.m. and 6 p.m. justice for the inner city youth. This, sistant Special Agent-in-Charge of the Hono- Operation Renaissance, a collaborative ef- of course, intensifies the problems of lulu District Office, the office advocates the fort by the police department, other city de- the inner city. same multi-pronged approach that I firmly be- partments, government agencies, and various Once again, all I ask is that in the fu- lieve is the solution to our drug abuse prob- community groups to revive the city’s inner- ture we look at our drug policy because lem: combining strong enforcement, with edu- city neighborhoods. Operation Renaissance current policy is working so poorly, cation, prevention, and treatment efforts. For employs a holistic approach and embraces the and also to reconsider the fact that we example, through its partnerships with the philosophy of Neighborhood Oriented Govern- have gone 30 years with a program Counties of Kauai and Hawaii, the DEA’s De- ment and the Super Neighborhood concept. It where there is no evidence of success, mand Reduction Program educates many of is comprised of five pillars: narcotics interdic- and astoundingly it was all done under our young people on the dangers of drugs. tion, directed patrol, nuisance abatement, an executive order. In my home State, the unfortunate drug of Mr. Speaker, I yield back the balance trash removal, and graffiti abatement. The choice today is crystal methamphetamine, also community assists the police by reporting of my time. Mr. SENSENBRENNER. Mr. Speak- known as ice. High purity ice, ranging from 96 known drug dealers and locations while the er, I yield myself the balance of my percent to 99 percent, is all too readily avail- police utilize a two-phase approach in tar- time. able, and commonly abused throughout our geting identified individuals and locations. Mr. Speaker, while I respect the ar- State. In Hawaii, ice users have been linked to Phase One calls for a highly visible police guments of the gentleman from Texas violent crimes including child abuse, hostage presence in areas of known ‘‘open-air’’ mar- (Mr. PAUL), even though I do not agree situations, and homicides. The DEA has been kets and Phase Two targets indoor locations. with them, I think it is important to a strong and valuable force in our fight against Although the fruits of this office’s impressive look at what the resolved clause of this the scourge of ice. performance record are many, I highlight the resolution says in deciding whether or In August 2003, the Honolulu DEA’s Oper- fact that in late 2000, the DEA Houston Field not to support or oppose the resolu- ation Jetway Task Force was notified of three Division reported two seizures of suspected tion. parcels suspected of carrying ice. Pursuant to SA heroin. Nearly 2 kilograms were seized at I will read it. ‘‘Resolved, That the a search warrant, approximately 15.9 pounds a bus terminal in Houston from a Colombian House of Representatives: (1) congratu- of ice, worth more than $1 million were seized female who was traveling from San Antonio to lates the DEA on the occasion of its from two of the parcels, and approximately New York City. In the other instance, four 30th Anniversary; $65,000 in cash was seized from the third par- Venezuelans, in possession of 1.4 kilograms ‘‘(2) honors the heroic sacrifice of cel. Later that same month, the task force of heroin, were arrested at a local hotel. those of its employees who have given seized approximately 674 grams of ice from On a per capita basis, the Texas South their lives or have been wounded or in- the inside jacket pocket of an individual trav- (Houston) district is one of the four districts jured in the service of our Nation; and eling from Los Angeles to Honolulu. with the largest number of DEA referrals in ‘‘(3) thanks all the men and women of I would like to extend a very special mahalo past fiscal years along with New Mexico (Albu- the DEA for their past and continued (thank you) to the 15 Special Agents, 17 Task querque), Texas West (San Antonio), and efforts to defend the American people Force Officers, 2 Intelligence Analysts, 2 Di- New York South (Manhattan). In terms of the from the scourge of illegal drugs.’’ version Investigators, and 2 Administrative effectiveness and fairness of the government’s This resolution has nothing to do Staff in our DEA Honolulu District Office. The overall enforcement effort against drugs, the with drug policy. It has nothing to do district extends DEA’s presence with per- work of the prosecutors and the courts often with whether the war on drugs has sonnel assigned to offices on the islands of is as important as that of the investigators. been successful or not. It has nothing Maui and the Big Island of Hawaii, as well as One measure of this joint responsibility is the to do with whether or not drugs should offices in Guam and Saipan. I know that the length of time required from when the DEA re- be legalized. What it does do is to tell Honolulu District Office will continue to initiate fers a matter for prosecution to when the mat- the people who have worked for the drug investigations targeting the highest level ter is disposed of. Nationally, the median proc- DEA for the last 30 years that their traffickers, and for that we are all very grateful. essing time was 272 days. Texas South service has not been in vain executing Again, congratulations to the DEA on its (Houston) yielded 134 days which was signifi- a policy in criminalizing certain drug 30th anniversary. cantly lower than the national median. activities and use of certain drugs that Mr. SENSENBRENNER. Mr. Speak- Mr. Speaker, therefore, I strongly support this Congress has passed. er, I yield back the balance of my time. this bill. In the very near future this body It also commemorates the people who The SPEAKER pro tempore (Mr. should deal with this misdirected policy of have given their lives or been wounded SHAW). The question is on the motion mandatory sentencing so that the work of the in the service of their country. The offered by the gentleman from Wis- DEA can be directed to the violent drug traf- DEA is a law enforcement agency. We consin (Mr. SENSENBRENNER) that the ficking that hurts Americans most. make the laws, they enforce the laws. House suspend the rules and agree to Mr. PAUL. Mr. Speaker, I yield my- This resolution gives them thanks for the resolution, H. Res. 412. self such time as I may consume. enforcing the laws and commemorating The question was taken. Mr. Speaker, let me just close with a those who have made the ultimate sac- The SPEAKER pro tempore. In the comment about the prison system and rifice. I support the resolution, and I opinion of the Chair, two-thirds of what has happened. As I mentioned be- urge Members to support the resolu- those present have voted in the affirm- fore, 84 percent of Federal prisoners are tion. ative.

VerDate jul 14 2003 01:33 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00023 Fmt 4634 Sfmt 0634 E:\CR\FM\A03MR7.013 H03PT1 H778 CONGRESSIONAL RECORD — HOUSE March 3, 2004 Mr. SENSENBRENNER. Mr. Speak- Internment of Civilians so that the events States, including government-imposed er, on that I demand the yeas and nays. surrounding the exclusion, forced removal, curfews, detentions, prohibitions on The yeas and nays were ordered. and internment of civilians and permanent items considered to be contraband by The SPEAKER pro tempore. Pursu- resident aliens of Japanese ancestry will be military authorities, and seizures of remembered, and so that the causes and cir- ant to clause 8 of rule XX and the cumstances of this and similar events may personal property. Chair’s prior announcement, further be illuminated and understood’’; President Ford formally rescinded proceedings on this motion will be Whereas Congress adopted the Wartime Executive Order 9066 in 1976. In his postponed. Violation of Italian Americans Civil Lib- proclamation repealing this executive f erties Act, which was signed by President order, President Ford said: Bill Clinton on November 7, 2000, which in- ‘‘I call upon the American people to b 1145 cluded provisions which resulted in a report affirm with me this American promise, SUPPORTING GOALS OF CERTAIN containing detailed information on the types that we have learned from the tragedy of violations that occurred, as well as lists of of that long-ago experience forever to COMMUNITIES IN RECOGNIZING individuals of Italian ancestry that were ar- NATIONAL DAY OF REMEM- rested, detained, and interned; treasure liberty and justice for each in- BRANCE Whereas the Japanese American commu- dividual American, and resolve that Mr. SENSENBRENNER. Mr. Speak- nity recognizes a National Day of Remem- this kind of action shall never again be er, I move to suspend the rules and brance on February 19th of each year to edu- repeated.’’ cate the public about the lessons learned Twelve years later, President Reagan agree to the resolution (H. Res. 56) sup- from the internment to ensure that it never signed the Civil Liberties Act of 1988 to porting the goals of the Japanese happens again; and formally acknowledge and apologize American, German American, and Whereas the Day of Remembrance provides for ‘‘fundamental violations of the Italian American communities in rec- an opportunity for all people to reflect on basic civil liberties and constitutional ognizing a National Day of Remem- the importance of justice and civil liberties rights of individuals of Japanese ances- brance to increase public awareness of during times of uncertainty and emergency: try.’’ When signing the legislation, the events surrounding the restriction, Now, therefore, be it Resolved, That the House of Representa- President Reagan said: exclusion, and internment of individ- tives— ‘‘Here we admit a wrong. Here we af- uals and families during World War II. (1) recognizes the historical significance of firm our commitment as a Nation to The Clerk read as follows: February 19, 1942, the date Executive Order equal justice under the law.’’ H. RES. 56 9066 was signed by President Roosevelt, re- In the year 2000, President Clinton Whereas President Franklin Delano Roo- stricting the freedom of Japanese Ameri- signed the Wartime Violation of sevelt signed Executive Order 9066 on Feb- cans, German Americans, and Italian Ameri- cans, and legal resident aliens through re- Italian Americans Civil Liberties Act, ruary 19, 1942, which authorized the exclu- which formally acknowledged civil lib- sion of 120,000 Japanese Americans and legal quired identification cards, travel restric- resident aliens from the west coast of the tions, seizure of personal property, and in- erties violations against Italian Ameri- United States and the internment of United ternment; and cans committed during World War II. States citizens and legal permanent resi- (2) supports the goals of the Japanese In November of 2001, the Committee on dents of Japanese ancestry in internment American, German American, and Italian the Judiciary received a comprehensive camps during World War II; American communities in recognizing a Na- report prepared by the Department of Whereas the freedom of Italian Americans tional Day of Remembrance to increase pub- Justice detailing civil liberties viola- lic awareness of these events. and German Americans was also restricted tions committed against persons of during World War II by measures that brand- The SPEAKER pro tempore (Mr. Italian American ancestry during this ed them enemy aliens and included required SHAW). Pursuant to the rule, the gen- period. identification cards, travel restrictions, sei- tleman from Wisconsin (Mr. SENSEN- zure of personal property, and internment; The Japanese American community BRENNER) and the gentleman from New Whereas President Gerald Ford formally presently recognizes a National Day of rescinded Executive Order 9066 on February York (Mr. NADLER) each will control 20 Remembrance on February 19 of each 19, 1976, in his speech, ‘‘An American Prom- minutes. year to educate the public about the ise’’; The Chair recognizes the gentleman internment. House Resolution 56 reaf- Whereas Congress adopted legislation from Wisconsin (Mr. SENSENBRENNER). firms the importance of this day. The which was signed by President Jimmy Carter GENERAL LEAVE resolution also supports the goals of on July 31, 1980, establishing the Commission Mr. SENSENBRENNER. Mr. Speak- on Wartime Relocation and Internment of the Japanese American, German Amer- Civilians to investigate the claim that the er, I ask unanimous consent that all ican and Italian American commu- incarceration of Japanese Americans and Members may have 5 legislative days nities in recognizing a National Day of legal resident aliens during World War II was within which to revise and extend their Remembrance to increase public justified by military necessity; remarks and include extraneous mate- awareness of the events surrounding Whereas the Commission held 20 days of rial on House Resolution 56 currently this difficult period of our Nation’s his- hearings and heard from over 750 witnesses under consideration. tory. on this matter and published its findings in The SPEAKER pro tempore. Is there I urge my colleagues to support this a report entitled ‘‘Personal Justice Denied’’; objection to the request of the gen- resolution. Whereas the conclusion of the Commission tleman from Wisconsin? was that the promulgation of Executive Mr. Speaker, I reserve the balance of Order 9066 was not justified by military ne- There was no objection. my time. cessity, and that the decision to issue the Mr. SENSENBRENNER. Mr. Speak- Mr. NADLER. Mr. Speaker, I yield order was shaped by ‘‘race prejudice, war er, I yield myself such time as I may myself 2 minutes. hysteria, and a failure of political leader- consume. Mr. Speaker, I rise in support of this ship’’; Mr. Speaker, today I rise in favor of resolution. The World War II intern- Whereas Congress enacted the Civil Lib- House Resolution 56. On February 19, ment of American citizens of Japanese, erties Act of 1988, in which it apologized on 1942, President Roosevelt signed Execu- German and Italian ancestry for no behalf of the Nation for ‘‘fundamental viola- tive Order 9066. Shortly afterwards, reason other than their heritage is a tions of the basic civil liberties and constitutional rights of these individuals of Japanese citizens of Japanese ancestry residing disgraceful blot on the history of this ancestry’’; in the United States were prohibited Nation and on our commitment to free- Whereas President Ronald Reagan signed from living, working or traveling on dom and equality. Sometimes, in times the Civil Liberties Act of 1988 into law on the West Coast of the United States. of panic and insecurity, we have forgot- August 10, 1988, proclaiming that day to be a Executive Order 9066 ultimately led to ten what is best and most admired ‘‘great day for America’’; the detention of 120,000 Japanese Amer- about our Nation and we have done Whereas the Civil Liberties Act of 1988 es- icans and residents, most of whom did things which in retrospect and with tablished the Civil Liberties Public Edu- not see freedom until the closing days cooler heads we have come to realize cation Fund, the purpose of which is ‘‘to sponsor research and public educational ac- of World War II. Executive Order 9066 were both unnecessary and unjust. This tivities and to publish and distribute the also resulted in restrictions upon the unfortunate history includes the Alien hearings, findings, and recommendations of civil liberties of Italian and German and Sedition Acts of 1798, the suspen- the Commission on Wartime Relocation and Americans residing in the United sion of the writ of habeas corpus during

VerDate jul 14 2003 01:33 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00024 Fmt 4634 Sfmt 0634 E:\CR\FM\K03MR7.036 H03PT1 March 3, 2004 CONGRESSIONAL RECORD — HOUSE H779 the Civil War, the Espionage Act of decorated combat unit of World War II, the floor today. While the resolution 1917, the Smith Act of 1940, the Japa- the 442nd Regimental Combat Team, addresses events from our past, it does nese, German and Italian internments, was composed of Japanese Americans, more than honor victims. It reminds us the McCarthy depredations of the early many of whom themselves had been in- and our constituents that past national Cold War years, the COINTELPRO op- ternees in these camps. mistakes must not be repeated, even erations of the FBI, and some of what Mr. Speaker, Franklin Roosevelt’s during times of great uncertainty. is going on today. executive order was never formally re- To achieve these goals, we must first We are regrettably going through an- scinded until President Gerald Ford recognize the magnitude and severity other period of fear and insecurity due took action. On February 19, 1976, he of our Nation’s injustices during World to the very real threat of terrorism. We rescinded Executive Order 9066 with a War II. In 1942, the U.S. Government must not give in to fear and we must proclamation entitled ‘‘An American rounded up and incarcerated approxi- not repeat the sin of trampling civil Promise.’’ By President Ford’s procla- mately 120,000 Americans of Japanese liberties in ways that purport to, but mation, America finally recognized the descent, primarily from the West do not even, add to our own security. sacrifices made by Japanese Americans Coast, tearing families apart and forc- But I fear we are yet again doing just for the United States and called upon ing these hardworking people to sell that. all Americans to resolve that such a their businesses and their personal There is no greater way to honor tragedy would never happen again. properties for pennies on the dollar. those many loyal Americans who suf- And then on August 10, 1988, Presi- Many literally lost the fruits of a life- fered injustices during World War II dent Ronald Reagan signed into law time of work due to Executive Order than to rededicate ourselves to fighting the Civil Liberties Act of 1988 by which 9066 signed by President Roosevelt on for the principles that this history the United States Government at long February 19, 1942. teaches, to remembering this history, last apologized for, quote, the funda- I know firsthand the pain inflicted on to passing this resolution but to try to mental violations of the basic civil lib- those families incarcerated because I avoid repeating this history as I fear erties and constitutional rights of per- spent part of my childhood at Amache we are doing in some of the things that sons of Japanese ancestry. One of my internment camp in southeast Colo- are going on in this time of insecurity predecessors as policy chairman here in rado. My family was uprooted from our today. the House, then Representative Dick home and community and sent hun- Mr. Speaker, I reserve the balance of Cheney, now Vice President DICK CHE- dreds of miles away from our homes my time. NEY, cosponsored the bill. My prede- and communities for no other reason Mr. SENSENBRENNER. Mr. Speak- cessor from Orange County, California, than our ancestry. There can be no er, I yield such time as he may con- Representative Robert Badham, was confusion. The decision by America’s sume to the gentleman from California one of its strongest advocates. The political leaders in 1942 to intern Japa- (Mr. COX) Civil Liberties Act also established the nese Americans was signed, sealed and Mr. COX. Mr. Speaker, I thank the Civil Liberties Public Education Fund delivered not out of concern for na- gentleman for bringing this important to preserve in the national conscious- tional security or for the safety and se- resolution to the floor. I rise in strong ness of our country the memory of the curity of Japanese Americans. This ex- support of House Resolution 56, which internment. At the signing ceremony, ecutive order was based on neither rea- calls for a National Day of Remem- President Reagan quoted his own words son nor evidence but on fear and panic. brance to increase public awareness of honoring Japanese-American soldiers The U.S. Government acknowledged as the Japanese Americans, German and all American soldiers who fought much in 1982 under Carter when the Americans and Italian Americans in World War II. Here is what President Commission on Wartime Relocation whose civil rights were violated during Reagan said: and Internment of Civilians concluded World War II. Suffering by the Japa- ‘‘Blood that has soaked into the that military necessity did not justify nese-American community was par- sands of a beach is all of one color. the exclusion and detention of these ticularly acute. America stands unique in the world, groups. Instead, the government’s deci- On February 19, 1942, President the only country not founded on race sion-making was driven by race preju- Franklin D. Roosevelt signed his infa- but on a way, an ideal. Not in spite of dice, war hysteria and the failure of po- mous Executive Order 9066. It ordered but because of our polyglot back- litical leadership. the imprisonment of 120,000 Japanese ground, we have had all the strength in As the commission’s report points Americans on the West Coast of the the world. That is the American way.’’ out, ‘‘A grave personal injustice was United States. For most of the war, Six decades later, as President done to the American citizens and resi- these loyal Americans, who had done Reagan would say, that is still the dent aliens of Japanese ancestry who, nothing to deserve such treatment, American way, and we do great honor without individual review or any pro- were forced to live under armed guard to the Congress, to the country, to Jap- bative evidence against them, were ex- in isolated camps hundreds of miles anese Americans and to people who cluded, removed and detained by the from home. The Japanese Americans come to America from all parts of the United States during World War II.’’ subject to Franklin Roosevelt’s execu- world by passing this resolution. In 1988, Congress finally redressed tive order had as little as 4 days to pre- Mr. Speaker, I urge a ‘‘yes’’ vote on these wrongs by formally apologizing pare for being rounded up. They were House Resolution 56. and providing compensation to those forced to sell or lease their property Mr. NADLER. Mr. Speaker, I yield 5 unjustly relocated during World War II. often at ruinous losses. They were de- minutes to the distinguished gen- It is a true testament to our Nation’s prived of income during their imprison- tleman from California (Mr. HONDA), values and democratic process that our ment. Many lost their businesses, their the sponsor of the resolution. Nation has been able to look back and livelihoods and their life savings. So Mr. HONDA. Mr. Speaker, I rise admit errors from its past. I can think many hardworking Americans were today in support of House Resolution of no greater evidence to demonstrate rounded up into camps that the econo- 56, a resolution I introduced last year why the United States, with all its mies of entire States, California, Or- on behalf of the Japanese-, Italian- and flaws, is still looked to worldwide as egon and Washington, suffered se- German-American communities to es- the nation with the strongest and fair- verely. tablish a National Day of Remem- est form of government. FDR’s wholesale denial of Americans’ brance for the restriction, exclusion But it is not enough to admit our constitutional rights shamed America and internment of individuals and fam- wrong and compensate those per- but all Americans can be proud of the ilies during World War II. I thank the secuted. It is equally important that Japanese Americans he imprisoned. House leadership as well as the gen- today we endeavor to educate the pub- Despite their shameful treatment by tleman from Wisconsin (Mr. SENSEN- lic about the internment of Americans the Roosevelt administration, they BRENNER), the gentleman from Michi- to avert the execution of federally never wavered in their patriotism and gan (Mr. CONYERS) and the gentleman sanctioned discrimination and mal- their support for the United States and from New York (Mr. NADLER) for their treatment in the future. It is critically for the war effort. In fact, the most leadership in steering this measure to important more than ever to speak up

VerDate jul 14 2003 03:46 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00025 Fmt 4634 Sfmt 0634 E:\CR\FM\K03MR7.039 H03PT1 H780 CONGRESSIONAL RECORD — HOUSE March 3, 2004 against possible unjust policies that By the spring of 1942, California, Or- from California (Mr. HONDA) and Norm may come before this body. It is crit- egon, Washington, and Arizona were Mineta and others; but this resolution ical that we educate all Americans of designated as military areas. And in is also important because it allows all the Japanese-American experience dur- May, Japanese Americans were ordered of the Americans, not just those whose ing World War II as well as the experi- to ‘‘close their affairs promptly and rights were violated but those who ence of other groups like the Japanese make their own arrangements for dis- were on the outside, to reflect and to Latin Americans. posal of personal and real property.’’ understand that an apology can be b 1200 Official government fliers were post- given, a country can improve, and we ed around California instructing fami- will never allow such a thing to happen These people were extricated from lies to report to 12 assembly centers in- again. Latin America, brought over here, and cluding the Tanforan Racetrack for Mr. NADLER. Mr. Speaker, I yield 3 had their documents taken away from San Francisco Japanese Americans to them, thus becoming individuals with- minutes to the distinguished gen- the Santa Anita Racetrack for Japa- tleman from New Jersey (Mr. out a country to be used as pawns in nese Americans in the Santa Clara Val- exchange for POWs in the Pacific The- PASCRELL). ley. They could only bring the bare ne- Mr. PASCRELL. Mr. Speaker, I ater. As this resolution does, we must cessities, leaving behind homes, their also remember the experiences of the thank the gentleman from New York lives, and most personal belongings. for yielding me this time. German and Italian Americans who Santa Clara and San Francisco Japa- were also victimized. Mr. Speaker, I rise today in strong nese Americans were forced to live in Having recognized this, many mem- support of the gentleman from Califor- horse stables for as long as 6 months bers of those communities have sud- nia’s (Mr. HONDA) resolution and thank denly realized that they were wrong, until a permanent camp was built for the members of the Committee on the that they were not criminals; and be- them; 110,000 Japanese Americans were Judiciary for bringing it to the floor. cause of the recognition, this awful evacuated from their homes and incar- At sometime or another, we have all burden of guilt has been lifted from cerated throughout the duration of the heard the words of Pastor Martin Nie- their shoulders and from the commu- war. moller. We know he was commenting By the fall of 1942, most of the Santa nities. on an unspeakable time when through- Clara Valley Japanese American in- As a teacher, I feel this point is espe- out Europe the Nazis were rounding up ternees were transported to a camp far cially timely and pertinent. In today’s those they did not want in their model away from home, the Heart Mountain war against terrorism, we must be es- society. But do his words ring true for Internment Camp Wyoming; and the pecially cognizant of the adage that the United States as well? San Francisco internees were sent to those who do not learn from their past He said, ‘‘First they came for the various camps, some as far away as mistakes are doomed to repeat them. Jews, and I did not speak out because I Utah. Since World War II, our civil liberties was not a Jew. Then they came for the have not been as much at risk as they The horror did not end there. At the end of the war when Japanese Ameri- Communists, and I did not speak out are today. Even while we prosecute the because I was not a Communist. Then war against terrorism, we must protect cans were finally released and went home, they found that they had no they came for the trade unionists, and all innocent Americans from prejudice I did not speak out because I was not a and xenophobia. shelter, no food, money, much less a job. Some returned to find homes trade unionist. Then they came for me, Today, Mr. Speaker, a person with and there was no one left to speak out my face, my background, and being a looted and destroyed. In my district, for me.’’ third-generation American of Japanese the San Jose Buddhist Church offered Under the Roosevelt-signed Execu- descent, standing in the Halls of Con- what it could, shelter and hot meals for tive Order 9066, American citizens of gress under the dome of the greatest most families. And a good piece of capitol of this Nation, of this world, I news, in Santa Clara County, the fam- Japanese descent and Japanese resi- have learned one lesson. And bringing ily of Bob Peckham, later to become dents of the United States were prohib- together all of our experiences from Federal District Court Judge Bob ited from living, working, or traveling our various communities during that Peckham, had taken title to the prop- on the west coast of the United States. time of trauma, the lesson that was erty of their Japanese American neigh- It sounds almost foreign to us in Amer- learned, and it is an American lesson, bors, and they were able to preserve ica. EO 9066 ultimately led to the de- is that the Constitution is never tested much of the property and return it at tention of 120,000 Japanese Americans in times of tranquility. Rather, our the end of the internment. and residents, most of whom did not Constitution is sorely tested in times All of this happened before I was see freedom until the closing days of of national tension, trauma, tragedy, born, but I remember hearing about it World War II. That executive order also and terrorism; and that we as Ameri- well before it hit the history books be- resulted in restrictions upon the civil cans, in order to address our future, cause my mother was a young woman liberties of Italian Americans and Ger- must internalize the principles of the in 1942, and she was building airplanes man Americans residing in the United Constitution and the Bill of Rights. for Douglas Aircraft. My dad was in the States during World War II, including So I would like to conclude my re- Army. And I remember her telling me government-imposed curfews, prohibi- marks by honoring all those Americans going past the Tanforan Racetrack and tion on items considered to be contra- who suffered on the homefront during how guilty and ashamed she was and band by military authorities, and sei- World War II, and I hope this resolu- how helpless she felt. She knew that zures of personal property. tion will provide additional healing for her neighbors had been wrongly locked In the Korematsu case that chal- those of our Nation. It takes enormous up in these horse stables. She knew lenged Japanese internment camps, maturity for our Nation to admit its what her government had done was even our United States Supreme Court wrongs. wrong; but as a young girl, she really failed our right to freedom, despite Mr. NADLER. Mr. Speaker, I yield 3 did not know what to do and how to those words ‘‘Equal Justice Under minutes to the gentlewoman from Cali- change that. She was a lifelong Demo- Law’’ engraved on the facade. fornia (Ms. LOFGREN). crat. She cast her first Presidential Thankfully, over the past 62 years, Ms. LOFGREN. Mr. Speaker, as has vote for FDR, but she never agreed this order has been revoked and the been mentioned, on February of 1942, with what he did to her neighbors. Federal Government has tried to make then-President Franklin Roosevelt What has happened since then? We amends. We owe a debt of gratitude to issued an executive order which au- have adopted legislation to rescind. We our Greatest Generation in protecting thorized the Secretary of War to define have the Civil Liberties Act. We have our freedom and democracy abroad; military areas in which ‘‘the right of apologies. And that is important to my however, we cannot forget that in some any person to enter, remain in, or leave neighbors and my parents’ neighbors respects democracy failed us at home shall be subject to whatever restric- who were incarcerated people like Ed in 1942. The freedom we fought for was tions’’ are deemed ‘‘necessary’’ or ‘‘de- Kawazoe and Jimi Yamaichi and Ted not shared by many Americans during sirable.’’ and Raiko and certainly the gentleman that time.

VerDate jul 14 2003 01:33 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00026 Fmt 4634 Sfmt 0634 E:\CR\FM\K03MR7.040 H03PT1 March 3, 2004 CONGRESSIONAL RECORD — HOUSE H781 Today’s resolution reaffirms the im- mistakes just as we celebrate our na- I rise as the representative of one of portance of the National Day of Re- tional achievements. We must ac- the two districts in our country that membrance on February 19 to educate knowledge our misgivings in the past if contains the largest number of Japa- the public about the internment. But we are to strengthen our ability to nese Americans in our entire country. let this resolution also remind us to avoid mistakes in the future. As Presi- Some 20 percent of my constituents de- never repeat the mistakes of the past. dent Ford said in 1976 when he formally scended from the people that were di- We must stand up for freedom for all rescinded Executive Order 9066, learn- rectly impacted by the events of the Americans, regardless of skin color, ing from our mistakes is not pleasant; Second World War and themselves im- ethnicity, or religion. It is vital now but we must do so if we want to avoid pacted, the other district being the not only because it is right and the repeating them. First Congressional District of Hawaii. human thing to do, but for self-interest Supporting the goals of the Japanese But in 1941 as the war broke out, 38 as well. American, German American, and percent of Hawaii was composed of Mr. NADLER. Mr. Speaker, I yield 3 Italian American communities in rec- Americans of Japanese ancestry; 38 minutes to the distinguished gentle- ognizing a National Day of Remem- percent of people from Japan whose woman from Guam (Ms. BORDALLO). brance will help us learn the lessons, origins were in Japan, who had lived Ms. BORDALLO. Mr. Speaker, I understand the historical significance and worked successfully in Hawaii for thank the gentleman from New York of these actions, and honor the sac- almost a century at that point. By the (Mr. NADLER) for yielding me this time, rifice. end of the war, about 1,500 of them had and I am pleased to join my colleagues Mr. Speaker, I am in support of been interned, an unconscionable fig- in support of House Resolution 56, House Resolution 56. ure, but nothing like what happened which seeks to increase awareness and Mr. NADLER. Mr. Speaker, I yield 1 proportionately to the population of further public understanding of the minute to the distinguished gentle- Japanese Americans on the mainland. mistreatment of American citizens woman from Texas (Ms. JACKSON-LEE). And there were some heroes to be during World War II. Ms. JACKSON-LEE of Texas. Mr. recognized even today. So as we re- I want to thank the gentleman from Speaker, I thank the distinguished gen- member today what our country did to California (Mr. HONDA) for his compas- tleman for yielding me this time. those citizens of our country and those sionate leadership on these issues and It is with a humble spirit the rec- of German and Italian descent, we also in particular for his sponsorship of ognition that we have come this far. have to remember there were heroes House Resolution 56. We have not yet done and completed then, people not from those racial In the aftermath of the attacks on our journey. groups, who stood up and were counted. Pearl Harbor, President Roosevelt I rise to support H. Res. 56, sup- Robert Shivers, the former Director signed Executive Order 9066, allowing porting the goals of the Japanese of the FBI’s Honolulu office, who ar- for thousands of Japanese Americans American, German American, and rived in 1939 and took it upon himself and Japanese residents, primarily from Italian American communities in rec- to understand Japanese Americans in the west coast, to be removed from ognizing a National Day of Remem- Hawaii, he had the power to say who their homes, interned, and prohibited brance to increase public awareness of would and would not be interned, and from returning until December of 1944. the events surrounding the restriction, he recognized that most, if not all, of In addition, Mr. Speaker, many exclusion, and internment of individ- the Japanese American citizens of Hon- Italian Americans and German Ameri- uals and families during World War II. olulu and Hawaii were not to be in- cans were expelled from designated I thank the gentleman from California terned. He was a hero. He remains a areas under the U.S. Government’s In- (Mr. HONDA) for his persistence in hero to my constituency today. dividual Exclusion Program and were cleaning the slate. Dr. Charles Hemenway, former Presi- subject to arbitrary arrest. My emphasis is to suggest that no dent of the U.H. Board of Regents, who The actions of our government dur- one can feel their pain. We cannot in took the time as well to work with ing this period was and remains a any way speak to the pain that German Agent Shivers to get beyond the source of great pain. The internment of Americans and Japanese Americans, hysteria of the war and into the facts, the Japanese Americans, German Italian Americans felt as their young who did have to be interned as a legiti- Americans, and Italian Americans was men were on the front lines in Europe mate risk, but who was simply not a a grave injustice of their civil rights. fighting on behalf of our freedom. risk to their country; Colonel Kendall There are lessons to be learned from Fielder, former head of G–2 intelligence b 1215 this experience, and these lessons can- operations for the Army in the Pacific, not be learned without discussing and Yet their families at home were decisions that he made on behalf of our understanding the circumstances sur- being mistreated and discriminated military, for which he took an incred- rounding the enactment of Executive against, eliminated from jobs, abused ible amount of heat at the time from Order 9066. We must be cognizant of the and maybe somewhat violently treated. his national superiors, were vindicated fragile nature of our civil rights which We know the Japanese Americans were after the war. have been won on the battlefield and in interned. We know the German Ameri- These were people that stood up and the Halls of Congress; and we must al- cans were accused, and the Italian counted at the time, and as we remem- ways be mindful of the threats to our Americans as well. ber what we did, we need to remember freedom and security; and, likewise, we This resolution is long overdue. I who helped them at that time. We also must be mindful of how our own per- stand enthusiastically to support it so need to remember simply that our in- ceptions of our fellow Americans and we as Americans can stand united in stitutions are what prevent this from our own prejudices affect our freedom. freedom without discrimination and happening again. It is now more important than ever with affectionate respect for the heroes Mr. Speaker, I commend this resolu- because of the many issues that have in the Japanese American family, the tion, and support it fully. arisen concerning security in the after- Italian American family and the Ger- Mr. NADLER. Mr. Speaker, I yield 1 math of September 11. As we wage the man American family. minute to the distinguished gentleman war on terrorism, the need for aware- Mr. NADLER. Mr. Speaker, I yield 2 from California (Mr. BECERRA). ness and education is especially impor- minutes to the distinguished gen- Mr. BECERRA. Mr. Speaker, let me tant. We must ensure that we have an tleman from Hawaii. begin by thanking the gentleman from understanding of who among us is the (Mr. CASE asked and was given per- Wisconsin (Chairman SENSENBRENNER), threat, not based on race or color or re- mission to revise and extend his re- the gentleman from New York (Mr. ligion but based on facts that will marks.) NADLER) and certainly the gentleman withstand the scrutiny of our history. Mr. CASE. Mr. Speaker, I also rise in from California (Mr. HONDA) for their As we fight for freedom and security, very strong support of this resolution, work in bringing this resolution to the let us not cast aside our own humanity. and commend my colleague, the gen- floor. Mr. Speaker, as difficult as it is, we tleman from California (Mr. HONDA), H. Res. 56 deserves the support not must come to terms with our national for introducing it. just of the Members of this House, but

VerDate jul 14 2003 01:33 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00027 Fmt 4634 Sfmt 0634 E:\CR\FM\K03MR7.043 H03PT1 H782 CONGRESSIONAL RECORD — HOUSE March 3, 2004 every single American who believes in that from one generation to the next right to live. They, in many cases, are sum- democracy and freedom. We must re- people will see that the United States marily turned back to the shores of Haiti member, because the final chapter on of America made a bad mistake. where they will likely suffer or die. In Iraq, those events back during World War II This resolution will come and go and under the name of ‘‘national security’’ and has not yet closed. That chapter has maybe it will be forgotten and maybe ‘‘war powers,’’ this Administration has led us yet to be fully written, and before we it will not be forgotten, but the annual into a war and subsequent occupation that are able to say we can turn the last remembrances on February 19 will has cost us numerous lives and high costs. H. page and put that book up on the shelf make sure that the violation of civil Res. 56 sets a precedent of recognizing that we have to make sure that we remem- liberties will not be forgotten, and that the notion of ‘‘national security’’ and the ‘‘war ber that there still are Japanese Amer- is the preventive to make sure that powers’’ need to be utilized with more fore- icans as a result of technicalities who this never happens again. sight, respect, and adherence to the principles have not received any redress from the Mr. Speaker, I urge adoption of the of international as well as domestic laws. 1988 Civil Liberties Act. resolution. For the above reasons, Mr. Speaker, I sup- We still have many communities, the Ms. JACKSON-LEE of Texas. Mr. Speaker, port this legislation. German American community, the I rise in strong support of this bill, H. Res. 56, Mr. ENGEL. Mr. Speaker, I rise today in Italian American community, that which came before the Committee on the Ju- support of H. Res. 56 which seeks to recog- have not yet had a chance to have their diciary in January for markup. I supported this nize a National Day of Remembrance regard- contributions to this country fully ap- bill at that time as well. ing the treatment of Japanese, German and preciated. So I think we have to all It recognizes the historical significance of Italian Americans during World War II. come together to agree that it was February 19, 1942, the day that President Many Americans are not aware that on Feb- time for this resolution to come before Roosevelt signed Executive Order 9066 to re- ruary 19th, 1942 Executive Order 9066 was us and to pass. strict the freedom of Japanese Americans, and signed by President Roosevelt authorizing re- I also believe that at some point soon supports efforts of the Japanese, German, and strictions and internment of ‘‘enemy aliens.’’ this Congress will be benevolent and Italian American communities to increase pub- While the intent of this order was to monitor the American people will understand lic awareness of these events by way of a Na- and detain people from countries the United that there are Japanese Latin Ameri- tional Day of Remembrance. Every year, this States was fighting in World War II, the result cans who deserve to be fully recognized day is recognized by the Japanese American was that thousands of patriotic Americans of and be conveyed some kind of apology, community to educate the public about the in- foreign descent had their civil liberties re- along with redress, to make sure all ternment and to prevent such restrictions of voked—even though they had done nothing wrong. those who suffered have an opportunity civil liberties from happening again. I am troubled by the fact that the internment to have redress fully fulfilled. Our colleague Mr. HONDA is to be com- of Italian Americans is little known even today. I thank the gentleman for yielding mended for his work in drafting this important For these reasons I authored H.R. 2442 in the me time, and I appreciate the resolu- legislation, and I am pleased that it has 70 co- 106th Congress, which called for the United tion that has come before us this sponsors, 67 of whom are from this side of the States to acknowledge this terrible chapter in evening. aisle. our history and required the Department of Mr. NADLER. Mr. Speaker, I yield During World War II, President Roosevelt Justice to study and report back to Congress myself the balance of my time. used his executive authority to authorize the on the extent of the Italian American Intern- Mr. Speaker, over 60 years ago, at a exclusion of 120,000 Japanese Americans and ment, known in the Italian American Commu- time of panic and insecurity, this coun- Japanese legal permanent residents from the nity as ‘‘Una Storia Segreta’’ (the Secret try committed a great wrong against United States and their internment in camps Story). people of Japanese, Italian and German on the grounds of national security and mili- Mr. Speaker, the Justice Department report background. Several years ago, the tary necessity. The freedoms of Italian and confirmed much of what I learned in the years United States apologized for this, voted German Americans were also restricted during leading up to the enactment of H.R. 2442. monetary compensation, and today we this war. These individuals were classified as Thousands of loyal Italian American patriots, are passing a resolution supporting the enemy aliens and were required to carry iden- mothers and fathers of U.S. troops, even goal of recognizing a day of national tifications cards. Their property was seized, women and children were suspected of being remembrance to increase public aware- their travel was limited, and they were also in- dangerous and subversive. With this new ness of these events. terned in camps. enemy alien status, Italians were subjected to It is right and fitting that we should Fortunately, President Ford rescinded Exec- strict curfew regulations, forced to carry photo do this, and we should pass this resolu- utive Order 9066 on February 19, 1976. In ID’s, and could not travel further than a 5 mile tion. I hope and I pray that as we in- 1980, Congress established a Commission on radius from their homes without prior approval. crease public awareness of these Wartime Relocation and Internment of Civil- Furthermore, many Italian fishermen were for- events, we will learn from it, so that ians that investigated the internment and re- bidden from using their boats in prohibited we do not repeat the same kind of ac- striction of civil liberties under Executive Order zones. Since fishing was the only means of in- tions as we have done in the past at 9066. The Commission found that the Order come for many families, households were torn times of insecurity and panic. was not justified by military necessity but re- apart or completely relocated as alternative Mr. Speaker, I yield back the balance sulted from ‘‘race prejudice, war hysteria, and sources of income were sought. of my time. a failure of political leadership.’’ In 1988, Con- It is difficult to believe that over 10,000 Mr. SENSENBRENNER. Mr. Speak- gress enacted the Civil Liberties Act of 1988 Italians deemed enemy aliens were forcibly er, I yield myself the balance of my apologizing to people of Japanese ancestry for evacuated from their homes and over 52,000 time. the denial of their civil liberties and for the vio- were subject to strict curfew regulations. Iron- Mr. Speaker, all of those who have lations perpetrated against them by the U.S. ically, over 500,000 Italians were serving in spoken during this debate have pointed The Wartime Violation of Italian Americans the United States Armed Forces fighting to out very clearly that this resolution is Civil Liberties Act, which passed in 2000, protect the liberties of all Americans, while a good resolution and is a necessary chronicled violations of the rights of Italian many of their family members had their basic resolution. I think that probably the Americans that occurred during that time. freedoms revoked. key part of this resolution is that it H. Res. 56 had added significance in light of When we first started researching the Italian gives Congressional recognition to the the Bush Administration’s expensive detention American Internment we had vague accounts remembrances that occur on February of Arab and Muslim Americans and resident in of mostly anonymous Italians who were sub- 19 of each year, because we should not the week of 9/11. The Bush Administration jected to these civil liberties abuses. However, forget about the egregious error that consistently uses ‘‘national security’’ and ‘‘war throughout the process we came in contact President Roosevelt committed against powers’’ to violate the civil liberties of citizens with many Italians who experienced the intern- the civil liberties of the Japanese and deport, question, and harass immigrants. ment ordeal first hand. Dominic DiMaggio tes- Americans when he signed the execu- Today, a similar situation is occurring with tified at a Judiciary Committee hearing about tive order that resulted in their intern- respect to Haiti and Iraq. In Haiti, hundreds of his dismay when he returned home from the ment. asylum-seeker are being denied due process war to find that his mother and father were The only way we will not forget is by in their asylum petition hearings. These people enemy aliens. Doris Pinza, wife of inter- having a remembrance that occurs, so are being denied their civil liberties and the national opera star Ezio Pinza, also testified at

VerDate jul 14 2003 01:33 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00028 Fmt 4634 Sfmt 9920 E:\CR\FM\K03MR7.047 H03PT1 March 3, 2004 CONGRESSIONAL RECORD — HOUSE H783 the hearing about her husband who was only nese American community and its supporters forts in educating the American public. Your weeks away from obtaining U.S. citizenship across the Nation have worked hard to edu- leadership inspires us all. when he was classified as an enemy alien and cate the public about the internment. Mr. LARSON of Connecticut. Mr. Speaker, I detained at Ellis Island. It still saddens me to The lessons of that dark chapter in our his- rise today to express my support for House think that Ellis Island, the world renowned tory are especially relevant today. As we pro- Resolution 56 which was introduced by Mr. symbol of freedom and democracy, was used tect and defend the American people against Honda of California last month. This resolution as a holding cell for Italians. There is even terrorism, we must protect and defend the would create a National Day of Remembrance documented evidence of Italians being in- Constitution and the civil liberties that define in honor of the Japanese-Americans, Italian- terned in camps at Missoula, Montana. our democracy. Americans, and German-Americans who suf- Mr. Speaker, we must ensure that these ter- I commend the House of Representatives fered injustices during the Second World War. rible events will never be perpetrated again. for considering this Resolution. I urge its pas- Before I begin, I would like to congratulate We must safeguard the individual rights of all sage. Mr. HONDA on his new role as the Chairman Americans from arbitrary persecution or no Mr. MATSUI. Mr. Speaker, I rise today in of the Caucus of Asian Pacific American Cau- American will ever be secure. While we can- support of H. Res. 56 and commend the Japa- cus. He has long been a champion of the con- not erase the mistakes of the past, we must nese American, German American and Italian cerns of Asian Pacific Americans and will un- learn from them in order to ensure that we American communities for their efforts to com- doubtedly serve them well in his new role. never subject anyone to the same injustices. memorate and promote a National Day of Re- In February of 1942, President Franklin D. But most important of all, we can never forget membrance. Although this is a regrettable time Roosevelt signed Executive Order 9066 that what happened during this time or we run the in American history, we cannot let this period paved the way for discriminatory action risk of repeating this awful chapter in our his- be forgotten. It is only by increasing public against American citizens of Japanese, Ger- tory. That is why H. Res. 56 is important to awareness of the events surrounding the re- man, and Italian descent. Across the West this Congress and all Americans. A National striction, exclusion and internment of individ- Coast, Japanese-Americans were evacuated Day of Remembrance will ensure that the uals and families during World War II that we en masse from their homes and relocated to treatment of Japanese, German, and Italian can guard against such future violations. internment camps. German-Americans and Americans will always be remembered, and Sixty-two years ago, the signing of Execu- Italian-Americans were often the object of dis- hopefully, we will never allow the civil liberties tive Order 9066 led to the forced internment of criminatory policies, as well. of Americans to be jeopardized again. 120,000 Japanese Americans during World The residents in my home State of Con- Ms. PELOSI. Mr. Speaker, I rise today in War II. They were held without cause and necticut were as deeply affected as the rest of strong support of House Resolution 56 recog- without recourse. These individuals and fami- the country by these political actions. A deten- nizing the significance of February 19, 1942, lies suffered needlessly because of rampant tion center for those considered to be ‘alien the day that President Franklin Roosevelt fear, prejudice and a lack of political leader- enemies’ was established in a community cen- signed Executive Order 9066, which led to the ship. ter in Hartford. Japanese, Italian, and German internment of 120,000 Japanese Americans These pervasive feelings also imposed lim- resident aliens were required to carry their im- and residents of Japanese descent and the its on the freedoms of German Americans and migration papers at all times and their move- deprivation of rights of German Americans and Italian Americans. The government restricted ment was restricted. In addition, many of the Italian Americans. their travel and seized their property, and the Japanese-Americans who were interned on The Resolution supports the goals of the public branded them as the enemy. the West Coast moved to the East Coast, in- Japanese American, German American, and In 1988, the Federal government acknowl- cluding Connecticut, after their release. The Italian American communities in recognizing a edged the tragic injustice of the internment. suffering that these communities endured has national day of remembrance to increase pub- Due in large part to the efforts of the Japa- remained with them and must be addressed. lic awareness of the restrictions and intern- nese American community, the government The apology offered by this government in ment of individuals during World War II. issued a formal apology and offered redress to 1988 is not sufficient. We must not allow the I am proud to join my colleague Represent- internees. We can never compensate for what lessons learned from this chapter of our his- ative MIKE HONDA, who spent his early child- was taken away from these families and indi- tory to be lost, regardless of how painful they hood in an internment camp, in cosponsoring viduals. But we can honor their struggle and may be. It is this very pain that makes them this Resolution. I appreciate his leadership their legacy by understanding the events that so valuable. We cannot forget the suffering and diligence in bringing this Resolution. lead to their internment. endured by our own citizens. Establishing a The West Coast of our country was particu- It takes a strong and confident Nation to National Day of Remembrance is important in larly affected by the forced relocations and un- look introspectively at its own actions and ensuring that this does not happen. just internment of thousands of American citi- admit that it made a mistake. Today, it is ac- The National Day of Remembrance is not zens and residents of Japanese descent dur- cepted that the World War II Japanese intern- simply a matter of honoring the past. The ing World War II. The failure of our political ment was a grievous error. Not only did these treatment of Japanese-Americans, Italian- and judicial system to prevent this injustice still actions disrupt lives and communities, it has Americans, and German-Americans during reverberates strongly across our nation. left a stain on America’s history of freedom, World War II has significant implications for us Only belatedly did this Nation acknowledge tolerance, and liberty for all of its citizens. today. This country is in a war against terror. and apologize for the bigotry and injustice Marking the anniversary of the signing of Our relations with other nations should not spurred by Executive Order 9066. The ‘‘Civil Executive Order 9066 provides a time for polit- make way for injustice and discrimination to- Liberties Act of 1988’’ was enacted to formally ical leaders to reflect on the lessons of the ward our own people. The National Day of Re- acknowledge and apologize for fundamental past and on the importance of principled lead- membrance would serve as a reminder that violations of the basic civil liberties and con- ership in the future. We must never again sac- questioning the loyalty of our citizens without stitutional rights of these individuals of Japa- rifice the core values of our democracy and just cause is a grave mistake. nese ancestry.’’ In 2000, President Clinton Constitution, especially in times of uncertainty I would like to commend Mr. HONDA on his signed the ‘‘Wartime Violation of Italian Ameri- and emergency. introduction of this resolution and his dedica- cans Civil Liberties Act,’’ which formally ac- The National Day of Remembrance honors tion to this important cause. The Japanese- knowledged civil liberties violations against those who suffered and reminds us to strive American, Italian-American, and German- Italian Americans. toward a better society where such prejudice American people have expressed the desire It is imperative that our generation and fu- does not exist. We all have a role in ensuring that the experiences of their communities dur- ture generations recall the deprivations suf- that such injustices do not happen again. ing World War II be remembered to serve as fered by the Japanese American, German Once again, I want to join my colleagues in a lesson for future generations. This resolution American and Italian American communities recognizing the very important work the Japa- is a valuable reminder that it is the work of during World War II. The date of February 19, nese American, German American and Italian this country to preserve the civil liberties of its 1942 must serve as a constant reminder that American communities are doing in raising people. we must never again violate individual rights awareness of the National Day of Remem- It is often said that history tends to repeat on the basis of national origin. brance. I also want to commend Representa- itself. However, it does not have to. We have The Resolution reaffirms the importance of tive HONDA for his efforts to bring this resolu- an opportunity to take action to prevent a simi- February 19th, which is recognized as a Na- tion to the floor. To those personally affected lar threat to the civil liberties of innocent citi- tional Day of Remembrance each year by the by these events, I especially want to thank zens as took place during World War II from Japanese American community. The Japa- you for sharing your stories and for your ef- occurring again. I hope that this is something

VerDate jul 14 2003 01:33 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00029 Fmt 4634 Sfmt 9920 E:\CR\FM\A03MR7.027 H03PT1 H784 CONGRESSIONAL RECORD — HOUSE March 3, 2004 that members on both sides of the aisle will be cans of Japanese ancestry and others who Mr. SENSENBRENNER. Mr. Speak- able to agree to do and I would therefore like have been victimized by injustice. Several of er, I yield back the balance of my time. to urge all of my colleagues to support this im- the members attending the talk were, in fact, The SPEAKER pro tempore (Mr. portant resolution. children of parents who had been interned in CULBERSON). The question is on the mo- Mr. WU. Mr. Speaker, I rise today in support camps, and some had even been interned tion offered by the gentleman from of H. Res. 56, a resolution recognizing the his- themselves. Mr. Speaker, I would like to thank Wisconsin (Mr. SENSENBRENNER) that torical significance of February 19, 1942 and the JACL, and also Former Representative the House suspend the rules and agree supporting the Japanese American, German Norm Mineta, whose leadership has been in- to the resolution, H. Res. 56. American, and Italian American communities strumental to ensuring that the American pub- The question was taken. in recognizing a National Day of Remem- lic is educated about this tragedy. The SPEAKER pro tempore. In the brance. As we are all well aware, following the opinion of the Chair, two-thirds of On February 19, 1942, President Franklin issuance of Presidential Executive Order No. those present have voted in the affirm- Delano Roosevelt signed Executive Order 9066 on February 19, 1942, tens of thousands ative. 9066, under which authority approximately of Americans were evicted from their homes, Mr. SENSENBRENNER. Mr. Speak- 120,000 Americans of Japanese ancestry rounded up, and sent to internment camps er, on that I demand the yeas and nays. were forcibly removed from their homes and across the western United states. In San Fran- The yeas and nays were ordered. incarcerated during World War II. The last of cisco, this program began in earnest on April The SPEAKER pro tempore. Pursu- the detainees were released in October 1946, 1, 1942, when all persons of Japanese ances- ant to clause 8 of rule XX and the try—whether they were American citizens or 41⁄2 years after the signing of the Executive Chair’s prior announcement, further Order, and over a year after the end of the not—were notified to report for ‘‘relocation.’’ In proceedings on this motion will be my own Congressional district, 7,800 people war. But this dark chapter in our American his- postponed. tory did not end there. were assembled against their will at the San Bruno Tanforan Racetrack, which was recently Upon release from the internment camps, f Japanese Americans could not return to the portrayed in the movie ‘‘Sea Biscuit.’’ Mr. Speaker, I submit that it is not only in lives they had led before the tragic Executive retrospect that the internment of the Japanese CONTINUATION OF NATIONAL Order. During the period of internment, they appears absurd and unacceptable. As early as EMERGENCY BLOCKING PROP- lost their homes, their businesses, their liveli- 1946 Harold Ickes, President Roosevelt’s own ERTY OF PERSONS UNDER- hoods. secretary of the Interior, characterized the MINING DEMOCRATIC PROC- Thirty years passed before the Executive mass detention of Japanese Americans as a ESSES OR INSTITUTIONS IN Order was formally rescinded in 1976. And it ‘‘mass hysteria over the Japanese,’’ he noted, ZIMBABWE—MESSAGE FROM THE took the government an additional 12 years ‘‘we gave the fancy name of ‘relocation cen- PRESIDENT OF THE UNITED before reparations and a Presidential apology ters’ to these dust bowls, but they were con- STATES (H. DOC. NO. 108–168) were issued in 1988. centration camps.’’ Mr. Speaker, ultimately the Mr. Speaker, it took over 40 years for the The SPEAKER pro tempore laid be- way we treated Japanese Americans was in- government to acknowledge the magnitude of fore the House the following message excusable. Moreover, the enormous human the mistake it had made in interning Japanese from the President of the United suffering and violation of civil liberties that this States; which was read and, together Americans. We must now vow to remember policy caused vastly outweighed any purported the unspeakable injustice perpetrated upon with the accompanying papers, without national security benefit derived from the gov- objection, referred to the Committee our fellow Americans by our American govern- ernment’s internment policy. ment so that it may not be repeated. I thank on International Relations and ordered Mr. Speaker, the internment of Japanese to be printed: Mr. HONDA for introducing this important reso- Americans during World War II is one of the lution which reminds us not to forget the mis- most ignominious and repugnant acts that our To the Congress of the United States: takes of our past. Nation has committed. Americans of Japanese Section 202(d) of the National Emer- We support the Japanese American, Ger- descent, some of whom had been in our na- gencies Act (50 U.S.C. 1622(d)) provides man American, and Italian American commu- tion for generations, were herded into intern- for the automatic termination of a na- nities in recognizing a National Day of Re- ment camps, and denied the basic human tional emergency unless, prior to the membrance. This dark period in our history rights afforded to all other Americans. Al- anniversary date of its declaration, the not only devastated the lives of Japanese though we have taken the first steps toward President publishes in the Federal Reg- Americans, but also restricted the freedoms of recognizing the insidiousness of the intern- ister and transmits to the Congress a Italian Americans and German Americans dur- ment policy, apologies and reparations are not notice stating that the emergency is to ing World War II. enough by themselves. Indeed, we ought to continue in effect beyond the anniver- Mr. Speaker, we must recognize that meas- be reminded on a regular basis of the dangers sary date. In accordance with this pro- ures such as Executive Order 9066, which of fanaticism. Today, as we face a new set of vision, I have sent the enclosed notice was found to be shaped by ‘‘race prejudice, challenges to civil liberties in our Nation, it is to the Federal Register for publication. war hysteria, and a failure of political leader- imperative that we work together to preserve It states that the national emergency ship,’’ violate not only the rights of those they our basic freedoms. After the September 11th blocking the property of persons under- target, but in fact, attack the basic freedoms of tragedy, Arab, South Asian, Muslim and Sikh mining democratic processes or insti- all Americans guaranteed by the Constitution. Americans faced real threats to their safety. tutions in Zimbabwe is to continue in Let the lessons of the past teach us to be Many immigrant communities were concerned effect beyond March 6, 2004. wary of the actions we as a Congress take that America’s legitimate anger towards the The crisis caused by the actions and hastily, based on fear. Let us remember. foreign terrorist who masterminded and car- policies of certain members of the Gov- Mr. LANTOS. Mr. Speaker, I am proud to ried-out September 11th would be turned to- ernment of Zimbabwe and other per- join my good friend MIKE HONDA as a cospon- wards them. We must constantly be vigilant sons to undermine Zimbabwe’s demo- sor of H. Res. 56, a bill that commemorates that his does not occur, and establishing a na- cratic processes or institutions has not the suffering of the Japanese-American, Ger- tional day of remembrance is a laudable step been resolved. These actions and poli- man-American and Italian-American commu- toward this necessary goal. cies pose a continuing, unusual, and ex- nities during World War II by recognizing Feb- As the only Member of this body to have traordinary threat to the foreign pol- ruary 19 as a National Day of Remembrance. survived the Holocaust I bring a unique per- icy of the United States. For these rea- It is my sincere hope and belief that estab- spective to today’s debate. As an oft quoted sons, I have determined that it is nec- lishing a National Day of Remembrance will saying goes, ‘‘Those who forget history are essary to continue the national emer- increase public awareness about the loss of doomed to repeat it,’’ and this legislation is the gency declared on March 6, 2003, block- civil liberties that were suffered by individuals first step to ensuring that all Americans learn ing the property of persons under- as well as entire families in this country during from the mistakes of our Nation’s past mis- mining democratic processes or insti- World War II. treatment of Japanese-, German-, and Italian- tutions in Zimbabwe and to maintain I recently had the privilege to speak to the Americans. I applaud Congressman HONDA for in force the sanctions to respond to San Mateo Chapter of the Japanese American introducing it, the Japanese American Citi- this threat. Citizens Leagues (JACL), whose mission is to zens’ League for endorsing it, and urge all of GEORGE W. BUSH. secure and maintain the civil rights of Ameri- my colleagues to vote for it. THE WHITE HOUSE, March 2, 2004.

VerDate jul 14 2003 03:46 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00030 Fmt 4634 Sfmt 0634 E:\CR\FM\A03MR7.030 H03PT1 March 3, 2004 CONGRESSIONAL RECORD — HOUSE H785 RECESS Mrs. MALONEY. Mr. Speaker, I fully support lic hearing as a matter of legal precedent. ‘‘White House staff have not testified before The SPEAKER pro tempore. Pursu- this extension for the 9/11 commission. In fact, I would support giving it any and all time and legislative bodies,’’ Mr. McCormack said. ant to clause 12(a) of rule I, the Chair ‘‘This is not a matter of Dr. Rice’s pref- declares the House in recess subject to cooperation it needs to get to the bottom of 9/ erences.’’ the call of the Chair. 11. Even as panel members warned of a pos- Accordingly (at 12 o’clock and 25 Sixty days is but a bare minimum—but it is sible confrontation with the White House, minutes p.m.), the House stood in re- absolutely necessary. This extension is nice, there was fresh evidence that the commission had averted a showdown on Capitol Hill. cess subject to the call of the Chair. White House cooperation would be better. A thorough final report would bolster our national Speaker J. Dennis Hastert, Republican of Il- f linois, said Tuesday that he planned to shep- security and bring a measure of understanding b 1333 herd a bill granting the panel a 60-day exten- and closure to Americans, New Yorkers, and, sion for its final report. Mr. Hastert had AFTER RECESS most importantly, the victims’ loved ones. Un- vowed to block the extension. fortunately, that effort has been hampered by Mr. Hastert met Tuesday with the commis- The recess having expired, the House sion’s chairman, Thomas H. Kean, a Repub- was called to order by the Speaker pro an uncooperative White House. The latest manifestation, as reported in to- lican and a former governor of New Jersey, tempore (Mr. SIMPSON) at 1 o’clock and and the vice chairman, Lee H. Hamilton, an- day’s New York Times, is severe restrictions 33 minutes p.m. other former Democratic congressman from on interviews with key 9/11 players. f Indiana, and said at a news conference later I ask unanimous consent to put this in the that he would try to secure House approval EXTENSION OF NATIONAL COM- RECORD. of the extension, a proposal already accepted MISSION ON TERRORIST AT- Mr. Speaker we need White House coin the Senate. TACKS UPON THE UNITED operation now. And if they continue to refuse With the extension, the commission would STATES to give it, we should demand to know why. have until July 26 for its final report. The Mr. Speaker, it’s too important for this coun- panel had warned that if it was held to its Mr. GOSS. Mr. Speaker, I ask unani- original deadline of May 27, as mandated by mous consent to take from the Speak- try, for my city and its people not to get this Congress, it would be unable to complete a er’s table the Senate bill (S. 2136) to ex- report done right. This is too important an full investigation and would have to curtail tend the final report date and termi- issue for the White House to play hid and public hearings. Mr. Hastert denied suggestions from Con- nation date of the National Commis- seek with. I hope this extension will trigger full cooperation. gressional Democrats that he had tried to sion on Terrorist Attacks Upon the block the extension as a favor to the White United States, to provide additional [From the New York Times, Mar. 3, 2004] House, given Republican fears that the refunding for the Commission, and for 9/11 PANEL REJECTS WHITE HOUSE LIMITS ON port might embarrass President Bush during other purposes, and ask for its imme- INTERVIEWS his re-election campaign. Mr. Hastert said he diate consideration in the House. (By Philip Shenon) had no direction from the White House. ‘‘I didn’t want it to become a political The Clerk read the title of the Senate WASHINGTON, Mar. 2.—The independent football,’’ Mr. Hastert said of his initial op- commission investigating the Sept. 11 at- bill. position to the extension, adding that he had tacks is refusing to accept strict conditions The SPEAKER pro tempore. Is there been chagrined when the White House said in from the White House for interviews with objection to the request of the gen- February that it would back the extension. tleman from Florida? President Bush and Vice President Dick Che- Referring to the commission, Mr. Hastert ney and is renewing its request that Mr. There was no objection. said he had changed his mind last week Bush’s national security adviser testify in ‘‘after it became apparent that they couldn’t The Clerk read the Senate bill, as fol- public, commission members said Tuesday. lows: get their work done.’’ The panel members, interviewed after a Commission officials said that if the White S. 2136 private meeting on Tuesday, said the com- House continued to insist on limitations on Be it enacted by the Senate and House of Rep- mission had decided for now to reject a the interviews with Mr. Bush and Mr. Che- resentatives of the United States of America in White House request that the interview with ney, there might be little that the panel Congress assembled, Mr. Bush be limited to one hour and that the could do to force the issue and that the com- SECTION 1. EXTENSION OF NATIONAL COMMIS- questioners be only the panel’s chairman and mission might have to accept the White SION ON TERRORIST ATTACKS UPON vice chairman. House’s terms. THE UNITED STATES. The members said the commission had also And they said that despite internal con- (a) FINAL REPORT DATE.—Subsection (b) of decided to continue to press the national se- versation about the possibility of issuing a section 610 of the Intelligence Authorization curity adviser, Condoleezza Rice, to recon- subpoena for Ms. Rice’s public testimony, Act for Fiscal Year 2003 (Public Law 107–306; sider her refusal to testify at a public hear- that move was unlikely. Ms. Rice provided 6 U.S.C. 101 note; 116 Stat. 2413) is amended ing. Mr. Bush and Mr. Cheney are expected several hours of private testimony last by striking ‘‘18 months’’ and inserting ‘‘20 to be asked about how they had reacted to month and has suggested that she is willing months’’. intelligence reports before Sept. 11, 2001, sug- to answer additional questions behind closed (b) TERMINATION DATE.—Subsection (c) of gesting that Al Qaeda might be planning a doors. that section is amended— large attack. Panel members want to ask The Senate bill was ordered to be (1) in paragraph (1), by striking ‘‘60 days’’ Ms. Rice the same questions in public. read a third time, was read the third and inserting ‘‘30 days’’; and ‘‘We have held firm in saying that the con- time, and passed, and a motion to re- (2) in paragraph (2), by striking ‘‘60-day pe- ditions set by the president and vice presi- riod’’ and inserting ‘‘30-day period’’. dent and Dr. Rice are nog good enough,’’ said consider was laid on the table. (c) ADDITIONAL FUNDING.—Section 611 of Timothy J. Roemer, a former Indiana con- f that Act (6 U.S.C. 101 note; 116 Stat. 2413) is gressman who is one of five Democrats on PROVIDING FOR CONSIDERATION amended— the 10-member commission. (1) by redesignating subsection (b) as sub- Mr. Roemer said that former President Bill OF H.R. 3752, COMMERCIAL SPACE section (c); Clinton and former Vice President Al Gore LAUNCH AMENDMENTS ACT OF (2) by inserting after subsection (a) the fol- had agreed to meet privately with the full bi- 2004 lowing new subsection (b): partisan commission, and that Samuel R. Mr. REYNOLDS. Mr. Speaker, by di- ‘‘(b) ADDITIONAL FUNDING.—In addition to Berger, Ms. Rice’s predecessor, would testify rection of the Committee on Rules, I the amounts made available to the Commis- in public. call up House Resolution 546 and ask sion under subsection (a) and under chapter ‘‘It’s very important that we treat both the 2 of title II of the Emergency Wartime Sup- Bush and the Clinton administration the for its immediate consideration. plemental Appropriations Act, 2003 (Public same,’’ he said. The Clerk read the resolution, as fol- Law 108–11; 117 Stat. 591), of the amounts ap- The White House has declined to discuss lows: propriated for the programs and activities of details of the limitations it has sought on H. RES. 546 the Federal Government for fiscal year 2004 the interviews with Mr. Bush and Mr. Che- Resolved, That at any time after the adop- that remain available for obligation, not ney but has said the administration wants to tion of this resolution the Speaker may, pur- more than $1,000,000 shall be available for cooperate fully with the commission, known suant to clause 2(b) of rule XVIII, declare the transfer to the Commission for purposes of formally as the National Commission on Ter- House resolved into the Committee of the the activities of the Commission under this rorist Attacks Upon the United States. Whole House on the state of the Union for title.’’; and A spokesman for the National Security consideration of the bill (H.R. 3752) to pro- (3) in subsection (c), as so redesignated, by Council, Sean McCormack, said Tuesday mote the development of the emerging com- striking ‘‘subsection (a)’’ and inserting ‘‘this that the White House believed it would be in- mercial human space flight industry, to ex- section’’. appropriate for Ms. Rice to appear at a pub- tend the liability indemnification regime for

VerDate jul 14 2003 03:46 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00031 Fmt 4634 Sfmt 0634 E:\CR\FM\K03MR7.050 H03PT1 H786 CONGRESSIONAL RECORD — HOUSE March 3, 2004 the commercial space transportation indus- human space flight to the FAA’s Office had lasting effects on our space industry, to authorize appropriations for the Of- of the Associate Administrator for try. fice of the Associate Administrator for Com- Commercial Space Transportation. During World War II, Dr. Goddard mercial Space Transportation, and for other This will clearly define the structure was Director of Research for the Navy purposes. The first reading of the bill shall be dispensed with. Points of order against to allow flights of suborbital rockets Department’s Bureau of Aeronautics. consideration of the bill for failure to com- carrying human beings. Centrally lo- In that position he developed jet-as- ply with clause 4(a) of rule XIII are waived. cating this within the Administrator’s sisted takeoff and variable-thrust liq- General debate shall be confined to the bill office will also expedite the issuance of uid propellant rockets at Annapolis, and shall not exceed one hour equally di- permits and licenses for commercial Maryland and Roswell, New Mexico. vided and controlled by the chairman and space travel. The Administrator will Following his service as a researcher to ranking minority member of the Committee also be charged with drafting a policy our Nation in World War II, Dr. God- on Science. After general debate the bill for crews relating to training and med- dard served a year as Director of the shall be considered for amendment under the five-minute rule. The bill shall be considered ical condition prior to space travel. American Rocket Society before pass- as read. No amendment to the bill shall be in Mr. Speaker, H.R. 3752 is a non- ing away on August 10, 1945 in Balti- order except those printed in the portion of controversial bill that moved easily more, Maryland. the Congressional Record designated for that through the committee process and is As is the case with innovation, many purpose in clause 8 of rule XVIII and except necessary to support this emerging people did not see the potential that pro forma amendments for the purpose of de- space industry. I urge my colleagues to Dr. Goddard’s research would have on bate. Each amendment so printed may be of- support this rule and the underlying future space travel. Indeed, a New York fered only by the Member who caused it to legislation. Times editorial in January 1920 stated be printed or his designee and shall be con- Mr. Speaker, I reserve the balance of sidered as read. At the conclusion of consid- that Dr. Goddard’s assertions of future eration of the bill for amendment the Com- my time. space travel lacked the knowledge la- mittee shall rise and report the bill to the Mr. MCGOVERN. Mr. Speaker, I dled out daily in high schools. Dr. God- House with such amendments as may have thank the gentleman from New York dard countered by saying that every vi- been adopted. The previous question shall be for yielding me the customary 30 min- sion is a joke until the first man ac- considered as ordered on the bill and amend- utes and I yield myself such time as I complishes it. Once realized, it be- ments thereto to final passage without inter- may consume. comes commonplace. Of course, 49 vening motion except one motion to recom- Mr. Speaker, I want to recognize years later on the eve of man’s first mit with or without instructions. Chairman BOEHLERT, Ranking Member walk on the Moon in 1969, the New The SPEAKER pro tempore. The gen- GORDON and the entire Science Com- York Times printed a correction to tleman from New York (Mr. REYNOLDS) mittee’s hard work in crafting this leg- their editorial by stating that it is now is recognized for 1 hour. islation. While I am disappointed that definitely established that a rocket can Mr. REYNOLDS. Mr. Speaker, for the the Committee on Rules did not grant function in a vacuum as well as in an purpose of debate only, I yield the cus- an open rule today, it is refreshing to atmosphere. The Times regrets the tomary 30 minutes to the gentleman actually consider a truly bipartisan error. That was in their editorial. from Massachusetts (Mr. MCGOVERN), bill in this body. Since the start of the space program, pending which I yield myself such time Mr. Speaker, H.R. 3752 will promote we have seen Americans walk on the as I may consume. During consider- the development of the emerging com- Moon, we have started to construct an ation of this resolution, all time yield- mercial human space flight, extend the international space station, and we ed is for the purpose of debate only. government indemnification until 2007, currently have unmanned rovers ex- (Mr. REYNOLDS asked and was and allow the FAA to issue experi- ploring the surface of Mars. And now, given permission to revise and extend mental launch permits. Mr. Speaker, with the passage of this legislation, his remarks.) the idea of space travel is extremely commercial space travel is one step Mr. REYNOLDS. Mr. Speaker, House exciting and it holds a special place in closer to reality. Resolution 546 is a modified open rule the heart of Massachusetts’ Third Con- Mr. Speaker, while I am disappointed that provides for consideration of H.R. gressional District. My hometown of that the Committee on Rules would 3752, the Commercial Space Launch Worcester, Massachusetts, is the birth- refer a restrictive rule for this bipar- Amendments Act of 2004. The rule pro- place of Dr. Robert Goddard, the father tisan bill, I keep hoping that one of vides 1 hour of general debate and of modern rocketry. At the age of 17, these days the rhetoric of my friends makes in order under the 5-minute rule Dr. Goddard had a vision of space trav- on the majority side will be actually any amendments preprinted in the el while in his family’s backyard that matched by their actions, but I guess CONGRESSIONAL RECORD. The rule also would remain with him the rest of his we are going to have to wait for that provides one motion to recommit with life. In his autobiography, Goddard day. But having said that, I will not or without instructions. wrote: oppose the rule and I support the un- Mr. Speaker, recent discoveries in ‘‘On the afternoon of October 19, 1899, derlying legislation. the space program have reinvigorated I climbed a tall cherry tree. It was one Mr. Speaker, I yield back the balance our Nation’s enthusiasm for space trav- of the quiet, colorful afternoons of of my time. el and discovery and, while in its in- sheer beauty which we have in October Mr. REYNOLDS. Mr. Speaker, I yield fancy, commercial human space flight in New England, and as I looked to- back the balance of my time, and I is becoming a new and exciting indus- wards the fields at the east, I imagined move the previous question on the res- try. As this concept continues to ma- how wonderful it would be to make olution. ture, there is hope of regular and safe some device which had even the possi- The previous question was ordered. round trips into space for paying cus- bility of ascending to Mars. I was a dif- The resolution was agreed to. tomers. Eventually these trips will also ferent boy when I descended from the A motion to reconsider was laid on serve as an important tool for inves- tree from when I ascended for existence the table. tigation into commercial remote sens- at last seemed very purposive.’’ f ing and microgravity and atmospheric Mr. Speaker, in 1926 Dr. Goddard, as research. Currently there is no clear, Director of the physical laboratories at ANNOUNCEMENT BY THE SPEAKER defined structure to preside over this Clark University, went on to launch PRO TEMPORE emerging new concept. Failing to pro- the first liquid propellant rocket at The SPEAKER pro tempore. Pursu- vide a precise and consistent form of Auburn, Massachusetts, which was the ant to clause 8 of rule XX, proceedings management will negatively affect the catalyst for our modern space industry. will resume on four motions to suspend industry’s ability to plan for its future, Throughout his lifetime, Dr. Goddard the rules previously postponed. Votes compete with international providers was at the forefront of science and will be taken in the following order: and attract financing from investors. space research. As a Professor at Clark H. Res. 530, by the yeas and nays; The underlying bill creates a process University and Princeton University, H.R. 912, by the yeas and nays; for all commercial space flight and Dr. Goddard devoted his life to the H.R. 3389, by the yeas and nays; grants authority over commercial growth of rockets and his research has H.R. 1417, by the yeas and nays.

VerDate jul 14 2003 01:33 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00032 Fmt 4634 Sfmt 0634 E:\CR\FM\A03MR7.015 H03PT1 March 3, 2004 CONGRESSIONAL RECORD — HOUSE H787 The first electronic vote will be con- Johnson, E. B. Moore Scott (GA) the resolution, as amended, was agreed Johnson, Sam Moran (KS) Scott (VA) ducted as a 15-minute vote. Remaining Jones (NC) Moran (VA) Sensenbrenner to. electronic votes will be conducted as 5- Jones (OH) Murphy Serrano The result of the vote was announced minute votes. Kanjorski Murtha Sessions as above recorded. Kaptur Musgrave Shadegg The title of the resolution was f Keller Myrick Shaw Kelly Nadler Shays amended so as to read: ‘‘Resolution Kennedy (MN) Napolitano Sherman urging the appropriate representative URGING INTRODUCTION OF RESO- Kennedy (RI) Neal (MA) Sherwood LUTION CALLING ON CHINA TO of the United States to the 60th Ses- Kildee Nethercutt Shimkus sion of the United Nations Commission END ITS HUMAN RIGHTS VIOLA- Kilpatrick Neugebauer Shuster TIONS Kind Ney Simmons on Human Rights to introduce a reso- King (IA) Northup Simpson lution calling upon the Government of The SPEAKER pro tempore. The un- King (NY) Norwood Skelton the People’s Republic of China to end finished business is the question of sus- Kingston Nunes Slaughter Kirk Nussle Smith (NJ) its human rights violations in China, pending the rules and agreeing to the Kleczka Oberstar Smith (TX) and for other purposes.’’. resolution, H. Res. 530, as amended. Kline Obey Smith (WA) A motion to reconsider was laid on The Clerk read the title of the resolu- Knollenberg Olver Snyder Kolbe Osborne Solis the table. tion. LaHood Ose Souder Stated for: The SPEAKER pro tempore. The Lampson Otter Spratt Mr. STEARNS: Mr. Speaker, on rollcall No. question is on the motion offered by Langevin Owens Stark 34 I was unavoidably detained. Had I been the gentleman from New Jersey (Mr. Larsen (WA) Oxley Stenholm Larson (CT) Pallone Strickland present, I would have voted ‘‘yea.’’ SMITH) that the House suspend the Latham Pascrell Stupak Mr. FILNER. Mr. Speaker, on rollcall No. 34, rules and agree to the resolution, H. LaTourette Pastor Sullivan due to urgent constituent support commit- Res. 530, as amended, on which the yeas Leach Payne Sweeney Lee Pearce Tancredo ments in my congressional district, I missed and nays are ordered. Levin Pelosi Tanner the vote. Had I been present, I would have The vote was taken by electronic de- Lewis (CA) Peterson (MN) Tauscher voted ‘‘yea.’’ vice, and there were—yeas 402, nays 2, Lewis (GA) Peterson (PA) Tauzin not voting 29, as follows: Lewis (KY) Petri Taylor (MS) f Linder Pickering Taylor (NC) [Roll No. 34] Lipinski Pitts Terry ANNOUNCEMENT BY THE SPEAKER YEAS—402 LoBiondo Platts Thomas PRO TEMPORE Lofgren Pombo Thompson (CA) Abercrombie Case Franks (AZ) Lowey Pomeroy Thompson (MS) The SPEAKER pro tempore. Pursu- Ackerman Chabot Frelinghuysen Lucas (KY) Porter Thornberry ant to clause 8, rule XX, the remainder Alexander Chandler Frost Lucas (OK) Portman Tiahrt of this series will be conducted as 5- Allen Clay Gallegly Lynch Price (NC) Tiberi Andrews Clyburn Garrett (NJ) Majette Pryce (OH) Tierney minute votes. Bachus Coble Gephardt Maloney Putnam Towns f Baird Cole Gerlach Manzullo Quinn Turner (OH) Baker Collins Gibbons Markey Radanovich Turner (TX) CHARLES ‘‘PETE’’ CONRAD Baldwin Conyers Gilchrest Marshall Rahall Udall (CO) Ballance Cooper Gillmor Matheson Ramstad Udall (NM) ASTRONOMY AWARDS ACT Ballenger Costello Gingrey Matsui Rangel Upton The SPEAKER pro tempore. The Barrett (SC) Cox Gonzalez McCarthy (MO) Regula Van Hollen Bartlett (MD) Cramer Goode McCarthy (NY) Rehberg Vela´ zquez pending business is the question of sus- Barton (TX) Crane Goodlatte McCollum Renzi Visclosky pending the rules and passing the bill, Bass Crenshaw Gordon McCrery Reynolds Vitter H.R. 912, as amended. Beauprez Crowley Goss McGovern Rogers (AL) Walden (OR) Becerra Cubin Granger McHugh Rogers (KY) Walsh The Clerk read the title of the bill. Bell Culberson Graves McInnis Rogers (MI) Wamp The SPEAKER pro tempore. The Bereuter Cummings Green (TX) McIntyre Rohrabacher Waters question is on the motion offered by Berkley Cunningham Green (WI) McKeon Ros-Lehtinen Watson the gentleman from California (Mr. Berman Davis (AL) Greenwood McNulty Ross Watt Biggert Davis (FL) Grijalva Meehan Rothman Waxman ROHRABACHER) that the House suspend Bilirakis Davis (IL) Gutierrez Meek (FL) Roybal-Allard Weiner the rules and pass the bill, H.R. 912, as Bishop (GA) Davis (TN) Gutknecht Meeks (NY) Ruppersberger Weldon (FL) amended, on which the yeas and nays Bishop (NY) Davis, Jo Ann Hall Menendez Rush Weller Bishop (UT) Davis, Tom Harman Mica Ryan (OH) Wexler are ordered. Blackburn Deal (GA) Harris Michaud Ryan (WI) Whitfield This will be a 5-minute vote. Blumenauer DeFazio Hart Millender- Ryun (KS) Wicker The vote was taken by electronic de- Blunt DeGette Hastings (FL) McDonald Sabo Wilson (NM) vice, and there were—yeas 404, nays 1, Boehlert Delahunt Hastings (WA) Miller (FL) Sanchez, Loretta Wilson (SC) Boehner DeLauro Hayes Miller (MI) Sanders Wolf not voting 28, as follows: Bonilla DeLay Hayworth Miller (NC) Sandlin Wu [Roll No. 35] Bonner DeMint Hefley Miller, Gary Saxton Wynn Bono Deutsch Hensarling Miller, George Schakowsky Young (AK) YEAS—404 Boozman Diaz-Balart, L. Herger Mollohan Schrock Young (FL) Abercrombie Blackburn Cantor Boswell Diaz-Balart, M. Hill Ackerman Blumenauer Capito Boucher Dicks Hinchey NAYS—2 Akin Blunt Capps Boyd Dingell Hobson McDermott Paul Alexander Boehlert Capuano Bradley (NH) Doolittle Hoeffel Allen Boehner Cardin Brady (PA) Doyle Hoekstra NOT VOTING—29 Andrews Bonilla Cardoza Brady (TX) Dreier Holden Aderholt Filner Rodriguez Bachus Bonner Carson (IN) Brown (OH) Duncan Holt Akin Frank (MA) Royce Baird Bono Carson (OK) Brown (SC) Dunn Honda Baca Hinojosa Sa´ nchez, Linda Baker Boozman Carter Brown, Corrine Edwards Hostettler Berry Hooley (OR) T. Baldwin Boswell Case Brown-Waite, Ehlers Houghton Calvert Kucinich Schiff Ballance Boucher Chabot Ginny Emanuel Hoyer Castle Lantos Smith (MI) Ballenger Boyd Chandler Burgess Emerson Hulshof Chocola McCotter Stearns Barrett (SC) Bradley (NH) Clay Burns Engel Hunter Davis (CA) Ortiz Toomey Bartlett (MD) Brady (PA) Clyburn Burr English Hyde Doggett Pence Weldon (PA) Barton (TX) Brady (TX) Coble Burton (IN) Eshoo Inslee Dooley (CA) Reyes Woolsey Bass Brown (OH) Cole Buyer Etheridge Isakson Beauprez Brown (SC) Collins Camp Evans Israel ANNOUNCEMENT BY THE SPEAKER PRO TEMPORE Becerra Brown, Corrine Conyers Cannon Everett Issa The SPEAKER pro tempore (Mr. Bell Brown-Waite, Cooper Cantor Farr Istook SIMPSON) (during the vote). Members Bereuter Ginny Costello Capito Fattah Jackson (IL) Berkley Burgess Cox Capps Feeney Jackson-Lee are advised 2 minutes remain in this Berman Burns Cramer Capuano Ferguson (TX) vote. Biggert Burr Crane Cardin Flake Jefferson Bilirakis Burton (IN) Crenshaw Cardoza Foley Jenkins b 1408 Bishop (GA) Buyer Crowley Carson (IN) Forbes John So (two-thirds having voted in favor Bishop (NY) Camp Cubin Carson (OK) Ford Johnson (CT) Bishop (UT) Cannon Culberson Carter Fossella Johnson (IL) thereof) the rules were suspended and

VerDate jul 14 2003 03:46 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00033 Fmt 4634 Sfmt 0634 E:\CR\FM\K03MR7.055 H03PT1 H788 CONGRESSIONAL RECORD — HOUSE March 3, 2004 Cummings Jackson (IL) Obey Tierney Vitter Wexler Burns Grijalva McKeon Cunningham Jackson-Lee Olver Towns Walden (OR) Whitfield Burr Gutierrez McNulty Davis (AL) (TX) Osborne Turner (OH) Walsh Wicker Burton (IN) Gutknecht Meehan Davis (FL) Jefferson Ose Turner (TX) Wamp Wilson (NM) Buyer Hall Meek (FL) Davis (IL) Jenkins Otter Udall (CO) Waters Wilson (SC) Camp Harman Meeks (NY) Davis (TN) John Owens Udall (NM) Watson Wolf Cannon Harris Menendez Davis, Jo Ann Johnson (CT) Oxley Upton Watt Wu Cantor Hart Mica Davis, Tom Johnson (IL) Pallone Van Hollen Waxman Wynn Capito Hastings (FL) Michaud Deal (GA) Johnson, E. B. Pascrell Vela´ zquez Weiner Young (AK) Capps Hastings (WA) Millender- DeFazio Johnson, Sam Pastor Visclosky Weller Young (FL) Capuano Hayes McDonald DeGette Jones (NC) Payne Cardin Hayworth Miller (FL) Delahunt Jones (OH) Pearce NAYS—1 Cardoza Hefley Miller (MI) DeLauro Kanjorski Pelosi Paul Carson (IN) Hensarling Miller (NC) DeLay Kaptur Peterson (MN) Carson (OK) Herger Miller, Gary DeMint Keller Petri NOT VOTING—28 Carter Hill Miller, George Deutsch Kelly Pickering Aderholt Hinojosa Rodriguez Case Hinchey Mollohan Diaz-Balart, L. Kennedy (MN) Pitts Baca Hooley (OR) Royce Chabot Hobson Moore Diaz-Balart, M. Kennedy (RI) Platts Berry King (IA) Schiff Chandler Hoeffel Moran (KS) Clay Hoekstra Moran (VA) Dicks Kildee Pombo Calvert Kucinich Smith (MI) Clyburn Holden Murphy Dingell Kilpatrick Pomeroy Castle Lantos Toomey Coble Holt Murtha Doolittle Kind Porter Chocola McCotter Weldon (FL) Doyle King (NY) Portman Davis (CA) Ortiz Cole Honda Musgrave Weldon (PA) Collins Hostettler Myrick Dreier Kingston Price (NC) Doggett Pence Woolsey Duncan Kirk Pryce (OH) Dooley (CA) Peterson (PA) Conyers Houghton Nadler Dunn Kleczka Putnam Filner Reyes Cooper Hoyer Napolitano Edwards Kline Quinn Costello Hulshof Neal (MA) Ehlers Knollenberg Radanovich ANNOUNCEMENT BY THE SPEAKER PRO TEMPORE Cox Hunter Nethercutt Emanuel Kolbe Rahall The SPEAKER pro tempore (Mr. Cramer Hyde Neugebauer Crane Inslee Ney Emerson LaHood Ramstad BASS) (during the vote). Members are Engel Lampson Rangel Crenshaw Isakson Northup English Langevin Regula advised 2 minutes remain in this vote. Crowley Israel Norwood Cubin Issa Nunes Eshoo Larsen (WA) Rehberg Culberson Istook Nussle Etheridge Larson (CT) Renzi b 1416 Cummings Jackson (IL) Oberstar Evans Latham Reynolds So (two-thirds having voted in favor Cunningham Jackson-Lee Obey Everett LaTourette Rogers (AL) Davis (AL) (TX) Olver Farr Leach Rogers (KY) thereof) the rules were suspended and Davis (FL) Jefferson Osborne Fattah Lee Rogers (MI) the bill, as amended, was passed. Davis (IL) Jenkins Ose Feeney Levin Rohrabacher The result of the vote was announced Davis (TN) John Otter Ferguson Lewis (CA) Ros-Lehtinen as above recorded. Davis, Jo Ann Johnson (CT) Owens Flake Lewis (GA) Ross Davis, Tom Johnson (IL) Oxley Foley Lewis (KY) Rothman A motion to reconsider was laid on Deal (GA) Johnson, E. B. Pallone Linder Forbes Roybal-Allard the table. DeFazio Johnson, Sam Pascrell Ford Lipinski Ruppersberger Stated for: DeGette Jones (NC) Pastor Fossella LoBiondo Rush Delahunt Jones (OH) Paul Frank (MA) Lofgren Ryan (OH) Mr. FILNER. Mr. Speaker, on rollcall No. 35, due to urgent constituent support commit- DeLauro Kanjorski Payne Franks (AZ) Lowey Ryan (WI) DeLay Kaptur Pearce Frelinghuysen Lucas (KY) Ryun (KS) ments in my Congressional District, I missed DeMint Keller Pelosi Frost Lucas (OK) Sabo the vote. Had I been present, I would have Deutsch Kelly Peterson (MN) Lynch ´ Gallegly Sanchez, Linda voted ‘‘yea.’’ Diaz-Balart, L. Kennedy (MN) Peterson (PA) Garrett (NJ) Majette T. Diaz-Balart, M. Kennedy (RI) Petri Gephardt Maloney Sanchez, Loretta Mr. WELDON of Florida. Mr. Speaker, on Dicks Kildee Pickering Gerlach Manzullo Sanders rollcall No. 35, I was unavoidably detained. Dingell Kilpatrick Pitts Gibbons Markey Sandlin Had I been present, I would have voted ‘‘yea.’’ Doolittle Kind Platts Gilchrest Marshall Saxton Doyle King (IA) Pombo Gillmor Matheson Schakowsky f Dreier King (NY) Pomeroy Gingrey Matsui Schrock Duncan Kingston Porter Gonzalez McCarthy (MO) Scott (GA) PERMITTING MALCOLM BALDRIGE Dunn Kirk Portman Goode McCarthy (NY) Scott (VA) NATIONAL QUALITY AWARDS TO Edwards Kleczka Price (NC) Goodlatte McCollum Sensenbrenner Ehlers Kline Pryce (OH) Gordon McCrery Serrano NONPROFIT ORGANIZATIONS Emanuel Knollenberg Putnam Goss McDermott Sessions The SPEAKER pro tempore. The Emerson Kolbe Quinn Granger McGovern Shadegg Engel LaHood Radanovich Graves McHugh Shaw pending business is the question of sus- English Lampson Rahall Green (TX) McInnis Shays pending the rules and passing the bill, Eshoo Langevin Ramstad Green (WI) McIntyre Sherman H.R. 3389. Etheridge Larsen (WA) Rangel Greenwood McKeon Sherwood Evans Larson (CT) Regula Grijalva McNulty Shimkus The Clerk read the title of the bill. Everett Latham Rehberg Gutierrez Meehan Shuster The SPEAKER pro tempore. The Farr LaTourette Renzi Gutknecht Meek (FL) Simmons question is on the motion offered by Fattah Leach Reynolds Hall Meeks (NY) Simpson the gentleman from Pennsylvania (Ms. Feeney Lee Rogers (AL) Harman Menendez Skelton Ferguson Levin Rogers (KY) Harris Mica Slaughter HART) that the House suspend the rules Flake Lewis (CA) Rogers (MI) Hart Michaud Smith (NJ) and pass the bill, H.R. 3389, on which Foley Lewis (GA) Rohrabacher Hastings (FL) Millender- Smith (TX) the yeas and nays are ordered. Forbes Lewis (KY) Ros-Lehtinen Hastings (WA) McDonald Smith (WA) Ford Linder Ross Hayes Miller (FL) Snyder This will be a 5-minute vote. Fossella Lipinski Rothman Hayworth Miller (MI) Solis The vote was taken by electronic de- Frank (MA) LoBiondo Roybal-Allard Hefley Miller (NC) Souder vice, and there were—yeas 408, nays 0, Franks (AZ) Lofgren Ruppersberger Hensarling Miller, Gary Spratt not voting 25, as follows: Frelinghuysen Lowey Rush Herger Miller, George Stark Frost Lucas (KY) Ryan (OH) Hill Mollohan Stearns [Roll No. 36] Gallegly Lucas (OK) Ryan (WI) Hinchey Moore Stenholm YEAS—408 Garrett (NJ) Lynch Ryun (KS) Hobson Moran (KS) Strickland Gephardt Majette Sabo Hoeffel Moran (VA) Stupak Abercrombie Beauprez Bonilla Gerlach Maloney Sa´ nchez, Linda Hoekstra Murphy Sullivan Ackerman Becerra Bonner Gibbons Manzullo T. Holden Murtha Sweeney Akin Bell Bono Gilchrest Markey Sanchez, Loretta Holt Musgrave Tancredo Alexander Bereuter Boozman Gillmor Marshall Sanders Honda Myrick Tanner Allen Berkley Boswell Gingrey Matheson Sandlin Hostettler Nadler Tauscher Andrews Berman Boucher Gonzalez Matsui Saxton Houghton Napolitano Tauzin Bachus Biggert Boyd Goode McCarthy (MO) Schakowsky Hoyer Neal (MA) Taylor (MS) Baird Bilirakis Bradley (NH) Goodlatte McCarthy (NY) Schrock Hulshof Nethercutt Taylor (NC) Baker Bishop (GA) Brady (PA) Gordon McCollum Scott (GA) Hunter Neugebauer Terry Baldwin Bishop (NY) Brady (TX) Goss McCrery Scott (VA) Hyde Ney Thomas Ballance Bishop (UT) Brown (OH) Granger McDermott Sensenbrenner Inslee Northup Thompson (CA) Ballenger Blackburn Brown (SC) Graves McGovern Serrano Isakson Norwood Thompson (MS) Barrett (SC) Blumenauer Brown, Corrine Green (TX) McHugh Sessions Israel Nunes Thornberry Bartlett (MD) Blunt Brown-Waite, Green (WI) McInnis Shadegg Issa Nussle Tiahrt Barton (TX) Boehlert Ginny Greenwood McIntyre Shaw Istook Oberstar Tiberi Bass Boehner Burgess

VerDate jul 14 2003 03:56 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00034 Fmt 4634 Sfmt 0634 E:\CR\FM\A03MR7.022 H03PT1 March 3, 2004 CONGRESSIONAL RECORD — HOUSE H789 Shays Tancredo Vitter Boehlert Garrett (NJ) Lynch Ryun (KS) Smith (WA) Turner (TX) Sherman Tanner Walden (OR) Boehner Gephardt Majette Sabo Snyder Udall (CO) Sherwood Tauscher Walsh Bonilla Gerlach Maloney Sa´ nchez, Linda Solis Udall (NM) Shimkus Tauzin Wamp Bonner Gibbons Manzullo T. Souder Upton Shuster Taylor (MS) Waters Bono Gilchrest Markey Sanchez, Loretta Spratt Van Hollen Simmons Taylor (NC) Watson Boozman Gillmor Marshall Sanders Stark Vela´ zquez Simpson Terry Watt Boswell Gingrey Matheson Sandlin Stearns Visclosky Skelton Thomas Waxman Boucher Gonzalez Matsui Saxton Stenholm Vitter Slaughter Thompson (CA) Schakowsky Strickland Weiner Boyd Goode McCarthy (MO) Walden (OR) Smith (NJ) Thompson (MS) Schrock Stupak Weldon (FL) Bradley (NH) Goodlatte McCarthy (NY) Walsh Smith (TX) Thornberry Brady (PA) Gordon McCollum Scott (GA) Sullivan Weller Wamp Smith (WA) Tiahrt Scott (VA) Sweeney Brady (TX) Goss McCrery Waters Snyder Tiberi Wexler Sensenbrenner Tancredo Brown (SC) Granger McDermott Watson Solis Tierney Whitfield Serrano Tanner Brown, Corrine Graves McGovern Watt Souder Towns Wicker Sessions Tauscher Brown-Waite, Green (TX) McHugh Waxman Spratt Turner (OH) Wilson (NM) Ginny Green (WI) McInnis Shadegg Tauzin Weiner Stark Turner (TX) Wilson (SC) Burgess Greenwood McIntyre Shaw Taylor (MS) Weldon (FL) Stearns Udall (CO) Wolf Burns Grijalva McKeon Shays Taylor (NC) Wexler Stenholm Udall (NM) Wu Burr Gutierrez McNulty Sherman Terry Whitfield Strickland Upton Wynn Burton (IN) Gutknecht Meehan Sherwood Thomas Wicker Stupak Van Hollen Young (AK) Buyer Hall Meek (FL) Shimkus Thompson (CA) Wilson (NM) Sullivan Vela´ zquez Young (FL) Camp Harman Meeks (NY) Shuster Thompson (MS) Wilson (SC) Sweeney Visclosky Cannon Harris Menendez Simmons Thornberry Simpson Tiahrt Wolf NOT VOTING—25 Cantor Hart Mica Capito Hastings (FL) Michaud Skelton Tiberi Wu Aderholt Filner Rodriguez Capps Hastings (WA) Millender- Slaughter Tierney Wynn Baca Hinojosa Royce Capuano Hayes McDonald Smith (NJ) Towns Young (AK) Berry Hooley (OR) Schiff Cardin Hayworth Miller (FL) Smith (TX) Turner (OH) Young (FL) Calvert Kucinich Smith (MI) Cardoza Hefley Miller (MI) NOT VOTING—27 Castle Lantos Toomey Carson (IN) Hensarling Miller (NC) Chocola McCotter Weldon (PA) Carson (OK) Herger Miller, Gary Aderholt Dooley (CA) Reyes Davis (CA) Ortiz Woolsey Carter Hill Miller, George Baca Filner Rodriguez Doggett Pence Case Hinchey Mollohan Berry Hinojosa Royce Dooley (CA) Reyes Chabot Hobson Moore Brown (OH) Hooley (OR) Schiff Calvert Kucinich Smith (MI) ANNOUNCEMENT BY THE SPEAKER PRO TEMPORE Chandler Hoeffel Moran (KS) Clay Hoekstra Moran (VA) Castle Lantos Toomey The SPEAKER pro tempore (Mr. Clyburn Holden Murphy Chocola McCotter Weldon (PA) BASS) (during the vote). Members are Coble Holt Murtha Davis (CA) Ortiz Weller Doggett Pence Woolsey reminded that there are 2 minutes re- Cole Honda Musgrave Collins Hostettler Myrick ANNOUNCEMENT BY THE SPEAKER PRO TEMPORE maining in this vote. Conyers Houghton Nadler Cooper Hoyer Napolitano The SPEAKER pro tempore (during b 1426 Costello Hulshof Neal (MA) the vote). Members are advised that 2 So (two-thirds having voted in favor Cox Hunter Nethercutt minutes remain in this vote. Cramer Hyde Neugebauer thereof) the rules were suspended and Crane Inslee Ney the bill was passed. Crenshaw Isakson Northup b 1434 The result of the vote was announced Crowley Israel Norwood So (two-thirds having voted in favor as above recorded. Cubin Issa Nunes Culberson Istook Nussle thereof) the rules were suspended and A motion to reconsider was laid on Cummings Jackson (IL) Oberstar the bill, as amended, was passed. the table. Cunningham Jackson-Lee Obey The result of the vote was announced Stated for: Davis (AL) (TX) Olver Davis (FL) Jefferson Osborne as above recorded. Mr. FILNER. Mr. Speaker, on rollcall No. 36, Davis (IL) Jenkins Ose The title of the bill was amended so due to urgent constituent support commit- Davis (TN) John Otter as to read: ‘‘A bill to amend title 17, ments in my Congressional District, I missed Davis, Jo Ann Johnson (CT) Owens United States Code, to replace copy- the vote. Had I been present, I would have Davis, Tom Johnson (IL) Oxley Deal (GA) Johnson, E. B. Pallone right arbitration royalty panels with voted ‘‘yea’’. DeFazio Johnson, Sam Pascrell Copyright Royalty Judges, and for f DeGette Jones (NC) Pastor other purposes.’’. Delahunt Jones (OH) Paul A motion to reconsider was laid on COPYRIGHT ROYALTY AND DIS- DeLauro Kanjorski Payne DeLay Kaptur Pearce the table. TRIBUTION REFORM ACT OF 2004 DeMint Keller Pelosi Stated for: The SPEAKER pro tempore. The Deutsch Kelly Peterson (MN) Mr. FILNER. Mr. Speaker, on rollcall No. Diaz-Balart, L. Kennedy (MN) Peterson (PA) pending business is the question of sus- Diaz-Balart, M. Kennedy (RI) Petri 37, due to urgent constituent support commit- pending the rules and passing the bill, Dicks Kildee Pickering ments in my Congressional District, I missed H.R. 1417, as amended. Dingell Kilpatrick Pitts the vote. Had I been present, I would have Doolittle Kind Platts The Clerk read the title of the bill. Doyle King (IA) Pombo voted ‘‘yea.’’ The SPEAKER pro tempore. The Dreier King (NY) Pomeroy question is on the motion offered by Duncan Kingston Porter f the gentleman from Wisconsin (Mr. Dunn Kirk Portman Edwards Kleczka Price (NC) PERSONAL EXPLANATION SENSENBRENNER) that the House sus- Ehlers Kline Pryce (OH) pend the rules and pass the bill, H.R. Emanuel Knollenberg Putnam Mr. BACA. Mr. Speaker, on rollcall Nos. 34, 1417, as amended, on which the yeas Emerson Kolbe Quinn Engel LaHood Radanovich 35, 36, and 37, for personal reasons, I was and nays are ordered. English Lampson Rahall unable to be in the chamber when the time This will be a 5-minute vote. Eshoo Langevin Ramstad elapsed on the vote. The vote was taken by electronic de- Etheridge Larsen (WA) Rangel Had I been able to vote, I would have voted vice, and there were—yeas 406, nays 0, Evans Larson (CT) Regula Everett Latham Rehberg ‘‘aye’’ for all four votes. not voting 27, as follows: Farr LaTourette Renzi [Roll No. 37] Fattah Leach Reynolds f Feeney Lee Rogers (AL) YEAS—406 Ferguson Levin Rogers (KY) Abercrombie Ballance Berkley Flake Lewis (CA) Rogers (MI) RECESS Ackerman Ballenger Berman Foley Lewis (GA) Rohrabacher The SPEAKER pro tempore (Mr. Akin Barrett (SC) Biggert Forbes Lewis (KY) Ros-Lehtinen Alexander Bartlett (MD) Bilirakis Ford Linder Ross BASS). Pursuant to clause 12(a) of rule Allen Barton (TX) Bishop (GA) Fossella Lipinski Rothman I, the Chair declares the House in re- Andrews Bass Bishop (NY) Frank (MA) LoBiondo Roybal-Allard cess subject to the call of the Chair. Bachus Beauprez Bishop (UT) Franks (AZ) Lofgren Ruppersberger Accordingly (at 2 o’clock and 32 min- Baird Becerra Blackburn Frelinghuysen Lowey Rush Baker Bell Blumenauer Frost Lucas (KY) Ryan (OH) utes p.m.), the House stood in recess Baldwin Bereuter Blunt Gallegly Lucas (OK) Ryan (WI) subject to the call of the Chair.

VerDate jul 14 2003 02:20 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00035 Fmt 4634 Sfmt 0634 E:\CR\FM\A03MR7.023 H03PT1 H790 CONGRESSIONAL RECORD — HOUSE March 3, 2004 b 1608 In section 6(a), strike ‘‘Except as’’ and all subparagraph (B) may not exceed $100, and of that follows through the end of the sentence a patent application described in clause (iii) AFTER RECESS and insert ‘‘Except as otherwise provided in of subparagraph (B) may not exceed $300. The The recess having expired, the House this Act and this section, this Act and the Director may not increase any such fee by was called to order by the Speaker pro amendments made by this Act shall take ef- more than 20 percent in each of the next 3 1- fect on October 1, 2004, or on the date of the year periods, and the Director may not in- tempore (Mr. LAHOOD) at 4 o’clock and enactment of this Act, whichever occurs crease any such fee thereafter.’’. 8 minutes p.m. later.’’. f f Page 12, strike lines 17 through 20 and insert the following: PROVIDING FOR CONSIDERATION GENERAL LEAVE (d) ADJUSTMENTS.— OF H.R. 1561, UNITED STATES (1) IN GENERAL.—Section 41(f) of title 35, Mr. LINDER. Mr. Speaker, I ask PATENT AND TRADEMARK FEE United States Code, shall apply to the fees MODERNIZATION ACT OF 2003 unanimous consent that all Members established under the amendments made by may have 5 legislative days within this section, beginning in fiscal year 2005. Mr. LINDER. Mr. Speaker, by direc- which to revise and extend their re- (2) CONFORMING AMENDMENT.—Effective Oc- tion of the Committee on Rules, I call marks and include extraneous material tober 1, 2004, section 41(f) of title 35, United up House Resolution 547 and ask for its on S. 2136. States Code, is amended by striking ‘‘(a) and immediate consideration. The SPEAKER pro tempore. Is there (b)’’ and inserting ‘‘(a), (b), and (d)’’. The Clerk read the resolution, as fol- objection to the request of the gen- Page 11, add the following after line 24: lows: ‘‘(F) The Director shall require that any H. RES. 547 tleman from Georgia? search by a qualified search authority that is There was no objection. a commercial entity is conducted in the Resolved, That at any time after the adoption of this resolution the Speaker may, pur- f United States by persons that— ‘‘(i) if individuals, are United States citi- suant to clause 2(b) of rule XVIII, declare the MAKING IN ORDER AMENDMENT zens; and House resolved into the Committee of the IN LIEU OF AMENDMENT PRINT- ‘‘(ii) if business concerns, are organized Whole House on the state of the Union for under the laws of the United States or any consideration of the bill (H.R. 1561) to amend ED IN HOUSE REPORT 108–431 title 35, United States Code, with respect to State and employ United States citizens to DURING CONSIDERATION OF H.R. patent fees, and for other purposes. The first perform the searches. 1561, UNITED STATES PATENT reading of the bill shall be dispensed with. ‘‘(G) A search of an application that is the General debate shall be confined to the bill AND TRADEMARK FEE MOD- subject of a secrecy order under section 181 and shall not exceed one hour equally di- ERNIZATION ACT OF 2003 or otherwise involves classified information vided and controlled by the chairman and may only be conducted by Office personnel. Mr. LINDER. Mr. Speaker, I ask ranking minority member of the Committee ‘‘(H) A qualified search authority that is a unanimous consent that the amend- on the Judiciary. After general debate the commercial entity may not conduct a search ment that I have placed at the desk be bill shall be considered for amendment under of a patent application if the entity has any the five-minute rule. It shall be in order to considered as the amendment printed direct or indirect financial interest in any in House Report 108–431 and numbered 1 consider as an original bill for the purpose of patent or in any pending or imminent appli- amendment under the five-minute rule the and that the amendment be considered cation for patent filed or to be filed in the as read for purposes of this unanimous amendment in the nature of a substitute rec- Patent and Trademark Office. ommended by the Committee on the Judici- Page 12, insert the following after line 20 consent request. ary now printed in the bill. The committee and redesignate the succeeding subsection The SPEAKER pro tempore. Is there amendment in the nature of a substitute accordingly: objection to the request of the gen- shall be considered as read. All points of (e) FEES FOR SMALL ENTITIES.—Section order against the committee amendment in tleman from Georgia? 41(h) of title 35, United States Code, is the nature of a substitute are waived. No There was no objection. amended— amendment to the committee amendment in The text of the amendment is as fol- (1) in paragraph (1), by striking ‘‘Fees the nature of a substitute shall be in order lows: charged under subsection (a) or (b)’’ and in- except those printed in the report of the serting ‘‘Subject to paragraph (3), fees AMENDMENT TO H.R. 1561, AS REPORTED, OF- Committee on Rules accompanying this res- charged under subsections (a), (b), and FERED BY MR. SENSENBRENNER OF WIS- olution. Each such amendment may be of- (d)(1)’’; and CONSIN fered only in the order printed in the report, (2) by adding at the end the following new Strike section 5 and insert the following: may be offered only by a Member designated paragraph: in the report, shall be considered as read, SEC. 5. PATENT AND TRADEMARK FUNDING. ‘‘(3) The fee charged under subsection shall be debatable for the time specified in Section 42(c) of title 35, United States (a)(1)(A) shall be reduced by 75 percent with the report equally divided and controlled by Code, is amended— respect to its application to any entity to the proponent and an opponent, shall not be (1) by striking ‘‘(c)’’ and inserting ‘‘(c)(1)’’; which paragraph (1) applies, if the applica- subject to amendment, and shall not be sub- and tion is filed by electronic means as pre- (2) by adding at the end the following new ject to a demand for division of the question scribed by the Director.’’. in the House or in the Committee of the paragraph: (f) SIZE STANDARDS FOR SMALL ENTITIES.— Whole. All points of order against such ‘‘(2) There is established in the Treasury a (1) STUDY.—The Director, in conjunction amendments are waived. At the conclusion Patent and Trademark Fee Reserve Fund. If with the Administrator of the Small Busi- of consideration of the bill for amendment fee collections by the Patent and Trademark ness Administration and the Chief Counsel the Committee shall rise and report the bill Office for a fiscal year exceed the amount ap- for Advocacy of the Small Business Adminis- to the House with such amendments as may propriated to the Office for that fiscal year, tration, shall conduct a study on the effect have been adopted. Any Member may de- fees collected in excess of the appropriated of patent fees on the ability of small entity mand a separate vote in the House on any amount shall be deposited in the Patent and inventors to file patent applications. Such amendment adopted in the Committee of the Trademark Fee Reserve Fund. After the end study shall examine whether a separate cat- Whole to the bill or to the committee of each fiscal year, the Director shall make egory of reduced patent fees is necessary to amendment in the nature of a substitute. a finding as to whether the fees collected for ensure adequate development of new tech- The previous question shall be considered as that fiscal year exceed the amount appro- nology by small entity inventors. ordered on the bill and amendments thereto priated to the Patent and Trademark Office (2) REPORT.—The Director shall, not later to final passage without intervening motion for that fiscal year. If the amount collected than 6 months after the date of the enact- except one motion to recommit with or with- exceeds the amount appropriated, the Direc- ment of this Act, submit a report on the re- out instructions. tor shall, if the Director determines that sults of the study under paragraph (1) to the there are sufficient funds in the Reserve Committee on the Judiciary and the Com- The SPEAKER pro tempore. The gen- Fund, make payments from the Reserve mittee on Small Business of the House of tleman from Georgia (Mr. LINDER) is Fund to persons who paid patent or trade- Representatives and the Committee on the recognized for 1 hour. mark fees during that fiscal year. The Direc- Judiciary and the Committee on Small Busi- Mr. LINDER. Mr. Speaker, for the tor shall by regulation determine which per- ness and Entrepreneurship of the Senate. purpose of debate only, I yield the cus- sons receive such payments and the amount Page 8, line 3, add the following after the tomary 30 minutes to the gentleman of such payments, except that such pay- period: ‘‘For the 3-year period beginning on from Florida (Mr. HASTINGS), pending ments in the aggregate shall equal the October 1, 2004, the fee for a search by a amount of funds deposited in the Reserve qualified search authority of a patent appli- which I yield myself such time as I Fund during that fiscal year, less the cost of cation described in clause (i), (iv), or (v) of may consume. During consideration of administering the provisions of this para- subparagraph (B) may not exceed $500, of a this resolution, all time yielded is for graph.’’. patent application described in clause (ii) of the purpose of debate only.

VerDate jul 14 2003 02:20 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00036 Fmt 4634 Sfmt 0634 E:\CR\FM\K03MR7.065 H03PT1 March 3, 2004 CONGRESSIONAL RECORD — HOUSE H791 Mr. Speaker, H. Res. 547 is a fair, skyrocket to a backlog of over 1 mil- underrepresented and disadvantaged structured rule that provides for the lion applications by 2008, more than groups. I urge my colleagues to support consideration of H.R. 1561, the U.S. double the current amount, and pend- this amendment. Patent and Trademark Fee Moderniza- ency (as measured from the time of fil- In examining the underlying legislation Act. This rule provides for 1 hour ing) will jump to over 40 months aver- tion, it is becoming increasingly clear of general debate equally divided and age in the next few years. This would that we should not call this bill the controlled by the chairman and rank- represent the highest pendency rates in U.S. Patent and Trademark Fee Mod- ing minority member of the Committee decades.’’ ernization Act. Instead, we should call on the Judiciary. I agree with former Director Rogan’s it what it really is, the Increased Fees H. Res. 547 provides that the amend- account, and I believe that H.R. 1561 on Small Businesses Act of Fiscal Year ment in the nature of a substitute rec- will benefit our Nation in the proc- 2003. ommended by the Committee on the essing of patent and trademark appli- To make a bad bill worse, the major- Judiciary now printed in the bill shall cations. I have always supported the ity is once again seeking to outsource be considered as an original bill for the rights of independent inventors to seek the jobs of Federal employees. Simply purpose of amendment, and shall be protections under Federal patent laws. put, the patent examining and proc- considered as read. The rule waives all Undoubtedly, some of the world’s essing are core governmental functions points of order against the Committee greatest innovations have come from and should be performed by Federal amendment in the nature of a sub- America’s great independent inventors, employees. Yet, my friends in the ma- stitute. including Thomas Edison and Alex- jority are using the bill as another op- H. Res. 547 makes in order only those ander Graham Bell. portunity to fail Federal employees by amendments to the Committee amend- outsourcing their jobs. b 1615 ment in the nature of a substitute Mr. Speaker, Congress must protect which are printed in the Committee on Nevertheless, it is also necessary to the jobs of Federal employees. Like Rules report accompanying the resolu- expedite patent applications to help any workforce, the primary interests of tion. protect small independent inventors. Federal employees lie in opportunities The rule provides that the amend- Mr. Speaker, this rule was approved for reward, professional development ments made in order may be offered by the Committee on Rules last night. and job satisfaction. The United States only in the order printed in the report, I urge my colleagues to support the Government trails behind the private may be offered only by a Member des- rule and the underlying bill. sector when it comes to investing in its ignated in the report, shall be consid- Mr. Speaker, I reserve the balance of employees. When I see bills such as the ered as read, shall be debatable for the my time. underlying legislation, it seems unreal- time specified in the report equally di- Mr. HASTINGS of Florida. Mr. istic to think that change will occur vided and controlled by the proponent Speaker, I yield myself such time as I under this leadership. Perhaps it will and an opponent, shall not be subject may consume, and I thank the gen- take their jobs to be on the line before to amendment, and shall not be subject tleman from Georgia (Mr. LINDER) for we institute change. to a demand for division of the ques- yielding me the time. Mr. Speaker, this bill has many glar- tion in the House or in the Committee Mr. Speaker, I rise today in opposi- ing problems, and as I previously men- of the Whole. tion to the U.S. Patent and Trademark tioned, I oppose the underlying legisla- H. Res. 547 waives all points of order Fee Modernization Act of 2003, as well tion, and I will oppose the rule, and I against the amendments printed in the as the rule providing for its consider- urge my colleagues to do the same. report and provides one motion to re- ation. Mr. Speaker, I reserve the balance of commit with or without instructions. As the majority member of the com- my time. With respect to the underlying legis- mittee previously mentioned, I agree Mr. LINDER. Mr. Speaker, I am lation, H.R. 1561, the U.S. Patent and that the premise of our patent system pleased to yield 4 minutes to the gen- Trademark Fee Modernization Act, lies in its mutual benefit to both the tleman from North Carolina (Mr. represents the beginning of the imple- inventor and our country. With the COBLE). mentation of the revised Strategic constant evolution of science and tech- Mr. COBLE. Mr. Speaker, I thank the Business Plan to transform the Patent nology, spurred by the monetary incen- gentleman from Georgia for yielding and Trademark Office’s operations by tive the U.S. patent system offers to me the time. I appreciate that. improving patent and trademark qual- inventors, new inventions have led to Mr. Speaker, this bill implements the ity and reducing application backlogs new technologies, job creation and im- revised Strategic Business Plan pro- and delays. The bill incorporates a re- provements to our quality of life. In- posed by Director Rogan when he was vised fee schedule previously submitted deed, Congress should be creating legis- at the Patent and Trademark Office to by the PTO that would generate an ad- lation that fosters and nurtures the re- update the services and structure of ditional $201 million in revenue. Spe- lationship between the United States the office. The Strategic Business Plan cifically, H.R. 1561 amends Federal pat- Patent Office and the entrepreneur and will enhance the quality of the patent ent law to lower patent filing and basic business communities. and trademark examining operations, national fees; increase appeal, excess The underlying legislation, however, accelerating the application pendency claims, disclaimer, extension, revival, does nothing of the sort, and the rule period, making it more consumer and maintenance fees; and add new fees which the majority is asking us to ap- friendly and efficient. for application examination, patent prove today stifles debate and limits The manager’s amendment to the bill search, and patent issuance. our ability to improve this legislation. addresses the fee diversion problem and As our former colleague and former I really find it outrageous that the prevents the PTO funds from being director of the PTO, Jim Rogan, noted, bill in its current state hurts aspiring used to fund general revenue programs the implementation of the revised small businesses by inflicting addi- throughout the Federal Government. Strategic Plan hinges on the passage of tional fees on their patent and trade- Under the agreement reached be- H.R. 1561. He stated, ‘‘Without the abil- mark applications. It should be our tween the gentleman from Wisconsin ity to hire and train new examiners mission to build an enterprise society (Chairman SENSENBRENNER) and the and also improve infrastructure, our in which small firms of all kinds thrive Committee on Appropriations, PTO hands will be tied . . . The con- and achieve their potential. We should fees collected in a given fiscal year sequences of failing to enact the fee not allow small businesses to fail be- that exceed the appropriation to PTO bill and giving the (PTO) access to fore they even get started. for that year would be placed in what those fees will mean quality and pend- An amendment will be offered later will be known as a PTO reserve fund. ency will continue to suffer. We will be today by our colleague the gentle- At the end of that fiscal year, the Di- unable to hire needed examiners, and woman from Texas (Ms. JACKSON-LEE) rector of the Patent and Trademark Of- over 140,000 patents will not issue over that I strongly support. This amend- fice may determine if, and how, these the next 5 years. The inventory of ment will aid in the promotion of en- funds should be allocated back to the unexamined patent applications will terprise across society, particularly in eligible applicants.

VerDate jul 14 2003 02:20 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00037 Fmt 4634 Sfmt 0634 E:\CR\FM\K03MR7.067 H03PT1 H792 CONGRESSIONAL RECORD — HOUSE March 3, 2004 Mr. Speaker, I have been a proponent eral Government is getting into the act on our inventors and our bright minds of modernizing the patent and trade- and the outsourcing of jobs from our actually, in this environment, verges mark fee structure and have fought on government, in this case the U.S. Pat- on insanity. this floor year after year to protect ent Office, has infected the heart of Where does it stop? Where does it these dollars from being used to fund American ingenuity. stop? I urge my colleagues to vote non-PTO programs, as have my chair- Mr. Speaker, the bill before us au- against H.R. 1561. man the gentleman from Wisconsin and thorizes the Patent and Trademark Of- Mr. BERMAN. Mr. Speaker, will the other Members of the Committee on fice to outsource work. There is some gentlewoman yield? the Judiciary. They have fought equal- palliative, feel-good language about Ms. KAPTUR. I yield to the gen- ly diligently to this end. companies being organized under the tleman from California. A fully funded United States Patent laws of the United States in the bill, Mr. BERMAN. Mr. Speaker, I thank and Trademark Office is vital to sus- but under U.S. law Honda is a U.S. the gentlewoman for yielding and ap- taining the strength and growth of company, Toshiba is a U.S. company. preciate her comments. At this time I will not get into the United States companies, inventors Saudi companies, if they operate on issue of the restricted nature under and innovations, and this legislation is U.S. soils, are U.S. companies. That which outsourcing is permitted, but I integral to preserving the United does not give me a lot of comfort. This think the gentlewoman accurately de- States’ worldwide leadership in the in- is an insult to the entrepreneurs and scribed the base bill. The chairman of tellectual property industry. inventors of this country. the Committee on the Judiciary will be I say to my friend from Georgia, who As someone who comes from the offering an amendment with respect to yielded to me, I was at the PTO office State of Ohio, home of Thomas Edison outsourcing outside the United States about 5 years ago for an event. I was and Charles Kettering, the thought of that restricts even the limited invited to take part in an event there, outsourcing patent application reviews outsourcing that is allowed under this and I said to those people, from the Di- from the U.S. Patent and Trademark bill to companies organized under the rector to all the patent examiners who Office is inconceivable. One might laws of the United States. As the gen- were there and trademark examiners, I think that with this outsourcing, well, tlewoman mentioned, that in and of said I want to send a message to Cap- the price is going to go down to inven- itself does not protect against inter- itol Hill and I want to tell everybody tors. Are they going to get anything national outsourcing, or any State, and up there to keep their grubby paws out out of this? That is the way the free employ U.S. citizens to perform the of the PTO coffers. Now that may have trade fundamentalists try to tell the searches. been an indelicate way of saying it, but story, send the work overseas if it can So there will be an amendment to the I wanted to make clear to everyone up be done, send it out of the government, base bill at the time that once the rule here that these funds should not be re- but guess what. They are going to raise is adopted, if it is adopted, that will moved from PTO custody and control. the cost to patent holders. So the same deal with that specific issue very spe- The opponents of such a proposal in- old bankrupt theory is at work. cifically and prohibit that kind of dicate that some sort of unjust enrich- Patent application reviews will be outsourcing that the gentlewoman was ment will ensue if the PTO gets to keep outsourced, but the price to the small concerned about. these funds. That is poppycock. That is inventor or the small entrepreneur Ms. KAPTUR. Mr. Speaker, this is a nonsense. These funds belong to the would not decrease. In fact, they put very important point, and I respect my PTO, and I am confident that with the an additional fee, an additional tax on dear colleague from California (Mr. them. Currently, a small entity pays passage of this legislation, the diver- BERMAN), but the facts are we are sion anathema that has plagued us for $385. The proposed fee would be $675 outsourcing patent review procedures so long hopefully will finally be re- with an e-file and $750 without an e- from the U.S. Patent and Trademark solved. file. Total fees for the life of a patent Office. In other words, it is going to go I again thank the gentleman from currently are $4,160, which is a lot of to private companies, not the govern- Georgia for yielding me time. money for a small inventor. The pro- ment of the United States, protected Mr. HASTINGS of Florida. Mr. posed fee with an e-file would raise it by what the Constitution demands. It Speaker, I yield 7 minutes to the gen- to $4,875. is going to be outsourced to companies. tlewoman from Ohio (Ms. KAPTUR). Call it what you want, fee increase, The question is what is a U.S. com- Ms. KAPTUR. Mr. Speaker, I thank user fee adjustment, search fee. I will pany? If we look into the law, a U.S. the gentleman from Florida for yield- tell my colleagues what it really is. It company operating within the bound- ing me time. is another tax, and a tough one, on the aries of the United States, even if it is Mr. Speaker, I would like to strongly very people who are trying to invent Honda Motor Corporation, is a U.S. oppose this bill, H.R. 1561, and I do so America’s future, the very people on company. Foreign corporations oper- because it is based on our good old Con- whom we are counting for the intellec- ating within the United States are de- stitution, which says the Congress tual moxie to fuel the information- fined as U.S. corporations because they shall have power to promote the based economy or knowledge-based operate within our soil. progress of science and useful arts by economy that the experts say are sup- securing for limited times to authors posed to lead us out of the doldrums b 1630 and inventors the exclusive right to that this economy is in. But they are not U.S. corporations, their respective writings and discov- The people in this country who tin- because their profits are booked back eries, and from the very founding of ker with objects and machines and to their home country. So I have a real the republic that knowledge has been ideas, why should they be taxed and problem with this. housed in the U.S. Patent Office where why should we want to outsource any- Number one, we should not be inventors around our country had con- thing from the U.S. Patent and Trade- outsourcing the jobs from the Patent fidence that those inventions belonged mark Office? Office. That is the most important line to them, protected by the Constitution If my colleagues vote for this bill, that we are breaching here. Never be- of our Nation. So important patents they are voting for a tax increase, and fore in the history of this country has are listed, patents inventors, congres- a rather large increase at that, on the this been done. It has never been done. sional protection. best and brightest minds of our coun- And then we are saying, well, you Today, we have a bill before us, H.R. try. It is bad enough they want to know, it will be a U.S. company. But 1561, that really is another episode in outsource such an important function then look to the law. How do we define the outsourcing of American jobs. Yes, such as patent application search and what a U.S. company is? Any company the outsourcing craze continues. It is examination. This is so important that operating within the boundaries of the like a virus that cannot be stopped. it still remains right here in the Con- United States? It could be Honda, it The American people cannot under- stitution of our country, and now we could be Toshiba, it could be Daemler, stand why their officials in Washington are talking about outsourcing con- it could be any company. do not step in and put an end to this stitutional responsibility. That in Mr. BERMAN. Mr. Speaker, will the nonsense, but guess what, now the Fed- itself is an outrage, but to raise taxes gentlewoman yield?

VerDate jul 14 2003 02:20 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00038 Fmt 4634 Sfmt 0634 E:\CR\FM\K03MR7.069 H03PT1 March 3, 2004 CONGRESSIONAL RECORD — HOUSE H793 Ms. KAPTUR. I yield to the gen- House on the State of the Union for the I would point out that the patent tleman from California. consideration of the bill, H.R. 1561. term is 20 years from the date of filing. So if it takes 6 to 8 years before the Mr. BERMAN. Mr. Speaker, I take b 1633 the gentlewoman’s point about U.S. PTO can decide whether or not an ap- companies and who might be called a IN THE COMMITTEE OF THE WHOLE plication is indeed patentable and U.S. company. I simply wanted to Accordingly, the House resolved grants a patent, that will be that much point out that the chairman of the itself into the Committee of the Whole less time that the patent is actually Committee on the Judiciary has a House on the State of the Union for the good, and, thus, that much less valu- manager’s amendment that will not consideration of the bill (H.R. 1561) to able to the person who has successfully simply limit this to U.S. companies, amend title 35, United States Code, invented a new technology or product but limit it to searches only by compa- with respect to patent fees, and for and patented it. nies employing U.S. citizens to perform other purposes, with Mr. LAHOOD in the Moreover, the backlog of applica- the searches. So there is that as an ad- chair. tions awaiting a first review by an ex- ditional element. The Clerk read the title of the bill. aminer will grow from the current Ms. KAPTUR. Mr. Speaker, reclaim- The CHAIRMAN. Pursuant to the level of 475,000 to over a million. These ing my time, and I thank the gen- rule, the bill is considered as having delays pose a grave threat to American tleman from California for those com- been read the first time. businesses and entrepreneurs. The na- ments, but it is interesting because our Under the rule, the gentleman from ture of technology and the nature of submarine technology happened to end Wisconsin (Mr. SENSENBRENNER) and the marketplace make these delays un- up in the hands of the former Soviet the gentleman from California (Mr. acceptable and unsustainable. And what I would point out to the Union through a subsidiary of a com- BERMAN) each will control 30 minutes. gentlewoman from Ohio and others pany operating here and also in Eu- The Chair recognizes the gentleman who complain about this bill and the rope. It does not matter if U.S. citizens from Wisconsin (Mr. SENSENBRENNER). fee increases that are contained to are in those jobs; what matters is who Mr. SENSENBRENNER. Mr. Chair- modernize the system is that if our owns the company. And beyond that, man, I yield myself such time as I may competitors in an increasingly why should we be outsourcing anything consume. Mr. Chairman, H.R. 1561 will help im- globalized economy, in Europe and in from the Patent and Trademark Office? Japan and elsewhere, are able to obtain I totally oppose this bill. At least I plement the Patent and Trademark Of- fice’s Strategic Business Plan to trans- more prompt decisions from their pat- want on the record that there was one ent offices, that will put American in- Member standing to say that the con- form the agency’s operations. The bill incorporates a revised fee schedule pre- ventors at a disadvantage considerably. stitutional protections to America’s To fund the initiatives set forth in patent holders and inventors should viously submitted by the PTO that will generate much-needed additional rev- the strategic plan, the administration not be breached. It has been working. has proposed in H.R. 1561 an increase in Why change it? enue. The plan also includes a true structural reform of the office, which patent and trademark fees. The pro- ANNOUNCEMENT BY THE SPEAKER PRO TEMPORE demonstrates that the PTO is not sim- posed fee changes accurately reflect The SPEAKER pro tempore (Mr. ply saying give us more money and we the PTO’s cost of doing business. They LAHOOD). The Chair would appreciate will solve the problem. The implemen- will benefit the PTO’s customers by re- Members’ abiding by the time limits. tation of the strategic plan is the first ducing application filing fees and al- Mr. HASTINGS of Florida. Mr. step forward toward improving patent lowing applicants to evaluate the com- Speaker, I have no further requests for and trademark quality while reducing mercial value of their inventions and time, and I yield back the balance of application backlogs and pendency at recover the cost of search and examina- my time. the agency. tion as the situation warrants. Most Mr. LINDER. Mr. Speaker, I have no These goals are critical to the health importantly, the new fee structure will further requests for time, and I yield of cutting-edge industries in particular enable the PTO to reduce pendency time, improve quality and customer back the balance of my time. and our economy in general. Americans service through electronic processing, The SPEAKER pro tempore. All time lead the world in the production and and pursue greater enforcement of in- has expired. Without objection, the export of intellectual property and re- previous question is ordered. tellectual property rights abroad. lated goods and services. Time is For example, the additional revenue There was no objection. money in the intellectual property The SPEAKER pro tempore. The provided by the fee bill will allow the world. If the PTO cannot issue quality PTO to hire an additional 2,900 patent question is on the resolution. patents and trademarks in a timely The resolution was agreed to. examiners, these are Federal employ- manner, then inventors and trademark ees, not outsourced employees, and A motion to reconsider was laid on filers are the losers. the table. move to full electronic processing of By granting patents and registering patent and trademark applications. f trademarks, the PTO affects the vital- The Committee on the Judiciary ity of businesses and entrepreneurs, GENERAL LEAVE unanimously approved this bill on July paving the way for investment in re- 9, 2003. The administration and private Mr. SENSENBRENNER. Mr. Speak- search and development. Industries sector strongly advocated the adoption er, I ask unanimous consent that all based on intellectual property, like of the fee bill as a necessary means to Members may have 5 legislative days biotechnology and motion pictures, address the workload crisis at the PTO. within which to revise and extend their represent the largest single sector of Failure to pass the restructuring con- remarks and include extraneous mate- the United States economy. Approxi- tained in H.R. 1561 will result in fur- rial on the bill H.R. 1561, soon to be mately 50 percent of American exports ther degrading of PTO operations and considered. depend upon some form of IP protec- increasing the already unacceptable The SPEAKER pro tempore. Is there tion. delays to patent and trademark appli- objection to the request of the gen- While intellectual property protec- cants. tleman from Wisconsin? tion is increasing in importance, the Mr. Chairman, I will soon offer a bi- There was no objection. PTO is collapsing under an increas- partisan compromise amendment on f ingly complex and massive workload. section 5 of this bill. This portion of Patent pendency, the amount of time the bill, as reported, would essentially UNITED STATES PATENT AND of patent application is pending before have taken the PTO off budget, a result TRADEMARK FEE MODERNIZA- a patent is issued, now averages over 2 that our friends at the Committee on TION ACT OF 2003 years. Without fundamental changes in Appropriations strongly opposed. My The SPEAKER pro tempore (Mr. LIN- the way the PTO operates, average amendment, developed with their DER). Pursuant to House Resolution 547 pendency in these areas will likely input, as well as that of the majority and rule XVIII, the Chair declares the more than double to 6 to 8 years in the leader’s office, the Congressional Budg- House in the Committee of the Whole next few years. et Office, and the Committee on the

VerDate jul 14 2003 02:20 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00039 Fmt 4634 Sfmt 0634 E:\CR\FM\K03MR7.071 H03PT1 H794 CONGRESSIONAL RECORD — HOUSE March 3, 2004 Budget, would deposit any fees col- there are fee increases; and we need a 21st-century strategic plan to address lected in a given fiscal year in excess of these fee increases to be able to pre- this crisis, but it needs this legislation that actually appropriated in a Fee Re- vent unacceptably long backlogs from to implement that plan. serve Fund. At the end of the fiscal occurring, because it is anticipated H.R. 1561 is necessary because the year, the director would then be em- that the business of the PTO will dou- patent system is coming apart at the powered to rebate the reserve-fund rev- ble in the next few years. seams. A perfect storm of sorts has hit enue to users of the agency. If we do not give them more money the PTO, which administers the patent I understand that the CBO and the and we do not make this into a user system. This storm threatens to make Committee on the Budget believe this fee, then the constitutional protection the patent system dysfunctional. This compromise accomplishes the twin that the gentlewoman from Ohio and perfect storm involves a tremendous goals set forth by the majority leader’s others are referring to will end up be- growth in the amount and complexity office in backing these discussions; coming very much debased in terms of of PTO workload, matched by a de- that we will have eliminated the incen- their worth. I do not think that we creasing ability to handle that work- tive to use PTO revenue for non-agency want to see this happen, and that is load. The number of patent applica- purposes without compromising the why this legislation is essential to tions received annually by the PTO ability of the Committee on Appropria- maintain the competitiveness of Amer- doubled between 1992 and 2003 to a fig- tions to exercise their oversight pre- ican intellectual property inventions ure of over 350,000 last year. What is rogatives in providing appropriations and the inventiveness that has marked more, the number of applications con- for the agency. The mainstream user American society since the beginning tinued to grow throughout our recent groups have signaled their intent to days of our Republic. recession and is expected to increase support the amendment based on this The amendment that I offer in this another 5 percent this year. This interpretation. bill is necessary for the improved per- growth is fed in part by the expanding I appreciate very much the coopera- formance of the PTO, and failure to scope of patentability. Due to a string tion of the appropriators in working enact this legislation will truly be a of court opinions, patentable inven- out this compromise, and I would call disaster for American innovation. I tions now include software, business on them to take this opportunity to urge Members to support this bill. methods, and anything else made under fully fund the strategic plan. Full fund- Mr. Chairman, I reserve the balance the sun by man. ing will be crucial to achieving the of my time. The technology boom in the United changes that we all want to see at the Mr. BERMAN. Mr. Chairman, I yield States has also resulted in applications PTO. myself such time as I may consume. for patents on inventions in areas of Now, let me say a couple of words of Mr. Chairman, H.R. 1561 is a wonder- technology that did not exist just a few what the consequence will be if this ful illustration of the principle that years ago. On a daily basis, PTO is bill is voted down. First, if this bill is something does not have to be inter- asked to review applications for pat- voted down, the current fee diversion esting to be important. ents on such things as genetic tests and that occurs, where up to 30 percent of laser vision technologies. b 1645 the fees that are collected by the PTO The numerical growth, and the ex- are not spent on PTO activities but in- This bill is of critical importance to panding scope, are matched by a stead are diverted into other areas the health of our information economy. growth in complexity. For instance, under the jurisdiction of the Sub- Intangible property, such as patents, some biotechnology patents covering committee on Commerce, Justice, trademarks and copyrights, now con- genetic sequences can occupy the State, Judiciary and Related Agencies stitute well over 50 percent of the as- equivalent of 10,000 pages. The PTO of the Committee on Appropriations, sets of U.S. corporations, both large must hire new examiners with the req- will continue. and small. Most of the great advances uisite skills in these areas or fund ex- Patent and trademark applicants in pharmaceuticals, telecommuni- tensive retraining for current exam- should no longer be required to fund cations, biotechnology, and Internet iners. functions of the Federal Government fields began as patented inventions. The PTO’s decreasing ability to deal that have no relationship whatsoever Patent protection played a critical role with this increasing workload is the re- to Patent and Trademark Office oper- in the creation and dissemination of insult of several factors. Most respon- ations. This bill, and the amendment ventions from the telephone to sible is the cumulative effect of more that I will be proposing at the conclu- fiberoptics, from injectable insulin to than a decade of fee diversion. The PTO sion of the general debate, will end the laser eye surgery. is entirely funded by user fees. Patent fee diversion and will mean that fees The Patent and Trademark Office, and trademark holders and applicants that are collected by the PTO will ei- which issues both patents and trade- pay the PTO a variety of fees to obtain ther be used by the PTO or refunded to marks, has a critical role to play in and retain their patent and trademark the applicants and other users. creating and securing these assets. By rights. The fees are supposed to reflect Second, if this bill gets voted down, facilitating many needed reforms, H.R. the cost of services provided by the instead of having a 2-year delay be- 1561 ensures that the PTO plays a posi- PTO; but between 1992 and 2003, Con- tween the time of the application and tive role in stimulating our informa- gress denied the PTO the ability to the time that the application is acted tion economy, rather than becoming an spend $654 million of the fees paid to it. upon, within the next several years obstacle to it. Instead, Congress appropriated these that will expand to 6 or 8 years. And if Furthermore, H.R. 1561 does not sad- fees for unrelated programs. This will it is 8 years, that means that the pat- dle the U.S. taxpayer with the cost of stop as a result of this bill. ent will only be good and effective for these reforms. The PTO is fully funded As a result of that diversion, the PTO 12 years, because the patent term is 20 by fees from the patent and trademark has been forced to gradually can- years from the date of application. applicants, and this bill raises some of nibalize itself. It has deferred critical That puts our successful patent appli- those fees to enable those reforms. H.R. information technology upgrades. It cants at a considerable disadvantage 1561 pays for other reforms by ending has squeezed every ounce of possible over those competitors who choose to the innovation tax. Throughout the productivity out of examiners, and ap- patent their inventions overseas, where last decade, over $650 million in fees pears now to be asking them to review patent and trademark offices will work paid to PTO by American inventors applications in an unrealistic time in a more expeditious manner. and small businesses have been di- frame. It even laid off almost one-third I would point out that the small- and verted to unrelated agencies. H.R. 1561 of its trademark examining corps. De- medium-sized enterprises who apply for stops this tax on innovators by ending spite these drastic measures, the PTO patents under the compromise that is diversion once and for all. only managed to delay, not avert, a worked out will get a significant fee re- The PTO is in a crisis that threatens train wreck. By all objective measures, duction from a large corporation that the stability and usefulness of our pat- that train wreck is upon us. is applying for a patent. So there still ent and trademark systems. At con- I could go through, and my the state- is a break for small inventors. But gressional urging, the PTO has crafted ment in the RECORD will contain a full

VerDate jul 14 2003 02:20 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00040 Fmt 4634 Sfmt 0634 E:\CR\FM\K03MR7.074 H03PT1 March 3, 2004 CONGRESSIONAL RECORD — HOUSE H795 statistical explanation of the incred- islative proposals that deal with a Failure to enact the bill will mean ible increase in the backlog for patent number of these issues, but this is the that quality and pendency issues will applications, but in conclusion, it key first step. I urge my colleagues to continue to cause harm to American takes more than 2 years now for a pat- approve H.R. 1561. innovators and to American job cre- ent application to be granted or dis- Mr. Chairman, I reserve the balance ators. Without this legislation, the posed. In many cases, more than 60 of my time. backlog of applications will skyrocket months is the pendency for a patent Mr. SENSENBRENNER. Mr. Chair- to over 1 million applications by 2008, application. man, I yield 3 minutes to the gentle- more than double the current amount. Why does this pendency matter? Why woman from Pennsylvania (Ms. HART). The pendency time will also continue do we care about these backlogs? It af- Ms. HART. Mr. Chairman, I thank to increase. This cannot be tolerated. fects both the patent applicants and so- the gentleman from Wisconsin (Mr. We need to pass this bill. ciety at large. Patent ownership en- SENSENBRENNER) for yielding me this Finally, families in the communities ables individual inventors and small time. I represent are dependent upon this businesses to obtain capital. Patent I rise in support of the legislation, bill’s success. A significant number of ownership gives prospective financiers, H.R. 1561. Congress has been working the people in my communities are em- such as venture capitalists and banks, on this legislation for a number of ployed in the coatings industry, in the important reassurance that investment years, in fact, since before I got here. I glass industry, plastics, specialty steel, in a small entity is sound. know since the 106th Congress, they not to mention high-technology com- Long patent pendency also nega- have attempted to solve the problem munications and technology for health that exists in the Patent and Trade- tively affects society at large. Long care devices. These products are unique mark Office, that is, funding problems, patent pendency and patent backlogs processes and are unique products. We structural problems, and approval-time creates substantial uncertainty in the need to have these products patented marketplace and thus makes it dif- problems. Passage of this bill is imperative, and to keep these jobs in the United States, ficult for all businesses to operate. A it is long overdue. Unfortunately, qual- to keep these people in my community backlog of 500,000 patent applications ity, pendency, and overall efficiency employed. may cover business methods now com- I know that employers and have continued to be a problem mon in the financial service business, innovators are at the heart of pro- throughout these years. In fact, there software contained in every personal viding these jobs. We need to protect is a greater threat to the health of computer, or a type of computer chip American’s intellectual property sys- their innovations and their processes. that will cost billions to manufacture. tem than ever. The longer we wait to We need to make sure that our Patent As troubling as the lengthy patent confront these issues and pass this bill, and Trademark Office works for them. pendencies are, they are not the the more costly and time consuming it I urge my colleagues to support this gravest problem facing the PTO. Even will be to overcome the problems. bill. greater concern should be given to the Through working on the legislation, Mr. BERMAN. Mr. Chairman, I yield quality of the patents granted by PTO. it has become clear to me that a strong 3 minutes to the gentlewoman from When PTO grants patents in error to patent and trademark system is not California (Ms. LOFGREN), a member of things that are not true inventions, only essential for continued growth of the Committee on the Judiciary and many negative side effects occur. Low- the high-tech industry here in this the first articulator of the principle quality patents can deter scientific re- country, but for our entire economy. ‘‘no end to diversion, no fee increase.’’ search, create obstacles to legitimate H.R. 1561 has fee readjustments that Ms. LOFGREN. Mr. Chairman, I commercial activities, and create op- will enable the Patent and Trademark thank the ranking member of the sub- portunities for illegitimate rent-seek- Office to fund its operations as needed committee and the chairman. Yes, it is ing. A bad patent on a pharmaceutical to ensure that the long-term goals of true that we have been objecting to the drug means that consumers cannot ob- enhanced efficiency and proficiency of diversion of fees from the Patent and tain a cheaper generic version. A bad staff are met by providing a more vi- Trademark Office for some time. In patent on Web browser technology may brant, seamless, and cost-effective in- fact, since 1962 some $6 million has force the redesign of every piece of tellectual property system. been diverted from the PTO and put to software interoperating with current The readjustment of the fees will other uses; and according to the Patent Web browsers. generate an additional $201 million in Public Advisory Committee, this has Using a random sampling method- revenue for improvements at the Pat- created a crisis at the PTO. There is in- ology, the PTO estimates its error rate ent and Trademark Office. That means adequate funding, and there is also a for patents issued in fiscal year 2003 at less time to review a patent, better significant increase in patent and 4.4 percent. That means more than 7,000 quality staffing, and better quality trademark applications. patents were issued in error. That patents. The diversion of fees is not the cause means that at any given time given the While fee readjustment alone is in- of the problems in the Patent Office. It 7-year pendency term for patents, there sufficient, the enactment of this bill is is the cause of the inability to deal are over 120,000 bad patents in force. a necessary precursor to the implemen- with the problem in the Patent Office. Enactment of this legislation will en- tation of crucial administrative We know that we have to spend more able the PTO to substantially improve changes, such as quality checks at to implement the plan that Jim Rogan, patent quality. It will also enable the every stage of the examination process, our prior colleague, headed up when he PTO to hire 750 new patent examiners improvements in patent practitioners was at the Patent Office. We need to a year between 2004 and 2006, and addi- in customer service and ability to pro- upgrade the computer system so we tional numbers in subsequent years. It vide competent analysis of applica- have a priority search that really is will take time to train these new ex- tions, refinement of training and per- worthy of our country. We know that aminers. They will eventually be able formance assessment programs, testing the amount of time that each patent to shoulder some of the patent exam- for and evaluations of these patent ex- examiner has to examine a patent is in- ination workload that threatens to aminers to ensure thorough under- sufficient. It is impossible to do the swamp the current examining corps. standing of relevant technology, appli- kind of job that we want them to do With an expanded examining corps, the cable law, and related internal proce- and they want to do in the time avail- PTO will be able to give patent exam- dures. able. iners more flexibility in the amount of Also of key importance is accelera- Because of the problems in the act time they spend on any one application of processing time by and the diversion of fees, I think we tion. transitioning from paper to e-govern- have had some problems with some of I am convinced that H.R. 1561 is an ment processing, hiring of almost 3,000 the patents that have been generated important part of the solution to the examiners, reduction in the pendency in recent times. There have been sub- pendency and quality problems. It is a of these applications and the backup at stantial questions generated about first absolutely necessary step to re- the PTO. All of these issues will be ad- some of them. We hear a lot about the forming the PTO. There are other leg- dressed under this bill. business methods patents, but it is not

VerDate jul 14 2003 02:20 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00041 Fmt 4634 Sfmt 0634 E:\CR\FM\K03MR7.076 H03PT1 H796 CONGRESSIONAL RECORD — HOUSE March 3, 2004 just about those patents; and it is im- USPTO, which receives no taxpayer U.S. Patent and Trademark Office. The portant that we do not grant a patent dollars and is fully fee-funded, would bill before us on page 11 reads, the Di- that cannot withstand a court chal- now be able to retain its fee revenue rector can provide that searches be lenge. It is costly and wastes valuable and to fully fund their widely sup- done by commercial entities. resources; but more importantly, it ported 5-year strategic plan. Is that the That is not what the Constitution grants unwarranted rights of exclu- gentleman from Virginia’s under- says. That is not the U.S. Patent Of- sivity that deter otherwise lawful ac- standing? fice. That is a commercial entity. Yes, tivity and impedes competition and in- Mr. WOLF. If the gentleman from searches will be outsourced from the novation. Wisconsin will yield, I concur with the U.S. Patent Office. You could say they reading of the intent of this funding would be contracted out. That is not b 1700 mechanism. I would add that an impor- the U.S. Patent Office. We have plenty Furthermore, the pendency for pat- tant tool the Committee on Appropria- of examples in this world of ents is now averaging 24.7 months, tions uses in its oversight of the Pat- copycatting of inventions, of counter- which is an unbelievable delay. When ent and Trademark Office as a Federal feiting of intellectual property, par- we think about the pace of techno- agency is control over its discretionary ticularly by the Chinese and by patent logical change that a patent should on appropriation. We will ensure that this thieves and by submarine patents. average take, 24.7 months is really not new funding mechanism maintains There are plenty of things going on in a good thing for the innovation high- that control and does not give the Pat- this world that contracting out or tech economy. To quote a former First ent and Trademark Office a blank outsourcing of the Patent Office does Lady, those of us on the Committee on check particularly at a time when all not help because you cannot secure the the Judiciary believe we should just discretionary spending is tight. honesty or the integrity of those in- say no to patent fee diversion. Pat- The USPTO must modernize. The strumentalities. And though the bill entors and inventors do not object to Committee on the Judiciary and says business concerns, it does not say being taxed on their income just the USPTO’s user groups have developed a corporations, it says business concerns way other Americans are taxed on comprehensive 5-year blueprint to organized under the laws of the United their income but to divert patent fees streamline the operations of the office. States that indeed can be a foreign cor- to general purposes is basically a tax Given the significant increase in fund- poration, because a foreign corporation on innovation, a special tax on innova- ing that this bill would provide, I have operating inside the United States, be tion. That is something that we should asked the General Accounting Office it Chinese, Japanese, Bangladeshi, In- object to. and the National Academy of Public dian, whatever, is defined as a U.S. cor- I believe that the bill before us with Administration to conduct comprehen- poration. That is not the Patent and the compromises that have been made sive reviews to ensure the moneys are Trademark Office of the United States is one that I can support. I think in the spent to reduce pendency and increase of America. Patent holders actually end it will well serve our country. It the quality of our patent and trade- will not know if their search is being will well serve our economy. Because mark system. outsourced or contracted out and they as someone from Silicon Valley, I know Particularly in the high-tech sector, will not know to whom. And in terms as well as anyone that it is innovation a company’s competitiveness is di- of the fees being charged, the addi- that really grows the American econ- rectly related to the amount of time it tional tax being put on small inventors omy and by making the Patent Office takes to receive a patent for their new and small companies, all this bill has, better, by precluding the diversion of product. They are disadvantaged when with all due respect to the Committee fees, we will help that innovation econ- the life cycle of their products expires on Small Business, is a study. It does omy. before they are able to get a patent. I not stop those fees and taxes from I would note further that in all of my would also like to thank the chairman being imposed. It increases them. How dealings with innovators in Silicon for including language to ensure that in heaven’s name does this make Amer- Valley and really around the country, searches are not outsourced offshore. I ica any more secure? not one has objected to the increase in think it is important for Members to I might point out to my dear friend fees. Not a single one. What they object know under no circumstances should from Wisconsin, as good a Badger as he to is the diversion of fees. I recommend this be outsourced to another country is, that indeed the Japanese patent sys- this bill. and under no circumstances should tem and the European patent system Mr. SENSENBRENNER. Mr. Chair- these searches be conducted by non- are not the American system. We have man, I yield myself 4 minutes. U.S. citizens. the protections here, which is why Mr. Chairman, I rise today to express I commend and thank the gentleman other countries want to file their pat- my sincere gratitude and appreciation from Wisconsin for his work on this ents here. We do not want to har- to my good friend, the distinguished measure, and I urge its adoption. monize with systems unlike ours. We chairman of the Subcommittee on Mr. BERMAN. Mr. Chairman, not- want them to be like us. Why are we Commerce, Justice, State, Judiciary withstanding the difference of view we doing this? And if a patent search and Related Agencies of the Committee have on this issue, I yield 3 minutes to takes a while, that is a good thing. It on Appropriations, for his work with the gentlewoman from Ohio (Ms. KAP- protects my rights, particularly my me on this bill. Working to reform the TUR), a tenacious fighter for that in rights as a small inventor. So I would PTO to ensure timely and effective in- which she believes. say with all due respect to the authors tellectual property protection for Ms. KAPTUR. Mr. Chairman, I want of this legislation, changing the U.S. American inventors and businesses has to thank the gentleman from Cali- Patent Office, why? Why dismantle it been a multiyear effort for many of us, fornia for allowing this institution to after over two centuries of success? authorizers and appropriators, on both function as it should and to allow those I deeply thank the gentleman from sides of the aisle. Today, we see the who disagree with this bill an oppor- California for yielding me this time. At fruits of these efforts. Thanks to the tunity to speak. least we had the opportunity to put our support of Chairman WOLF and full Mr. Chairman, across our country we views on the record. I would ask my committee Chairman YOUNG, our com- see the dismantling of jobs and busi- colleagues to vote ‘‘no’’ on H.R. 1561. mittees have come together and ness in this country. This particular Mr. SENSENBRENNER. Mr. Chair- reached an agreement on a funding bill, H.R. 1561, dismantles the Patent man, I yield myself 4 minutes. mechanism that will enable the USPTO and Trademark Office as we have Mr. Chairman, one of our jobs in Con- to fully fund its restructuring and re- known it. If one reads article 1, section gress is to make the government work. form activities. It is my understanding 8, it says, the Congress shall have the We have heard ample data that has that this rebate mechanism would en- power to secure for inventors the ex- been presented on both sides of the sure that all revenue from patent and clusive right to their respective aisle that the PTO is in crisis and un- trademark fees would in fact go to the writings and discoveries. Throughout less we pass legislation, things will get USPTO or would be rebated to those the over 200-year history of our coun- worse rather than better. What this who have paid the fees. As a result, the try, that has been done through the bill does is that it allows the PTO to

VerDate jul 14 2003 02:20 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00042 Fmt 4634 Sfmt 0634 E:\CR\FM\K03MR7.078 H03PT1 March 3, 2004 CONGRESSIONAL RECORD — HOUSE H797 add an additional 2,900 patent exam- recollection, the WTO treaty was rati- out these valuable changes, an overbur- iners, government employees, so that fied by Congress. It was urged upon us dened and slow patent examination there will be more people on the gov- and signed by President Clinton. I system will deter the innovations of ernment payroll to examine these ap- joined the gentlewoman from Ohio in American business. Given the impor- plications. If the bill goes down, those opposing the WTO treaty when it came tance to our lives and our economy, 2,900 people will not be there. up in 1994 but we lost on that and the patent reform is one of the most impor- And we have heard a lot about diver- extension or the change in the patent tant issues for increasing the growth sion from the gentleman from Cali- term from the previous 17 years of the and strength of the economy for both fornia (Mr. BERMAN), the gentlewoman date of granting of the patent by the small and large businesses. Congress from California (Ms. LOFGREN) and oth- Patent Office was changed to 20 years has the opportunity with this bill to ers. This bill ends the diversion. So we from the date of filing. The gentle- give the PTO the flexibility they have will not be using PTO fees for other woman and I voted against it but it is been asking for to strengthen and im- government programs. If the bill goes the law and we have to face up to the prove America’s patent system. down, the diversion will continue. The fact that the longer the PTO delays in The gentlewoman from Ohio (Ms. outsourcing issue, the amendment that issuing a patent, the less time of pat- KAPTUR) is correct to raise the issue has been agreed to will, number one, ent protection there is for an applicant and the concern of loss of jobs in Amer- require that the outsourcing if it is for a patent who succeeds. ica and the outsourcing of jobs. I would done be done by a U.S. corporation; Mr. Chairman, I yield 1 minute to the respectfully argue that one of the ways two, it will be done by American citi- gentleman from Illinois (Mr. MAN- in which to assist American workers in zens; and, three, it will be done in the ZULLO). regaining what they have lost over the United States of America. Mr. MANZULLO. Mr. Chairman, I past 3 years is to allow the Patent and If we do not do that, then we are want to thank Chairman SENSEN- Trademark Office these reforms that going to further complicate the patent BRENNER and Chairman LAMAR SMITH are in desperate need and should have process. I would point out that our pat- for their very important changes for been done years ago. ent law is such that if there is an in- small entities and other Patent and Mr. SENSENBRENNER. Mr. Chair- fringement suit the patent holder must Trademark Office users. I also want to man, I yield 5 minutes to the gen- prove that the patent is valid. That is thank their dedicated and excellent tleman from Texas (Mr. SMITH), who is not the case under foreign patent laws. staffs, Phil Kiko, Steve Pinkos and the chairman of the subcommittee. So if there is a bad patent that is Blaine Merritt. I also want to thank Mr. SMITH of Texas. Mr. Chairman, issued because the PTO is rushed, then the majority leader and his staff led by first of all, I would like to personally it is going to cost the patent holder Brett Loper for crafting a very excel- thank the gentleman from Wisconsin more when an infringement suit is lent amendment to this bill that as the (Chairman SENSENBRENNER); the gen- filed. That does not happen in the case chairman of the Committee on Small tleman from Illinois (Chairman MAN- of a patent that is issued by a foreign Business I am satisfied that the small ZULLO); the gentleman from Florida country. This bill makes the quality of inventor is protected. (Chairman YOUNG); the gentleman from the patents that are issued by the Pat- Mr. BERMAN. Mr. Chairman, I yield Virginia (Chairman WOLF); and also ent Office better because we have got myself 30 seconds. the gentleman from California (Mr. more people looking at them and they The gentlewoman argued in favor of BERMAN), ranking member, for their are not as rushed. help in pulling this bill together. They Ms. KAPTUR. Mr. Chairman, will the her position, take more time. There is helped to iron out the wrinkles. They gentleman yield? no problem with taking time. The fact Mr. SENSENBRENNER. I yield to is we want a thorough investigation. helped resolve the differences between the gentlewoman from Ohio. We want a good quality patent. But many parties, and it is much appre- Ms. KAPTUR. I thank the gentleman simply taking more time, the argu- ciated. very much for yielding and would just ment against that is not simply the Mr. Chairman, this legislation that I wish to ask him this question. If there one made by the chairman about the authored modernizes the U.S. Patent are additional staff that will be work- patent term and how much of it will be and Trademark Office. It was inspired ing directly for the U.S. Patent and left, it is that in that backlog that is by two principles essential to a democ- Trademark Office, then why does this getting longer and longer and longer racy: the protection of intellectual bill permit commercial entities to do are lifesaving medical devices, new property rights and the freedom to ex- the review process, which means you drugs, new technologies to make Amer- change goods and services. are outsourcing or contracting out ica more productive and efficient, fas- The Patent and Trademark Office work that should legitimately be done cinating and important inventions that does not receive the attention of other by the office? need to be disseminated and distrib- government agencies such as the De- Mr. SENSENBRENNER. The answer uted and will not be until that patent partment of State and Department of to the question is that it speeds up the issues. Justice, but it should. The Patent and Trademark Office is crucial to the process. And with the WTO treaty b 1715 changing the patent term to 20 years health of our economy and to the lives from the date of filing, every day that That time is costing our economy of millions of Americans. there is a delay in actually deter- and our people both in terms of quality The Patent and Trademark Office mining whether the application results of life, health care, and economic effi- protects the rights of all American in- in the patentable invention means that ciency. ventors. From the lone individual there is one less day of patent protec- Mr. Chairman, I yield 2 minutes to working in their garage to the small tion before that patent expires. So if it the gentleman from Florida (Mr. business owner with a breakthrough takes 8 years for the PTO to act on an WEXLER), a member of the sub- idea to the large high-tech company application, that means that somebody committee. that applies for hundreds of patents, all who has invented something only has Mr. WEXLER. Mr. Chairman, as a rely on a responsive Patent and Trade- got 12 years left. With software tech- member of the Subcommittee on mark Office. Without a strong PTO, nology increasing at such a rapid rate, Courts, the Internet, and Intellectual our economy would be devastated, our by the time the PTO acts if we do not Property and as a co-chair of the Con- quality of life would be diminished, and do something about it, the invention is gressional IP Caucus, I rise in strong jobs would be lost or never created in going to be practically useless. support of H.R. 1561, and I am quite the first place. Ms. KAPTUR. If the gentleman could pleased that the House leadership has Mr. Chairman, this bill prevents the clarify, he has stated then that because allowed this compromise to be reached diversion of Patent and Trademark Of- of the World Trade Organization, the and that we have the debate today. fice fees paid by inventors to fund gov- WTO requirements, this is why we are The Patent and Trademark Office is ernment programs unconnected to the having to pass this bill? in severe need of additional resources agency. The diversion of fees to the of- Mr. SENSENBRENNER. If the gen- to ensure the expedience and quality of fice is unfair, counterproductive, and tlewoman from Ohio will refresh her the patent examination process. With- an obstacle to sustained economic

VerDate jul 14 2003 02:20 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00043 Fmt 4634 Sfmt 0634 E:\CR\FM\K03MR7.081 H03PT1 H798 CONGRESSIONAL RECORD — HOUSE March 3, 2004 growth. Approximately $750 million has and the future of entrepreneurial cap- posal from the Patent Office to allow been diverted from the PTO in the last italism are literally at stake. outsourcing of searches, and working decade alone. Such a large revenue loss Mr. BERMAN. Mr. Chairman, I yield with the gentleman from Texas (Chair- has deprived the Patent and Trade- 2 minutes to the gentleman from Wash- man SMITH), with other committee mark Office of the resources it must ington (Mr. INSLEE). members, with the PTO, with PTO em- have to serve the patent and trade- (Mr. INSLEE asked and was given ployee unions, and with all the various mark holders of the United States. At permission to revise and extend his re- industry groups, we put constraints on a time when the office is struggling to marks.) the ability to outsource allowed by the pay its examiners enough and to keep Mr. INSLEE. Mr. Chairman, this bill bill. Together with the gentleman from up with applications, particularly in is consistent with an idea expressed by Texas (Chairman SMITH), we developed high-tech areas, Congress should take a former Member of this Chamber who a limiting amendment that was accept- an interest in protecting our economy did pretty well for himself, Abraham ed with essentially no opposition in the by keeping patents and trademark fees Lincoln. Lincoln said that the Patent Committee on the Judiciary; and the within the Patent and Trademark Of- Office adds the flame of interest to the bill, as so amended, was reported out fice. light of creativity. And that is why we with Democrats and Republicans ex- This bill enables the Patent and need to improve the effectiveness of pressing just about unanimous support Trademark Office to hire 2,900 new pat- our Patent Office. We need to do so be- for the bill. ent examiners. Today the average time cause what we all recognize in this to process a patent exceeds 2 years. Chamber is one answer to the $64,000 H.R. 1561 prohibits the PTO from Without the new examiners, agency question of how we are going to grow outsourcing until all of the following delays will soon reach 3 or even 4 jobs in this country, is we are going to criteria are met: the PTO conducts a years. If this fee bill does not become do this by playing to our American pilot project of limited scope for not law, it is estimated that 140,000 patents unique strength; and the uniquely more than 18 months to test the effi- will not be issued over the next 5 years. American strength is we are the best cacy of outsourcing patent searches; That is 140,000 missed opportunities for innovators, we are the best tech- secondly, that the pilot program must the American people. nologists, we are the best creators for demonstrate that the searches per- If nothing is done, if the status quo new devices the world has ever seen. formed by commercial entities are ac- continues, it means new products will And we need to play to this unique curate and at least meet or exceed the not make it to the market, jobs will American strength in our strategy on standards conducted and used by the not be created, and the inventors who how to deal with the development of PTO; the director, third, must submit a came up with new ideas and products the global economy. And this bill, al- report to Congress detailing the meth- will not have their intellectual prop- though it will be little noted, it should odology of the pilot and containing a erty protected and so will not market be long remembered in our ability to comparative evaluation of outsourced their inventions. play to that strength because we have and patent examiner searches, address- This bill helps small businesses and people in every district in this country ing factors such as productivity, costs, nonprofit institutions. It provides a 50 who today are working on inventions and quality; fourth, and very impor- percent discount on most services to who will have the added flame of inter- tantly, the Patent Public Advisory small businesses, universities, and est to their light of creativity. Committee, an independent entity con- other nonprofit entities. The benefits Let me give the Members an exam- sisting of patent union representatives of an improved and streamlined PTO ple. I have got some folks this after- and PTO user groups, has to submit a will help small businesses and univer- noon who are working on a potential report to Congress with a detailed sities and encourage new research and drug in Bothell, Washington, that analysis of the pilot project. innovation. could potentially actually cure in a And even after that, if that inde- Mr. Chairman, I would like to again meaningful way one type of diabetes. pendent committee, all that concludes thank the gentleman from Wisconsin Those folks who are laboring over their that it makes sense to outsource pat- (Mr. SENSENBRENNER), chairman of the computers and bunsen burners today ent searches, nothing can happen until Committee on the Judiciary, for mak- deserve an American Patent Office that after 1 year so that Congress has a year ing this issue a priority for our com- will process patents in a timely fash- to decide whether or not to continue to mittee and working with the appropri- ion, which we simply do not have now. prohibit search outsourcing despite the ators to resolve our differences on PTO We do not want to see the time period results of these reports. funding. move from a horrendous 2-year delay Since U.S. Patent No. 1 was issued in today up to a 4- or 6-year delay in 5 or H.R. 1561 prohibits the PTO from 1837 for traction wheels, the patent sys- 6 years. outsourcing searches unless all of these tem and the creativity, genius, and tal- So I want to show my appreciation criteria are met. The National Treas- ent that defined it have benefited all for the chairman and the gentleman ury Union, every patent user organiza- Americans. From the revolutionary from California (Mr. BERMAN), who tion that I know of, large companies, electric light bulb to the latest soft- have worked on this to get this bill to small companies, universities, non- ware technology, patents reflect Amer- the floor. It is one answer to how we profits, all of them involved in the pat- ica and contribute to our economic are going to really compete in a global ent process all think this bill does not prosperity. economy. Let us play to the American destroy the Patent Office. This bill is This bipartisan bill is supported by strength. Let us improve the Patent of- the most important thing to saving the these organizations: the Information fice. Let us grow jobs in this country. whole patent process. And the whole Technology Industry Council, Chamber Mr. BERMAN. Mr. Chairman, I yield point of even entertaining the idea of of Commerce, the National Association myself such time as I may consume. outsourcing is simply to deal with bet- of Manufacturers, the Intellectual I have no further requests for time, ter quality, better productivity, and Property Owners, the International but I do want to address this issue of more time. I urge that H.R. 1561 be Trademark Association, the Associa- outsourcing just to get the record passed. tion of American Universities, and the straight here. As a general principle, I Mr. GOODLATTE. I rise today in strong Association for Competitive Tech- am opposed. I share the feelings of the nology, as well as many others. gentlewoman from Ohio regarding the support of the U.S. Patent and Trademark Fee Mr. Chairman, this bill is good for in- general proposition, the farming gov- Modernization Act. novation, good for the economy, and ernment responsibilities and jobs out America’s commitment to protecting intellec- good for the American people. The PTO to private entities and particularly tual property gives America a distinct competi- has rarely been more important than it when we are dealing with core govern- tive advantage in the global marketplace. is today. It must have the resources it ment functions; and I think searches When a country provides an atmosphere that needs to professionally and expedi- performed by patent examiners may be is conducive to innovation and encourages the tiously process patent and trademark such core functions. But in H.R. 1561 aggressive enforcement of intellectual property applications. American jobs, profits, what we took was an open-ended pro- rights, businesses will seek the protection of

VerDate jul 14 2003 02:20 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00044 Fmt 4634 Sfmt 9920 E:\CR\FM\K03MR7.082 H03PT1 March 3, 2004 CONGRESSIONAL RECORD — HOUSE H799 that country and will make conscious deci- were used for unrelated government pro- priations Committees that will give the appro- sions to innovate there. America must con- grams. I am pleased because these fees will priators the deference they need to set the tinue to be the world leader in protecting intel- specifically go to improving patent quality, refunding levels, but will provide the authorizers lectual property so that it will continue to be ducing the time it takes to examine a patent and the patent community the assurances the world leader in innovation. and increasing efficiency of the Patent and they need to make sure that any additional H.R. 1561, the U.S. Patent and the Trade- Trademark Office in total. These are the goals funds raised through the fees will be spent for mark Fee Modernization Act, would codify a of the 21st Century Strategic Plan that was their designated purpose. Any balance of revised fee schedule that would give the developed by the Patent Office and reviewed funds are to be returned to the patent appli- USPTO the resources it needs to increase the by the Congress. cants, and not be spent elsewhere by the Fed- quality of issued patents and trademarks, to Finally and most importantly this bill ensures eral Government. hire additional examiners, and to reduce the that companies can and will continue to have Let me also make it clear that while I have backlog of applications that is currently pend- opportunities to innovate and remain competi- some concerns about outsourcing and poten- ing. tive in this global economy. tial liability issues outsourcing might create, In addition, H.R. 1561 represents an impor- Mr. MORAN of Virginia. Mr. Chairman, I rise let’s recognize that this is just a pilot program tant compromise that effectively ends ‘‘fee di- in support of the U.S. Patent and Trademark with ample opportunity for Congress to exer- version,’’ the current practice of diverting the Fee Modernization Act (H.R. 1561). cise appropriate oversight. Whatever civil serv- excess fees collected by the USPTO to the This legislation builds upon a strong founda- ice jobs might one day be lost by outsourcing Federal Government. Under the compromise, tion first established back on April 5, 1790, will more than be made up by the thousands if the USPTO collects more in fees than it is when the first patent statute was passed by of jobs this legislation will help create. The Patent and Trademark Office plans to appropriated, the balance would be rebated the Congress of the 12 United States. That’s increase its patent examining staff by about back to the users. right, we had our first patent law before Rhode Furthermore, the bill protects small busi- Island became our 13th State. 1,000 annually in fiscal years 2005 and 2006, nesses by reducing the filing fee for any small At the time, the first law directed the Sec- reaching and maintaining a stable level of about 4,500 examiners after that. entity or independent inventor by 75 percent if retary of State, the Secretary of War and the Mr. Chairman, our future is made more se- those entities file their applications electroni- Attorney General to determine if they, or any cure through a system that protects the rights two of them thought ‘‘the invention or dis- cally, in addition to other protections for small of inventors. businesses. covery sufficiently useful and important’’ to At the centennial celebration of the U.S. This legislation is an important step in the merit a patent. Patent Office in 1890, Commissioner Charles ongoing effort to enhance the quality and time- A hefty fee between $4 and $5 was col- Elliot Mitchell eloquently stated the important liness of patent and trademark processing. lected to process and approve each patent pe- decision of our Founding Fathers to provide Our Nation’s investors deserve nothing less tition. Interestingly, the payment did not go to protections for intellectual property when draft- than the most efficient and accurate patent the newly created Federal Government but to ing the Constitution: and trademark office in the world. I urge each a government employee, the Chief Clerk of For who is bold enough to say that the of my colleagues to support this important leg- the Department of State. The funds went to Constitution could have overspread a con- islation. support the patent operations and later fi- tinent if the growth of invention and inven- Mr. CANTOR. Mr. Chairman, I rise today in nanced the construction of the first Patent Of- tive achievement had not kept pace with ter- favor of the United States Patent and Trade- fice, not to support the general funds of the ritorial expansion. It is invention which mark Fee Modernization Act (H.R. 1561). This U.S. Treasury. brought the Pacific Ocean to the legislation is crucial to America maintaining its Today, the U.S. Patent and Trademark Of- Alleghanies. It is invention which, fostered, by a single sentence in their immortal work, role as the world leader in innovative tech- fice, an office that I am proud to say resides has made it possible for the flag of one re- nology. in my congressional district, is struggling with public to carry more than forty symbolic Intellectual Property is the currency that an increasingly complex and voluminous work- stars. drives innovation in America’s high-tech econ- load. Last year, the office received more than My colleagues for the sake of this great Na- omy, and the U.S. Patent and Trademark Of- 330,000 patent applications and more than tion, modernize the Patent and Trademark Of- fice (PTO) is charged with granting the impor- 260,000 trademark applications. fice; support the U.S. Patent and Trademark tant patents and trademarks for these innova- Patent applications have doubled since Fee Modernization Act of 2003. tions. The PTO serves a critical role in the 1992. As a result, patent pendency (the Mr. BERMAN. Mr. Chairman, I yield promotion and development of new products amount of time a patent application is pending back the balance of my time. and commercial activity in our country. before a patent is issued) now averages over Mr. SENSENBRENNER. Mr. Chair- The PTO is of vital importance to the tech- 2 years and is even longer in more com- man, I yield back the balance of my nology sector of our economy, and it is vital plicated technologies. time. that this agency have proper funding to exe- Without more examiners, average pendency The CHAIRMAN. All time for general cute its mission. This legislation will allow the in areas such as computer-related tech- debate has expired. PTO to accomplish this goal—while allowing nologies will double to 6 to 8 years in the next Pursuant to the rule, the committee small business innovators to compete with few years. This delay is a drag, holding back amendment in the nature of a sub- larger corporations. our economy’s full potential, unfairly punishing stitute shall be considered as an origi- H.R. 1561 will eliminate patent fee diversion American businesses and entrepreneurs at a nal bill for the purpose of amendment and will ensure that all fees paid to the PTO time when intellectual-property-based indus- under the 5-minute rule and shall be will be used to expedite the time-consuming tries are essential to economic growth. considered read. and costly procedures associated with grant- As application processing times grow, the The text of the committee amending patents and trademarks. incentives for investment diminish, especially ment in the nature of a substitute is as This legislation is the first step toward im- for individuals and small entities with limited follows: proving patent and trademark quality while re- resources whose inventions are in greater H.R. 1561 ducing application backlogs. This reform will danger of being counterfeited or pirated. Be it enacted by the Senate and House of Rep- help eliminate some of the bureaucracy that The status quo is a recipe for disaster, and resentatives of the United States of America in hinders businesses from success in the mar- H.R. 1561 represents a well-conceived and bi- Congress assembled, ketplace and hinders the advancement of partisan way out of this dilemma. Without the SECTION 1. SHORT TITLE. This Act may be cited as the ‘‘United States technology in America. bill, the backlog of unexamined patents will Patent and Trademark Fee Modernization Act I urge final passage of H.R. 1561. more than double—from 475,000 today to 1 of 2003’’. Mr. LATHAM. Mr. Chairman, I stand in sup- million by 2008. SEC. 2. FEES FOR PATENT SERVICES. port of H.R. 1561. The legislation is the cul- This legislation will allow the Patent and (a) GENERAL PATENT FEES.—Section 41(a) of mination of years of hard work between the Trademark Office to implement its 21st Cen- title 35, United States Code, is amended to read appropriators and the members of the Judici- tury Strategic Plan by improving productivity, as follows: ary Committee. It allows the appropriators to patent quality, and e-government. It will give ‘‘(a) GENERAL FEES.—The Director shall retain oversight of the Patent and Trademark charge the following fees: the agency the revenue it needs to hire 2,900 ‘‘(1) FILING AND BASIC NATIONAL FEES.— Office, while permanently ending the practice needed new patent examiners. ‘‘(A) On filing each application for an origi- of diverting fees paid by users of the Patent I support the compromise that was brokered nal patent, except for design, plant, or provi- and Trademark Office. In the past, these fees between members of the Judiciary and Appro- sional applications, $300.

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‘‘(B) On filing each application for an origi- ‘‘(6) APPEAL FEES.— this paragraph for any applicant who files a nal design patent, $200. ‘‘(A) On filing an appeal from the examiner to written declaration of express abandonment as ‘‘(C) On filing each application for an origi- the Board of Patent Appeals and Interferences, prescribed by the Director before an examina- nal plant patent, $200. $500. tion has been made of the application under sec- ‘‘(D) On filing each provisional application ‘‘(B) In addition, on filing a brief in support tion 131 of this title, and for any applicant who for an original patent, $200. of the appeal, $500, and on requesting an oral provides a search report that meets the condi- ‘‘(E) On filing each application for the reissue hearing in the appeal before the Board of Pat- tions prescribed by the Director. of a patent, $300. ent Appeals and Interferences, $1,000. ‘‘(E) For purposes of subparagraph (A), a ‘‘(F) The basic national fee for each inter- ‘‘(7) REVIVAL FEES.—On filing each petition ‘qualified search authority’ may not include a national application filed under the treaty de- for the revival of an unintentionally abandoned commercial entity unless— fined in section 351(a) of this title entering the application for a patent, for the unintentionally ‘‘(i) the Director conducts a pilot program of national stage under section 371 of this title, delayed payment of the fee for issuing each pat- limited scope, conducted over a period of not $300. ent, or for an unintentionally delayed response more than 18 months, which demonstrates that ‘‘(G) In addition, excluding any sequence list- by the patent owner in any reexamination pro- searches by commercial entities of the available ing or computer program listing filed in an elec- ceeding, $1,500, unless the petition is filed under prior art relating to the subject matter of inven- tronic medium as prescribed by the Director, for section 133 or 151 of this title, in which case the tions claimed in patent applications— any application the specification and drawings fee shall be $500. ‘‘(I) are accurate; and of which exceed 100 sheets of paper (or equiva- ‘‘(8) EXTENSION FEES.—For petitions for 1- ‘‘(II) meet or exceed the standards of searches lent as prescribed by the Director if filed in an month extensions of time to take actions re- conducted by and used by the Patent and electronic medium), $250 for each additional 50 quired by the Director in an application— Trademark Office during the patent examina- sheets of paper (or equivalent as prescribed by ‘‘(A) on filing a first petition, $120; tion process; the Director if filed in an electronic medium) or ‘‘(B) on filing a second petition, $330; and ‘‘(ii) the Director submits a report on the re- fraction thereof. ‘‘(C) on filing a third or subsequent petition, sults of the pilot program to the Congress and ‘‘(2) EXCESS CLAIMS FEES.—In addition to the $570.’’. the Patent Public Advisory Committee that in- fee specified in paragraph (1)— (b) PATENT MAINTENANCE FEES.—Section 41(b) cludes— ‘‘(A) on filing or on presentation at any other of title 35, United States Code, is amended to ‘‘(I) a description of the scope and duration of time, $200 for each claim in independent form in read as follows: the pilot program; excess of 3; ‘‘(b) MAINTENANCE FEES.—The Director shall ‘‘(II) the identity of each commercial entity ‘‘(B) on filing or on presentation at any other charge the following fees for maintaining in participating in the pilot program; time, $50 for each claim (whether dependent or force all patents based on applications filed on ‘‘(III) an explanation of the methodology used independent) in excess of 20; and or after December 12, 1980: to evaluate the accuracy and quality of the ‘‘(C) for each application containing a mul- ‘‘(1) 3 years and 6 months after grant, $900. search reports; and tiple dependent claim, $360. ‘‘(2) 7 years and 6 months after grant, $2,300. ‘‘(IV) an assessment of the effects that the ‘‘(3) 11 years and 6 months after grant, $3,800. For the purpose of computing fees under this pilot program, as compared to searches con- paragraph, a multiple dependent claim referred Unless payment of the applicable maintenance ducted by the Patent and Trademark Office, to in section 112 of this title or any claim de- fee is received in the United States Patent and had and will have on— pending therefrom shall be considered as sepa- Trademark Office on or before the date the fee ‘‘(aa) patentability determinations; rate dependent claims in accordance with the is due or within a grace period of 6 months ‘‘(bb) productivity of the Patent and Trade- number of claims to which reference is made. thereafter, the patent will expire as of the end mark Office; The Director may by regulation provide for a re- of such grace period. The Director may require ‘‘(cc) costs to the Patent and Trademark Of- fund of any part of the fee specified in this the payment of a surcharge as a condition of ac- fice; paragraph for any claim that is canceled before cepting within such 6-month grace period the ‘‘(dd) costs to patent applicants; and an examination on the merits, as prescribed by payment of an applicable maintenance fee. No ‘‘(ee) other relevant factors; the Director, has been made of the application fee may be established for maintaining a design ‘‘(iii) the Patent Public Advisory Committee under section 131 of this title. Errors in payment or plant patent in force.’’. reviews and analyzes the Director’s report of the additional fees under this paragraph may (c) PATENT SEARCH FEES.—Section 41(d) of under clause (ii) and the results of the pilot pro- be rectified in accordance with regulations pre- title 35, United States Code, is amended to read gram and submits a separate report on its anal- scribed by the Director. as follows: ysis to the Director and the Congress that in- ‘‘(3) EXAMINATION FEES.— ‘‘(d) PATENT SEARCH AND OTHER FEES.— cludes— ‘‘(A) For examination of each application for ‘‘(1) PATENT SEARCH FEES.—(A) The Director ‘‘(I) an independent evaluation of the effects an original patent, except for design, plant, pro- shall charge a fee for the search of each appli- that the pilot program, as compared to searches visional, or international applications, $200. cation for a patent, except for provisional appli- conducted by the Patent and Trademark Office, ‘‘(B) For examination of each application for cations. The Director shall establish the fees had and will have on the factors set forth in an original design patent, $130. charged under this paragraph to recover an clause (ii)(IV); and ‘‘(C) For examination of each application for amount not to exceed the estimated average cost ‘‘(II) an analysis of the reasonableness, ap- an original plant patent, $160. to the Office of searching applications for pat- propriateness, and effectiveness of the methods ‘‘(D) For examination of the national stage of ent either by acquiring a search report from a used in the pilot program to make the evalua- each international application, $200. qualified search authority, or by causing a tions required under clause (ii)(IV); and ‘‘(E) For examination of each application for search by Office personnel to be made, of each ‘‘(iv) the Congress does not, during the 1-year the reissue of a patent, $600. application for patent. period beginning on the date on which the Pat- The provisions of section 111(a)(3) of this title ‘‘(B) For purposes of determining the fees to ent Public Advisory Committee submits its report relating to the payment of the fee for filing the be established under this paragraph, the cost to to the Congress under clause (iii), enact a law application shall apply to the payment of the the Office of causing a search of an application prohibiting searches by commercial entities of fee specified in this paragraph with respect to to be made by Office personnel shall be deemed the available prior art relating to the subject an application filed under section 111(a) of this to be— matter of inventions claimed in patent applica- title. The provisions of section 371(d) of this title ‘‘(i) $500 for each application for an original tions. relating to the payment of the national fee shall patent, except for design, plant, provisional, or ‘‘(2) OTHER FEES.—The Director shall estab- apply to the payment of the fee specified in this international applications; lish fees for all other processing, services, or ma- paragraph with respect to an international ap- ‘‘(ii) $100 for each application for an original terials relating to patents not specified in this plication. The Director may by regulation pro- design patent; section to recover the estimated average cost to vide for a refund of any part of the fee specified ‘‘(iii) $300 for each application for an original the Office of such processing, services, or mate- in this paragraph for any applicant who files a plant patent; rials, except that the Director shall charge the written declaration of express abandonment as ‘‘(iv) $500 for the national stage of each inter- following fees for the following services: prescribed by the Director before an examina- national application; and ‘‘(A) For recording a document affecting title, tion has been made of the application under sec- ‘‘(v) $500 for each application for the reissue $40 per property. tion 131 of this title, and for any applicant who of a patent. ‘‘(B) For each photocopy, $.25 per page. provides a search report that meets the condi- ‘‘(C) The provisions of section 111(a)(3) of this ‘‘(C) For each black and white copy of a pat- tions prescribed by the Director. title relating to the payment of the fee for filing ent, $3. ‘‘(4) ISSUE FEES.— the application shall apply to the payment of ‘‘(A) For issuing each original patent, except the fee specified in this paragraph with respect The yearly fee for providing a library specified for design or plant patents, $1,400. to an application filed under section 111(a) of in section 12 of this title with uncertified printed ‘‘(B) For issuing each original design patent, this title. The provisions of section 371(d) of this copies of the specifications and drawings for all $800. title relating to the payment of the national fee patents in that year shall be $50.’’. ‘‘(C) For issuing each original plant patent, shall apply to the payment of the fee specified (d) ADJUSTMENTS.—Section 41(f) of title 35, $1,100. in this paragraph with respect to an inter- United States Code, shall apply to the fees es- ‘‘(D) For issuing each reissue patent, $1,400. national application. tablished under the amendments made by this ‘‘(5) DISCLAIMER FEE.—On filing each dis- ‘‘(D) The Director may by regulation provide section, beginning in fiscal year 2005. claimer, $130. for a refund of any part of the fee specified in (e) CONFORMING AMENDMENTS.—

VerDate jul 14 2003 02:20 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00046 Fmt 4634 Sfmt 6333 E:\CR\FM\A03MR7.045 H03PT1 March 3, 2004 CONGRESSIONAL RECORD — HOUSE H801 (1) Section 41 of title 35, United States Code, United States Code, as amended by this Act, SEC. 8. CLERICAL AMENDMENT. is amended— shall apply only to— Subsection (c) of section 311 of title 35, United (A) in subsection (c), by striking ‘‘(c)(1)’’ and (I) applications for patents filed under section States Code, is amended by aligning the text inserting ‘‘(c) LATE PAYMENT OF FEES.—(1)’’; 111(a) of title 35, United States Code, on or after with the text of subsection (a) of such section. (B) in subsection (e), by striking ‘‘(e)’’ and in- the effective date set forth in subsection (a) of The CHAIRMAN. No amendments to serting ‘‘(e) WAIVERS OF CERTAIN FEES.—’’; this section, and the committee amendment in the na- (C) in subsection (f), by striking ‘‘(f)’’ and in- (II) international applications entering the ture of a substitute are in order except serting ‘‘(f) ADJUSTMENTS IN FEES.—’’; national stage under section 371 of title 35, (D) in subsection (g), by striking ‘‘(g)’’ and in- the amendments printed in House Re- United States Code, for which the basic national port 108–431. Each amendment may be serting ‘‘(g) EFFECTIVE DATES OF FEES.—’’; fee specified in section 41 of title 35, United (E) in subsection (h), by striking ‘‘(h)(1)’’ and States Code, was not paid before the effective offered only in the order printed in the inserting ‘‘(h) REDUCTIONS IN FEES FOR CERTAIN date set forth in subsection (a) of this section. report, by a Member designated in the ENTITIES.—(1)’’; and (ii) Section 41(a)(1)(D) of title 35, United report, shall be considered read, shall (F) in subsection (i), by striking ‘‘(i)(1)’’ and States Code as amended by this Act, shall apply be debatable for the time specified in inserting ‘‘(i) SEARCH SYSTEMS.—(1)’’. only to applications for patent filed under sec- the report, equally divided and con- (2) Section 119(e)(2) of title 35, United States tion 111(b) of title 35, United States Code, be- trolled by the proponent and an oppo- Code, is amended by striking ‘‘subparagraph (A) fore, on, or after the effective date set forth in or (C) of’’. nent, shall not be subject to amend- subsection (a) of this section in which the filing ment, and shall not be subject to a de- SEC. 3. ADJUSTMENT OF TRADEMARK FEES. fee specified in section 41 of title 35, United mand for division of the question. (a) FEE FOR FILING APPLICATION.—The fee States Code, was not paid before the effective It is now in order to consider amend- under section 31(a) of the Trademark Act of 1946 date set forth in subsection (a) of this section. ment No. 1 printed in House Report (15 U.S.C. 1113(a)) for filing an electronic appli- (C) Section 41(a)(2) of title 35, United States cation for the registration of a trademark shall Code, as amended by this Act, shall apply only 108–431 and made in order by the order be $325. If the trademark application is filed on to the extent that the number of excess claims, of the House of earlier today. paper, the fee shall be $375. The Director may after giving effect to any cancellation of claims, AMENDMENT NO. 1 OFFERED BY MR. reduce the fee for filing an electronic applica- is in excess of the number of claims for which SENSENBRENNER tion for the registration of a trademark to $275 the excess claims fee specified in section 41 of Mr. SENSENBRENNER. Mr. Chair- for any applicant who prosecutes the applica- title 35, United States Code, was paid before the man, I offer an amendment. tion through electronic means under such condi- effective date set forth in subsection (a) of this The CHAIRMAN. The Clerk will des- tions as may be prescribed by the Director. Be- section. ignate the amendment. ginning in fiscal year 2005, the provisions of the (2) The amendments made by section 3 shall The text of the amendment is as fol- second and third sentences of section 31(a) of apply to all applications for the registration of lows: the Trademark Act of 1946 shall apply to the a trademark filed or amended on or after the ef- Amendment made in order pursuant to the fees established under this section. fective date set forth in subsection (a) of this order of the House of today and House Reso- (b) REFERENCE TO TRADEMARK ACT OF 1946.— section. For purposes of this section, the ‘‘Trademark lution 547 offered by Mr. SENSENBRENNER: (c) TRANSITIONAL PROVISIONS.— Strike section 5 and insert the following: Act of 1946’’ refers to the Act entitled ‘‘An Act (1) SEARCH FEES.—During the period begin- to provide for the registration and protection of SEC. 5. PATENT AND TRADEMARK FUNDING. ning on the effective date set forth in subsection Section 42(c) of title 35, United States trademarks used in commerce, to carry out the (a) of this section and ending on the date on provisions of certain international conventions, Code, is amended— which the Director establishes search fees under (1) by striking ‘‘(c)’’ and inserting ‘‘(c)(1)’’; and for other purposes.’’, approved July 5, 1946 the authority provided in section 41(d)(1) of title (15 U.S.C. 1051 et seq.). and 35, United States Code, the Director shall (2) by adding at the end the following new SEC. 4. CORRECTION OF ERRONEOUS NAMING OF charge— OFFICER. paragraph: (A) for the search of each application for an ‘‘(2) There is established in the Treasury a (a) CORRECTION.—Section 13203(a) of the 21st original patent, except for design, plant, provi- Patent and Trademark Fee Reserve Fund. If Century Department of Justice Appropriations sional, or international application, $500; fee collections by the Patent and Trademark Authorization Act (Public Law 107–273; 116 Stat. (B) for the search of each application for an Office for a fiscal year exceed the amount ap- 1902) is amended— original design patent, $100; propriated to the Office for that fiscal year, (1) in the subsection heading, by striking (C) for the search of each application for an fees collected in excess of the appropriated ‘‘COMMISSIONER’’ and inserting ‘‘DIRECTOR’’; original plant patent, $300; amount shall be deposited in the Patent and and (D) for the search of the national stage of Trademark Fee Reserve Fund. After the end (2) in paragraphs (1) and (2), by striking each international application, $500; and of each fiscal year, the Director shall make ‘‘Commissioner’’ each place it appears and in- a finding as to whether the fees collected for serting ‘‘Director’’. (E) for the search of each application for the reissue of a patent, $500. that fiscal year exceed the amount appro- (b) EFFECTIVE DATE.—The amendments made (2) TIMING OF FEES.—The provisions of section priated to the Patent and Trademark Office by subsection (a) shall be effective as of the date for that fiscal year. If the amount collected of the enactment of Public Law 107–273. 111(a)(3) of title 35, United States Code, relating to the payment of the fee for filing the applica- exceeds the amount appropriated, the Direc- SEC. 5. PATENT AND TRADEMARK OFFICE FUND- tor shall, if the Director determines that ING. tion shall apply to the payment of the fee specified in paragraph (1) with respect to an applica- there are sufficient funds in the Reserve Section 42 of title 35, United States Code, is Fund, make payments from the Reserve amended— tion filed under section 111(a) of title 35, United States Code. The provisions of section 371(d) of Fund to persons who paid patent or trade- (1) in subsection (b), by striking ‘‘Appropria- mark fees during that fiscal year. The Direc- tion’’; and title 35, United States Code, relating to the payment of the national fee shall apply to the pay- tor shall by regulation determine which per- (2) in subsection (c), in the first sentence— sons receive such payments and the amount (A) by striking ‘‘To the extent’’ and all that ment of the fee specified in paragraph (1) with respect to an international application. of such payments, except that such pay- follows through ‘‘fees’’ and inserting ‘‘Fees’’; ments in the aggregate shall equal the and (3) REFUNDS.—The Director may by regulation provide for a refund of any part of the fee speci- amount of funds deposited in the Reserve (B) by striking ‘‘shall be collected by and Fund during that fiscal year, less the cost of shall be available to the Director’’ and inserting fied in paragraph (1) for any applicant who files a written declaration of express abandon- administering the provisions of this para- ‘‘shall be collected by the Director and shall be graph.’’. available until expended’’. ment as prescribed by the Director before an examination has been made of the application In section 6(a), strike ‘‘Except as’’ and all SEC. 6. EFFECTIVE DATE, APPLICABILITY, AND that follows through the end of the sentence TRANSITIONAL PROVISION. under section 131 of title 35, United States Code, and for any applicant who provides a search re- and insert ‘‘Except as otherwise provided in (a) EFFECTIVE DATE.—Except as provided in this Act and this section, this Act and the section 4 and this section, this Act and the port that meets the conditions prescribed by the Director. amendments made by this Act shall take ef- amendments made by this Act shall take effect fect on October 1, 2004, or on the date of the (d) EXISTING APPROPRIATIONS.—The provi- on October 1, 2003, or the date of the enactment enactment of this Act, whichever occurs sions of any appropriation Act that make of this Act, whichever is later. later.’’. amounts available pursuant to section 42(c) of (b) APPLICABILITY.— Page 12, strike lines 17 through 20 and in- title 35, United States Code, and are in effect on (1)(A) Except as provided in subparagraphs sert the following: (B) and (C), the amendments made by section 2 the effective date set forth in subsection (a) (d) ADJUSTMENTS.— shall apply to all patents, whenever granted, shall cease to be effective on that effective date. (1) IN GENERAL.—Section 41(f) of title 35, and to all patent applications pending on or SEC. 7. DEFINITION. United States Code, shall apply to the fees filed after the effective date set forth in sub- In this Act, the term ‘‘Director’’ means the established under the amendments made by section (a) of this section. Under Secretary of Commerce for Intellectual this section, beginning in fiscal year 2005. (B)(i) Except as provided in clause (ii), sec- Property and Director of the United States Pat- (2) CONFORMING AMENDMENT.—Effective Oc- tions 41(a)(1), 41(a)(3), and 41(d)(1) of title 35, ent and Trademark Office. tober 1, 2004, section 41(f) of title 35, United

VerDate jul 14 2003 02:20 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00047 Fmt 4634 Sfmt 0634 E:\CR\FM\A03MR7.045 H03PT1 H802 CONGRESSIONAL RECORD — HOUSE March 3, 2004 States Code, is amended by striking ‘‘(a) and Mr. SENSENBRENNER. Mr. Chair- to the appropriators and the majority leader for (b)’’ and inserting ‘‘(a), (b), and (d)’’. man, I yield myself such time as I may working with us on this point. I emphasize that Page 11, add the following after line 24: consume. without this language, support for the bill dis- ‘‘(F) The Director shall require that any I have a lengthy statement that I sipates. search by a qualified search authority that is will not read in full, but will insert in In addition, the bill as reported contains a a commercial entity is conducted in the pilot program to determine the efficacy of al- United States by persons that— the RECORD. But let me state that a ‘‘(i) if individuals, are United States citi- significant part of this amendment lowing commercial entities to perform the zens; and deals with the agreement that we have search function, thereby relieving the agency ‘‘(ii) if business concerns, are organized reached with the appropriators that of the burden and freeing up examiners to do under the laws of the United States or any was discussed in the colloquy which I other work. The amendment specifies that par- State and employ United States citizens to had earlier today with the gentleman ticipation in the pilot program will be restricted perform the searches. from Virginia (Mr. WOLF), the distin- to American businesses and American citi- ‘‘(G) A search of an application that is the guished chairman of the Subcommittee zens. We have worked closely with Chairman subject of a secrecy order under section 181 on Commerce, Justice, State, Judiciary WOLF’s staff on this point. or otherwise involves classified information Also, in furtherance of the ongoing mod- may only be conducted by Office personnel. and Related Agencies of the Committee on Appropriations. ernization efforts at PTO, the Director is re- ‘‘(H) A qualified search authority that is a quired to reduce the filing fee for any small commercial entity may not conduct a search Let me also state that the amend- of a patent application if the entity has any ment contains various provisions that entity, independent inventor, or nonprofit organization by 75 percent provided those so direct or indirect financial interest in any the gentleman from Illinois (Mr. MAN- qualified file their applications electronically. patent or in any pending or imminent appli- ZULLO) and I have agreed upon relative As I noted a moment ago, Mr. MANZULLO, cation for patent filed or to be filed in the to our previous differences over the Patent and Trademark Office. and I have resolve dour differences over the treatment of small entities under this treatment of small entities under H.R. 1561. Page 12, insert the following after line 20 bill. And pursuant to this agreement, and redesignate the succeeding subsection Pursuant to recently agreed-upon changes, accordingly: my amendment applies a 50 percent my amendment: Applies a 50 percent discount (e) FEES FOR SMALL ENTITIES.—Section discount to all searches for small enti- to all searches for small entities; prohibits 41(h) of title 35, United States Code, is ties, prohibits commercial searches commercial searches that apply to classified amended— that apply to classified matters, pre- matters; prevents commercial entities from (1) in paragraph (1), by striking ‘‘Fees vents commercial entities from per- performing searches when they have a finan- charged under subsection (a) or (b)’’ and in- forming searches when they have a fi- cial interest or other conflict at stake; caps the serting ‘‘Subject to paragraph (3), fees nancial interest or other conflict at search fee after the sixth year; and requires a charged under subsections (a), (b), and stake, caps the search fee after the 6th joint PTO-SBA study regarding the effects of (d)(1)’’; and year, and requires a joint PTO and (2) by adding at the end the following new the fee structure on small entities. paragraph: Small Business Administration study Mr. Chairman, by addressing the fee diver- ‘‘(3) The fee charged under subsection regarding the effects of the fee struc- sion and other issues, this amendment clears (a)(1)(A) shall be reduced by 75 percent with ture on small entities. the way for the other body to consider H.R. respect to its application to any entity to b 1730 1561 and bring real reform to the PTO. I urge which paragraph (1) applies, if the applica- its adoption. tion is filed by electronic means as pre- This, I believe, meets the objections Mr. BERMAN. Mr. Chairman, will scribed by the Director.’’. that members of the Committee on the gentleman yield? (f) SIZE STANDARDS FOR SMALL ENTITIES.— Small Business had relative to the cost Mr. SENSENBRENNER. I yield to (1) STUDY.—The Director, in conjunction to small business of applying for and the gentleman from California. with the Administrator of the Small Busi- hopefully obtaining a patent. I hope Mr. BERMAN. Mr. Chairman, I thank ness Administration and the Chief Counsel that this amendment clears the way the gentleman for yielding. for Advocacy of the Small Business Adminis- for the other body to consider this bill Mr. Chairman, I simply want to ex- tration, shall conduct a study on the effect and bring real reform to the PTO. press my strong support for this of patent fees on the ability of small entity Mr. Chairman, I am delighted to report that amendment. If I were a betting man, I inventors to file patent applications. Such would have bet a lot of money that the study shall examine whether a separate cat- this amendment reflects a thoughtful com- egory of reduced patent fees is necessary to promise between myself and Mr. WOLF, chair- chairman would not have been able to ensure adequate development of new tech- man of the CJS Appropriations Subcommittee, deal with the end of diversion in the nology by small entity inventors. as well as a fair deal between the Judiciary fashion that he was able to without at (2) REPORT.—The Director shall, not later Committee and the chairman of the Small least 25 or 30 appropriators on the than 6 months after the date of the enact- Business Committee, the gentleman from Illi- House floor. I congratulate both him ment of this Act, submit a report on the re- and the subcommittee chairman for nois, Mr. MANZULLO. I want to thank both of sults of the study under paragraph (1) to the their excellent work, and I urge the Committee on the Judiciary and the Com- them for working so steadfastly and produc- tively on this important issue. manager’s amendment be adopted. mittee on Small Business of the House of Mr. SMITH of Texas. Mr. Chairman, I Mr. Chairman, the heart of my amendment Representatives and the Committee on the strongly support this amendment, which is the Judiciary and the Committee on Small Busi- creates a ‘‘refund’’ program to eliminate the result of careful negotiations between the Judi- ness and Entrepreneurship of the Senate. potential incentive for diverting PTO revenue Page 8, line 3, add the following after the ciary and Appropriations Committees. to non-PTO programs. Briefly, if fee collections The two goals of the underlying bill are to period: ‘‘For the 3-year period beginning on in a given fiscal year exceed the amount ap- October 1, 2004, the fee for a search by a improve PTO operations and to end fee diver- propriated to the agency, the excess or over- sion. This amendment makes sure those goals qualified search authority of a patent appli- age shall be deposited in a PTO ‘‘Reserve cation described in clause (i), (iv), or (v) of are achieved. subparagraph (B) may not exceed $500, of a Fund.’’ At the end of the fiscal year the Direc- In order to eliminate the incentive to divert patent application described in clause (ii) of tor determines if there are sufficient funds to fees from the PTO, the amendment estab- subparagraph (B) may not exceed $100, and of make payments to persons who paid fees dur- lishes a rebate program that will deposit any a patent application described in clause (iii) ing that year. fee collections that exceed the amount of of subparagraph (B) may not exceed $300. The The Director is empowered to determine money appropriated to the PTO in a ‘‘reserve Director may not increase any such fee by which recipients qualify and in what amounts, fund.’’ At the end of each year, the PTO Direc- more than 20 percent in each of the next 3 1- except that the payments in aggregate must tor will determine whether there are sufficient year periods, and the Director may not in- equal the amount of revenue in the Reserve crease any such fee thereafter.’’. funds to make payments to users who paid Fund during that fiscal year, less the cost of applicant fees that year. By ending fee diver- The CHAIRMAN. Pursuant to House administering the program. sion and allowing the PTO to keep the fees its Resolution 547, the gentleman from This text is crucial to the bill before us. We users pay each year, the agency will be able Wisconsin (Mr. SENSENBRENNER) and a have been at loggerheads with the Appropria- to make many much-needed reforms to in- Member opposed each will control 10 tions committee on this matter for nearly a crease its efficiency and productivity. minutes. decade, so I am glad to say that we have This amendment also contains provisions The Chair recognizes the gentleman struck an acceptable compromise that serves that will ensure the PTO will operate effec- from Wisconsin (Mr. SENSENBRENNER). the interests of both committees. I am grateful tively. It establishes a pilot program to allow

VerDate jul 14 2003 02:20 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00048 Fmt 4634 Sfmt 9920 E:\CR\FM\A03MR7.043 H03PT1 March 3, 2004 CONGRESSIONAL RECORD — HOUSE H803 private entities to perform the search function pursuant to House Resolution 547, he Hoyer Miller (FL) Saxton associated with obtaining a patent. This will reported the bill back to the House Hulshof Miller (MI) Schiff Hyde Miller (NC) Schrock free up patent examiners to focus on other with an amendment adopted by the Inslee Miller, Gary Scott (GA) work. Committee of the Whole. Isakson Miller, George Scott (VA) Some have mischaracterized this provision The SPEAKER pro tempore. Under Israel Mollohan Sensenbrenner as ‘‘outsourcing’’ that will cut American jobs the rule, the previous question is or- Issa Moore Serrano Jefferson Moran (KS) Sessions and send work overseas. In fact, this amend- dered. Jenkins Moran (VA) Shadegg ment specifies that participation in the pilot Is a separate vote demanded on the John Murphy Shaw program is restricted to American businesses amendment to the committee amend- Johnson (CT) Murtha Shays ment in the nature of a substitute Johnson (IL) Musgrave Sherman and American citizens. By allowing patent Johnson, E. B. Myrick searches to be performed by commercial enti- adopted by the Committee of the Sherwood Johnson, Sam Nadler Shimkus ties, this pilot program will simply allow the pri- Whole? If not, the question is on the Jones (OH) Napolitano Shuster vate sector to take some of the load off of an committee amendment in the nature of Keller Neal (MA) Simmons Kelly Nethercutt a substitute. Simpson already overburdened patent evaluation sys- Kennedy (MN) Neugebauer Skelton tem at the PTO. The committee amendment in the Kennedy (RI) Ney Slaughter Twenty-five to thirty percent of the 355,000 nature of a substitute was agreed to. Kildee Northup Smith (MI) Kilpatrick Norwood patent applications the PTO receives each The SPEAKER pro tempore. The Smith (NJ) Kind Nunes year come from small businesses. The Sen- question is on the engrossment and Smith (TX) King (IA) Nussle senbrenner amendment has many provisions third reading of the bill. King (NY) Olver Smith (WA) to help small businesses obtain patents. The bill was ordered to be engrossed Kingston Ortiz Snyder The PTO is one of the most important agen- Kirk Osborne Solis and read a third time, and was read the Souder cies in the country. It is the agency behind the third time. Kleczka Ose Kline Otter Spratt innovation and invention that drives our econ- The SPEAKER pro tempore. The Knollenberg Owens Stark omy. We must give it the funding it needs to question is on the passage of the bill. Kolbe Oxley Stearns implement meaningful reform and improve its The question was taken; and the LaHood Pallone Stenholm Lampson Pascrell Stupak operations. Speaker pro tempore announced that Langevin Pastor Sweeney This amendment strengthens the underlying the ayes appeared to have it. Larsen (WA) Payne Tancredo bill and I urge my colleagues to support it. Mr. SENSENBRENNER. Mr. Speak- Larson (CT) Pearce Tanner Mr. SENSENBRENNER. Mr. Chair- er, on that I demand the yeas and nays. Latham Pelosi Tauscher man, I have no further requests for LaTourette Peterson (MN) Tauzin The yeas and nays were ordered. Leach Peterson (PA) time, and I yield back the balance of Taylor (MS) The vote was taken by electronic de- Lee Petri Taylor (NC) my time. vice, and there were—yeas 379, nays 28, Levin Pickering Terry The CHAIRMAN. Does anyone seek not voting 26, as follows: Lewis (CA) Pitts Thomas time in opposition? Lewis (KY) Platts Thompson (CA) [Roll No. 38] Linder Pombo The question is on the amendment Thompson (MS) YEAS—379 Lipinski Pomeroy Thornberry offered by the gentleman from Wis- LoBiondo Porter Tiahrt Abercrombie Capps Everett Lofgren Portman consin (Mr. SENSENBRENNER). Tiberi Ackerman Capuano Farr Lowey Price (NC) The amendment was agreed to. Tierney Akin Cardin Fattah Lucas (KY) Pryce (OH) Towns The CHAIRMAN. It is now in order to Alexander Cardoza Feeney Lynch Putnam consider Amendment No. 2 printed in Allen Carter Ferguson Majette Quinn Turner (OH) House Report 108–431. Andrews Case Filner Maloney Radanovich Turner (TX) Baca Chabot Flake Udall (CO) The gentleman from Illinois appar- Manzullo Rahall Bachus Chandler Foley Markey Ramstad Udall (NM) ently is not offering his amendment. Baird Chocola Forbes Marshall Rangel Upton Baker Clyburn Ford It is now in order to consider Amend- Matheson Regula Van Hollen Baldwin Coble Fossella Matsui Rehberg Vela´ zquez ment No. 3 printed in House Report Ballance Collins Frank (MA) McCarthy (MO) Renzi Vitter 108–431. Barrett (SC) Conyers Franks (AZ) McCarthy (NY) Reyes Walden (OR) Barton (TX) Cooper Frelinghuysen PARLIAMENTARY INQUIRY McCollum Reynolds Walsh Bass Cox Frost McCotter Rogers (AL) Wamp Ms. KAPTUR. Mr. Chairman, I have a Beauprez Cramer Gallegly McCrery Rogers (KY) parliamentary inquiry. Becerra Crane Garrett (NJ) Watt McDermott Rogers (MI) Bell Crenshaw Gephardt Waxman The CHAIRMAN. The gentlewoman McGovern Rohrabacher Bereuter Crowley Gerlach Weiner McHugh Ros-Lehtinen will state it. Berkley Cubin Gibbons Weldon (FL) McInnis Ross Ms. KAPTUR. Mr. Chairman. I just Berman Culberson Gilchrest Weller Rothman wanted to ask, is this the final amend- Biggert Cunningham Gillmor McIntyre Wexler McKeon Roybal-Allard ment in the series, and then will we Bilirakis Davis (AL) Gingrey Whitfield Bishop (GA) Davis (CA) Gonzalez McNulty Royce Wicker Rush move to final passage? Bishop (NY) Davis (FL) Goode Meehan Wilson (NM) Meeks (NY) Ryan (OH) The CHAIRMAN. The gentlewoman is Bishop (UT) Davis (IL) Goodlatte Wilson (SC) Mica Ryan (WI) correct. Blackburn Davis (TN) Gordon Wolf Michaud Ryun (KS) Blumenauer Davis, Jo Ann Goss Wu The Chair is ready to proceed. Appar- Millender- Sabo Blunt Davis, Tom Granger Young (AK) ently the gentlewoman from Texas Boehlert Deal (GA) Graves McDonald Sanchez, Loretta does not offer her amendment. Boehner DeFazio Green (TX) The question is on the committee Bonilla DeGette Green (WI) NAYS—28 amendment in the nature of a sub- Bonner Delahunt Greenwood Bartlett (MD) Jackson (IL) Paul Bono DeLauro Grijalva Brown (OH) Jackson-Lee Ruppersberger stitute, as amended. Boozman DeLay Gutierrez Carson (IN) (TX) Sanders Boswell DeMint Gutknecht The committee amendment in the Clay Jones (NC) Schakowsky Boucher Deutsch Harman nature of a substitute, as amended, was Costello Kanjorski Strickland Boyd Diaz-Balart, L. Harris agreed to. Cummings Kaptur Visclosky Bradley (NH) Diaz-Balart, M. Hart Evans Lewis (GA) The CHAIRMAN. Under the rule, the Brady (PA) Dicks Hastings (WA) Waters Hastings (FL) Meek (FL) Watson Committee rises. Brady (TX) Dingell Hayes Holt Oberstar Wynn Accordingly, the Committee rose; Brown (SC) Doolittle Hayworth Hunter Obey Brown, Corrine Doyle Hefley and the Speaker pro tempore (Mr. Brown-Waite, Dreier Hensarling NOT VOTING—26 CUNNINGHAM) having assumed the Ginny Duncan Herger chair, Mr. LAHOOD, Chairman of the Burgess Dunn Hill Aderholt Hall Rodriguez Burns Edwards Hinchey Ballenger Hinojosa Sa´ nchez, Linda Committee of the Whole House on the Burr Ehlers Hobson Berry Hooley (OR) T. State of the Union, reported that that Burton (IN) Emanuel Hoeffel Calvert Istook Sandlin Committee, having had under consider- Buyer Emerson Hoekstra Carson (OK) Kucinich Sullivan ation the bill (H.R. 1561) to amend title Camp Engel Holden Castle Lantos Toomey Cannon English Honda Cole Lucas (OK) Weldon (PA) 35, United States Code, with respect to Cantor Eshoo Hostettler Doggett Menendez Woolsey patent fees, and for other purposes, Capito Etheridge Houghton Dooley (CA) Pence Young (FL)

VerDate jul 14 2003 02:20 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00049 Fmt 4634 Sfmt 0634 E:\CR\FM\A03MR7.051 H03PT1 H804 CONGRESSIONAL RECORD — HOUSE March 3, 2004 ANNOUNCEMENT BY THE SPEAKER PRO TEMPORE hereafter in the Extensions of Re- bragged about. One of the things that The SPEAKER pro tempore (Mr. marks.) the President’s Economic Adviser said LAHOOD) (during the vote). Members f when he said, ‘‘When a good or service are advised there are 2 minutes remain- The SPEAKER pro tempore. Under a is produced more cheaply abroad, it ing in this vote. previous order of the House, the gen- makes more sense to import it than to b 1802 tleman from Oregon (Mr. DEFAZIO) is provide it domestically,’’ and then the Messrs. JACKSON of Illinois, OBEY, recognized for 5 minutes. Chief Economic Adviser to the Presi- WYNN and RUPPERSBERGER (Mr. DEFAZIO addressed the House. dent said, That is a good thing. If it is changed their vote from ‘‘yea’’ to His remarks will appear hereafter in made somewhere else cheaper, then ‘‘nay.’’ the Extensions of Remarks.) good economics says we ought to ship So the bill was passed. f those jobs overseas and make them The result of the vote was announced The SPEAKER pro tempore. Under a more cheaply overseas and make them as above recorded. previous order of the House, the gen- there and displace the jobs in the A motion to reconsider was laid on tleman from Michigan (Mr. MCCOTTER) United States. the table. is recognized for 5 minutes. That is not good economic policy. It f (Mr. MCCOTTER addressed the is not good trade policy. It particularly is not good policy for our people. Yes, b 1800 House. His remarks will appear hereafter in the Extensions of Remarks.) we want to do trade. Yes, we want that HOUR OF MEETING ON THURSDAY, f train to move out of the station ad- MARCH 4, 2004 vancing trade, but we want to do the OUR ECONOMIC POLICY Mr. TOM DAVIS of Virginia. Mr. trade, we want fair trade, not free Speaker, I ask unanimous consent that The SPEAKER pro tempore. Under a trade. This administration, unfortu- when the House adjourns today, it ad- previous order of the House, the gen- nately, is committed to free trade. journ to meet at 11:30 a.m. tomorrow. tleman from Ohio (Mr. BROWN) is rec- In the meantime, the President’s The SPEAKER pro tempore (Mr. ognized for 5 minutes. Council on Economic Advisers has said LAHOOD). Is there objection to the re- Mr. BROWN of Ohio. Mr. Speaker, in this report, also on page 103, In the quest of the gentleman from Virginia? the President last week delivered the long run, a large part of the burden of There was no objection. Central American Free Trade Agree- taxes is likely to be shifted to workers f ment to this Congress as part of his through a reduction in wages. In other SAVE THE HUBBLE economic plan to grow the economy. words, the President’s policy of tax What we have seen from the Presi- cuts for the wealthy, hoping that it (Mr. MCDERMOTT asked and was dent’s economic plan, which consists of trickles down and provides something given permission to address the House two basic solutions, are two things. for 1 minute and to revise and extend for everybody else, and these trade One is tax cuts for the wealthiest peo- agreements with no labor and environ- his remarks.) ple of our society, the 1 percent Mr. MCDERMOTT. Mr. Speaker, 2 mental standards, these trade agree- wealthiest, the people who need it years ago today the Columbia Space ments that ship jobs overseas, in the least, hoping it will trickle down and Shuttle, in what turned out to be its meantime, the President’s people say create jobs. The other part of this pro- last full mission, serviced the Hubble what is going to happen is a large part gram is to push through this Congress Space Telescope. of the burden of taxes is likely to be more NAFTAs, the Central American Those astronauts knew and children shifted to workers through a reduction Free Trade Agreement, the Free Trade across America know that Hubble is a in wages. Area of the Americas, trade agree- national treasure. Hubble offers a dra- That is why even people that have ments which have no labor and envi- matic view into the cosmos, and it has kept their jobs, as most people have ronmental standards, trade agreements yielded profound scientific discoveries. during this Bush recession, even then which hemorrhage jobs, which ship jobs Yet for all of Hubble’s national acclaim those people’s wages have been stag- overseas. and the inspiration it has given us, nant or in some cases have gone down. We have seen that kind of economic NASA has given Hubble a death sen- That is because the President’s people policy, except we have seen it not tence. It is up to us to commute that say that we are going to see tax cuts work. We have seen in this administra- sentence. for the wealthy, and we are going to tion a loss of almost 3 million jobs. In That is why I have joined with a bi- see loss of wages for workers and for my State of Ohio, we have lost one out partisan group calling for NASA to the middle class. of every six manufacturing jobs. Hun- convene the best and the brightest The President’s Chief Economic Ad- dreds of thousand of Ohioans have lost minds to reevaluate their decision and viser goes on to say, Analyses that fail their jobs. We have seen no manufac- look at every reasonable alternative. to recognize this shift can be mis- turing jobs created. In fact, since In the meantime, keep the Hubble leading, suggesting that higher income President Bush took office, we have going. groups bear an unrealistically large In my view, Hubble is one of the best lost manufacturing jobs not just in share of the long run burden. In other scientific investments we have ever Ohio but across the country every sin- words, when the President’s people say, made. Hubble is certainly the best re- gle month of the Bush administration. well, we have to give a tax cut to the Now, just recently the President put cruiter we have today to inspire our richest people in our society because out his economic report. This Eco- children to excel in science and reach they are paying the most taxes, the nomic Report of the President is put for the stars. President’s own Economic Adviser said out every year. As my colleagues can f that is not the case. see here, the President signed it on What is happening in our economy, SPECIAL ORDERS page 4, and this economic report makes you may applaud that, is these tax cuts The SPEAKER pro tempore (Mr. a lot of promises. As one of his earlier shift the burden. As we cut taxes on PEARCE). Under the Speaker’s an- economic reports had made, the Presi- the wealthy, it shifts the burden to the nounced policy of January 7, 2003, and dent in 2002 promised an increase of 3.4 middle class in the form of lower under a previous order of the House, million jobs. We have actually seen a wages, and we can also see that, Mr. the following Members will be recog- loss of 1.7 million jobs since then. In Speaker, with what Alan Greenspan nized for 5 minutes each. this report, he makes another promise said last week. f of 2.6 million jobs created just this He came to this Congress and said I The SPEAKER pro tempore. Under a year alone. Already the President’s support continuing the tax cuts for the previous order of the House, the gen- people are backing off that promise. wealthiest Americans, and then he tleman from Indiana (Mr. BURTON) is But you might be interested, and said, but because of that, we have a recognized for 5 minutes. there are some things in this report budget shortfall and we have to cut So- (Mr. BURTON of Indiana addressed that the President and his people, his cial Security. So the President of the the House. His remarks will appear Chief Economic Adviser, have sort of

VerDate jul 14 2003 03:46 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00050 Fmt 4634 Sfmt 0634 E:\CR\FM\K03MR7.092 H03PT1 March 3, 2004 CONGRESSIONAL RECORD — HOUSE H805 United States and Alan Greenspan, his b 1815 The SPEAKER pro tempore. Under a man at the Federal Reserve, are saying Iraq, of course, is a little behind the previous order of the House, the gen- to the American people, you have ei- time line of Afghanistan, because it tleman from Florida (Mr. MARIO DIAZ- ther got the tax cuts for the most priv- came several months later; but the in- BALART) is recognized for 5 minutes. ileged and if you take those tax cuts, frastructure has been restored. (Mr. MARIO DIAZ-BALART of Flor- then it means we have to cut Social Se- The water is running, the electricity ida addressed the House. His remarks curity. is on, and 17,000 reconstruction projects will appear hereafter in the Extensions That is really what we are going to have been completed; 17,000 projects of Remarks.) talk about in the next 8 months, that if have been completed. The schools are f we are going to make these tax cuts, if open. They have been given significant THE PRESIDENT’S CREDIBILITY we are going to continue these tax cuts aid; 33,000 teachers have received train- DEFICIT for the wealthy that the President ing in just the last few weeks. The hos- The SPEAKER pro tempore. Under a wants, it means fewer dollars for edu- pitals and clinics are open. There is previous order of the House, the gen- cation, less money for prescription much better health care. There has tleman from Illinois (Mr. EMANUEL) is drugs and other health care, and ulti- been a 6,000 percent increase in health recognized for 5 minutes. mately it means cutting Social Secu- care service expenditures in the last Mr. EMANUEL. Mr. Speaker, Presi- rity. That is the choice. That is what few months. The economy is expand- dent Bush has announced that his cam- the election will be about this year. ing. Shops and businesses are springing paign strategy will be to make credi- That is what this Congress is going up. Consumer demand is good. Wages bility an issue. Just last night, the to be about in the next 6 months. That are between 25 and 30 times higher Vice President said that if the Demo- is what we are going to hear JOHN than they were under Saddam Hussein. crats had been in charge for the last 2 KERRY and George Bush debate. If we So the economy is showing real signs or 3 years we would have endangered do the tax cuts and cut the taxes of the of life. One million more cars in this wealthiest Americans, it means less the job creation of the economy. country than a year ago. Newspaper Really? What a fascinating take, that money for Social Security bene- and television stations are springing up ficiaries. It means less money for envi- Democrats would have endangered the as well. job creation and the economy. Under ronmental enforcement. It means less Insurgent attacks on our troops have money for the middle class. It means a this administration, $3 trillion has decreased dramatically. About all the been added to the Nation’s debt, and stagnation of wages, and it takes this attacks we are hearing about lately are country in the wrong direction. nearly 3 million American jobs have on Iraqi citizens, mainly because they disappeared. And they want to make It is bad economic policy. It is bad are the only soft targets that they have for our country. It is bad for our com- credibility an election year issue? left. Weapons and ammunition supplies In the ‘‘Meet the Press’’ interview, munities. It is bad for our schools. It is have been destroyed, and an Iraqi army bad for the middle class. the President could have talked about of 133,000 is being trained and should be his foreign policy accomplishments and f in place by next fall. An Iraqi police his record, but what does he have to force is assembled. And all but a hand- offer but an endless occupation. He THE SITUATION IN AFGHANISTAN ful of Saddam’s lieutenants have been could have chosen to talk about the AND IRAQ captured. I think 45 out of 50 have been economy and the jobs he created, but The SPEAKER pro tempore. Under a captured and, of course, Saddam Hus- then he would have to point to the job- previous order of the House, the gen- sein himself. less economy and the wage recession tleman from Nebraska (Mr. OSBORNE) is A provisional constitution has been Americans face. And this is a President recognized for 5 minutes. drafted and ratified, just today, I be- and an administration that wants to Mr. OSBORNE. Mr. Speaker, as we lieve, by the Kurds, the Shiites, and make credibility an issue in this cam- have listened to debates over the last the Sunis. This is a tremendous step paign? several days, actually last several toward democracy and a tremendous The administration announced 5 weeks, there has been a lot of rhetoric accomplishment. So we are on track to months ago, on Labor Day, that they about how poorly things are going in see a viable democracy in a country were appointing a manufacturing czar. Afghanistan and Iraq, the administra- that has been a major destabilizing in- That position remains empty. There is tion has no plan, et cetera, and along fluence in the Middle East for the last not even a nominee. And they want to with many other Members of Congress, number of years. We have had no at- make credibility an issue? Interesting. I visited both countries within about tacks in the U.S. since 9–11. Since that date, 250,000 Americans the last 5 or 6 weeks, and it did not So again, Mr. Speaker, I would just have lost their manufacturing jobs. seem to me that the information I was reiterate the fact that what I and And they want to make credibility an getting and seeing squared with what many of my colleagues have witnessed issue? After 5 months, there is not a we have been hearing. in Afghanistan and Iraq does not seem single person to fill that job. In Afghanistan, for instance, the to square with some of the conversa- Now, the President does not take ad- Taliban is out. They were a tremen- tion we have been hearing on the polit- vice from me, but as far as I can see dously oppressive regime. Terrorist ical scene in recent months and recent David Kay is available. He did the training camps, and of course, Afghani- weeks. So we think that we have been weapons of mass destruction research. stan was the hotbed of terrorist activ- doing a good job over there. Maybe we can help him find where the ity, have been shut down. Most of the The soldiers, the troops that I met, 2.7 million American jobs have gone. funding has been dried up. Al Qaeda is have a tremendous sense of mission, a And they had the gall to announce it on the defense, and of course, the great sense of accomplishment; and I under a banner of American jobs and democratic loyal jurga formed a con- think it is important that they get the American values. And they want to stitution which I think was a tremen- message that we are solidly behind make credibility an issue? dous step toward democracy. Women them and solidly behind this effort Every year the President submits a have been given a significant role. that is going on. budget, and he has submitted time and Elections have been scheduled this f again the elimination of the Manufac- summer, and they have a great leader The SPEAKER pro tempore (Mr. turing Extension Program, which helps in Karzai, and I think there is a great PEARCE). Under a previous order of the small businesses, small manufacturers chance he will be elected President. House, the gentleman from California in this country. And he wants to make All of this has been accomplished (Mr. GEORGE MILLER of California) is credibility an issue? with 13,000 coalition troops controlling recognized for 5 minutes. Not only is the President not inter- this country, very little loss of life. It (Mr. GEORGE MILLER of California ested in the issue of jobs and job cre- has been a tremendous military victory addressed the House. His remarks will ation in the United States, his own and a great victory for those who are appear hereafter in the Extensions of economic report that he submitted the opponents of terrorism. Remarks.) other day to Congress say that

VerDate jul 14 2003 02:20 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00051 Fmt 4634 Sfmt 0634 E:\CR\FM\K03MR7.097 H03PT1 H806 CONGRESSIONAL RECORD — HOUSE March 3, 2004 ‘‘outsourcing of jobs is good for the GREAT WORK BEING DONE BY THE Mountain Division, spoke to us there American economy and good for the 10TH MOUNTAIN DIVISION OF as part of our briefing, and he shared a middle class,’’ especially the middle FORT DRUM, NEW YORK picture with us. He shared a picture class in India, not Indiana. And they The SPEAKER pro tempore. Under a with us that was so dramatic and so want to make credibility an issue? previous order of the House, the gen- impressive that I asked their permis- In that report, they envisioned 2.7 tleman from Texas (Mr. BURGESS) is sion to bring it back and show it on the million jobs being created in the recognized for 5 minutes. floor of the House, and we can see it United States. Then they had to walk Mr. BURGESS. Mr. Speaker, we hear here beside me. In fact, Mr. Speaker, I was anxious to away from it. And they want to make so much information here in this share this picture with the whole coun- credibility an issue? House, and this evening is no exception. I wanted to pick up a little bit on try. This is a picture of what our guys They also in that report cited manu- the point that the gentleman from Ne- in Afghanistan are doing to end the facturing would now be defined as flip- braska (Mr. OSBORNE) made in his re- war on terror in that country, to re- ping hamburgers. And, again, they marks here a few moments ago. claim that country for its people, and, would like to make credibility an Mr. Speaker, of course both sides of in the end, make us safer here at home. issue. the House have not only the right but Here we see some of our young sol- Since we have decided to make credi- they have the obligation to speak up diers and a man that is being escorted bility an issue, I would like to say that when they believe things are not right. into a helicopter. This man, I do not not only does this administration have And it is an election season, so we are remember whether he was a Taliban or a big fiscal deficit; it has a huge credi- hearing a lot of political discourse and al Qaeda or just a member of one of the bility deficit. rhetoric. The gentleman from Ne- warlord tribes there, but he thought he braska (Mr. OSBORNE) got up and spoke was relatively safe on that house on a Let me give some other highlights of very eloquently to that fact, that per- steep mountainside. He could see any- the issue of credibility. haps what we hear is not always body coming up after him, and he was One month steel tariffs are on; the aligned with what in fact is happening pretty comfortable there in his belief next month steel tariffs are off. There on the ground. that there was no way he could be ap- was $3.5 billion in new police funding, The gentleman from Nebraska spoke prehended. and yet the President’s budget cuts $1 about his travels to Iraq and Afghani- So sitting by his campfire one morn- billion from the police funding. Pre- stan. And, indeed, just 2 weeks ago I ing and taking his morning meal, he scription drugs one month cost $400 bil- took a trip to Iraq and Afghanistan. It was visited by our troops from the 10th lion, the next month, with nothing was my second trip into the country of Mountain Division. They were able to changed, not a single benefit, we send a Iraq, but my first to the country of Af- encircle him and surprise him. And bill to the taxpayers for $550 billion. ghanistan. And, Mr. Speaker, I want to then to get him back to where he need- And they want to make credibility an point out that as far as the talk we ed to be, they landed half a helicopter issue. hear going on here on the floor of the on his house. And we see him there being helped into the back of the heli- Now, I am not the one to give advice House, yes, it is our right and indeed copter to be brought back to face what- to this administration, or unsolicited our obligation to speak out, but we know or at least we should know that ever charges awaited him. advice; but if the President or this ad- Mr. Speaker, this is a dramatic ministration thinks we are going to words have consequences. And the words spoken here in this House do res- photo, and it shows what lengths our cut Social Security to pay for tax cuts fighting men and women will go to in for the wealthy, I got a bridge over the onate around the country; and in fact they resonate around the world, and order to end the conflict in Afghani- Tigress they can buy. Let me say this: stan. And I believe they are well on the the only people that think that is a they are picked up frequently by our troops fighting for our freedom over- way to ending that conflict. In fact, good economic plan are pioneers and Mr. Speaker, I would go so far as to say rangers who think cuts in Social Secu- seas. Now, Mr. Speaker, I would never as soon as the snow melts out of the rity is what this economy needs so we passes in the mountains on the border can pay for tax cuts for the well-off. question anyone’s motives or question anyone’s patriotism, but at the same between Afghanistan and Pakistan, we What we need is a President who time I just cannot help to point out are very likely to see the beginning of wakes up every day and who rolls up how a few weeks going to Iraq and Af- the end for those groups who mean to his sleeves as he goes into the Oval Of- ghanistan I did have the chance to see harm our troops and harm innocent Af- fice and thinks about the American what was happening there on the ghan citizens and those individuals workers, their families, and their val- ground. The 4th Infantry Division cap- who want to prevent the return of civil ues, not somebody who, for a press tured Saddam Hussein in December, society to Afghanistan. headline, announces a manufacturing and in an effort to minimize the impor- So, Mr. Speaker, I know it is a little czar and 5 months later, 250,000 jobs tance of that singularly important off the point from what we hear here later that have disappeared, has that feat, we will hear people say, well, it is on the floor of the House night after position remaining unfilled. That is not that important; it, in fact, does not night after night, but in fact there are not an administration that every day make us any safer here at home. Mr. some good things going on in the sees the American family and its val- Speaker, let me say tonight that I world. Our troops are doing a masterful ues at the center of what it does in the firmly believe that that event was im- job on the ground both in Iraq and Af- Oval Office. portant and indeed we are safer here at ghanistan. I am proud of them. I am I only wish that they would spend as home because that man is in custody. proud of our country. Once again, I want to point out the much time thinking about the Amer- But, again, in an effort to minimize the dramatic aspect of this photo. Think of ican family, their values, their chil- importance of that event, we will hear the risk that that pilot is taking to ap- dren, their jobs, their health care, their the talk over and over again that it prehend that individual and bring him security, and their retirement security does not really matter. to justice, the loadmaster in the back as the focus they give to those on K The other thing we will hear is that of the aircraft that essentially landed Street and the lobbyists in this town. we have not finished the job in Afghan- istan. Well, Mr. Speaker, just like the that half a helicopter on that man’s On policy after policy this adminis- gentleman from Nebraska, I want to roof. I can imagine the surprise of this tration says one thing and they do an- take a minute tonight and talk about individual as he was brought into other, and yet they have the gall to say what I saw going on in the country of United States custody. credibility will be an issue. Afghanistan and the great work that is f So to quote one Senator: If they being done by the 10th Mountain Divi- The SPEAKER pro tempore. Under a would like credibility to be an issue sion out of Fort Drum, New York. previous order of the House, the gen- this election year, Democrats say, Mr. Speaker, General Austin in Af- tleman from New Jersey (Mr. ROTH- bring it on. ghanistan, the commander of the 10th MAN) is recognized for 5 minutes.

VerDate jul 14 2003 02:20 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00052 Fmt 4634 Sfmt 0634 E:\CR\FM\K03MR7.102 H03PT1 March 3, 2004 CONGRESSIONAL RECORD — HOUSE H807 (Mr. ROTHMAN addressed the House. Senate and a Chamber of Deputies. The to agree to the Annan plan just the His remarks will appear hereafter in Senate shall be composed of 48 mem- way it is and that no changes can be the Extensions of Remarks.) bers with a requirement that half of made. That is not only unfair, I think f those Members, 24, come from Cyprus it leads to an unworkable situation in The SPEAKER pro tempore. Under a and the other half come from the Turk- the long run. We have to realize that as previous order of the House, the gen- ish Cypriot side. Keep in mind that the much as the Annan plan is a good basis tleman from Florida (Mr. FOLEY) is Turkish Cypriot minority only makes for negotiation, it should not be the recognized for 5 minutes. up 18 percent of the islands. The Annan end result because if it were, I think in (Mr. FOLEY addressed the House. His plan gives that 18 percent equal footing the long run it would actually be to the remarks will appear hereafter in the with the 82 percent of the Republic of detriment to the future government of Extensions of Remarks.) Cyprus population. How is that demo- a united Cyprus. cratic? f f Then in addition to that in the The SPEAKER pro tempore (Mr. The SPEAKER pro tempore. Under a Chamber of Deputies, the Annan plan PEARCE). Under a previous order of the previous order of the House, the gen- says it too shall consist of 48 members House, the gentlewoman from Florida tleman from Texas (Mr. GREEN) is rec- elected on a proportional basis, but (Ms. HARRIS) is recognized for 5 min- ognized for 5 minutes. both the Turkish Cypriot side and the utes. (Mr. GREEN of Texas addressed the Republic of Cyprus side are guaranteed (Ms. HARRIS addressed the House. House. His remarks will appear here- a minimum of one-fourth of the seats. Her remarks will appear hereafter in after in the Extensions of Remarks.) And the significant advantage for the the Extensions of Remarks.) f minority does not end there. The The SPEAKER pro tempore. Under a Annan plan states that laws be enacted f previous order of the House, the gen- by a majority vote in each of the GADDAFI DELIVERS HISTORIC 90– tleman from Florida (Mr. BILIRAKIS) is houses as long as at least one-fourth of MINUTE SPEECH recognized for 5 minutes. the senators from each of the two com- (Mr. BILIRAKIS addressed the ponent states comprises the majority The SPEAKER pro tempore. Under a House. His remarks will appear here- vote in the Senate. This means that previous order of the House, the gen- after in the Extensions of Remarks.) the 18 percent holds a virtual veto over tleman from Pennsylvania (Mr. WELDON) is recognized for 5 minutes. f any legislation being passed. Mr. Speaker, if we compare the Mr. WELDON of Pennsylvania. Mr. CYPRUS PEACE NEGOTIATIONS Annan plan to our own government Speaker, a group of seven Members of The SPEAKER pro tempore. Under a here in the United States, let us say Congress just finished leaving the air- previous order of the House, the gen- that the Democrats and Republicans plane at Andrews Air Force Base from tleman from New Jersey (Mr. PALLONE) each held 50 seats in the Senate, some- a 3-day trip to Libya, the second trip is recognized for 5 minutes. thing that actually happened a few that I have led there in 30 days. This Mr. PALLONE. Mr. Speaker, last years ago. You remember how difficult trip is one that will go down in history week, peace negotiations finally reit was for both sides to govern. If fact, as one of the most historic events that sumed over the 30-year Cyprus conflict. it created a position in which one Re- was documented in that country that After reaching the end of the road last publican, JIM JEFFORDS, actually left has been a problem for us over the past March, thanks to what was described the Republican Party in order to be- 30 years. at the time by officials close to the ne- come an Independent. Now, if just Mr. Speaker, I was asked by the gotiations as intransigence on the part being 50–50 is not hard enough, imagine chairman of the People’s Congress of of Turkish-Cypriot leader Rauf if the U.S. Senate could not pass any Libya to give a speech at the opening Denktash, the Turkish-Cypriot leader legislation without one-fourth of the session 2 days ago, which I did. Senator finally agreed to return to the negoti- Republican side agreeing with the BIDEN is giving a speech there today. ating table with Cyprus President Democratic side, or vice versa. There is Along with my speech and speeches Tassos Papadopoulos. The framework no way we could govern under those from the French, the Egyptians, the by which the two are now negotiating conditions. head of the European Parliament, Colo- is a plan written by the U.N. Secretary How can we expect Cyprus, a country nel Gaddafi rose to the podium and General Kofi Annan. While the Sec- which has been torn apart for almost 30 spoke for 90 minutes. He gave what will retary General’s proposal serves as a years, to govern under these same cir- go down in history, I am convinced, as starting off point, it should by no cumstances? I do not mean to be crit- a speech that will equal the tearing means serve as the final agreement to ical of U.N. Secretary Annan. He has down of the Berlin Wall and the event finally unify the nation of Cyprus. done a fantastic job of trying to meet that had Boris Yeltsin standing along- Last year, Mr. Speaker, I visited Cy- the unrealistic threats of Turkish lead- side the tank outside of the Moscow prus for the first time. And while I beer Denktash. Furthermore, the govern- White House proclaiming that com- lieve it is critical for a unified Cyprus ment of Cyprus has consistently agreed munism was dead because in this 90- to join the European Union later this to negotiate within the frame of the minute speech Gaddafi, who has been year, I also believe that the framework U.N. proposal. someone that we have not had any type agreed to between the two sides must The Annan plan is a good draft, but of relationship with, whose country has lay the foundation for a democratic that is all it is. It is critical that not admitted to completing the bombing of government to thrive for many years only the United Nations but also the Pan Am 103, Gaddafi, in front of the 600 to come. Bush administration and the State De- people assembled in the auditorium partment realize that in its current and 100 nations that were in attend- b 1830 form the Cyprus government would not ance, renounced the actions of Libya Unfortunately, there are parts of the be able to govern. These concerns, as over the past 25 years. Annan plan that makes it virtually im- well as several others, must be ad- He admitted to his people that they possible for an established government dressed before any real peace agree- had been involved in funding terrorist to function. In fact, there are sections ment can be reached. organizations from the IRA in Ireland of the plan that would make the island I want to conclude by saying again, to the PLA, to the Sandinistas, to country less democratic than it was the Annan plan was supposed to be a other terrorist groups around the after an agreement imposed against basis for negotiations and everyone world. He admitted that they were in- Greek Cypriots during the Cold War agrees that is certainly the case, but it volved in crimes, and they had done back in 1959. should not be the final outcome. I am things for other groups. He rose to the Mr. Speaker, the Annan plan in my afraid that our own administration, occasion to tell his people that he had opinion is undemocratic. Under the the Bush administration, the State De- come to the conclusion it was time for plan, a parliamentary system would be partment, are trying to put pressure on Libya to abandon these people who no created with two legislative bodies, a the Cyprus government that they have longer were needing of the support of

VerDate jul 14 2003 02:20 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00053 Fmt 4634 Sfmt 0634 E:\CR\FM\K03MR7.104 H03PT1 H808 CONGRESSIONAL RECORD — HOUSE March 3, 2004 the Libyan people, and whom the Liby- woman from Texas (Ms. JACKSON-LEE) tuation, the environmental variables an people only suffered from, becoming is recognized for 5 minutes. from this point on are not going to be isolated from the rest of the world. (Ms. JACKSON-LEE of Texas ad- predictable as far as the climate and He spoke of the United States and dressed the House. Her remarks will the weather is concerned. the Pan Am 103 bombing. He said it is appear hereafter in the Extensions of Mr. Speaker, this chart has two parts a part of history that they want to put Remarks.) to this graph. The first part, which is behind them after I had said in my f the color gray, deals with the computer speech that we were happy that the The SPEAKER pro tempore. Under a models that are telling us something Libyans had admitted to that bombing about the climate and how it has and being responsible for it. We told previous order of the House, the gentleman from Kentucky (Mr. LEWIS) is changed over the past 100 years. One them that we would never forgive nor part of this chart shows the input in forget the actions of their country, but recognized for 5 minutes. (Mr. LEWIS of Kentucky addressed the model. The other part of the chart, here was Moammar Gaddafi changing the color red, shows actual observa- not for the international community, the House. His remarks will appear tions on the ground where you go out but in front of his own people saying it hereafter in the Extensions of Re- and you actually take temperatures all was time for Libya to renounce weap- marks.) around the globe. The first part of the ons of mass destruction, and calling for f chart, the gray line, is what you put complete and total transparency, call- The SPEAKER pro tempore. Under a into the computer. The second part is ing for other terrorist nations to aban- previous order of the House, the gentle- what you actually observe. There are don their weapons of mass destruction, woman from the District of Columbia three charts up here. telling them that it is no longer a valid (Ms. NORTON) is recognized for 5 min- position for countries to take, to en- utes. The first chart deals with the natural courage and support terrorism (Ms. NORTON addressed the House. fluctuation in the climate over the last throughout the world. Her remarks will appear hereafter in 150 years with solar energy, with ocean Then he said about the United the Extensions of Remarks.) currents, with volcanoes, with a num- States, the United States does not ber of things that have caused the cli- want to bomb Libya. We are not f mate to change, the geologic forces Libya’s enemies. If we wanted to take SCIENCE INVESTIGATES HUMAN which have caused the climate to over their country, we would have done CONTRIBUTION TO CLIMATE change over the last thousand years. that 27 years ago when they asked us CHANGE We see if we just take the variables in to get out of the military bases we had The SPEAKER pro tempore. Under a the natural forcing, the climate will in their country. He said to his people, previous order of the House, the gen- stay fairly steady. In other words, America did not fight, they simply left tleman from Maryland (Mr. GILCHREST) there would be no increase in the last our country as our friends. He said it is recognized for 5 minutes. 150 years. The actual temperature, was only in recent times that we have Mr. GILCHREST. Mr. Speaker, I though, shows that there has been an become an enemy, and he said no would like to make a few comments increase over the last 150 years. So longer will Libya be an enemy of the this evening on an issue that remains there is a question, where is the in- United States; Libya wants to return, somewhat controversial. The issue is crease in temperature coming from? to become a friend, they want to at- climate change. Is the Earth warming, The next chart shows only measuring tempt as much as possible to join the human activity, anthropogenic forcing family of nations and join those multi- and is there such a thing as global warming? only. That means we only measure the national groups in Europe and around kind of temperature increase we would the world. They want to become a part I would like to present a few findings affirmed by National Academy of get from burning fossil fuel or cutting of arms control regimes. He even down a forest or a variety of other agreed, as I met with the Gaddafi Science, at the request of George Bush, and which the American Geophysical things. When we do that, we show that Foundation, that they should look to the temperature, as we see over here, is rejoin efforts like the Vienna Con- Union also agrees with. Basically the conclusion of the sci- the same. There is an abrupt increase ference that oversees the Helsinki final in the temperature. act guaranteeing basic human rights entific community is that the Earth for all citizens. We talked about human has been warming for the last 10,000 The third chart shows the natural rights, and the fact that Libya was now years. We left the Ice Age, and for the fluctuation or the natural increase in on a course to set out for their people last 10,000 years, the Earth on average temperature that we have seen over an effort to clean up the human rights has been warming 1 degree centigrade 10,000 years, but it also shows mixed in records of the Nation. every 1,000 years, and this is detectable with that if we add to that natural in- Mr. Speaker, this speech was not to through various tree rings, ice cores crease, if we add human activity, we the world community. The external and a number of other techniques used see that the blend shows that there has media was not invited. It was broad- to determine the kind of climate we been about a 1 degree temperature rise cast live throughout Libya. Every tele- have had over the past 400,000 years. in the last 150 years. vision in Libya had this proceeding on But the last 10,000 years, the trend is for 90 minutes in front of 600 delegates, the natural range of fluctuation, it is a b 1845 100 nations and 7 Members of Congress. little warmer 1 year, a little colder the You cannot account for the increase Moammar Gaddafi issued the message next year, but the natural range of in temperature over the last 150 years to the people of the world that Libya fluctuation clearly shows that we have with just natural forces but you can had changed dramatically and com- been in a warming trend over the past account for it when you add in human pletely, that Libya was ready now to 10,000 years about 1 degree centigrade activity. begin a new chapter. every 1,000 years. He was very thankful that our dele- What we have seen in the last 100 to Those are just a few interesting gation was there because he said it 150 years is that natural range of fluc- facts, Mr. Speaker, I thought that the showed the Libyan people that Amer- tuation appears to have abruptly Members would like to know. ica was ready to respond. Senator changed. The question is that abrupt BIDEN’s speech today will reinforce change, which actually is a jump in f that. I congratulate my colleagues on surface warming, is that a natural fluc- The SPEAKER pro tempore (Mr. both sides of the aisle who traveled to tuation or is it as a result of mankind PEARCE). Under a previous order of the Libya. We will be putting a complete burning fossil fuel and adding green- House, the gentleman from Texas (Mr. report into every Member’s office be- house gases to the environment. HENSARLING) is recognized for 5 min- fore the end of this week. What I am going to show tonight is utes. f the fluctuation that we have seen, the (Mr. HENSARLING addressed the The SPEAKER pro tempore. Under a abrupt fluctuation, is not a natural House. His remarks will appear here- previous order of the House, the gentle- fluctuation. If it is not a natural fluc- after in the Extensions of Remarks.)

VerDate jul 14 2003 02:20 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00054 Fmt 4634 Sfmt 0634 E:\CR\FM\K03MR7.111 H03PT1 March 3, 2004 CONGRESSIONAL RECORD — HOUSE H809 The SPEAKER pro tempore. Under a North Carolina, allowed other Members surrounding Haiti, then we can no previous order of the House, the gentle- that were concerned about not only the longer move forth with a Saturday woman from New York (Mrs. MALONEY) plight of Haiti but also the U.S. in- night policy ultimatum. is recognized for 5 minutes. volvement in Haiti. I think the events This should have not happened, la- (Mrs. MALONEY addressed the that took place last Saturday evening dies and gentlemen. Mr. Speaker, I House. Her remarks will appear here- and early Sunday morning has a lot to must say that it brings into question after in the Extensions of Remarks.) do with how we move forward from this the very safety of troops and also it point on. Many of us in this Congress f brings into question good elections in feel very strongly about the U.S. in- The SPEAKER pro tempore. Under a the future. If Haitians that were pro- volvement in Haiti from this point on, previous order of the House, the gen- Aristide and within the party that he on how safe will it be in Haiti? How tleman from Massachusetts (Mr. was the head of know and feel that the safe will it be for the Haitian people? LYNCH) is recognized for 5 minutes. United States played a strong role in How many months will our U.S. Coast (Mr. LYNCH addressed the House. His his departure by force, and taken from Guard be visually off the coast of Mr. Noriega’s quote, I might add, that remarks will appear hereafter in the Haiti? What kind of commitment will Extensions of Remarks.) he just gave in responding to the gen- the United States make to Haiti? And tleman from New York (Mr. RANGEL) in f also what kind of commitment will the the committee just a couple of hours The SPEAKER pro tempore. Under a international community put forth as ago, the gentleman from New York previous order of the House, the gentle- it relates to Haiti? asked him: Mr. Noriega, is it true that woman from Ohio (Ms. KAPTUR) is rec- First of all, I would have to go back. President Aristide was told that he ognized for 5 minutes. We spoke last night about Mr. needed to sign a resignation letter be- (Ms. KAPTUR addressed the House. Philippe, who has announced himself as fore he boarded the plane? Her remarks will appear hereafter in the leader of Haiti, the head of the Mr. Noriega responded: It was impor- the Extensions of Remarks.) rebel force, using Secretary Noriega’s tant to make sure that we have a posi- description of him as a thug, that has f tive process to a political resolution. now taken control of Haiti. He was in The SPEAKER pro tempore. Under a The gentleman from New York asked Port-au-Prince yesterday, he had a previous order of the House, the gentle- him again: Is it true that he was asked meeting, he talked about him being in woman from Florida (Ms. CORRINE to sign a resignation letter before he charge of Haiti. He said he really looks BROWN) is recognized for 5 minutes. boarded the plane? That answer was: up to the United States, that he re- (Ms. CORRINE BROWN of Florida ad- Yes. veres our President, and rightfully so, dressed the House. Her remarks will he should revere our President, because And then after that, to give Sec- appear hereafter in the Extensions of if it was not for a visit by officials from retary Noriega some credit, he said Remarks.) the State Department that will go that to make sure that we can resolve f unnamed at the home of President a good political resolution. Aristide and giving him an ultimatum Mr. Speaker, if someone showed up to ANNOUNCEMENT BY THE SPEAKER my house on a Saturday night and PRO TEMPORE to either leave or be killed, that simple, that he had to make the decision shared with me that either I needed to The SPEAKER pro tempore. Pursu- right then and there. Reports say that leave with them or I would be killed ant to clause 8 of rule XX, the Chair re- he made that decision. That decision and my family, I would leave. If they designates the time for further pro- empowered Mr. Philippe, a known indi- were to ask me, listen, sign your mort- ceedings on House Resolution 412 and vidual not only to Haitians but also a gage or your deed over to your prop- on House Resolution 56 as tomorrow. known individual that has carried out erty because we are not going to take f terror in Haiti in the past, a 36-year- you unless you do that, I would sign it. old young man that is now on the We met with the Secretary-General HAITI streets of Haiti who has announced of the U.N., several Members of this The SPEAKER pro tempore. Under that he is going to arrest the prime Congress, on Monday. This brings into the Speaker’s announced policy of Jan- minister of Haiti. I say that as a back- question, was this an exit of a leader uary 7, 2003, the gentleman from Flor- drop of talking about troop safety. who wanted to leave of his own free ida (Mr. MEEK) is recognized for 60 min- I think it is important to note in the will and saying that, hey, come get me, utes as the designee of the minority early 1990s when U.S. troops went into I already have my resignation letter leader. Haiti to not only kick General Cedras ready and I’m willing to sign it, I want Mr. MEEK of Florida. Mr. Speaker, it out who took Haiti by a coup but to to thank you, America, for helping me is a pleasure to address the House and also provide a level of safety to try to and helping my family leave this is- the American people this evening. build onto democracy, that not one sol- land? Or was this a resignation under Last night, Mr. Speaker, we were on dier lost his or her life. No one even duress? We do not know if the 33rd the floor talking about the recent choked on popcorn. It was that smooth coup d’etat took place on Saturday events in Haiti that has also involved of an operation. I commend Senator night or it was just a misunder- not only our military but our inter- Nunn at that time, I commend Mr. standing. national community, not only as it re- Powell at that time, now Secretary I must say, I am no fan, and I have lates to humanitarian efforts but to Powell, and also the leadership of Wil- said this time after time, Mr. Speaker, the safety of the Haitian people. I just liam Jefferson Clinton. of President Aristide. I represent left the Committee on International But now we have a situation that is Miami. I represent south Florida. But Relations, the Subcommittee on the in question. Some people may say, why what I am a fan of is democracy. When Western Hemisphere where we had wit- are you so concerned? Okay, President these knee-jerk policy decisions are nesses, the Assistant Secretary of the Aristide said he felt like he was kid- made on a Saturday night, it puts forth Bureau of Western Hemisphere Affairs napped. Some people say, well, he a bad light on the United States of from the U.S. State Department, Mr. wasn’t kidnapped, that’s not true. America as it relates to how we deal Roger Noriega; and also the Honorable Who’s right? Who’s wrong? That is not with democracies in South America or Arthur Dewey, Assistant Secretary of the issue. The issue is that for us to in the Americas. This is so very, very Population, Refugee and Migration of provide the kind of forward progress important. We are sending the signal the United States State Department; that we are going to need in Haiti to to individuals that will arm them- also other representatives from the make sure that Haiti is able to move selves, known to be outlaws, have been State Department. Mr. Speaker, it was forth in a democratic way, for us to a part of terror groups in the past of quite disturbing hearing some of the continue to have the international Haiti to arm themselves and take cit- testimony that was given to us there community willing to be a part of de- ies, if we like it or not. Some may on that committee. I am thankful that mocracy-building in the Caribbean as argue, well, the 2000 elections as it re- the chairman, the gentleman from it relates to other Caribbean islands lates to Haiti was wrong and it was

VerDate jul 14 2003 02:20 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00055 Fmt 4634 Sfmt 0634 E:\CR\FM\K03MR7.118 H03PT1 H810 CONGRESSIONAL RECORD — HOUSE March 3, 2004 flawed. I would say that he was recog- eryone was going to see me and know good information and share it with nized and given credentials by the Am- exactly where I am. They are now in them that all is well so that we can bassador of the U.S., President Aristide hiding in Haiti. hopefully see some sort of smooth po- was. He was recognized by the United I think it is important, ladies and litical process in the future. Nations as the President of Haiti. So to gentlemen, that we look at what we Mr. CONYERS. Mr. Speaker, I thank even talk about the 2000 elections, and are doing and how we are doing it and the gentleman for his comments. And I I think that we should not even go if we want to see a peaceful resolution would like to put on the record at this there as it relates to our own personal in Haiti, it is important that we put point that the Assistant Secretary of situations. And one thing that I do forth policy not on slogan but based on State, Mr. Noriega, testified, much to honor. Never once that I have de- making sure that our troops and hu- my interest, that at this point the nounced or said that President Bush is manitarian supporters are safe. So it is United States, having brought the not my President. He is my President. very, very important that we under- president and his wife to the Central Until November, until we all get a stand that as this U.S. Congress. Republic of Africa, has now taken no chance to be able to cast our ballots as Mr. Speaker, I yield to the gentleman responsibility for his security at this Americans on how we feel, he will be from Michigan, the ranking member of point. This is a Francophone country the President until that point. If he is the Committee on the Judiciary. in sub-Saharan Africa that has re- reelected, he will be reelected. That is Mr. CONYERS. I thank the gen- cently undergone a coup. As a matter just something that we have to live tleman from Florida for yielding. of fact, there were two coups, and the with. But what is important as we (Mr. CONYERS asked and was given last one was successful. It is a very move forth from this point and making permission to revise and extend his re- dangerous circumstance because those sure that we stop the violence is that marks.) of us who may have talked to the presi- we play with a level hand. Guy Mr. CONYERS. Mr. Speaker, I begin dent or his wife, and I am one of them, Philippe is an individual that has said, by commending my colleague from they have yet to have met with the once again, that he will arrest the Florida for the testimony that he has president of the country in which they prime minister. The prime minister of given before the Subcommittee on the have been brought, that they are ap- Haiti’s house has been burned down to Western Hemisphere of the Committee parently under some kind of formal or the ground. It has been looted and on International Relations. It has been informal house arrest, that they con- burned down to the ground. He has quite a day, quite an afternoon and sider themselves to be in danger. been living in his office protected by evening. As a matter of fact, that sub- So I wanted to put everybody on no- U.S. Marines. Can he leave that office? committee is still going on as we take tice in the United States of America, No. I do not think that that is a safe this special order. I think the gen- including the President and the Sec- situation. tleman who has perhaps more citizens retary of State of the United States, I have one other thing before I yield of Haitian descent than anyone else in that they may be in danger even as we to my colleague here. Secretary Dewey the Congress should take this special speak. We are trying to get phone calls said that there has been over 900 Hai- order in which we can continue to de- to them to determine what amount of tians rescued. The Secretary-General velop the discussion about how we are security is being afforded them. It is of the U.N. had brought a question to to deal with this very sensitive foreign somewhat disingenuous for the Assist- the United States policy as it relates policy issue that is made more em- ant Secretary of State to tell us that to individuals trying to flee Haiti of phatic because of the fact that it is having deposited them in a rather iso- fear of persecution. Persecution means within the Western hemisphere. This is lated part of Africa of a very small and that if you return, you are fearful of not thousands of miles away. This is modest means, this nation, in a coun- your life or your family’s life, women hundreds of miles away from our shore. try in Africa which is circumscribed by and children. We have repatriated over It is very, very important. I appreciate poverty and economic deprivation, 900 Haitians even though the road is my colleague’s testimony and that of which in some reports to me have indi- littered of bloated bodies that the rebel all the members of the Committee on cated that there may be elements of forces left in the path on their way to International Relations and the Con- civil unrest still going on in the coun- Port-au-Prince, never once stopped by gressional Black Caucus and others try, that he could testify before a com- the United States of America, never who participated in the proceedings mittee of the United States Govern- once stopped by the international com- this afternoon in the Committee on ment that we have no responsibility for munity but kept marching on. It is International Relations. the president’s or his wife’s safety at that same rebel force that did not this point. If this does not set off alarm b 1900 agree to any of the diplomatic or polit- bells, I do not know what else will. ical solutions we tried to bring about Let us begin with the most imme- So if this Special Order convened by to bring a peaceful resolution to what diate consideration, that is, the safety the gentleman from Florida does noth- was going on in Haiti. Nine hundred of the president of Haiti and his wife, ing else but preserve the security and were repatriated. The Secretary re- Mildred Aristide. And I want to ask the safety of the president and his wife in ported since Aristide has left the island gentleman from Florida if he can shed the National Republic of Africa, this only three have been caught and repa- any light based on the numerous dis- will be well worth the time that we triated. Let me just say this. After the cussions that went on around this sub- have spent here. 900 that were brought into the Port-au- ject this afternoon in terms of where It is my position that the United Prince dock and sent off to the streets they are and what amount of security States has every responsibility for the because they were leaving from the is being made available to them at this continued security and safety of the south end of the island, not from Port- point. president. As a matter of fact, we have au-Prince, which is like over 100 miles Mr. MEEK of Florida. Mr. Speaker, been told that the reason that he left away, they are walking through a pop- from what I understand, I have no Haiti was because his life and his wife’s ulated area where rebel forces and firsthand accounts, that they are in a were in danger. Now to take him thou- other folks can see them and their fam- Central African country, that they sands of miles out of his country and ilies. Some of them are government have French and U.S. guards that are then tell us that we have no longer any workers, some of them are individuals protecting them, including their own responsibility for his security, it is up that were pro-Aristide or they never private security that President to somebody else, is totally unaccept- would have left the island in the first Aristide has had over the last couple of able. And I want to put this govern- place. They were not leaving because of years. So from what I understand, his ment on notice right now that we had President Aristide. They were leaving life is not in jeopardy, and I am glad better get some security over there if because of the violence and the vio- that the gentleman has brought that it is not already, and this is what I am lence and the persecution that they up because there are many people not going to be working on for the rest of were going to receive. So I would not only in the United States but many of the evening and into the morning. even try to leave if I knew I was going my constituents that feel otherwise, Mr. MEEK of Florida. Mr. Speaker, I to go through Port-au-Prince and ev- and we try to find out that kind of think that is important too. I just

VerDate jul 14 2003 02:20 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00056 Fmt 4634 Sfmt 0634 E:\CR\FM\K03MR7.123 H03PT1 March 3, 2004 CONGRESSIONAL RECORD — HOUSE H811 want to make sure that I clarify that, protected status to the Haitians that back to have an insurrection as well as from what I understand from the gen- are fleeing. To turn them around upon killing innocent men and women on tleman from New York (Mr. RANGEL), arriving here from hundreds of miles in the streets of Haiti, that we should that he spoke with President Aristide an ocean always on very fragile craft, have done something about it. And now this evening or earlier, and he did that the first miracle is that it even with no form of government that is share that he had French, U.S., and got to our shores, would be inhumane. there now, democracy basically we did personal security individuals; and he is And yet this is the policy as we speak not uphold, it has crumbled, the people on a French base in this particular tonight. in Haiti are at the mercy of these indi- country. Hopefully, that security holds And so I have to ask the President of viduals. up over time and justifiably so. the United States to review this stand- I think that the gentleman from Going back to what I was mentioning ard, especially since this is the only Florida (Mr. MEEK) clearly pointed out a little earlier, and I know that the group coming to this country, Hai- at the Committee on International Re- gentleman from New York (Mr. MEEKs) tians, that are instantly turned away lations how he brought both The Wash- has joined us now for this discussion, in violation of the immigration laws of ington Post and the New York Times but the very safety and how President this country and in violation of the hu- showing this Philippe, who is a known Aristide was removed speaks to the fu- manitarian laws that control all of us criminal, convicted, is now declaring ture security of Haiti. And the gen- in the family of nations and in the himself to be the leader and people tleman from Michigan is a member of United Nations itself. holding him up as if he is ruling the the Committee on the Judiciary. I Mr. MEEK of Florida. Mr. Speaker, I country, and we saw no place in the know that he is fully aware of the tem- want to thank the gentleman for com- paper, nor have I heard of anyone else porary protected status that all of us ing down and his being willing to stay saying, that they were in charge. We have been fighting for so that we do and be a part of this discussion. have not heard from the prime min- not put Haitians that are in the U.S. I know the gentleman from New ister. We have not seen that the chief into harm’s way just like we have done York (Mr. MEEKs) left the Committee justice of the supreme court, anywhere for other countries that had similar on International Relations to come in the constitution, when we talk turmoil, be it political or natural dis- here and join us here tonight. about democracy, says is supposed to aster. I think it is important that we Mr. Speaker, I yield to the gentleman be in charge. note that when people are saying why from New York (Mr. MEEKs). Mr. MEEKS of New York. Mr. Speak- are we worried about how President b 1915 Aristide left, I am more worried, Mr. er, I want to thank the gentleman from Speaker, about the safety of the Hai- Florida for yielding to me, and I want Here is this guy demanding and com- tian people, also worried about our to thank him for having this important manding the police force, telling the troops that are in Haiti protecting not hour. I want to thank the distinguished people if this guy shows his face he is only U.S. properties but also looking at ranking member of the Committee on going to have him placed under arrest. the issue as it relates to the safety of the Judiciary and the dean of the Con- So the people of Haiti are under, appar- humanitarian workers; and I think the gressional Black Caucus as to all of his ently, unless the papers are lying, and way that the administration moved on insight and his invaluable knowledge. from what I see, are apparently under a Saturday night/early Sunday morn- I just left the hearing; and just the jurisdiction of individuals who are ing with this whole resignation thing piggybacking on the colloquy that was convicted criminals. What they did was or he cannot get on a plane fuels more taking place, I just asked one of the come, and now they have opened up chaos on the ground in Haiti. witnesses that was brought in who used and destroyed all of the prisons, where Mr. Speaker, I yield back to the gen- to be in charge of Haiti University, and people who are under a legal system, tleman, as the ranking member of the I asked him a simple question since I we talk about institutions, but under a Committee on the Judiciary, to speak know that part of the administration judicial institution system, that were to that. had brought him here and wanted him convicted by law, they are now walking Mr. CONYERS. Mr. Speaker, let us to testify since he was their witness, the streets and the people of Haiti are review the urgency of what the gen- whether or not he thought that indi- subject to them. tleman has described as the designa- viduals in Haiti should receive asylum So I say to the gentleman from Flor- tion of a temporary protected status right now coming into America, wheth- ida (Mr. MEEK), we have to really won- for all Haitians who are fleeing the er he thought that the policy that the der whether or not the people in Haiti country. I was not able to raise this United States has of turning back Hai- are safe now. I hope that the troops on personally with Mr. Noriega, the As- tians and accepting Cubans was a fair the ground are changing their position, sistant Secretary of State for Carib- policy. And he quickly and unequivo- because I know at one time they were bean Affairs; but he said that now that cally said that he thought that that only protecting United States prop- President Aristide has gone, it may be policy should change and it shows ab- erty. So the question is, what about safe for people to return to Haiti. This solute discrimination against the Hai- the people? is probably the most dangerous state- tian people and that that is something Mr. MEEK of Florida. If I could re- ment that has been uttered in a con- we should be moving in a complete bi- claim my time from the gentleman gressional hearing certainly this year partisan manner to make sure that we from New York (Mr. MEEKS), I just and maybe all last year as well. take care of those individuals, particu- wanted to make a quick point. I share To tell anybody that it is safe to go larly now because of the fact that our with Secretary Noriega and others, you back to Haiti when there is no govern- hands are virtually tied into what is would have individuals in the White ment, when the rebel leaders have an- taking place in Haiti currently. House saying that, well, I hope that nounced that they are replacing the po- We need to talk about the security of Members of Congress would watch lice and cooperating with the prime the people that are on this little island what they say, because they are put- minister, people who led the overthrow called Haiti, 8 million people. What is ting troops’ lives and State Depart- of the first democratically elected going to happen to them? It seems to ment civilian workers’ lives at stake. president in the 200-year existence of me that what took place here when we I must beg to differ, because we did Haiti, is probably the most incredible did not compel the individuals to sit not make the Saturday night visit. We utterance of this year or last year. And down at the table to have a peaceful did not bring about the kind of swift- the gentlewoman from Texas (Ms. negotiation, when we knew that the al- ness that our country brought about. JACKSON-LEE), our ranking sub- ternative would be that common We did not allow rebels, I am going to committee person on the Immigration, crooks and criminals would be coming use Mr. Noriega’s term, ‘‘thugs and Border Security, and Claims Sub- in armed, coming across the border, criminals,’’ to go through Haiti, taking committee on the Committee on the people who had been banned for life and over cities, burning police depart- Judiciary, and I and others on the com- people who are really Benedict Arnolds ments, pulling pro-Aristide supporters mittee have written Secretary Ridge, because they were traitors to their own out and executing them in front of asking that he designate temporary country, that they would be coming their homes. We did not do that as

VerDate jul 14 2003 02:20 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00057 Fmt 4634 Sfmt 0634 E:\CR\FM\K03MR7.125 H03PT1 H812 CONGRESSIONAL RECORD — HOUSE March 3, 2004 Members of the Congress. And as it rein the RECORD a communication from minister P.J. Patterson went to the Se- lates to the executive branch, the ad- Jamaica from Randall White about the curity Council on Friday of last week ministration, they did not stop it. All meeting of the CARICOM Conference, saying we must immediately go into they did was put out a little press re- the more than two dozen nations in the Haiti to secure the situation so that we lease and say ‘‘we condemn the actions Caribbean, who have sent this commu- can resolve the CARICOM agreement, of this group. Stop doing what you are nication. which was the political solution. doing.’’ It reads: ‘‘The CARICOM prime min- To his shock and dismay Saturday Not only did we go to the negotiating ister’s press conference ended at about evening came about, and I will tell you table, and I commend Mr. Noriega for 1330 EST today after meetings which there is no secret, there have been going over there, I commend the Presi- began yesterday and about midday. press accounts, that basically Presi- dent for saying we are sending the dip- ‘‘Here are the main points of the dent Aristide was told the following: lomatic corps over there. President press conference.’’ This is CARICOM, of ‘‘One, get on the plane and leave and Aristide sat down and said, ‘‘Fine, I which Haiti is a Member. save the lives of you and your family; agree with you. Let us share power.’’ ‘‘A communique is being drafted and or die.’’ The opposition party said no. ‘‘Okay. will be issued later. Now, this is the bicentennial, as the We will give you a deadline of 5 ‘‘CARICOM does not accept the re- gentleman from New York (Mr. MEEKS) o’clock.’’ Still no. The following day, moval of Aristide and demands the im- knows, of Haiti, 200 years. On this 200th still no. Then we just kind of walked mediate return of democratic govern- anniversary, or bicentennial, history is away. ment in Haiti. going to reflect that the United States But then it became a point to where ‘‘CARICOM leaders have been in al- played a hand in what possibly could that in this democracy, the biggest de- most constant contact with Aristide have been the 33rd coup d’etat of Haiti. mocracy on the face of the Earth, the before his removal and were never I personally did not want our con- United States of America, went in and given the impression that he wished to tribution to be that, especially since told the President of Haiti, as wrong as resign or to leave Haiti. Haiti made it possible for us to make he may be on several issues, ‘‘You have ‘‘CARICOM demands an impartial the Louisiana Purchase by taking out two choices: One, we can have a plane transparent investigation by the and beating down Napoleon, who was here to save the lives of you and your United Nations into the circumstances trying to run the whole world. Haiti family, or you will be killed. And, by surrounding Aristide’s removal. went to Savannah to help us gain our the way, if you want the plane, you ‘‘CARICOM will have no dealings independence against the British. We got all upset with France over have to sign this letter resigning as with the so-called government of Iraq, talking about they do not appre- president of the country that you were Haiti.’’ ciate our contributions of the past. I elected to serve.’’ Mr. Speaker, I include the commu- will say that the way we are going I would say to the gentleman from nication from Randall White for the about it, I will not even say ‘‘we,’’ be- New York (Mr. MEEKs) and the gen- RECORD: cause I do not think this Congress tleman from Michigan (Mr. CONYERS), I The Caricom prime minister’s press con- would have even moved in this way, if hate to keep going back to that point, ference ended at about 1330 EST after meet- we had the prerogative to have some because I think that is going to be the ings which began yesterday and ended about say in this, in the way the administra- cornerstone of how we move forth in midday today. I must confess pleasure and some surprise at the strength of the re- tion moved. Haiti. So, Mr. Chairman, I am glad you put Now, you listen to Mr. Noriega, you sponse. Here are the main points of the press con- that into the RECORD of the Congress, listen to the President, they start say- ference. A communique is begin drafted and so Americans will have an opportunity ing, ‘‘Well, you know, we are restoring will be issued later. to reflect back on this moment to order and peace.’’ But that is not what Caricom does not accept the removal of know that there were Members who the Washington Post is saying. That is Aristide and demands the immediate return were willing to bring this issue to the not what the New York Times is say- of democratic government in Haiti. Caricom leaders had been in almost con- floor to let them know that history ing. That is not what the Miami Herald should not repeat itself. is saying. That is not what the Associ- stant contact with Aristide before his removal and were never given the impression Mr. MEEKS of New York. Mr. Speak- ated Press is saying. That is not what that he wished to resign or leave Haiti. er, if the gentleman will yield further, CNN is saying. That is not what Caricom demands an impartial transparent I think that CARICOM really should be MSNBC and any other news organiza- investigation, by the UN, into the cir- applauded, because they really stepped tions are saying. cumstances surrounding Aristide’s removal. up to the plate. They could have sat What they are saying is Mr. Guy Caricom will have no dealings with the so- back and said just let it be. They could Philippe is the leader of the army and called government of Haiti. have been silent, as we were, up until Seems like a good strong statement. he is in charge, and he will say, Presi- that point, because we did not push dent Alexandre of the Supreme Court, I That reminds me that in our visit to CARICOM or anything. will yield to him, but at the same time the United Nations to meet with the We are the largest democracy on the it is him riding through the streets esteemed Secretary General, Kofi planet. Yet we did not go in there to with armed bandits. Annan, it was announced today that urge any kind of diplomatic or polit- Mr. MEEKS of New York. Just quick- they, too, have launched an investiga- ical solution. It took the nations of ly, it is not only all of the press, but tion into this matter. CARICOM to step up to the plate and my constituents who have relatives Mr. MEEK of Florida. Mr. Chairman, say, ‘‘Look, we do not want mayhem that live in Haiti, and they are on ei- I want to thank you for reading that, and violence. We understand the his- ther side of the fence. Some of them do and I will tell you how important tory and significance of Haiti. There- not like Aristide either. But they do CARICOM is to the economy here in fore, we are going to come up with this not like these common crooks that are the United States. We have what we plan and try to get two people to the there. call the Free Trade of the Americas, table.’’ When they call my office, they are and they are a part of the whole hemi- Who dropped the ball? Unfortunately, telling me they are afraid for their sphere and economy and everything. this administration dropped the ball, mothers, for their grandmothers, for We need the Caribbean with us. because it did absolutely nothing to their uncles, for their aunts who are Prime minister Patterson of Jamaica urge the opposition to come to the living there now. The situation is not put forth a great effort as a neighbor to table. In fact, by its silence it said, better than it was before Aristide was Haiti of wanting to see a resolution, a ‘‘You do not have to come to the forced to get on the plane. In fact, if peaceful resolution. It was the Bush ad- table,’’ which one knew then would anything else, it is worse. That is what ministration that rode in on the backs lead to a result of what could possibly they are calling my office and saying of CARICOM saying that we are going be the 33rd coup d’etat in the history of to me. to use the CARICOM agreement. That Haiti. Mr. CONYERS. If the gentleman is what the Secretary of State Noriega When we look at it, the question is, would yield further, I would like to put went down to Haiti to negotiate. Prime what if anything could have been done

VerDate jul 14 2003 02:20 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00058 Fmt 4634 Sfmt 0634 E:\CR\FM\K03MR7.127 H03PT1 March 3, 2004 CONGRESSIONAL RECORD — HOUSE H813 by Aristide at that time, because he tleman from Michigan (Mr. CONYERS), I is the real issue. Haitians, stay in agreed to everything. First the bishops have a question for you: Let us just Haiti. Deal with your own issues, but came with an agreement. Aristide play ‘‘what if.’’ Let us just reflect we will hold up the assistance. I say agreed to it. The opposition disagreed. back, because I was not in the Congress that again because that is what has No one compelled them to come to the when William Jefferson Clinton was happened in the past, Mr. Speaker. table. Then CARICOM came. Then the President of the United States of I appreciate the gentleman’s work as there was an international group that America. chairman of the working group as it re- came. You would have one side there If there was a Saturday night visit by lates to Haiti and its issues. But the saying we are willing to talk. the Clinton administration to a demo- gentleman from New York (Mr. MEEKs) I for one had some problems with cratically elected leader, what kind of and I celebrate representing a large what was going on, and I thought hav- Congressional hearings would be tak- Haitian American population, and I ing some more people involved in gov- ing place right now on the Hill? I just must say that it is important that we ernment and making sure there is a want the gentleman to share that. I do the right thing in Haiti. balance of power, that is what democ- want the RECORD to reflect that, be- Number one, to make sure our troops racy was all about. As I looked at the cause I remember being a member of are not over there for the rest of their CARICOM agreement, I saw there were the State legislature a number of hear- lives. Because if we follow the Bush concessions in there that individuals ings for less. policy that has been followed in Iraq, who may have felt they were locked I yield to the gentleman from Michi- we do not know when the clock will out of government and not able to par- gan. run out on that. We do not know how ticipate in a democratic process, that Mr. CONYERS. Mr. Speaker, I thank long our troops will be there. If you let they were given, and that was going to the gentleman for yielding. some of us tell it, we think we are in be part of the negotiating peace, where Well, first of all, we want to com- charge in Iraq. And every day on the they would be given the opportunity to mend the subcommittee chairman, the news it is different. sit in a floor similar to what we have gentleman from North Carolina (Mr. So when I look at this administration, it is a say-one-thing-and-do-an- here in the United States of America, BALLENGER), for doing what he did in Haiti, so they could have the polit- today. I think it was very important. other administration. And I hope that the American people are paying very ical debate to argue one side to the We will have a transcript of that close attention. If you care about Haiti other. record, the media was there, and it is or not, you have to care about the Now, for sure, in my estimation, I do an important beginning. But the gen- moves that we are making that are not agree with most of the things that tlewoman from California (Ms. LEE) going to define the very future of our the Republicans in our House do, as far and myself, who are the co-chairs of children’s and grandchildren’s lives as what they are moving. But we do the Haiti Committee, will have a reso- based on the knee-jerk decisions that not get into armed revolt. What we do lution circulating tomorrow calling for are being made on a Saturday night. is talk about it and debate on the floor an independent examination of this Mr. MEEKS of New York. Mr. Speak- and I have an opportunity to partici- over and above the Congress. er, I want to thank the gentleman, as pate. Sometimes I even question the b 1930 well as the ranking member, the gen- opportunity to participate because we tleman from Michigan (Mr. CONYERS), are limited in our rules. But still it is The United Nations will be embark- ing on the same thing. And so it seems when I think about the whole Haitian the democratic process. It is the insti- task force. tution that we have. I think that is to me that the three things I wanted to add as we conclude, and this is what I Number one, the record should re- how problems should be resolved, and flect that this is the gentleman’s first think has been the import of this 3-way that is what we should urge people to term in Congress, and he surely has fol- discussion this evening: one, the safety do. lowed right in the foot steps of his of the President of Haiti and his wife in I said for a long time that I disagreed mother, Carrie Meek, who long stood the Republic of Africa; two, that we with the results that took place in the fighting for the rights of Haitians and have an immediate meeting with Sec- year 2000, where I believe that we had a talking about the injustice that Hai- retary of State Powell and Ridge about President that was selected by the Su- tians were receiving. And I think that the temporary protected status of any- preme Court. I disagreed with that. But his stepping forward on behalf of the body that flees from Haiti and comes I thought that the way that we re- Haitian people is clearly what he has to our shores; and, three, that we con- sponded when we said okay, I disagree done. with it, but the Supreme Court is what tinue the introduction of the resolu- We talked in the hearing about the our institutions say where there a dis- tion that will call for, in addition to wisdom that the gentleman has pute it is to be resolved. So even the any congressional activity in the brought to the hearing today and that fact that I disagreed with what took House or the Senate, an independent he brings every Wednesday to the Con- place and with the decision, I am going examination of the circumstances of gressional Black Caucus meeting be- to agree with that. the United States in terms of this coup cause the gentleman has this interdia- That would be a lesson, an example, d’etat that has occurred in Haiti. logue with individuals from his com- for the rest of the world to see, and If there are other items to add, I munity, the largest Haitian commu- thereby we should then also encourage would be pleased to add them to this nity on or in our country. And what other individuals to establish these list. the gentleman brings is a different in- kinds of institutions and to support Mr. MEEK of Florida. Mr. Chairman, sight. It is an insight that unless you them and not undermine them with I just want to say that it is important have that kind of interaction, every- common crooks and criminals. that we try not in our democracy to re- body would not know of. And the gen- Mr. MEEK of Florida. I have two visit the kind of action as I understand tleman has done it in such an articu- points and a question for the chairman. it has taken place over the last 84 late manner, and we appreciate it. Two points: Number one, President hours. While we are speaking into the I mean, how the gentleman pointed Aristide was recognized not only by the record, I want to commend not only out today, for example, that our policy, U.S. Ambassador, I want to recap, as the Secretary of the U.N. for his for- we had a problem talking about getting the duly elected President of Haiti, but ward progress and concern and in ap- troops there to stop the common also recognized by the United Nations pointing a special envoy to deal with crooks from coming, but we had boats and the international community as this situation in Haiti. But it is going there instantly where you can see them being the President of Haiti. So when to be upon this Congress to be able to from the shore to stop Haitians from we hear these arguments about a ques- respond in the way that we should. We coming here. That is why you only see tionable election, I do not say history cannot have it both ways. We cannot 900 here. That was just very astute of speaks to that as it relates to our dip- say, Haitians, you stay in Haiti and the gentleman, and we thank him for lomatic ties with Haiti. then on the other hand clog up assist- bringing that forward. Mr. Ranking Member, whom I refer ance. We cannot say, because it is all Mr. CONYERS. Mr. Speaker, I would to as ‘‘chairman’’ constantly, the gen- wrapped around Haitians leaving, that like to join the gentleman from New

VerDate jul 14 2003 02:20 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00059 Fmt 4634 Sfmt 0634 E:\CR\FM\K03MR7.130 H03PT1 H814 CONGRESSIONAL RECORD — HOUSE March 3, 2004 York (Mr. MEEKs) in that commenda- minister of any country in that area, I be a better way. For us to make sure tion to the gentleman from Florida would be very concerned. that we assure the safety of those (Mr. MEEK). You would assume that the U.S. peacekeeping troops that are there, Mr. MEEK of Florida. If the gen- would help put a stop to this kind of some that are Americans, some that tleman from Michigan (Mr. CONYERS) thing. This is the vacation capital of are do-gooders at the United Nations, could yield while I call my mother so the Caribbean. They are not used to we need to make sure that we do not she can watch. Both of the gentlemen worrying about coups and all these lit- put them in harm’s way. are saying these wonderful things tle different things. But if they watch Mr. Speaker, I pray and I hope that about me. Go ahead. very slowly over a 4-week period, drug we do not have any harm come to any Mr. CONYERS. This has been very dealers, known criminals, thugs going of the peacekeepers that are there. I important; and, of course, it is very through Haiti and if you notice as they pray and hope that the killings stop on clear that this is the beginning of our are starting to progress, they are get- both sides of the ball as it relates to inquiries into U.S. activities, conduct, ting body armor, helmets, fully auto- Haitian people. action, in front of and behind the matic AR–15s, M–16s. Mr. Speaker, with that I will close. I scenes with regard to this poor, dis- Mr. MEEKS of New York. Where do am proud to be a Member of the U.S. traught, economically strapped nation. they come from? House of Representatives, and I hope in We have a much wider obligation Mr. MEEK of Florida. They say they the future that we can change some of than has been employed so far, and I came from the Dominican Republic. the mistakes that have been made in think the Congressional Black Caucus, Also, there was a question about the the last 84 hours. the Hispanic Caucus which has joined U.S. selling arms to the Dominican Re- f with us, the Progressive Caucus, the public, some of those same arms that Pacific-Asian caucus, the Native Amer- ended up in Haiti. REWRITING AMERICAN HISTORY ican Caucus, we have all been working So I am not a man with conspiracy The SPEAKER pro tempore (Mr. together with a number of people. The theory here. And take it from my good CARTER). Under the Speaker’s an- gentlewoman from Illinois (Ms. friend, the gentleman from New York nounced policy of January 7, 2003, the SCHAKOWSKY) is in at least one of those (Mr. RANGEL), this is not the Kendrick gentleman from Colorado (Mr. caucuses, but there are a number of Meek Report. This is factual. So we TANCREDO) is recognized for 60 minutes other people that are coming in to join have a lot to be worried about. And as the designee of the majority leader. us because democracy is being tested like I am saying to Americans, what Mr. TANCREDO. Mr. Speaker, as I by what we do and what we say. this administration is doing as it re- sit and listen to my colleagues discuss It is very important. We met with lates to putting our armed services and the events in Haiti, I cannot help but the CARICOM leaders and its chair- making the job harder, we could have think about the fact that although man, just before we met in the United had peacekeeping troops in there. We they are quite concerned about the re- Nations; and it was very obvious to could have stopped the violence, and cent events and that Mr. Aristide has them that if this could happen to Haiti, we could have come up with a peaceful been ousted, it is important I think for it could happen to them. solution. us all to recognize that it is the people Mr. MEEKS of New York. Just on Mr. CONYERS. Under the Special Or- of Haiti that ousted Mr. Aristide; and that point, because, I think it is impor- ders that we will be taking tomorrow whether our colleagues in the House of tant, on the whole western hemisphere evening, I will be able to report to you Representatives do not like that or because the first statement that we the whereabouts of young Duvalier, not, it is really irrelevant. heard from President Chavez from Ven- who is reported today to be planning to He was, in fact, a socialist and rather ezuela is indicating that Venezuela is return to Haiti. And there is a young incompetent administrator; and it is not Haiti. Because just in April of 2003, gentleman evicted from Haiti named not surprising that his regime came to there was an attempted coup there, Constant in New York. an end. again, threatening democracy; and we Mr. MEEK of Florida. He is in my At any rate, let me pose a question, stood idly by. And but for the people of district. Mr. Speaker. Mr. Speaker, would you Venezuela who decided that they were Mr. CONYERS. We have to watch believe that in the textbook in a school not going to allow the coup to stand where he is at all times. His record is district in New Mexico, an introduction and put the president back, we were si- bloody and long and unsavory. And so I to that textbook which is, by the way, lent on that. am very glad that both of the gen- called ‘‘500 Years of Chicano History In Our hands were kind of caught, the tleman, who have enormous Haitian Pictures,’’ states that, and remember, administration’s hands I should say, constituents, are here not just because this is a textbook in a public school in because the gentleman is correct. I do of their numbers, but because Amer- the United States of America, specifi- not think the Congress would have ican democracy is on trial in Haiti. cally now in New Mexico. And this is acted that way, but the administra- Mr. MEEK of Florida. As we close, not a question being posed. What I am tion’s hand was caught in a cookie jar. Mr. Speaker, and I want to thank the going to read here is not what some- Here we come just a few months, we Members of the House and the Demo- body just suggests. move from that, and we have the same cratic leader for allowing us to have kind of coup. There is a lot of similar- this moment to address not only Mem- b 1945 ities in that, whereas we seem to dis- bers of the House, but the American This is what the textbook purports to regard the institution of democracy be- people and that we think long and hard be true. It said that this textbook was cause of the dislike of who happens to about the decisions that the President written ‘‘in response to the bicenten- be the democratically elected presi- is making. We think we should not nial celebration of the 1776 American dent. What we should be doing is look- automatically give instant credibility Revolution.’’ You think good, nice ing to see how we can strengthen those to Saturday-night decisions. idea, ‘‘and it’s lies.’’ Its stated purpose institutions of democracy, how we can I am pretty sure there is a strong ar- is to ‘‘celebrate our resistance.’’ Who be helpful to strengthen those institu- gument to justify the reason why we are they talking to here? Celebrate our tions as opposed to saying that the way went in and we told President Aristide resistance to being colonized and ab- you do that is to have a coup d’etat what we told him when we told him. I sorbed by racist empire builders? which gets rid of government alto- am pretty sure that there is a strong The book describes defenders of the gether and causes mayhem. argument when we said you have to Alamo as slave owners, land specu- Mr. MEEK of Florida. Let me just sign this letter of resignation not once, lators and Indian killers, calls Davey say this, there is a footprint of drug ac- but twice, before you board the plane Crockett a cannibal, and it said that tivity in the Caribbean. So that means to save your own life. I am pretty sure the 1857 war on Mexico, not war with that you have well-financed individuals there is an argument. But I will tell Mexico, war on Mexico was an that have guns that have now been you as we look on the annals of history unprovoked U.S. invasion. green-lighted by this administration, of this country and how we treat de- Chapters include headings like Death that it is okay. And if I were the prime mocracies, like it or not, there has to to the Invader. This is the chapter

VerDate jul 14 2003 02:20 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00060 Fmt 4634 Sfmt 0634 E:\CR\FM\K03MR7.131 H03PT1 March 3, 2004 CONGRESSIONAL RECORD — HOUSE H815 heading: U.S. Conquest and Betrayal. is something where people would re- that had been relatively well-schooled Here is another chapter heading: We spond vitriolically and say how dare in math maybe and reading. I do not Are Now a U.S. Colony in Occupied you? But they did. But they did. know. I cannot tell you that I saw their America, and They Stole the Land. The National Education Association CSAT scores or anything, but it Now this is a textbook. This is what thinks it is deplorable. By the way, seemed like a good school. Brand new, has been printed. This is what has been there were similar press conferences all the best accoutrements of edu- adopted. This is what is being used in held throughout the country today by cation, and all these kids came to talk schools in New Mexico. I do not know State legislators or press releases they in an auditorium with me, and we had how widespread this is. I do not know sent out saying they were introducing a really great kind of discussion, and how many other schools have adopted similar resolutions in their State legis- then they started sending questions up it. I do not know whether it is on any- lature. We have probably, I do not to me. body’s recommended reading list for know, 10 or 15 State legislatures that One question that was posed to me children, but I do know that, as bizarre have agreed to take on this challenge. was this. They said, what do you think as all of this sounds, it is not unique. We have hundreds of individuals who is the most severe problem we face in This is not an aberration. This kind of have gone to our Web site on their own. this country, and I said, let me ask a revisionist history, this kind of ven- I mean, it was amazing that even be- question here, and then I can tell you omous descriptions of the United fore we announced this today, we had what I think that problem is. I said States is not unique. all kinds of folks who had gone to the how many people here in this audito- That should concern us all, I think, Web site, www.house.gov/tancredo, rium, 150 I would say, 150 to 200, I am and it is what I want to talk about to pulled up, and when the pop up came not sure how many, I said how many some extent this evening: What is hap- up, it is called Our Heritage, Our Hope. people here would say that you believe pening to the teaching of our history, They went to that page, and they saw you live in the best country in the our culture and the heritage we call the resolution. They saw the resolution world. Simple question. There was a Western civilization, and why I think that the State legislature was going to pause. A few hands began to go up. it is important to address this issue in introduce, and they saw a resolution Maybe two dozen eventually raised this body. they could bring to their school board, their hand out of 150 to 200 people. I There was an old chant during the a similar resolution, asking that the said, well, let me ask you about West- 1970s, I think it was, maybe late 1960s, board actually prepare students who ern civilization. Do you realize you are early 1970s. College campuses in ref- would be able to articulate an appre- a product of that and do you think by erence to maybe Ho Chi Minh. Stu- ciation for Western civilization. There and large it is a good thing? Are you dents would chant Ho Ho Ho, Western is plenty of opposition to this. It is just proud of that? Well, of course, no re- Civ has got to go. I remember that on amazing but there is. sponse to that one really. I said, well, my campus as a matter of fact, and it People ask me why did I do this, why then I can answer your question about has gone by the way. It has gone. Sev- did I find it necessary to actually take what I think is the biggest problem we enty percent of all of the elite institu- this action and introduce a resolution. face. This is it. Now, there were other kids in that tions of higher education in this coun- Well, Mr. Speaker, my colleagues know room, Mr. Speaker, that I felt wanted try have dumped it from their course that I spend a great deal of time on the to say, yes. You could tell that they list and from the curriculum. They will floor of this House and talking to you were. I have been a teacher, was a not teach Western civilization any- and other Members about immigration teacher for years, and I have seen that more, and quite frankly, if this is a re- related issues and my concerns that look on their face. It is, I put my hand flection of the way Western civilization our country is being divided up, it is up, he may call on me, and I will be is taught to students, not just in high being balkanized, that we are not enable to actually defend this propo- schools but colleges, which of course it couraging assimilation, that we are en- sition. That was the feeling I got that is, then I am glad they are not teach- couraging this fragmentation of Amer- held them back, not necessarily that ing it anymore because they are not ica by telling people who come here they did not like America, they did not teaching Western civilization. They are that they should not become part of think it was a good country, the best teaching a hatred for Western civiliza- the American experience; there is noth- country to live in. It was, they could tion and a hatred for everything we are ing really good about it; that they not defend it, they could not defend as a Nation because, Mr. Speaker, we should keep their own languages. We that proposition. are a reflection of that civilization, a should teach those languages in the You wonder why. You wonder how it Judeo-Christian heritage about which school instead of English. We should could be that by the time a child gets we can be very proud, the story of encourage them to stay separate. We to high school that they would feel un- which we should pass on to the chil- should encourage them actually to comfortable with saying, yeah, yeah, dren who come into our schools and the even keep their own political affili- man, this is great, it is a country of immigrants who come into this coun- ation with the country they came freedom and we have got the Bill of try. from. We tell them they can become Rights and just some things that you Let us go through some other inter- dual citizens. We send all kinds of mes- maybe reel off that you think are pret- esting examples of what we have found sages to them that there is nothing ty good things and the reason why you in the textbooks of America and why good about America. Why would they live here, but they could not. today at 10 o’clock across the street I want to attach themselves to this kind Not too long thereafter I met with a and several other Members gathered to of a country? whole group of teachers. These were announce that we have introduced a We tell them this and we tell their teachers from the Cherokee Creek resolution into this body. Simply put, children that when they come to schools. They were all social studies the resolution says that children grad- school, and we wonder why we are hav- teachers. It was one of those in-service uating from schools in this country ing a hard time actually creating a ho- days. They were all supposed to come should be able to articulate an appre- mogenous society. We really wonder and hear me speak as part of their in- ciation for Western civilization. That what is happening to us. This is one service. Some of them boycotted, is it. That is it. Does not mandate any- reason why I address this issue, be- would not come, because I was the thing on schools. Does not demand that cause I believe that we are telling our speaker, understandable, but I would we change textbooks. Does not do any- children and the children of immi- say again maybe 75 to 100 teachers. thing. It just says that we think, as a grants that there is nothing of value in I brought this issue up, and I told body, that children graduating from Western civilization or in the United them what had happened in the other our schools should be able to articulate States of America. school. I said, do you believe it? Do you an appreciation for Western civiliza- I went to a school in my district believe it? Again, maybe a couple of tion. about 2 or 3 weeks ago when we were on dozen, and I thought to myself, no won- Would you think, Mr. Speaker, that break. It was a high school, brand new der, of course. It is not a surprise then that is a contentious amendment or high school, good principal, good teach- if the teachers in this room do not be- resolution? Would you think that that ers, as far as I could tell certainly, kids lieve that they live in the best country

VerDate jul 14 2003 02:20 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00061 Fmt 4634 Sfmt 0634 E:\CR\FM\K03MR7.134 H03PT1 H816 CONGRESSIONAL RECORD — HOUSE March 3, 2004 in the world, why would they teach In 2002, the ‘‘New Guidelines for I am telling you, Mr. Speaker. I their children that? Why would they Teaching History’’ in New Jersey’s mean, yes, I expect that here on the teach students that? But what they public schools failed to even mention floor of the House. I expect to hear teach them is to be critical of every- America’s Founding Fathers, the Pil- that from our opponents. Understand- thing. grims, or the Mayflower. In the ably, this is the place where this kind I want to emphasize, Mr. Speaker, I Prentice Hall history textbook, used by of tussle goes on. I expect to see it on do not want us to tell children that all students in Palm Beach County high the editorial pages of the papers in my of our history is of glory and promise schools, titled ‘‘A World Conflict,’’ the district. They are all pretty liberal. I and hope. Certainly that is not true. first five pages of the World War II expect to see it by commentators in Certainly there are many things we chapter focus entirely on topics such as those newspapers, in the Wall Street have done wrong, but let me suggest, gender roles in the Armed Forces, ra- Journal, in the New York Times, and Mr. Speaker, there is something abso- cial segregation and the war, intern- The Washington Post. Yes, I expect to lutely unique about this country that ment camps, and women and the war see all of this. But in a textbook? In a deserves to be told, a story that de- effort. history textbook? serves to be told and it is this. This is the way we introduce World It also states that communism had Of all the countries on this planet, War II to the students. It is all about potential totalitarian underpinnings. one, just one, started on the basis of this stuff, and not about trying to save Potential? It contrasts Chiang Kai- ideas and ideals back in the 1700s. civilization from a dark age; not about Shek’s repressive rule in China with Every other country came about be- trying to stop a psychopathic killer Mao Zedong’s benevolence toward peas- cause somebody carved it up, con- who would have in fact destroyed the ants in the 1940s. It fails to mention quered it, drew the lines or whatever, world. No, no, World War II was what the death of about 65 million Chinese but we started the whole concept of do we think about the gender roles in after Mao came to power in 1949. starting a country with an idea. And the Armed Forces. It classes sex roles in marriages with where do these ideas come from? They We have this list and many, many slavery as instances of inequality. It are the ideas of Western civilization. others on our Web site; and again I am states that sex roles in marriage and in They are the products of literally thou- going to say, Mr. Speaker, that it is the family foster discrimination and sands of years of human development, www.house.gov/tancredo, and one can inequality. starting with the Greeks and the Ro- go to ‘‘Our Heritage, Our Hope.’’ Mr. The Prentice Hall textbook ‘‘Amer- mans. Speaker, there are people who can help ica: Pathway to the Present’’ contains Certain concepts are uniquely West- us out there. They can sign up and help references to Ngo Dinh Diem’s repres- ern. No other civilization can claim us take a resolution to their school sion in South Vietnam, but no ref- them. How about the concept of the board. It is all on there, and we will erences to the purge by Communists in rule of law as opposed to the rule of give them all the help they want. North Vietnam from 1951 to 1956, which man? Uniquely Western. It is ours. It is Now, here is McDougal’s textbook. killed about 50,000 Vietnamese. good. It is a good thing. We are trying And, by the way, I used a textbook 30 It states that Bush’s 1,088 ads attack- our best to right now plant those seeds years ago by McDougal that is coming Dukakis created a nasty contest, in far off lands and are spending treas- pletely different from this one when I alienating some voters and contrib- ure, both monetary and human, in pur- taught seventh, eighth, and ninth uting to low voter turnout. suit of that goal. The rule of law over grade civics at Drake Junior High in It discusses the introduction of Old the rule of man, not a dictator, not Arvada, Colorado. World diseases into the New World in Saddam or Qusay or Uday, but the rule Here is what this one says about the Colombian Exchange, but it does of law. That is what we are trying to American history. It teaches that Sit- not discuss American diseases brought do. ting Bull had strength of character back to Europe. In fact, a lethal strain It is a noble cause. The men and while Custer was a fool and rode to his of syphilis, probably from America, women who are trying to plant those death. Now I am not saying Sitting killed many Europeans in the early seeds are being fired on every day, Bull did not have strength of character 1500s. some losing their lives, seems like and purpose; but, again, look at the Now, all these things are factual. every day. way all these things are presented. It And I am not suggesting for a moment discusses U.S. soldiers killing Indian that we should not talk about the prob- b 2000 women and children in Sand Creek and lems that happened when Columbus But it is for a noble cause, Mr. Wounded Knee, but fails to mention came and the clash of civilizations. Speaker. I believe that. the Indian killings and the kidnapping Would it be, I wonder, chauvinistic But how long would I believe those of white women and children the sum- here and too one-sided to suggest that things if I had been taught every single mer before Sand Creek. in the course of world history that day things like this: in a textbook It devotes 180 lines of text to dis- whenever two civilizations clash the called ‘‘Across the Centuries,’’ which is crimination in the United States in the one with the greater technology is al- used for seventh grade history, and, late 1800s and 1900s, 180 lines of text. It most always, in fact always is the vic- boy, I have to put the word history in notes in the context of the Nazi Holo- tor. And in the case of the clash of civ- quotation marks there. That is my edi- caust that George Custer used the term ilizations here on this continent, the torial comment. The book defines the ‘‘final solution.’’ It devotes 107 lines to fact is that the greater technology, the word jihad as, ‘‘To do one’s best to re- the racist internment of Japanese dur- civilization with the greater tech- sist temptation and overcome evil.’’ So ing World War II, but nothing on the nology, was the victor. now this is what children are taught Japanese rape of Nanking or the 1942 It does not excuse all of the problems the word jihad means. Bataan death march. Not a word. It that were inherent in that time frame When this child watches a program claims that anybody who opposes un- and in that manifest destiny that we on television and this word is used, and limited immigration is influenced by were pursuing. It does not excuse it it is a word used in conjunction with racism; that they were influenced by and should not be overlooked. But is it someone who has just blown himself or racism, especially in the 1920s, and the only story? Is that the only way to herself up, and a lot of other innocent were anti-immigrant. project American history and Western human beings around them, this kid is Further, it editorializes that George Civilization? Is that the only context supposed to think that that is what W. Bush’s conservative administration we can actually think of to discuss this somebody is doing in order to resist and policies are extreme. This is a text- in for students? Is there anything that temptation and overcome evil. And if book. It states that the Reagan-Bush has happened here worthy of note from we condemn jihad against the United ‘‘conservative agenda’’ limits advances a positive standpoint? States, then we are condemning some- in civil rights for minorities and that The same ‘‘Pathways to the Present’’ one who is just simply trying to over- the conservatives’ bid to dismantle argues that traditional sex roles deny come evil. This is what we tell our chil- Great Society social programs could be women full equality because it does not dren? compared to abandoning the Nation. empower them to perform as men. It

VerDate jul 14 2003 02:20 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00062 Fmt 4634 Sfmt 0634 E:\CR\FM\K03MR7.135 H03PT1 March 3, 2004 CONGRESSIONAL RECORD — HOUSE H817 fails to mention in the brief reference These are some of the events on col- and we had people in our country at in- it has to Thanksgiving that the Pil- lege campuses: University of California stitutions of higher education, and I grims were thanking God. at Berkeley. Student radicals broke have to put that in quotes, too, saying Now, there is Holt Rinehart Win- into a Berkeley student office, stole that he could not speak because what ston’s ‘‘American Nation in the Modern the entire 2,000 press run of a conserv- he said they did not agree with. It did Era.’’ ative newspaper, the California Pa- not fit the model, this radical And why I want to go through these, triot, then threatened the editors with multiculturalist model that they had Mr. Speaker, I know it is lengthy, but death when they filed a police report. been force-fed for years. It is intoler- I want to show the things I have point- It is believed the crime was committed ance that we are, in fact, promul- ed out were not aberrations. They were by members of MeChA, a Mexican lib- gating; intolerance for any other kind not just radical examples of this rad- eration group at Berkeley. of idea other than that pushed by the ical multiculturalist philosophy that At Tufts University, hooded leftists radical left and the cult of actually permeates our system and our assaulted a conservative student. The multiculturalists out there. schools. It is the norm. university let the attackers off with Mr. Speaker, I believe it is problem- I talked yesterday to an editor at the only a warning. atic, and I believe there are things that Rocky Mountain News about this issue, At San Diego State and at the Uni- we can and should do about it. If noth- and he said, well, you know, I do not versity of North Carolina, campus ad- ing else, we should simply start a de- know. I look at my kid’s textbook and, ministrators blame campus patriots bate about this. I hope that our resolu- admittedly, she is in a private school, and America for the terrorist attacks tion today helps generate some discus- so I am not sure it is the same thing, on September 11. sion and does help generate a debate but I do not see a lot of this stuff. But That was 2002. about what exactly it is we expect from he said, I do notice they are just not The University of Oregon. Elements the students that are in our schools being taught American history, not of the so-called Animal Liberation and what we expect from people com- any kind. Not this kind, but not any Movement specializes in ‘‘liberating ing into this country. kind. lab animals and destroying private Mr. Speaker, I had occasion to talk That certainly may be the case, that property through vandalism and to a bishop, a Catholic bishop in Den- the problem here is there is simply a arson’’ have an office at the University ver, Colorado, named Bishop Gomez. lack of American history or Western of Oregon in Eugene. Their newspaper, We had a breakfast meeting awhile Civilization being taught all together. paid for by student fees, is The Insur- back. During the course of the discus- Whatever is the problem, whether it is gent. The December 8 issue, which con- sion which naturally revolved around this kind of revisionist history that is tained an 8-page insert titled ‘‘The the issue of immigration, and I say being taught, whether it is these kinds ALF Primer: Your Guide to Economic naturally because that seems to be the of skewed examples of who we are and Sabotage and the Animal Liberation issue I find myself discussing more and what we are, or the fact that there is Front’’. It talks about arson and what more often, Bishop Gomez said some- nothing at all, there is a problem. else you can do to push this particular thing to me and the other people at the There is a problem because when we idea and agenda. A simple way to burn table that I thought was quite incred- ask children, as I did, if they believed a vehicle is to place a sheet or blanket ible. He said, Congressman, I do not in who we are and what we are, they on top or underneath and soak it with know why you are worried about the could not defend it. This is problem- a flammable liquid. Mexicans coming into this country. He atic, and it is something we should try The university does not go after this said, They do not want to be Ameri- to address. group. They let them stay on campus. cans. That was his comment. Holt Rinehart Winston’s ‘‘American I said, Bishop, that is the problem, of b 2015 Nation in the Modern Era’’ includes an course. That does not make me feel exercise calling for students to criti- The textbooks, of course, and profes- good. If you think I am relieved by the cize but not to defend nativists’ sup- sors at universities, things that are fact that we have people coming into port for immigration restrictions in said about America and our involve- the country by the millions who do not the 1800s. ment in Iraq, it is all absolutely in- want to be Americans, combined with Again, could it be possible that some credible and absolutely one-sided. So the fact that everywhere they go in our people during that period of time were that certainly does not help. society we tell them they should not concerned about things other than the What one would hope is that children be, if you believed what was in the race of the people coming in to the coming out of high schools in this textbooks that I just quoted, why United States? Could it possibly be? country would have what is often re- would you want to connect with this This links anybody who is opposed to ferred to in the parlance in edu-speak country? You would want to take the immigration reform as racist and dis- as critical thinking skills. That is what benefits of a good job and send money criminating. It associates immigration we are supposed to teach children, crit- back home, but you would not want to restrictions with intolerance and dis- ical thinking skills, so they are able to connect with it emotionally or politi- crimination. look at two sides of an argument and cally. You would say, no, I think I will I am surprised I did not get a men- make some intelligent decision about keep my citizenship in my country of tion in this book, but it is a little too which side is correct. But you can only origin. And between 5 and 10 million, early, I guess, for me. have critical thinking skills if you are huge numbers of people, are claiming It contains the theme that the only taught both sides of an issue, if you are dual citizenship in this country, which cause of violence in America, espe- shown there are two sides to these never happened before. cially in the South in the Reconstruc- issues. There are several great books, of tion area, were white racists. No other When children come out of our high course, but one is called ‘‘The Clash of objection to radical reconstructionism. schools and into these kinds of institu- Civilizations’’ by Samuel Huntington. I It devotes 1,456 lines to social protests tions, and we have literally scores of found it to be quite profound and quite by ethnic and other groups from the examples of things that happen and are provocative, and I certainly rec- 1950s to the 1970s, but far fewer lines to stated on campuses all over the United ommend it. But I harken back to an- U.S. involvement in World War I and States, it is no wonder that we see other book I read a long time ago. It is II. strange and bizarre reactions. For ex- called ‘‘The Disuniting of America,’’ These things are not unique to just ample, Antonin Scalia, a noted jurist and the author was a guy by the name textbooks, by the way. At our colleges speaking recently at an ivy league col- of James Schlesinger, Jr. Mr. Schles- and universities there are a lot of lege almost was not allowed to speak. inger is not known as a conservative awards that are given every year, The students and professors protested pundit or author, and he is not. He is a called the Pollys, and they are for out- the fact that he was allowed to speak liberal. But the book was, I thought, rageous activities or behaviors or on a college campus. They had big dem- quite compelling. Again, I recommend whatever on college campuses. They onstrations outside. He is a member of it to anyone. It is a great book, ‘‘The are as follows: the U.S. Supreme Court, a noted jurist; Disuniting of America.’’ He talks in

VerDate jul 14 2003 02:20 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00063 Fmt 4634 Sfmt 0634 E:\CR\FM\K03MR7.137 H03PT1 H818 CONGRESSIONAL RECORD — HOUSE March 3, 2004 ways far more articulate than I, and he vidualism to trample on the need for a try should be able to articulate an ap- talks about this phenomenon. He talks common citizenship, if we ignore civic preciation for Western Civilization. It about dividing this country and what education, the forging of a single peo- will be interesting to see and hear the we are doing to ourselves and what is ple, the building up of a legitimate pa- debate. It will be interesting to see and happening to us. Why is it so hard for triotism, then we will find ourselves a hear people say, no, they should not. us to think about America and Western Nation of selfish individuals heedless of f Civilization as a place and a civiliza- the needs of others. We will have the IRAN tion respectively of value? Is it because war of all against all, and we will have we are afraid to be patriots or to teach no common defense. The SPEAKER pro tempore (Mr. children to be patriots? ‘‘The civic sense America needs can CARTER). Under the Speaker’s an- There is a fascinating article by Don- come only from a common educational nounced policy of January 7, 2003, the ald Kagan in ‘‘The Intercollegiate Re- effort. In telling the story of the Amer- gentleman from New Jersey (Mr. AN- view’’ in the spring 2002 called ‘‘Ter- ican political experience, we must in- DREWS) is recognized for 60 minutes. rorism and the Intellectuals.’’ He says, sist on the honest search for truth. We Mr. ANDREWS. Mr. Speaker, I must ‘‘Free countries like our own have had must permit no comfortable self-decep- begin by thanking the staff of the even more powerful claim on the patri- tion or evasion, no seeking of scape- House of Representatives for enduring otism of their citizens than do others, goats; but the story of this country’s these long nights so we have a chance and our country has an even greater vision of a free, democratic republic to speak our minds about the impor- need of it than most. Every country re- and of its struggle to achieve it need tant subjects of the day. We certainly quires a high degree of cooperation and not fear the most thorough examina- appreciate the Speaker and the staff unity among its citizens if it is to tion. Our country’s story can proudly who stay here into the wee hours. I also extend my appreciation to the achieve the internal harmony that stand in comparison to that of any gentleman from Colorado (Mr. every good citizen requires. Unity and other land, and that story provides the TANCREDO) for the intense causes in cooperation must rest on something basis for a civic devotion we so badly which he believes and for his patriot- shared and valued in common. need. ism. I must say, one of the reasons I ‘‘Most countries have relied upon the ‘‘In spite of the shock caused by the love my country so much is we have common ancestry and traditions of attacks on New York and Washington the academic freedom that decisions their people as the basis of their unity, and the discovery of anthrax in the about what we teach and how we teach but the United States of America can mail, I am not sure we really under- it are made by educators and teachers rely on no such commonality. We are stand how serious is the challenge that and not by those of us in this Chamber, an enormously diverse and varied peo- now faces us. We are only at the begin- and I hope that is always the case. ple, almost all immigrants or the de- ning of a long and deadly war that will Mr. Speaker, I want to talk about a scendants of immigrants. We come inflict much loss and pain, one that challenge to the values that I just from every country on the face of the will require sacrifice and steady deter- made reference to, probably the most Earth. Our forebears spoke, and many mination during the very dark hours to important challenge to these values of us still speak, many different lan- come. We must be powerfully armed, that we have faced in many genera- guages. And all the races and religions morally as well as materially, if we are tions in this country. of the world are to be found among us. to do what must be done. That will The great strengths provided by this take courage and unity, and these b 2030 diversity are matched by great dan- must rest on a justified and informed In the 1970s a young man named gers. We are always vulnerable to divi- patriotism to sustain us through the Ghollam Nikbin came to the United sions among us that can be exploited, worst times. States from Iran. He came here to to set one group against another and ‘‘A verse by Edna St. Vincent Millay study at an American university. While thus to destroy the unity that enables provides a clear answer to the question he was here, the fundamentalist revo- us to flourish. of why Americans should love their lution in Iran took place and in 1979 his ‘‘We live in a time when civic devo- country: country changed dramatically and he tion has been undermined and national Not for the flag chose not to return to Iran. At the unity is under attack. The individ- Of any land because myself was born there time he came to the United States he ualism that is so crucial a part of our Will I give up my life. was a person who practiced the Islamic tradition is often used to destroy civic But will I love that land where man is free, faith. While he was in the United responsibility. The idea of a common And that will I defend. States, he met an American citizen American culture, enriched by the di- ‘‘Ours is such a land. who was a member of the Mormon faith verse elements that compose it but ‘‘Up to now, too many American in- and he married this American citizen available equally to all, is under as- tellectuals and too many faculty mem- and he converted. Mr. Nikbin converted sault. Attempts are made to replace bers of our greater universities have to the Mormon faith himself. That our common culture with narrower and been part of the country’s problem. If marriage subsequently ended in di- politically divisive programs that are we are to overcome the dangers that vorce and in 1991, Mr. Nikbin returned certain to set one group of Americans face us, we will need them to become to his native Iran to live his life. While against another.’’ part of the solution. My hope is that there, he met another woman and they Mr. Speaker, it is called the text- the natural, admirable, vitally nec- decided to get married and he had a books of American public education. essary patriotism that is now gaining wedding. During his wedding, members He continues, ‘‘The answer to these strength and expression among ordi- of the police force in Iran raided the problems and our only hope for the fu- nary people of our land will help to wedding because the men and women ture must lie in education, which phi- educate those among us who feel intel- at the wedding were engaged in danc- losophers have rightly put at the cen- lectually superior to them. We will ing. Men were dancing with women. ter of the propagation of justice and need that patriotism in the long, dan- For this hideous offense, Mr. Nikbin the good society. We rightly look to gerous, and difficult struggle that lies was publicly lashed 40 times with a education to solve the pressing current before us.’’ whip to punish him for his trans- problems of our economic and techno- Certainly I cannot say it better than gression against the prevailing culture. logical competition with other nations, Mr. Kagan. Again, that was Donald Things grew worse for Mr. Nikbin in but we must not neglect the inescap- Kagan from ‘‘The Intercollegiate Re- Iran. He was a suspicious person be- able political and ethical effects of edu- view’’ in the spring of 2002, ‘‘Terrorism cause he had converted to the Mormon cation. We in the academic community and the Intellectuals.’’ faith and then attempted to convert have too often engaged in My little attempt, Mr. Speaker, to do back to his native Islamic faith. So in miseducation. If we encourage sepa- what Mr. Kagan is suggesting is the 1995 he tried to leave the country. As ratism, we will get separatism and the resolution I mentioned earlier today. he was at the airport, he was inter- terrible conflicts in a society that it Again, it simply says that all children cepted by Iranian authorities who re- brings. If we encourage rampant indi- graduating from schools in this coun- fused to let him leave the country. He

VerDate jul 14 2003 03:46 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00064 Fmt 4634 Sfmt 0634 E:\CR\FM\K03MR7.138 H03PT1 March 3, 2004 CONGRESSIONAL RECORD — HOUSE H819 was beaten with an electric cable and peace, of humanity, of inclusion. By no who wishes to attack us in the future, he was hung upside down by his ankles means is this twisted attitude wholly where the threats exist for our future. for extended periods of time. Today he representative of the Arab culture or To understand why we want to prevent is 56 years old. He has returned to the the Arab ethnicity. I believe that the the next 9/11, why we want to limit the United States. His family says he was vast majority of men and women of next attack on this country so it does able to return to the United States be- Arab descent love peace, respect others not succeed and so we can defeat such cause they were able to bribe the ap- and wish that their children would an attack, we need to understand propriate officials in Iran to get him grow up in a world where others share where the first 9/11 came from. In order released from the country. His crime those values. But make no mistake for terrorists to succeed, they need per- was that he converted to a faith other about it, the poisonous well from which sonnel, they need leadership, they need than radical Islam. these acts spring is an attitude that financial and logistical support, and A woman named Zahara Kazemi, a identifies everything Western, every- their leaders need sanctuary. Their woman of both Iranian and Canadian thing modern, everything progressive, leaders need a place where they can descent, a 54-year-old woman, last June everything that America loves and ev- plan, plot and eventually execute at- 23 took an assignment. She was a photo erything that Americans are. It is an tacks against the people of the United journalist. She took an assignment to attitude that identifies all those things States of America. September 11 hap- go to Iran to do her work as a photo as a threat to be detested, defeated and pened because Osama bin Laden and his journalist. On the 23rd of June of last destroyed. It is an attitude that we saw al Qaeda organization had all four of year, she was taking photographs of a in the rubble of the World Trade Center those elements to attack us. They had student demonstration outside of the on September 11 of 2001. It is an atti- the personnel, the 19 twisted individ- Evin prison in Iran. She was appre- tude that literally blew a hole in the uals who hated us more than they hended by authorities for the hideous Pentagon. It is an attitude that led loved life to the point that they were crime of taking a photograph of a dem- dozens of brave Americans to their able to turn civilian airliners into onstration. After 77 hours of interroga- death in a field in Shanksville, Penn- weapons of mass destruction. They had tion in an Iranian prison, she took sylvania. the leadership, the odious cadre of dark sick. On the 11th of July of last year, 18 Many of us believe that September men who surround Osama bin Laden, days after she arrived in Iran, she died 11, 2001, was not an isolated criminal who conceived of such a horrific plot. in an Iranian hospital while in the cus- act. It was an act of war that shocked They had the finances and the logis- tody of the Iranian authorities. At Americans into a realization that we tics, passing through international fi- first, their report is that she had suf- are in the midst of a great global strug- nancial organizations, in many cases fered a stroke and died of natural gle between those who love and tol- laundered through Saudi Arabia, causes. Many in our sister nation of erate diversity and those who deplore laundered through other institutions, Canada expressed outrage as to the it and try to destroy it. So the reason many of which to this day refuse to conditions around Ms. Kazemi’s death we should care about the stories I told disclose their banking records to us. and the Canadian government was per- you about Ghollam Nikbin, Zahara The terrorists were able to gather the sistent and, finally, 5 days after she Kazemi, the stories that I could have logistics they needed to place the hi- died, authorities of the Iranian govern- told about hundreds of Iranian stu- jackers in America, buy their plane ment indicated that it was not a stroke dents who are in Iranian prisons to- tickets, acquire their training, keep at all, that she had died from beatings night, the reason we should care is that their cover and let them prepare to do that led to a cerebral hemorrhage, a 54- the hateful attitude from which the at- their horrible deeds. year-old woman beaten to death in an tacks on them sprung is an attitude And, finally, and I think crucially, Iranian prison because she dared to that targets us next, an attitude that the September 11 attackers flourished take photographs of a peaceful dem- seeks to destroy us and our way of life. in the terrorist sanctuary of Afghani- onstration. By no means is it fair or accurate to stan. At the time Afghanistan was run What kind of monstrous spirit would say that such an attitude is common or by the Taliban regime, a group that give rise to these atrocities? It is a characteristic of the Iranian people, by not only tolerated the presence of al spirit we have seen before. It is the no means is it fair or accurate to say Qaeda but actively facilitated the pres- spirit, the horrible spirit, the horrible that it is characteristic of the history ence of al Qaeda. I think the argument poisonous spirit that led 6 million Jews of their nation, and by no means is it is rather clear. Without a sanctuary in to the gas chambers during the Holo- accurate to say that this hatred will Afghanistan, there would have been no caust. It is the horrifying spirit that mar and define the future of the people place for Osama bin Laden to plot this sees people strap C4 to their waists and of Iran. I aspire to a future where the attack. Without a place to plot this at- walk into hotels and onto buses and people of the United States and the tack and gather his resources, there near schools in the Middle East every people of Iran are partners in peace and would not have been an opportunity to day. It is the awful animus that led to freedom, where we celebrate each oth- carry out the attack. Without the op- the bombings in Riyadh, in Ankara er’s differences and respect each oth- portunity to carry out the attack, within the last year. The victims are of er’s values. But that is not the case there certainly would not have been all faiths, Christian, Jew, Muslim, Bud- today. the carnage and pain this country felt dhist, agnostic. They are of all races Mr. Speaker, I would hope that we in and still feels emanating from Sep- and all nationalities. What these hor- this House and we in this country could tember 11. rific acts have in common is they are focus on the very grave and real threat What is the lesson of September 11? rooted in the poisonous well of an in- posed to the peace that we enjoy to- There are two lessons. The first is if tolerant hatred of anyone who is not night by the presence of the terrorist you give terrorists sanctuary, they will like those who practice that intolerant incubator in Iran. When we consider exploit that sanctuary and, like a hatred. what our policy should be toward Iran, snake that is coiled in the corner, they This poisonous attitude is contrary we should not think about September will wait till precisely the right mo- to everything that we are as Ameri- 11 of 2001 because there frankly is no ment to strike. And the second lesson cans. It is against inclusion of people of evidence that I have seen that would of September 11 is if you wait for the other races and cultures. It is an atti- suggest that the Iranian government snake to strike, it always will. If our tude that despises the equal treatment was in any way a sponsor of the atro- strategy in the face of this global of men and women under the law. It is cious attacks on our country on Sep- struggle is to wait and see if terrorists an attitude that looks at other faiths tember 11. In fact, the evidence is rath- who enjoy sanctuary will attack us, I not as an opportunity to learn how er replete with examples that Osama do not think, Mr. Speaker, that is a other people might live but as a threat bin Laden and his al Qaeda organiza- question. I think history is conclusive to one’s own twisted faith. By no tion have been at odds with the radical on this point. If you wait for terrorists means is this poisonous attitude rep- fundamentalist Iranian leadership. to attack you, they will. This is the resentative of the Islamic faith. I be- But the question is not who allied to context in which we must understand lieve the Islamic faith is a faith of attack us on September 11. The issue is what is happening in Iran today and

VerDate jul 14 2003 02:20 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00065 Fmt 4634 Sfmt 0634 E:\CR\FM\K03MR7.140 H03PT1 H820 CONGRESSIONAL RECORD — HOUSE March 3, 2004 why it is important to the United commonly known that one of the ways On February 21 of last year, 2003, the States of America to rethink the way that we are at risk is that as the huge leader of the International Atomic En- we approach this problem. influx of trade comes and goes from our ergy Agency, Mr. ElBaradei, visited Iran is a place where terrorist organi- country in container ships, that the Iran after extreme international pres- zations who disrupt the Palestinian- planting of a small nuclear weapon on sure following the Iranian disclosure. Israeli negotiations find refuge, find a container ship could cause cata- On June 6 of 2003, Mr. ElBaradei issued weaponry, find cash. It is a place where strophic results in this country that a report saying that the facilities that admittedly significant al Qaeda ele- would dwarf the pain of September 11. I mentioned, in particular the Natanz ments are present tonight. There is an Where might terrorists find such a facility, was an advanced uranium en- argument as to exactly what they are nuclear bomb? Sadly, there are a num- richment facility capable of performing doing. The Iranian authorities would ber of places. One of those places is the steps necessary and essential to the tell us that they are in the custody of from hungry former Soviet scientists creation of a nuclear bomb. On Sep- the Iranian government. Some would who were living relatively well under tember 12 of 2003, the International suggest that the Iranian government the old regime in the USSR and then Atomic Energy Agency issued an ulti- are using these al Qaeda leaders as found themselves driving cabs and matum to the Iranians which said by pawns to try to facilitate the release of waiting on tables and very hungry and October 31 of last year, Iranians were terrorists held by the Israelis and other very anxious in the years that follow. to prove to the world that they were law-abiding nations of the world. But It is one of the great bipartisan failures not working on building nuclear of this country for which we all should irrespective of the purpose for which bombs. The clock ticked. The world take responsibility, myself included, the Iranian government holds al Qaeda was not very specific as to what we that we have not been sufficiently vigi- terrorists tonight, the fact is they are would do if the Iranians failed to pro- lant since the waning days of the So- present in Iran tonight. vide that proof, reminiscent of how the viet Empire in identifying, corralling, b 2045 and destroying weapons of mass de- world was similarly negligent in dealing with Saddam Hussein for 12 long They found Iran to be a place that struction that were held by the Soviet Union. There are too many of them in years. was a willing sanctuary for their ac- Finally, on October 21 of 2003, the too many places. They are too cheap tivities. There can be no good inured to Iranians invited representatives of the America’s benefit from that sanctuary and too portable. We owe thanks to the great work of former Senator Nunn and French, German, and British govern- continuing. ments to Tehran. They began to nego- What do terrorists need? They need present Senator LUGAR for giving us the legal authority to solve this prob- tiate and they worked out a joint com- leadership. They need people who are munique with the governments of willing to conceive of these terrible lem. We are sadly negligent in not using that legal authority to its great- France and Germany and the United plans that spring from this awful Kingdom, which said that the Iranians wellspring of intolerance and hatred. est extent. Where else might a terrorist find a would permit full inspections, they They need personnel. They need to re- small nuclear bomb that could be would suspend their uranium enrich- cruit young men and young women transported in a container ship to the ment program, that they would sign and, in some cases, children who are United States? Mr. Speaker, if we international agreements that civilized willing to put their own lives at stake would have asked the Iranian govern- nations follow with respect to the pro- to manifest that hatred by killing ment that question 2 years ago, they duction of nuclear weapons, and that thousands of others. They need money would have said not here; we are not in essentially they would stop trying to and logistics to carry out their attack. the business of trying to make nuclear build a nuclear weapon. The world re- They need weaponry, and they need bombs, not us. For years, for 23 years, acted with cautious optimism. sanctuary. I think it is indisputable since the installation of the present re- The Iranians handed over files and that Iran is such a sanctuary. It is in- gime in Tehran, the official party line files of documents that described what disputable that if tonight the CIA, the was that the Iranian government was they had been doing over the course of National Security Agency, other U.S. not interested in the manufacture of a more than 2 decades in the past. Those intelligence operatives had informa- nuclear weapon. documents showed that the Iranians tion that there were terrorists at loose In December of 2002, that all changed. had engaged in a secretive uranium en- in Iran and they asked for the coopera- Iranian dissidents who were fortunate richment program over at least a 19- tion of the Iranian government, I think to escape the country began talking to year period for which there could be no it is indisputable that at best, at best, intelligence leaders around the world, plausible explanation other than it was we would get noninterference; at worst and they talked with specificity. They leading to the production of a nuclear we would get active resistance. talked about centrifuges, fissile mate- bomb. The world was divided as to Mr. Speaker, if those same terrorists rials. They talked about the enrich- what to do about this, and the con- were loose in Jordan, the Jordanian ment of uranium. They talked about a sensus on the International Atomic En- government would help us. If those ter- program of plutonium separation that ergy Agency was that we should criti- rorists were loose in Kuwait, the Ku- could lead to the manufacture of a nu- cize the Iranians for what they had waiti government would help us. If clear bomb. And enough of them talked done and lied about in the past and they were loose in Israel, the Israeli to enough people, and enough enlight- then warn them not to do it again. government would not need our help. ened people paid attention, that in De- Warnings like the ones we gave to the They would just find them and take cember of 2002, while our country was Taliban repeatedly throughout the care of the problem. If they were loose fixated upon the very grave question of 1990s not to cooperate with Osama bin in the countries of our European allies, what to do about Saddam Hussein in Laden, warnings like we gave to Sad- I am quite confident that we would Iraq, while we were grappling with dam Hussein repeatedly throughout have the assistance of those allies, in many other problems in our own coun- the 1990s that he was to disengage his South America, in the Philippines. Iran try, in December of 2002, the govern- weapons programs and to leave his is a place where terrorists will find the ment of Iran acknowledged that re- neighbors alone. Warnings. medium in which their peculiar form of ports that it was building facilities ca- The warnings have not had the in- bacteria need to grow. pable of producing the fissile materials tended effect. Two weeks ago, the lat- What logistics might Iran supply to a that would lead to a nuclear weapon est report from the International terrorist who wants to attack the were true. The Iranian government ad- Atomic Energy Agency released on United States of America? Today for mitted this. After 23 years of decep- February 24 of 2004 found some curious every 100 containers that enter the tion, the Iranian government admitted evidence, and that is that the Iranians ports of the United States in these that facilities at Iraq and Natanz in had agreed to stop their program of huge containers we see out by the Iran were, in fact, facilities which were uranium enrichment, which is one path ports, for every 100 of those containers capable of producing the fissile mate- to build a nuclear bomb; but another that enter the United States, two of rials necessary to make a nuclear path to build a nuclear bomb is called them were inspected, 98 were not. It is bomb. plutonium separation. Obviously, the

VerDate jul 14 2003 02:20 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00066 Fmt 4634 Sfmt 0634 E:\CR\FM\K03MR7.141 H03PT1 March 3, 2004 CONGRESSIONAL RECORD — HOUSE H821 Iranians who signed this agreement got and argue passionately that for us to These appearances are lethally de- very good legal advice because they aggressively pursue a policy of regime ceptive. The President of Iran got 77 learned how to define their way out of change in Afghanistan would be a gross percent of the vote in the popular elec- the problem because the Iranians did overreaction. Why should we worry tion, but I think realistically he has not breach apparently in the last few about a regime as weak as that one? On zero percent of the power in that coun- months their responsibility not to September 11, 2001, we got our answer. try. Instead, a council of elders, 12 carry out uranium enrichment pro- Regimes that harbor terrorists, re- men, 12, have effective control over the grams, but they did evidently step up a gimes that have the capability of arm- military, over the economic institu- program that is involved in the separa- ing terrorists with nuclear, biological tions of that country, over the mean- tion of plutonium, yet another path to or chemical weapons, regimes that fi- ingful ebb and flow of life in Iran. Even reach the same horrible result. Mr. nance and facilitate terrorism, are a though those 12 have such control, they ElBaradei said Iran is moving in the threat to the people of the United are wary, they are reluctant to even let right direction with respect to this States of America. These regimes the appearance of that control stray weapons program, that there is reason should not be negotiated with, they too far. for optimism, that there are moderate should not be heeded, they should not In the last month or so in Iran there influences beginning to influence the be abided. They should be replaced. were elections scheduled for the na- Iranian government. Well, can we af- Which American tonight would not tional legislative body of that country, ford to take the chance that he is agree that we would have prospered and most outside analysts saw those wrong? from regime change in Afghanistan 3 elections as a struggle between the so- International experts suspected for 2 years ago? There is lots of dispute to- called more moderate liberalizing decades that Iran was pursuing the de- night as to whether we are prospering forces of the country and the more con- velopment of a nuclear bomb, but they from regime change in Baghdad to- servative cultural forces of that coun- never knew for sure; and I know that night. I certainly think we are. I think try. 3,600 candidates of the moderate the annals of intelligence estimates are it is one of the reasons that Mu’ammar persuasion were removed from the bal- filled with conclusions that the best Qadhafi voluntarily surrendered his nu- lot by the council of elders. Twelve judgment was that Iran was not march- clear weapons, so he will not wind up people, none of whom were elected, ing toward the creation of a nuclear living in a spider hole at the end of this each of whom was appointed through bomb. Those assessments were wrong. year. the religious oligarchy of Iran, 12 peo- If this new set of assessments is wrong, I think it is one of the reasons that ple used their power to remove 3,600 we will find out to our peril what the President Assad in Syria for the first people from the ballot. 1,000 or so were consequences of that error are. time in his tenure as president is fur- restored after huge public protests. Is the present leadership of Iran ca- tively working behind the scenes to But I believe that the only conclu- pable of placing a small nuclear bomb open negotiations with the Israelis, so sion one can draw from this is that the on a cargo ship in a container and that maybe some day he will expel feeble images of democracy in Iran are floating it into the harbor of a major Hamas and Hizbollah from his coun- only a deceptive image, and not a American city? Some would say, no, tries. I think it is one of the reasons meaningful reality for that country. they are not capable. It would not be in why the Saudi Arabians, after years of These are foreboding and difficult their interest to do so. There would be culpability in terrorism, years of a thoughts, but there is great reason to massive retaliation against them by ‘‘deal with the devil’’ in which they be optimistic that the regime change the United States. Others would say looked the other way when terrorists that would benefit America is very they are imminently capable of such operated within their country, are now much on the minds of young men and atrocities. The family of Zahara more actively cooperating in the women, and older men and women, who Kazemi I would assume would agree crackdown on those terrorists. And I live under the oppressive yoke of the with that proposition. Mr. Ghollam think it is one of the reasons why the medieval government of Iran. Nikbin I assume would agree with that Iranians in December of 2002, on the So many Iranian Americans are en- proposition. Those who sit tonight in verge of the United States action gaged in conversations with their Iranian prisons and those who have against Iraq, decided to come clean brothers and sisters and mothers and been executed in Iranian prisons in re- about 23 years of lying about the devel- fathers back home. Iranian Americans cent days and weeks, if they were alive, opment of a nuclear weapon. make a magnificent contribution to would agree with that proposition. Regime change in Iran should be the this country every day, in our hos- Should we wait and see? Should it be policy of the United States of America; pitals, in our universities, in our cor- our policy to take an educated guess not negotiation, not cooperation, re- porations, in our governments, in our and find out? Many intelligence ana- gime change. Regime change does not military, and these loyal and patriotic lysts took an educated guess about the mean military action. Military action Americans, who have had a taste of Taliban in Afghanistan 10 years ago, 5 is the final step. Military action is the freedom, a taste of what it means to be years ago, 3 years ago, and here is what last, and, if necessary, essential step, if respected for your religious differences their assessment was: the Taliban are necessary, to regime change. and not reviled, they have spread the terrible people. Osama bin Laden is an Far more effective to the pursuit of word of this intoxicating freedom to awful force in the world. He was behind this goal are the diplomatic, economic their loved ones back in Iran. the bombing of the World Trade Center and moral assets of the United States Even though Iran is a place where in 1993. He was behind the attack of the of America. I am not calling for the use you can be whipped for dancing at a USS Cole in the year 2000. He was in- of military force against Iran; I am wedding, even though it is a place volved in the Khobar Towers bombing. calling for the concerted, coordinated where you can be beaten to death in Something needs to be done. But the use of this country’s diplomatic, eco- prison for taking a photograph of a assessment about the Taliban’s role in nomic force to achieve a regime change peaceful demonstration, it is a place this was that it was ludicrous to think in Tehran. I believe it is not only in where the rulers still cannot stop the that the Taliban government was a the interests of human rights, of per- flow of technology. The Internet, the threat to the United States. secuted citizens of that country, it is fax machine, the cellular phone, these in the interests of the national secu- are the most powerful weapons against b 2100 rity of the United States of America. tyranny in the history of mankind. It is certainly not an imminent What does regime change mean in And even in a place like Iran, the lead- threat to the United States. A govern- Iran? Who is the regime? The answer to ers cannot make themselves imper- ment that could barely manage its own this question is not self-evident. Iran is vious to the rush of truth that comes affairs, a government that was not a a schizophrenic state. On the surface, into their country in greater torrents threat to its own neighbors militarily, it is conducting what appears to be a with each passing day. was certainly not a threat to the parliamentary government with what I think that people in Iran are look- United States of America. appear to be reasonably free elections ing for a signal from the United States There would have been those who with what appears to be something re- of America. They are not looking for would stand on this floor 3 years ago sembling democracy. weakness or ambiguity or vacillation.

VerDate jul 14 2003 02:20 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00067 Fmt 4634 Sfmt 0634 E:\CR\FM\K03MR7.143 H03PT1 H822 CONGRESSIONAL RECORD — HOUSE March 3, 2004 We are students of our own history, where they find money and where they people for dancing and taking photo- and we know that at the time the colo- find weaponry and where they find per- graphs. It is a state that for 23 years nies rebelled against the British, there sonnel and where they find leadership, lied about its development of nuclear were many naysayers in America. these are the places that will incubate bombs. It is a state that is either try- There were many who said that this the next September 11. ing to put a good-faith effort forward was a foolish experiment; that it was There are really two views about ter- to stop its weapons program or trying reckless for people to pledge their lives rorism in America, and they are not to put the best face on an effort that and their fortunes and their sacred liberal and conservative, or Republican really is not taking place as the weap- honor to try to do something better. It and Democrat, or military and diplo- ons program continues. was suicidal, it was crazy. matic. The two views are these: The lesson of September 11 is do not Some were active opponents of the Some people view terrorism as a se- take chances on estimates. Act and revolution. Others, and these others ries of essentially unrelated crimes; make sure others cannot act against may have been more dangerous, sat on horrible crimes, but crimes that spring you. the fence. They were not sure what sig- from independent criminals. With the I believe that this country should en- nal they should send. They were not exception of the link between the USS gage in three steps immediately. First, sure whether they were ready to fight Cole bombing and the first World Trade we should unambiguously announce for their freedom or not. Center and the second one, all of which that the policy of the United States of The United States has sent a power- can be attributed to al Qaeda, pro- America is to encourage regime change ful signal I think to the world by say- ponents of this view would argue that in Iran, by which I mean the Council of ing that we are willing to take on, with we need to react to each one of these Elders that runs the country; and by our allies, the difficult work of intro- isolated incidents by prosecuting those which I mean the replacement of that ducing that sacred gift of freedom to who committed the offense, shoring up Council of Elders with a truly rep- the people of Iraq. We should not be our defenses so it cannot happen again. resentative group of people chosen by ambiguous in offering that same gift to The other view of terrorism, which I the Iranian people. the people of Iran. hold and I believe that history teaches The second thing we should do is We should not, we should not, be en- us is the correct view, is that these are fully enforce the Iran Sanctions Act gaged in any overt military acts, un- not a series of isolated incidents; that passed by this Congress a few years less intelligence would warrant action we are engaged in a struggle between ago. We should inventory every trade, to the contrary, specific intelligence. I those who would destroy our way of aid, economic and regulatory tool at repeat, I am not calling for a policy of life and those who would stand by us our disposal and use those tools. We military engagement against the Ira- and protect our way of life. should broadcast freedom into Iran nian government. But I am absolutely more aggressively. We should break b 2115 calling for an expression as clear as a down the information barriers and tell bell that the freedom that we enjoy The most horrific example of that young Iranians that we will be on their here, the freedom that we aspire to see struggle was the one that he experi- side if they rise up and fight for free- the people of Iraq enjoy, is the freedom enced in September of 2001. Shame on dom. We should encourage the patri- that we wish to see the people of Iran us if we do not learn from that exam- otic, law abiding citizens of this coun- enjoy, and we will not be fooled or de- ple. If we draw the lesson that Sep- try who are of Iranian descent to be- ceived by the false front of a faux tember 11 was about one terrorist orga- come actively engaged in encouraging democratic government. We will not nization operating out of one country their brothers and sisters in their na- relent in our opposition to that govern- that on one occasion was able to suc- tive land to make the regime change ment’s effort to build a nuclear bomb. ceed in a massive terrorist attack that will benefit them and us. We will not back down in the face of against this country, we are The third step is that we should seek any international criticism as to the misreading history to our great peril. international cooperation on every purity and import of this evil. If instead we understand what hap- level for this effort. It will not be easy. It would be horribly wrong and hor- pened then differently, if instead we There will be those who will say this is ribly prejudicial to leave anyone with say that the lesson that we learn is yet another American overreaction, the impression that any significant that when you give terrorists leader- that this is a further policy of Amer- portion of the 1 billion Muslims in this ship and personnel and money and ican unilateralism. We should never be world are dedicated to the eradication weaponry and sanctuary, they will at- unilateral. We should always seek the of us and our way of life. They are not. tack. It is not in our interest to make cooperation of allies. It would be horribly wrong and hor- lists of countries that we want to at- We should also understand the at- ribly false to leave anyone with the im- tack. It diminishes our strength. It tacks that are launched by terrorists pression that people of the Arab cul- lessens our standing in the world, and will be unilateral. They will have one ture and descent or the Persian culture we should not do it. But it is most em- target. They will start with the and descent are dedicated to the de- phatically in our interest to categorize Israelis. They always do. But they will struction of our way of life. They are and understand where the next sanc- eventually get to the United States of most emphatically not. tuary might be. America. We should ask for and ac- I believe that the vast majority of Everyone in this Chamber wishes tively seek the cooperation of our Eu- people of the Islamic faith, of the Arab that he or she had the foresight to ropean and Asian friends in meeting and Persian ethnicities, wish to live in know that Afghanistan was such a these efforts. Frankly, the actions of freedom and to celebrate diversity and sanctuary 3 years ago. We could have the International Atomic Energy Agen- to join the future, rather than wal- avoided a calamity of unspeakable pro- cy have been very helpful in this re- lowing in the past. portions in this country. The issue to- gard. We should continue those efforts, But it is irrefutable that there is a night, Mr. Speaker, is where is the next but we should not make the mistake of force present in the world, a small but sanctuary. assuming that their security risk here malignant force present in the world, I believe that the heroic actions ac- is the same as our security risk. that wishes to do us grave harm, that complished by American troops and al- When there is a demonstration spon- wishes to destroy our way of life and lied troops in Iraq has gone a long way sored by the medieval elements in a destroy the chance to spread our way toward removing Iraq as such a sanc- country like Iran, it is not the German of life to those in all corners of the tuary. I am certain that the heroic ef- flag that they burn. They do not shout world who would wish to enjoy it, and forts of our troops in Afghanistan have death to Germany. They do not destroy that force calls itself radical Islam. essentially removed Afghanistan as likenesses of the Eiffel Tower or Big It is a perversion of the Islamic faith. such a potential sanctuary. Ben. They burn the American flag. It is a hijacking of that faith of peace. Tonight our attention should very They smash likenesses of the American But it is what those who practice this much be focused on Iran as such a Capitol, and they clearly let us know poisonous attitude call themselves. sanctuary. It is a state that is capable that we are the ones who are in their And where they find sanctuary and of imprisoning and beating innocent sights. So be it.

VerDate jul 14 2003 02:20 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00068 Fmt 4634 Sfmt 0634 E:\CR\FM\K03MR7.145 H03PT1 March 3, 2004 CONGRESSIONAL RECORD — HOUSE H823 If we understand that we are the tar- the likelihood of having another Sep- Mr. ROTHMAN, for 5 minutes, today. gets, then we must understand we have tember 12, 2001, will diminish; and more Mr. GREEN of Texas, for 5 minutes, a special responsibility to act. I believe importantly, the likelihood of a cata- today. that this is a program for peace. I strophic repeat of September 11, 2001, Mr. PALLONE, for 5 minutes, today. think the best way to achieve peace is using a nuclear weapon will diminish Ms. JACKSON-LEE of Texas, for 5 min- to show those who would disrupt peace greatly. utes, today. that you will not tolerate it. It is peace We owe our country nothing less. We Ms. NORTON, for 5 minutes, today. through strength, and after we have owe the decent people of Iran nothing Mrs. MALONEY, for 5 minutes, today. been lied to for 23 years about the cre- less; and we owe it to our sense of his- Mr. LYNCH, for 5 minutes, today. ation of a nuclear bomb, a nuclear tory to get this very important job Ms. KAPTUR, for 5 minutes, today. bomb which could be floated into the done. Ms. CORRINE BROWN of Florida, for 5 harbors of this country and used as a Mr. Speaker, I would like to thank minutes, today. weapon of awful destruction against Mr. Paul Bauer of my staff who was (The following Members (at the re- the people of America, after we have very instrumental in getting the request of Mr. GUTKNECHT) to revise and seen the torture against innocent peo- search done for this effort. And, again, extend their remarks and include ex- ple that takes place in Iran every day I would like to thank the staff of the traneous material:) and is taking place tonight, I think the House of Representatives for being Mr. MARIO DIAZ-BALART of Florida, stakes are clear. If we are true to our with us so I would have this oppor- for 5 minutes, today. conviction of peace through strength, tunity to speak. Mr. BEREUTER, for 5 minutes, March we will make regime change the policy f 10. of the United States of America. Not Mr. BURGESS, for 5 minutes, today. through violence, not through attack, LEAVE OF ABSENCE Mr. CAMP, for 5 minutes, March 10. not through aggression, not through By unanimous consent, leave of ab- Mr. FOLEY, for 5 minutes, today. war. We should always reserve the sence was granted to: Mr. OSBORNE, for 5 minutes, March right to act in our defense. But we Mrs. JONES of Ohio (at the request of 10. should always understand that the best Ms. PELOSI) for March 2 on account of Mr. BILIRAKIS, for 5 minutes, today way to project our power is through primary election in the district. and March 4. our freedom, our economic might, our Mr. ORTIZ (at the request of Ms. Ms. HARRIS, for 5 minutes, today. diplomatic credibility which sadly PELOSI) for today on account of official Mr. LEWIS of Kentucky, for 5 min- needs to be rebuilt in many ways. utes, today and March 4. It is my objective as a Member of the business. Mr. HENSARLING, for 5 minutes, United States Congress that I will Mr. REYES (at the request of Ms. today. never again have another day like Sep- PELOSI) for today on account of official Mr. MCINNIS, for 5 minutes, March 10. tember 12, 2001, when I came to this business. Mr. PETERSON of Pennsylvania, for 5 building not sure whether it was safe f minutes, March 10. to be in, after a sleepless night, and SPECIAL ORDERS GRANTED Mr. OTTER, for 5 minutes, March 10. asked myself what I had failed to do to Mr. WELDON of Pennsylvania, for 5 prevent the mayhem that had occurred By unanimous consent, permission to minutes, today. in my country the day before. I asked address the House, following the legis- Mr. GILCHREST, for 5 minutes, today. myself whether any of the $3 trillion of lative program and any special orders the taxpayers’ money I had voted to heretofore entered, was granted to: f spend on intelligence and defense of (The following Members (at the re- this country had done us any good the quest of Mr. PALLONE) to revise and ex- ADJOURNMENT previous day. I never want to live an- tend their remarks and include extra- other September 12. I never again want neous material:) Mr. ANDREWS. Mr. Speaker, I move to have to think what we could have Mr. DEFAZIO, for 5 minutes, today. that the House do now adjourn. done to learn the lessons of terrorism Mr. BROWN of Ohio, for 5 minutes, The motion was agreed to; accord- and stop another terrorist attack. today. ingly (at 9 o’clock and 25 minutes If we take decisive action and, among Mr. GEORGE MILLER of California, for p.m.), under its previous order, the other things, if we pursue the policy of 5 minutes, today. House adjourned until tomorrow, regime change in Iran, I believeh that Mr. EMANUEL, for 5 minutes, today. Thursday, March 4, 2004, at 11:30 a.m. EXPENDITURE REPORTS CONCERNING OFFICIAL FOREIGN TRAVEL Reports concerning the foreign currencies and U.S. dollars utilized for speaker-authorized official travel during the fourth quarter of 2003 and the first quarter of 2004, pursuant to Public Law 95–384 are as follows:

REPORT OF EXPENDITURES FOR OFFICIAL FOREIGN TRAVEL, MR. BENJAMIN FALLON, HOUSE OF REPRESENTATIVES, EXPENDED BETWEEN JAN. 13 AND JAN. 15, 2004

Date Per diem 1 Transportation Other purposes Total U.S. dollar U.S. dollar U.S. dollar U.S. dollar Name of Member or employee Country Foreign equivalent Foreign equivalent Foreign equivalent Foreign equivalent Arrival Departure currency or U.S. currency or U.S. currency or U.S. currency or U.S. currency 2 currency 2 currency 2 currency 2

Benjamin Fallon ...... 1/3 1/15 Dominican Republic ...... 317.65 ...... 1,448.90 ...... 33.00 ...... 1,799.55 Committee total ...... 317.65 ...... 1,448.90 ...... 33.00 ...... 1,799.55 1 Per diem constitutes lodging and meals. 2 If foreign currency is used, enter U.S. dollar equivalent; if U.S. currency is used, enter amount expended. BENJAMIN FALLON, Feb. 11, 2004.

REPORT OF EXPENDITURES FOR OFFICIAL FOREIGN TRAVEL, DELEGATION TO BRAZIL, URUGUAY, ARGENTINA AND CHILE, HOUSE OF REPRESENTATIVES, EXPENDED BETWEEN JAN. 3 AND JAN. 13, 2004

Speaker Hastert ...... 1/3 1/6 Brazil ...... 902.00 ...... (3) ......

VerDate jul 14 2003 02:20 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00069 Fmt 4634 Sfmt 8634 E:\CR\FM\K03MR7.146 H03PT1 H824 CONGRESSIONAL RECORD — HOUSE March 3, 2004 REPORT OF EXPENDITURES FOR OFFICIAL FOREIGN TRAVEL, DELEGATION TO BRAZIL, URUGUAY, ARGENTINA AND CHILE, HOUSE OF REPRESENTATIVES, EXPENDED BETWEEN JAN. 3 AND JAN. 13, 2004—Continued

Hon. Pastor ...... 1/3 1/6 Brazil ...... 902.00 ...... (3) ...... Hon. Shaw ...... 1/3 1/6 Brazil ...... 902.00 ...... (3) ...... Hon. Ballenger ...... 1/3 1/6 Brazil ...... 902.00 ...... (3) ...... Hon. Goss ...... 1/3 1/6 Brazil ...... 902.00 ...... (3) ...... Hon. Ros-Lehtinen ...... 1/3 1/6 Brazil ...... 902.00 ...... (3) ...... Hon. Doolittle ...... 1/3 1/6 Brazil ...... 902.00 ...... (3) ...... Hon. Norwood ...... 1/3 1/6 Brazil ...... 902.00 ...... (3) ...... Hon. Granger ...... 1/3 1/6 Brazil ...... 902.00 ...... (3) ...... Hon. Hart ...... 1/3 1/6 Brazil ...... 902.00 ...... (3) ...... Hon. Putnam ...... 1/3 1/6 Brazil ...... 902.00 ...... (3) ...... Hon. Wilson Livingood ...... 1/3 1/6 Brazil ...... 902.00 ...... (3) ...... RADM Eisold ...... 1/3 1/6 Brazil ...... 902.00 ...... (3) ...... Scott Palmer ...... 1/3 1/6 Brazil ...... 902.00 ...... (3) ...... Ted Van Der Meid ...... 1/3 1/6 Brazil ...... 902.00 ...... (3) ...... Seth Webb ...... 1/3 1/6 Brazil ...... 902.00 ...... (3) ...... Chris Walker ...... 1/3 1/6 Brazil ...... 902.00 ...... (3) ...... Sam Lancaster ...... 1/3 1/6 Brazil ...... 902.00 ...... (3) ...... Margaret Peterlin ...... 1/3 1/6 Brazil ...... 902.00 ...... (3) ...... Dwight Comedy ...... 1/3 1/6 Brazil ...... 902.00 ...... (3) ...... Speaker Hastert ...... 1/6 1/7 Uruguay ...... 243.00 ...... (3) ...... Hon. Pastor ...... 1/6 1/7 Uruguay ...... 243.00 ...... (3) ...... Hon. Shaw ...... 1/6 1/7 Uruguay ...... 243.00 ...... (3) ...... Hon. Ballenger ...... 1/6 1/7 Uruguay ...... 243.00 ...... (3) ...... Hon. Gross ...... 1/6 1/7 Uruguay ...... 243.00 ...... (3) ...... Hon. Ros-Lehtinen ...... 1/6 1/7 Uruguay ...... 243.00 ...... 3,126.08 ...... Hon. Doolittle ...... 1/6 1/7 Uruguay ...... 243.00 ...... (3) ...... Hon. Norwood ...... 1/6 1/7 Uruguay ...... 243.00 ...... (3) ...... Hon. Granger ...... 1/6 1/7 Uruguay ...... 243.00 ...... (3) ...... Hon. Hart ...... 1/6 1/7 Uruguay ...... 243.00 ...... (3) ...... Hon. Putnam ...... 1/6 1/7 Uruguay ...... 243.00 ...... (3) ...... Hon. Wilson Livingood ...... 1/6 1/7 Uruguay ...... 243.00 ...... (3) ...... RADM Eisold ...... 1/6 1/7 Uruguay ...... 243.00 ...... (3) ...... Scott Palmer ...... 1/6 1/7 Uruguay ...... 243.00 ...... (3) ...... Ted Van Der Meid ...... 1/6 1/7 Uruguay ...... 243.00 ...... (3) ...... Seth Webb ...... 1/6 1/7 Uruguay ...... 243.00 ...... (3) ...... Chris Walker ...... 1/6 1/7 Uruguay ...... 243.00 ...... (3) ...... Sam Lancaster ...... 1/6 1/7 Uruguay ...... 243.00 ...... (3) ...... Margaret Peterlin ...... 1/6 1/7 Uruguay ...... 243.00 ...... (3) ...... Dwight Comedy ...... 1/6 1/7 Uruguay ...... 243.00 ...... (3) ...... Speaker Hastert ...... 1/7 1/11 Argentina ...... 413.89 ...... (3) ...... Hon. Pastor ...... 1/7 1/11 Argentina ...... 413.89 ...... (3) ...... Hon. Shaw ...... 1/7 1/11 Argentina ...... 413.89 ...... (3) ...... Hon. Ballenger ...... 1/7 1/11 Argentina ...... 413.89 ...... (3) ...... Hon. Goss ...... 1/7 1/11 Argentina ...... 413.89 ...... (3) ...... Hon. Doolittle ...... 1/7 1/11 Argentina ...... 413.89 ...... (3) ...... Hon. Norwood ...... 1/7 1/11 Argentina ...... 413.89 ...... (3) ...... Hon. Granger ...... 1/7 1/11 Argentina ...... 413.89 ...... (3) ...... Hon. Hart ...... 1/7 1/11 Argentina ...... 413.89 ...... (3) ...... Hon. Putnam ...... 1/7 1/11 Argentina ...... 413.89 ...... (3) ...... Hon. Wilson Livingood ...... 1/7 1/11 Argentina ...... 413.89 ...... (3) ...... RADM Eisold ...... 1/7 1/11 Argentina ...... 413.89 ...... (3) ...... Hon. Scott Palmer ...... 1/7 1/11 Argentina ...... 413.89 ...... (3) ...... Hon. Ted Van Der Meid ...... 1/7 1/11 Argentina ...... 413.89 ...... (3) ...... Seth Webb ...... 1/7 1/11 Argentina ...... 413.89 ...... (3) ...... Chris Waller ...... 1/7 1/11 Argentina ...... 413.89 ...... (3) ...... Sam Lancaster ...... 1/7 1/11 Argentina ...... 413.89 ...... (3) ...... Margaret Peterlin ...... 1/7 1/11 Argentina ...... 413.89 ...... (3) ...... Dwight Comedy ...... 1/7 1/11 Argentina ...... 413.89 ...... (3) ...... Speaker Hastert ...... 1/11 1/13 Chile ...... 548.00 ...... (3) ...... Hon. Pastor ...... 1/11 1/13 Chile ...... 548.00 ...... (3) ...... Hon. Shaw ...... 1/11 1/13 Chile ...... 548.00 ...... (3) ...... Hon. Ballenger ...... 1/11 1/13 Chile ...... 548.00 ...... (3) ...... Hon. Goss ...... 1/11 1/13 Chile ...... 548.00 ...... (3) ...... Hon. Doolittle ...... 1/11 1/13 Chile ...... 548.00 ...... (3) ...... Hon. Norwood ...... 1/11 1/13 Chile ...... 548.00 ...... (3) ...... Hon. Granger ...... 1/11 1/13 Chile ...... 548.00 ...... (3) ...... Hon. Hart ...... 1/11 1/13 Chile ...... 548.00 ...... (3) ...... Hon. Putnam ...... 1/11 1/13 Chile ...... 548.00 ...... (3) ...... Hon. Wilson Livingood ...... 1/11 1/13 Chile ...... 548.00 ...... (3) ...... RADM Eisold ...... 1/11 1/13 Chile ...... 548.00 ...... (3) ...... Scott Palmer ...... 1/11 1/13 Chile ...... 548.00 ...... (3) ...... Ted Van Der Meid ...... 1/11 1/13 Chile ...... 548.00 ...... (3) ...... Seth Webb ...... 1/11 1/13 Chile ...... 548.00 ...... (3) ...... Chris Walker ...... 1/11 1/13 Chile ...... 548.00 ...... (3) ...... Sam Lancaster ...... 1/11 1/13 Chile ...... 548.00 ...... (3) ...... Margaret Peterlin ...... 1/11 1/13 Chile ...... 548.00 ...... (3) ...... Dwight Comedy ...... 1/11 1/13 Chile ...... 548.00 ...... (3) ...... Committee total ...... 1 Per diem constitutes lodging and meals. 2 If foreign currency is used, enter U.S. dollar equivalent; if U.S. currency is used, enter amount expended. 3 Military air transportation. J. DENNIS HASTERT, Speaker of the House, Feb. 13, 2004.

REPORT OF EXPENDITURES FOR OFFICIAL FOREIGN TRAVEL, COMMITTEE ON EDUCATION AND THE WORKFORCE, HOUSE OF REPRESENTATIVES, EXPENDED BETWEEN OCT. 1 AND DEC. 31, 2003

Date Per diem 1 Transportation Other purposes Total U.S. dollar Name of Member or employee Country U.S. dollar U.S. dollar U.S. dollar Arrival Departure Foreign equivalent Foreign equivalent Foreign equivalent Foreign equivalent currency or U.S. currency or U.S. currency or U.S. currency or U.S. currency 2 currency 2 currency 2 currency 2

Hon. Michael Castle ...... 10/6 10/12 Iraq ...... 1,167.00 ...... (3) ...... 1,167.00 Hon. Ron Kind ...... 10/6 10/12 Iraq ...... 1,167.00 ...... (3) ...... 1,167.00 Committee total ...... 2,334.00 ...... 2,334.00 1 Per diem constitutes lodging and meals. 2 If foreign currency is used, enter U.S. dollar equivalent; if U.S. currency is used, enter amount expended. 3 Military air transportation. JOHN BOEHNER; Chairman, Feb. 17, 2004.

VerDate jul 14 2003 02:20 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00070 Fmt 4634 Sfmt 8634 E:\CR\FM\A03MR7.003 H03PT1 March 3, 2004 CONGRESSIONAL RECORD — HOUSE H825 REPORT OF EXPENDITURES FOR OFFICIAL FOREIGN TRAVEL, COMMITTEE ON ENERGY AND COMMERCE, HOUSE OF REPRESENTATIVES, EXPENDED BETWEEN OCT. 1 AND DEC 31, 2003

Hon. Fred Upton ...... 12/10 12/13 Italy ...... 537.00 ...... (3) ...... 537.00 10/6 10/10 Iraq/Kuwait ...... 1,167.00 ...... (3) ...... 1,167.00 Hon. Greg Walden ...... 10/6 10/10 Iraq/Kuwait ...... 1,167.00 ...... (3) ...... 1,167.00 Hon. Jim Davis ...... 10/6 10/10 Iraq/Kuwait ...... 1,167.00 ...... (3) ...... 1,167.00 Hon. James Greenwood ...... 12/10 12/11 Italy ...... 537.00 ...... 3,541.04 ...... 4,078.04 Robert Rainey ...... 12/6 12/13 Italy ...... 1,253.00 ...... 5,431.44 ...... 6,684.44 Robert Meyers ...... 12/6 12/14 Italy ...... 1,074.00 ...... 5,616.22 ...... 6,690.22 Sue Sheridan ...... 12/6 12/13 Italy ...... 1,253.00 ...... 5,444.44 ...... 6,697.44 Michael Goo ...... 12/6 12/13 Italy ...... 1,253.00 ...... 5,444.44 ...... 6,697.44 Hon. Cliff Stearns ...... 11/29 12/2 Hong Kong ...... 1,233.00 ...... (3) ...... 1,233.00 12/2 12/3 Thailand ...... 456.00 ...... (3) ...... 456.00 12/3 12/6 Korea ...... 417.00 ...... 5,748.77 ...... 6,165.77 Committee total ...... 11,514.00 ...... 31,226.35 ...... 42,740.35 1 Per diem constitutes lodging and meals. 2 If foreign currency is used, enter U.S. dollar equivalent; if U.S. currency is used, enter amount expended. 3 Military air transportation. BILLY TAUZIN, Chairman, Feb. 16, 2004.

REPORT OF EXPENDITURES FOR OFFICIAL FOREIGN TRAVEL, COMMITTEE ON GOVERNMENT REFORM, HOUSE OF REPRESENTATIVES, EXPENDED BETWEEN OCT. 1 AND DEC. 31, 2003

Tim Murphy ...... 11/8 11/10 Jordan ...... 476.00 ...... 11/10 11/11 Syria ...... 262.75 ...... 11/11 11/12 Germany ...... 241.00 ...... Chris Cannon ...... 12/9 12/12 Italy ...... 712.00 ...... Alexandria Teitz ...... 12/8 12/13 Italy ...... 1,545.00 ...... 662.44 ...... Greg Dotson ...... 12/8 12/13 Italy ...... 1,525.00 ...... 662.44 ...... Christopher Shays ...... 12/9 12/12 Italy ...... 712.00 ...... R. Nicholas Palarino ...... 12/1 12/3 Austria ...... 636.00 ...... 4,872.70 ...... 12/3 12/7 Jordan ...... 916.00 ...... Christopher Shays ...... 12/1 12/3 Austria ...... 636.00 ...... 4,872.70 ...... 12/3 12/7 Jordan ...... 916.00 ...... Committee total ...... 8,577.75 ...... 11,070.28 ...... 19,648.03 1 Per diem constitutes lodging and meals. 2 If foreign currency is used, enter U.S. dollar equivalent; if U.S. currency is used, enter amount expended. TOM DAVIS, Chairman, Feb. 10, 2004.

REPORT OF EXPENDITURES FOR OFFICIAL FOREIGN TRAVEL, COMMITTEE ON THE JUDICIARY, HOUSE OF REPRESENTATIVES, EXPENDED BETWEEN OCT. 1 AND DEC. 31, 2003

Hon. Steve King ...... 10/18 10/19 Kuwait/Iraq ...... 389.00 ...... 389.00 Hon. F. James Sensenbrenner ...... 12/14 12/17 Mexico ...... 1,014.00 ...... 550.89 ...... 1,564.89 Philip J. Kiko ...... 12/14 12/17 Mexico ...... 1,014.00 ...... 550.89 ...... 1,564.89 Committee total ...... 2,417.00 ...... 1,101.78 ...... 3,518.78 1 Per diem constitutes lodging and meals. 2 If foreign currency is used, enter U.S. dollar equivalent; if U.S. currency is used, enter amount expended. F. JAMES SENSENBRENNER, JR., Chairman, Feb. 4, 2004.

REPORT OF EXPENDITURES FOR OFFICIAL FOREIGN TRAVEL, COMMITTEE ON RESOURCES, HOUSE OF REPRESENTATIVES, EXPENDED BETWEEN OCT. 1 AND DEC. 31, 2003

Hon. Steve Pearce ...... 10/30 11/2 Kuwait ...... 1,556.00 ...... (3) ...... 1,556.00 11/3 11/4 Germany...... 157.00 ...... (3) ...... 157.00 Chris Foster ...... 11/6 11/18 Palau ...... 1,246.04 ...... 6,038.26 ...... 7,284.30 Tony Babauta ...... 11/6 11/18 Palau ...... 1,092.39 ...... 6,396.26 ...... 7,488.65 Bonnie Bruce ...... 11/16 11/22 Ireland ...... 2,170.00 ...... 5,231.90 ...... 7,401.90 Hon. Wayne Gilchrest ...... 11/16 11/18 Ireland ...... 434.00 ...... 5,079.00 ...... 5,513.00 Steve Ding ...... 11/16 11/22 Ireland ...... 2,170.00 ...... 5,383.77 ...... 7,553.77 Todd Willens ...... 11/16 11/22 Ireland ...... 2,170.00 ...... 5,388.35 ...... 7,558.35 Catherine Ware ...... 11/16 11/24 Ireland ...... 2,604.00 ...... 1,451.77 ...... 4,055.77 Hon. George Miller ...... 11/24 11/28 France ...... 1,242.00 ...... 7,194.74 ...... 8,436.74 Committee total ...... 57,005.48 1 Per diem constitutes lodging and meals. 2 If foreign currency is used, enter U.S. dollar equivalent; if U.S. currency is used, enter amount expended. 3 Military air transportation. RICHARD POMBO, Chairman, Feb. 11, 2004.

REPORT OF EXPENDITURES FOR OFFICIAL FOREIGN TRAVEL, COMMITTEE ON RULES, HOUSE OF REPRESENTATIVES, EXPENDED BETWEEN OCT. 1 AND DEC. 31, 2003

Martin Frost ...... 12/20 12/22 Kuwait ...... 800.00 ...... (3) ...... 800.00

VerDate jul 14 2003 02:20 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00071 Fmt 4634 Sfmt 8634 E:\CR\FM\A03MR7.003 H03PT1 H826 CONGRESSIONAL RECORD — HOUSE March 3, 2004 REPORT OF EXPENDITURES FOR OFFICIAL FOREIGN TRAVEL, COMMITTEE ON RULES, HOUSE OF REPRESENTATIVES, EXPENDED BETWEEN OCT. 1 AND DEC. 31, 2003—Continued

12/21 12/22 Iraq...... (3) ...... 12/22 12/23 Germany...... 200.00 ...... (3) ...... 200.00 Committee total ...... 1,000.00 ...... 1,000.00 1 Per diem constitutes lodging and meals. 2 If foreign currency is used, enter U.S. dollar equivalent; if U.S. currency is used, enter amount expended. 3 Military air transportation. DAVID DREIER, Chairman, Feb. 5, 2004.

REPORT OF EXPENDITURES FOR OFFICIAL FOREIGN TRAVEL, COMMITTEE ON SCIENCE, HOUSE OF REPRESENTATIVES, EXPENDED BETWEEN OCT. 1 AND DEC. 31, 2003

Kevin Carroll ...... 12/6 12/13 Italy ...... 1,074.00 ...... 5,564.94 ...... 6,638.94 Kathryn Clay ...... 11/30 12/13 Italy ...... 980.00 ...... 1,089.18 ...... 2,069.18 Committee total ...... 2,054.00 ...... 6,654.12 ...... 8,708.12 1 Per diem constitutes lodging and meals. 2 If foreign currency is used, enter U.S. dollar equivalent; if U.S. currency is used, enter amount expended. SHERWOOD BOEHLERT, Chairman, Feb. 9, 2004.

REPORT OF EXPENDITURES FOR OFFICIAL FOREIGN TRAVEL, COMMITTEE ON SMALL BUSINESS, HOUSE OF REPRESENTATIVES, EXPENDED BETWEEN OCT. 1 AND DEC. 31, 2003

Bryan Davis ...... 10/22 10/25 Milan, Italy ...... 1,073.00 ...... 5,614.83 ...... 1,073.00 5,614.83 Hon. W. Todd Akin ...... 10/30 11/2 Iraq ...... 1,556.00 3 522.00 ...... 1,034.00 Hon. Ed Case ...... 10/30 11/2 Iraq ...... 1,556.00 3 43.00 ...... 1,013.00 Hon. Thaddeus McCotter ...... 10/30 11/2 Iraq ...... 1,556.00 3 494.00 ...... 1,062.00 Thomas Bezas ...... 10/30 11/2 Iraq ...... 1,556.00 3 453.00 ...... 1,103.00 Hon. W. Todd Akin ...... 11/3 11/4 Germany ...... 157.00 3 157.00 ...... Hon. Ed Case ...... 11/3 11/4 Germany ...... 157.00 3 134.00 ...... 23.00 Hon. Thaddeus McCotter ...... 11/3 11/4 Germany ...... 157.00 3 157.00 ...... Thomas Bezas ...... 11/3 11/4 Germany ...... 157.00 3 157.00 ...... Hon. Anibal Acevedo-Vila ...... 11/25 11/28 Jordan ...... 674.00 952.00 ...... (4) ...... 674.00 952.00 Matthew Szymanski ...... 12/15 12/22 China ...... 1,346.00 3 362.00 6,515.47 ...... 7,499.47 Ian Deason ...... 12/15 12/22 China ...... 1,346.00 3 853.00 6,515.47 ...... 7,368.47 Thomas Bezas ...... 12/15 12/22 China ...... 1,346.00 3 574.00 6,515.47 ...... 7,282.47 Committee total ...... 32,929.24 1 Per diem constitutes lodging and meals. 2 If foreign currency is used, enter U.S. dollar equivalent; if U.S. currency is used, enter amount expended. 3 Returned. 4 Military air transportation. DONALD A. MANZULLO, Chairman, Feb. 11, 2004.

REPORT OF EXPENDITURES FOR OFFICIAL FOREIGN TRAVEL, COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE, HOUSE OF REPRESENTATIVES, EXPENDED BETWEEN OCT. 1 AND DEC. 31, 2003

Hon. Wayne Gilchrest ...... 10/6 10/10 Kuwait ...... 1,167.00 ...... (3) ...... 1,167.00 Robert Faber ...... 11/17 11/20 Greece ...... 1,360.00 ...... 3,747.45 ...... 944.00 ...... 6,051.45 Derek Miller ...... 11/17 11/20 Greece ...... 1,360.00 ...... 3,661.24 ...... 944.00 ...... 5,965.24 Anastasia Soumbenistis ...... 11/17 11/20 Greece ...... 1,360.00 ...... 3,698.70 ...... 944.00 ...... 6,002.70 Hon. Mario Diaz-Balart ...... 11/24 11/28 Kuwait ...... 952.00 ...... (3) ...... 952.00 Hon. John Duncan ...... 11/29 12/2 China ...... 1,233.00 ...... 5,715.53 ...... 7,821.53 12/2 12/3 Thailand ...... 456.00 ...... 12/4 12/6 Korea ...... 417.00 ...... Hon. Jerry Costello ...... 11/29 12/2 China ...... 1,233.00 ...... 5,625.27 ...... 7,731.27 12/2 12/3 Thailand ...... 456.00 ...... 12/4 12/6 Korea ...... 417.00 ...... Hon. Eddie Bernice Johnson ...... 11/29 12/2 China ...... 1,233.00 ...... 5,638.27 ...... 7,744.27 12/2 12/3 Thailand ...... 456.00 ...... 12/4 12/6 Korea ...... 417.00 ...... Hon. John Boozman ...... 11/29 12/2 China ...... 1,233.00 ...... 6,007.27 ...... 8,113.27 12/2 12/3 Thailand ...... 456.00 ...... 12/4 12/6 Korea ...... 417.00 ...... Lloyd Jones ...... 11/29 12/2 China ...... 1,233.00 ...... 4,899.27 ...... 7,005.27 12/2 12/3 Thailand ...... 456.00 ...... 12/4 12/6 Korea ...... 417.00 ...... David Heymsfeld ...... 11/29 12/2 China ...... 1,233.00 ...... 4,899.27 ...... 7,005.27 12/2 12/3 Thailand ...... 456.00 ...... 12/4 12/6 Korea ...... 417.00 ...... Jimmy Miller ...... 11/29 12/2 China ...... 1,233.00 ...... 4,899.27 ...... 7,005.27 12/2 12/3 Thailand ...... 456.00 ...... 12/4 12/6 Korea ...... 417.00 ...... Giles Giovinazzi ...... 12/7 12/10 Belgium ...... 702.00 ...... 6,953.52 ...... 7,655.52 Adam Tsao ...... 12/7 12/10 Belgium ...... 702.00 ...... 6,953.52 ...... 7,655.52 Hon. Bill Shuster ...... 12/18 12/20 Germany ...... 482.00 ...... 6,385.92 ...... 6,867.92 Hon. Tim Holden ...... 12/18 12/20 Germany ...... 482.00 ...... 6,385.92 ...... 6,867.92 Hon. Jim Gerlach ...... 12/18 12/20 Germany ...... 482.00 ...... 6,385.92 ...... 6,867.92 Committee total ...... 23,791.00 ...... 81,856.34 ...... 2,832.00 ...... 108,479.34 1 Per diem constitutes lodging and meals.

VerDate jul 14 2003 02:20 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00072 Fmt 4634 Sfmt 8634 E:\CR\FM\A03MR7.003 H03PT1 March 3, 2004 CONGRESSIONAL RECORD — HOUSE H827 2 If foreign currency is used, enter U.S. dollar equivalent; if U.S. currency is used, enter amount expended. 3 Military air transportation. DON YOUNG, Chairman, Feb. 9, 2004.

REPORT OF EXPENDITURES FOR OFFICIAL FOREIGN TRAVEL, SELECT COMMITTEE ON HOMELAND SECURITY, HOUSE OF REPRESENTATIVES, EXPENDED BETWEEN OCT. 1 AND DEC. 31, 2003

Hon. Christopher Cox ...... 12/10 12/11 Spain ...... 357.00 ...... (3) ...... 12/11 12/13 Italy ...... 922.00 ...... (3) ...... 12/13 12/14 Syria ...... 268.00 ...... (3) ...... 12/14 12/15 Israel ...... 362.00 ...... (3) ...... 12/10 12/16 Turkey ...... 276.00 ...... 1,467.00 ...... 3,652.00 Hon. Jennifer Dunn ...... 12/10 12/11 Spain ...... 357.00 ...... (3) ...... 12/11 12/13 Italy...... 922.00 ...... (3) ...... 12/13 12/14 Syria...... 268.00 ...... (3) ...... 12/14 12/15 Israel...... 362.00 ...... (3) ...... 12/15 12/16 Turkey...... 276.00 ...... 1,467.00 ...... 3,652.00 Hon. Ernest Istook ...... 12/10 12/11 Spain ...... 357.00 ...... (3) ...... 12/11 12/13 Italy...... 922.00 ...... (3) ...... 12/13 12/14 Syria...... 268.00 ...... (3) ...... 12/14 12/15 Israel...... 362.00 ...... (3) ...... 12/15 12/16 Turkey...... 276.00 ...... 1,467.00 ...... 3,652.00 Hon. Loretta Sanchez ...... 12/10 12/11 Spain ...... 357.00 ...... (3) ...... 12/11 12/13 Italy...... 922.00 ...... (3) ...... 12/13 12/14 Syria...... 268.00 ...... (3) ...... 12/14 12/15 Israel...... 362.00 ...... (3) ...... 12/15 12/16 Turkey...... 276.00 ...... 1,467.00 ...... 3,652.00 Hon. Bob Etheridge ...... 12/10 12/11 Spain ...... 357.00 ...... (3) ...... 12/11 12/13 Italy...... 922.00 ...... (3) ...... 12/13 12/14 Syria...... 268.00 ...... (3) ...... 12/14 12/15 Israel...... 362.00 ...... (3) ...... 12/15 12/16 Turkey...... 276.00 ...... 1,467.00 ...... 3,652.00 Hon. Ken Lucas ...... 12/10 12/11 Spain ...... 357.00 ...... (3) ...... 12/11 12/13 Italy...... 922.00 ...... (3) ...... 12/13 12/14 Syria...... 268.00 ...... (3) ...... 12/14 12/15 Israel...... 362.00 ...... (3) ...... 12/15 12/16 Turkey...... 276.00 ...... 1,467.00 ...... 3,652.00 Hon. Sheila Jackson-Lee ...... 12/10 12/11 Spain ...... 357.00 ...... (3) ...... 12/11 12/13 Italy...... 922.00 ...... (3) ...... 12/13 12/14 Syria...... 268.00 ...... (3) ...... 12/14 12/15 Israel...... 362.00 ...... 1,194.00 ...... 3,103.00 Margaret Peterlin ...... 12/10 12/11 Spain ...... 357.00 ...... (3) ...... 12/11 12/13 Italy...... 922.00 ...... (3) ...... 12/13 12/14 Syria...... 268.00 ...... (3) ...... 12/14 12/15 Israel...... 362.00 ...... (3) ...... 12/15 12/16 Turkey...... 276.00 ...... 1,467.00 ...... 3,652.00 David Schanzer ...... 12/10 12/11 Spain ...... 357.00 ...... (3) ...... 12/11 12/13 Italy...... 922.00 ...... (3) ...... 12/13 12/14 Syria...... 268.00 ...... (3) ...... 12/14 12/15 Israel...... 362.00 ...... (3) ...... 12/15 12/16 Turkey...... 276.00 ...... 1,467.00 ...... 3,652.00 Julie Sund ...... 12/10 12/11 Spain ...... 357.00 ...... (3) ...... 12/11 12/13 Italy...... 922.00 ...... (3) ...... 12/13 12/14 Syria...... 268.00 ...... (3) ...... 12/14 12/15 Israel...... 362.00 ...... (3) ...... 12/15 12/16 Turkey...... 276.00 ...... 1,467.00 ...... 3,652.00 Elizabeth Tobias ...... 12/10 12/11 Spain ...... 357.00 ...... (3) ...... 12/11 12/13 Italy ...... 992.00 ...... (3) ...... 12/13 12/14 Syria ...... 268.00 ...... (3) ...... 12/14 12/15 Israel ...... 362.00 ...... (3) ...... 12/15 12/16 Turkey ...... 276.00 ...... 1,467.00 ...... 3,652.00 John Gannon ...... 12/10 12/11 Spain ...... 357.00 ...... (3) ...... 12/11 12/13 Italy ...... 922.00 ...... (3) ...... 12/13 12/14 Syria ...... 268.00 ...... (3) ...... 12/14 12/15 Israel ...... 362.00 ...... (3) ...... 12/15 12/17 Turkey ...... 552.00 ...... 499.72 ...... 2,960.72 Steve DeVine ...... 12/10 12/11 Spain ...... 357.00 ...... (3) ...... 12/11 12/13 Italy ...... 922.00 ...... (3) ...... 12/13 12/14 Syria ...... 268.00 ...... (3) ...... 12/14 12/15 Israel ...... 362.00 ...... (3) ...... 12/15 12/18 Turkey ...... 828.00 ...... (3) ...... 3,045.00 12/18 12/19 Ireland ...... 308.00 ...... (3) ...... Camille Camacho ...... 12/10 12/11 Spain ...... 357.00 ...... (3) ...... 12/11 12/13 Italy ...... 922.00 ...... (3) ...... 12/13 12/14 Syria ...... 268.00 ...... (3) ...... 12/14 12/15 Israel ...... 362.00 ...... (3) ...... 3,045.00 12/15 12/18 Turkey ...... 828.00 ...... (3) ...... 12/18 12/19 Ireland ...... 308.00 ...... (3) ...... Hon. Sheila Jackson-Lee ...... 11/15 11/17 Kuwait ...... 804.00 ...... (3) ...... 804.00 Committee total ...... 33,114.00 ...... 16,636.72 ...... 49,477.72 1 Per diem constitutes lodging and meals. 2 If foreign currency is used, enter U.S. dollar equivalent; if U.S. currency is used, enter amount expended. 3 Military air transportation. h CHRISTOPHER COX, Chairman, Feb. 5, 2004. EXECUTIVE COMMUNICATIONS, 6932. A letter from the Principal Deputy cordance with title 10, United States Code, ETC. Under Secretary, Department of Defense, section 777; to the Committee on Armed transmitting Approval of Major General Services. Under clause 8 of rule XII, executive Thomas L. Baptiste, United States Air 6934. A letter from the Secretary, Depart- communications were taken from the Force, to wear the insignia of lieutenant ment of Health and Human Services, trans- Speaker’s table and referred as follows: general in accordance with title 10, United mitting a report on the Fiscal Years 1999-2001 6931. A letter from the Principal Deputy States Code, section 777; to the Committee Family Violence Prevention and Services Under Secretary, Department of Defense, on Armed Services. Act Program, pursuant to 42 U.S.C. 10405; to transmitting Approval of Brigadier General 6933. A letter from the Principal Deputy the Committee on Education and the Work- Lloyd J. Austin III to wear the insignia of Under Secretary, Department of Defense, force. major general in accordance with title 10, transmitting Approval of Major General 6935. A letter from the Secretary, Depart- United States Code, section 777; to the Com- John M. Curran, United States Army, to ment of Health and Human Services, trans- mittee on Armed Services. wear the insignia of lieutenant general in ac- mitting the 2003 annual report entitled,

VerDate jul 14 2003 02:20 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00073 Fmt 4634 Sfmt 0634 E:\CR\FM\A03MR7.003 H03PT1 H828 CONGRESSIONAL RECORD — HOUSE March 3, 2004 ‘‘Clinical Preventive Services for Older 2004,’’ pursuant to D.C. Code section 1– 6958. A letter from the Chairman, Council Americans,’’ based on the work of the U.S. 233(c)(1); to the Committee on Government of the District of Columbia, transmitting a Preventive Services Task Force (USPSTF), Reform. copy of D.C. ACT 15-383, ‘‘Health Services pursuant to Public Law 106–554, section 126; 6946. A letter from the Chairman, Council Planning and Development Amendment Act to the Committee on Energy and Commerce. of the District of Columbia, transmitting a of 2004,’’ pursuant to D.C. Code section 1– 6936. A letter from the Assistant Secretary copy of D.C. ACT 15-350, ‘‘Owner-Occupant 233(c)(1); to the Committee on Government for Legislative Affairs, Department of State, Residential Tax Credit and Exemption Act of Reform. transmitting certification of a proposed ex- 2004,’’ pursuant to D.C. Code section 1– 6959. A letter from the Chairman, Council tension of the license for the export of major 233(c)(1); to the Committee on Government of the District of Columbia, transmitting a defense equipment and defense articles to Reform. copy of D.C. ACT 15-364, ‘‘Sexual Minority Russia, Ukraine, and Norway (Transmittal 6947. A letter from the Chairman, Council Youth Assistance League Equitable Real No. DDTC 015-04), pursuant to 22 U.S.C. of the District of Columbia, transmitting a Property Tax Relief Act of 2004,’’ pursuant to 2776(c); to the Committee on International copy of D.C. ACT 15-366, ‘‘Revised Closing of D.C. Code section 1–233(c)(1); to the Com- Relations. a Portion of a Public Alley in Square 209, mittee on Government Reform. 6937. A letter from the Assistant Secretary S.O. 02-1019, Act of 2004,’’ pursuant to D.C. 6960. A letter from the Chairman, Council for Legislative Affairs, Department of State, Code section 1–233(c)(1); to the Committee on of the District of Columbia, transmitting a transmitting certification of a proposed ex- Government Reform. copy of D.C. ACT 15-365, ‘‘Dedication and tension of the license for the export of major 6948. A letter from the Chairman, Council Designation of Streets and an Alley in defense equipment and defense articles to of the District of Columbia, transmitting a Squares 878, S.O.95-251, Act of 2004,’’ pursu- Japan (Transmittal No. DDTC 017-04), pursu- copy of D.C. ACT 15-351, ‘‘December Use of ant to D.C. Code section 1–233(c)(1); to the ant to 22 U.S.C. 2776(c); to the Committee on the Cash Reserve Funds Temporary Act of Committee on Government Reform. International Relations. 2004,’’ pursuant to D.C. Code section 1– 6961. A letter from the Chairman, Broad- 6938. A letter from the Assistant Secretary 233(c)(1); to the Committee on Government casting Board Of Governors, transmitting for Legislative Affairs, Department of State, Reform. the Annual Program Performance Report on transmitting certification of a proposed ex- 6949. A letter from the Chairman, Council the FY 2003 Performance Plan, pursuant to tension of the license for the export of major of the District of Columbia, transmitting a the Government Performance and Results defense equipment and defense articles to copy of D.C. ACT 15-352, ‘‘Real Property Dis- Act of 1993 (GPRA); to the Committee on Russia and Kazakhstan (Transmittal No. position Economic Analysis Temporary Government Reform. DDTC 016-04), pursuant to 22 U.S.C. 2776(c); Amendment Act of 2004,’’ pursuant to D.C. 6962. A letter from the Secretary, Depart- to the Committee on International Rela- Code section 1–233(c)(1); to the Committee on ment of the Treasury, transmitting the Fi- tions. Government Reform. nancial Report of the United States Govern- 6939. A communication from the President 6950. A letter from the Chairman, Council ment for Fiscal Year 2003 (Financial Report), of the United States, transmitting an addi- of the District of Columbia, transmitting a pursuant to 31 U.S.C. 331(e)(1); to the Com- tional report, consistent with the War Pow- copy of D.C. ACT 15-353, ‘‘District of Colum- mittee on Government Reform. ers Resoultion, to help ensure that the Con- bia Emancipation Day Parade and Fund 6963. A letter from the Human Resources gress is kept fully informed on U.S. military Temporary Act of 2004,’’ pursuant to D.C. Specialist, Department of Labor, transmit- activities in Haiti, pursuant to Public Law Code section 1–233(c)(1); to the Committee on ting a report pursuant to the Federal Vacan- 93–148; (H. Doc. No. 108–167); to the Com- Government Reform. cies Reform Act of 1998; to the Committee on mittee on International Relations and or- 6951. A letter from the Chairman, Council Government Reform. dered to be printed. of the District of Columbia, transmitting a 6964. A letter from the Chairman, Federal 6940. A letter from the Acting Director, De- copy of D.C. ACT 15-360, ‘‘Kings Court Com- Election Commission, transmitting a copy of fense Security Cooperation Agency, trans- munity Garden Equitable Real Property Tax the annual report in compliance with the mitting a report in accordance with Section Relief Temporary Act of 2004,’’ pursuant to Government in the Sunshine Act for the cal- 25(a)(6) of the Arms Export Control Act D.C. Code section 1–233(c)(1); to the Com- endar year 2003, pursuant to 5 U.S.C. 552b(j); (AECA), describing and analyzing services mittee on Government Reform. to the Committee on Government Reform. performed during FY 2003 by full-time USG 6952. A letter from the Chairman, Council 6965. A letter from the Chairman, Federal employees who are performing services for of the District of Columbia, transmitting a Energy Regulatory Commission, transmit- which reimbursement is provided under Sec- copy of D.C. ACT 15-361, ‘‘District of Colum- ting the Commission’s FY 2003 Performance tion 21(a) or Section 43(b) of the AECA; to bia Public Schools Use of the Budget Reserve Report, pursuant to Public Law 103–62; to the the Committee on International Relations. Funds Temporary Act of 2004,’’ pursuant to Committee on Government Reform. 6941. A letter from the Secretary, Depart- D.C. Code section 1–233(c)(1); to the Com- 6966. A letter from the Chairman, Inter- ment of the Treasury, transmitting as re- mittee on Government Reform. national Trade Commission, transmitting quired by section 401(c) of the National 6953. A letter from the Chairman, Council pursuant to the Government Performance Emergencies Act, 50 U.S.C. 1641(c), and sec- of the District of Columbia, transmitting a and Results Act (Pub. L. 103–62), the Com- tion 204(c) of the International Emergency copy of D.C. ACT 15-367, ‘‘District of Colum- mission’s Performance Report for FY 2003; to Economic Powers Act, 50 U.S.C. 1703(c), and bia Auditor Subpoena and Oath Authority the Committee on Government Reform. pursuant to Executive Order 13313 of July 31, Act of 2004,’’ pursuant to D.C. Code section 1– 6967. A letter from the Director, Office of 2003, the final six-month periodic report on 233(c)(1); to the Committee on Government Personnel Management, transmitting a re- the national emergency declared with re- Reform. port on the Federal Activities Inventory Re- spect to Sierra Leone in Executive Order 6954. A letter from the Chairman, Council form Act Inventory as of June 30, 2003; to the 13194 of January 18, 2001, and expanded in of the District of Columbia, transmitting a Committee on Government Reform. scope with respect to Liberia by Executive copy of D.C. ACT 15-362, ‘‘Used Car Dealer- 6968. A letter from the Architect of the Order 13213 of May 22, 2001; to the Committee ship License Moratorium Temporary Act of Capitol, transmitting a report discussing the on International Relations. 2004,’’ pursuant to D.C. Code section 1– AOC’s activities to improve worker safety 6942. A letter from the U.S. Global AIDS 233(c)(1); to the Committee on Government during the fourth quarter of FY03, pursuant Coordinator, Department of State, transmit- Reform. to the directives issued in the 107th Congress ting on behalf of the President, the report, 6955. A letter from the Chairman, Council First Session, House of Representatives Re- ‘‘President Bush’s Emergency Plan for AIDS of the District of Columbia, transmitting a port Number 107-169; to the Committee on Relief: U.S. Five-Year Global HIV/AIDS copy of D.C. ACT 15-368, ‘‘Metropolitan Po- House Administration. Strategy,’’ pursuant to Public Law 108–25; to lice Department Educational Requirement 6969. A letter from the Secretary, Depart- the Committee on International Relations. Clarification Temporary Amendment Act of ment of the Interior, transmitting a draft 6943. A letter from the Chairman, Council 2004,’’ pursuant to D.C. Code section 1– bill entitled ‘‘To redesignate Fort Clatsop of the District of Columbia, transmitting a 233(c)(1); to the Committee on Government National Memorial as the Lewis and Clark copy of D.C. ACT 15–384, ‘‘Tobacco Product Reform. National Park, to include sites in the State Manufacturer Reserve Fund Complementary 6956. A letter from the Chairman, Council of Washington as well as the State of Or- Procedures Act of 2004,’’ pursuant to D.C. of the District of Columbia, transmitting a egon, and for other purposes’’; to the Com- Code section 1–233(c)(1); to the Committee on copy of D.C. ACT 15-363, ‘‘Crispis Attucks De- mittee on Resources. Government Reform. velopment Corporation Real Property Tax 6970. A letter from the Commissioner, Fi- 6944. A letter from the Chairman, Council Exemption and Equitable Real Property Tax nancial Management Service, Department of of the District of Columbia, transmitting a Relief Act of 2004,’’ pursuant to D.C. Code the Treasury, transmitting FY 2003 Report copy of D.C. ACT 15-385, ‘‘Consolidated of Fi- section 1–233(c)(1); to the Committee on Gov- to the Congress entitled ‘‘U.S. Government nancial Services Amendment Act of 2004,’’ ernment Reform. Receivables and Debt Collection Activities of pursuant to D.C. Code section 1–233(c)(1); to 6957. A letter from the Chairman, Council Federal Agencies,’’ pursuant to 31 U.S.C. the Committee on Government Reform. of the District of Columbia, transmitting a 3716(c)(3)(B); to the Committee on the Judici- 6945. A letter from the Chairman, Council copy of D.C. ACT 15-370, ‘‘Real Property ary. of the District of Columbia, transmitting a Classification Clarification Act of 2004,’’ pur- 6971. A letter from the Chief Scout Execu- copy of D.C. ACT 15-386, ‘‘Captive Insurance suant to D.C. Code section 1–233(c)(1); to the tive and President, Boy Scouts of America, Company Temporary Amendment Act of Committee on Government Reform. transmitting the Boy Scouts of America’s

VerDate jul 14 2003 03:46 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00074 Fmt 4634 Sfmt 0634 E:\CR\FM\L03MR7.000 H03PT1 March 3, 2004 CONGRESSIONAL RECORD — HOUSE H829 2003 Report to the Nation, pursuant to 36 pair Stations: Service Difficulty Reporting 6990. A letter from the Paralegal Spe- U.S.C. 28; to the Committee on the Judici- [Docket No. FAA-2003-16772; Amendment No. cialist, FAA, Department of Transportation, ary. 22] (RIN: 2120-AI07) received February 4, 2004, transmitting the Department’s final rule — 6972. A letter from the Program Analyst, pursuant to 5 U.S.C. 801(a)(1)(A); to the Com- Airworthiness Directives; Cessna Aircraft FAA, Department of Transportation, trans- mittee on Transportation and Infrastruc- Company Models 441 and F406 Airplanes mitting the Department’s final rule — Estab- ture. [Docket No. 2002-CE-18-AD; Amendment 39- lishment of Class E Airspace; Calverton, NY 6982. A letter from the Paralegal Spe- 13406; AD 2003-09-09 R1] (RIN: 2120-AA64) re- [Docket No. FAA-2003-16415; Airspace Docket cialist, FAA, Department of Transportation, ceived February 4, 2004, pursuant to 5 U.S.C. No. 03-AEA-16] received February 4, 2004, pur- transmitting the Department’s final rule — 801(a)(1)(A); to the Committee on Transpor- suant to 5 U.S.C. 801(a)(1)(A); to the Com- Airworthiness Directives; Airbus Model A300 tation and Infrastructure. mittee on Transportation and Infrastruc- B2, A300 B4, A300 B4-600, A300 B4-600R, A300 ture. F4-600R, A310, A330, and A340 Series Air- 6991. A letter from the Paralegal Spe- 6973. A letter from the Program Analyst, planes [Docket No. 2001-NM-154-AD; Amend- cialist, FAA, Department of Transportation, FAA, Department of Transportation, trans- ment 39-13220; AD 2003-14-01] (RIN: 2120-AA64) transmitting the Department’s final rule — mitting the Department’s final rule — Modi- received Febuary 4, 2004, pursuant to 5 U.S.C. Modification of Class E Airspace; fication of Class E Airspace; Mapleton, IA. 801(a)(1)(A); to the Committee on Transpor- Independance, IA. [Docket No. FAA-2003- [Docket No. FAA-2003-16496; Airspace Docket tation and Infrastructure. 16746; Airspace Docket No. 03-ACE-90] re- No. 03-ACE-80] received February 4, 2004, pur- 6983. A letter from the Paralegal Spe- ceived February 9, 2004, pursuant to 5 U.S.C. suant to 5 U.S.C. 801(a)(1)(A); to the Com- cialist, FAA, Department of Transportation, 801(a)(1)(A); to the Committee on Transpor- mittee on Transportation and Infrastruc- transmitting the Department’s final rule — tation and Infrastructure. ture. Airworthiness Directives; Bombardier Model CL-600-2C10 (Regional Jet Series 700 & 701) 6992. A letter from the Paralegal Spe- 6974. A letter from the Program Analyst. cialist, FAA, Department of Transportation, FAA, Department of Transportation, trans- and CL-600-2D24 (Regional Jet Series 900) Se- ries Airplanes [Docket No. 2003-NM-209-AD; transmitting the Department’s final rule — mitting the Department’s final rule — Establishment of Class E2 Airspace; and Amendment of Class E5 Airspace; Augusta, Amendment 39-13353; AD 2003-19-51] (RIN: 1220-AA64) received February 4, 2004, pursu- Modification of Class E5 Airspace; Hutch- GA [Docket No. FAA-2003-15124; Airspace inson, KS. [Docket No. FAA-2003-16410; Air- Docket No. 03-ASO-5] received February 4, ant to 5 U.S.C. 801(a)(1)(A); to the Committee space Docket No. 03-ACE-79] received Feb- 2004, pursuant to 5 U.S.C. 801(a)(1)(A); to the on Transportation and Infrastructure. ruary 9, 2004, pursuant to 5 U.S.C. Committee on Transportation and Infra- 6984. A letter from the Paralegal Spe- 801(a)(1)(A); to the Committee on Transpor- structure. cialist, FAA, Department of Transportation, tation and Infrastructure. 6975. A letter from the Program Analyst, transmitting the Department’s final rule — FAA, Department of Transportation, trans- Airworthiness Directives; Eurocopter France 6993. A letter from the Paralegal Spe- mitting the Department’s final rule — Modi- Model AS332C, L, L1, and L2 Helicopters cialist, FAA, Department of Transportation, fication of Class E Airspace; Maryville, MO. [Docket No. 2001-SW-07-AD; Amendment 39- transmitting the Department’s final rule — [Docket No. FAA-2003-15720; Airspace Docket 13371; AD 2003-24-02] (RIN: 2120-AA64) received Modification of Class E Airspace; Clay Cen- No. 03-ACE-62] received February 4, 2004, pur- February 4, 2004, pursuant to 5 U.S.C. ter, KS. [Docket No. FAA-2003-16759; Air- suant to 5 U.S.C. 801(a)(1)(A); to the Com- 801(a)(1)(A); to the Committee on Transpor- space Docket No. 03-ACE-96] received Feb- tation and Infrastructure. mittee on Transportation and Infrastruc- ruary 9, 2004, pursuant to 5 U.S.C. 6985. A letter from the Paralegal Spe- ture. cialist, FAA, Department of Transportation, 801(a)(1)(A); to the Committee on Transpor- 6976. A letter from the Program Analyst, transmitting the Department’s final rule — tation and Infrastructure. FAA, Department of Transportation, trans- Airworthiness Directives; McDonnel Douglas 6994. A letter from the Paralegal Spe- mitting the Department’s final rule — Modi- Model MD-11 Airplanes [Docket No. 2001-NM- cialist, FAA, Department of Transportation, fication of Class E Airspace; Milford, IA. 57-AD; Amendment 39-13340; AD 2003-21-05] transmitting the Department’s final rule — [Docket No. FAA-2003-16497; Airspace Docket (RIN: 2120-AA64) received February 4, 2004, No. 03-ACE-81] received February 4, 2004, pur- Modification of Class E Airspace; Colby, KS. pursuant to 5 U.S.C. 801(a)(1)(A); to the Com- suant to 5 U.S.C. 801(a)(1)(A); to the Com- [Docket No. FAA-2003-16760; Airspace Docket mittee on Transportation and Infrastruc- mittee on Transportation and Infrastruc- No. 03-ACE-97] received February 9, 2004, pur- ture. suant to 5 U.S.C. 801(a)(1)(A); to the Com- ture. 6986. A letter from the Paralegal Spe- 6977. A letter from the Program Analyst, mittee on Transportation and Infrastruc- cialist, FAA, Department of Transportation, ture. FAA, Department of Transportation, trans- transmitting the Department’s final rule — mitting the Department’s final rule — Modi- Airworthiness Directives; Pratt and Whitney 6995. A letter from the Paralegal Spe- fication of Class E Airspace; Mapleton, IA. PW4000 Series Turbofan Engines [Docket No. cialist, FAA, Department of Transportation, [Docket No. FAA-2003-16496; Airspace Docket 2002-NE-15-AD; Amendment 39-13131; AD 2003- transmitting the Department’s final rule — No. 03-ACE-80] received February 4, 2004, pur- 09-02] (RIN: 2120-AA64) received February 4, Modification of Class E Airspace; Chanute, suant to 5 U.S.C. 801(a)(1)(A); to the Com- 2004, pursuant to 5 U.S.C. 801(a)(1)(A); to the KS. [Docket No. FAA-2003-16757; Airspace mittee on Transportation and Infrastruc- Committee on Transportation and Infra- Docket No. 03-ACE-95] received February 9, ture. structure. 2004, pursuant to 5 U.S.C. 801(a)(1)(A); to the 6978. A letter from the Program Analyst, 6987. A letter from the Paralegal Spe- Committee on Transportation and Infra- FAA, Department of Transportation, trans- cialist, FAA, Department of Transportation, structure. mitting the Department’s final rule — Estab- transmitting the Department’s final rule — 6996. A letter from the Administrator, Of- lishment of Class D Airspace; Columbus, MS Airworthiness Directives; Eurocopter France fice of Management and Budget, transmit- [Docket No. FFAA-2003-15532; Airspace Dock- Model SA-365N, N1, AS-365N2, and AS 365 N3 ting the annual report on the Federal Gov- et No. 03-ASO-10] received February 4, 2004, Helicopters [Docket No. 2003-SW-09-AD; ernment’s use of voluntary consensus stand- pursuant to 5 U.S.C. 801(a)(1)(A); to the Com- Amendment 39-13363; AD 2003-22-15] (RIN: ards, pursuant to Public Law 104–113, section mittee on Transportation and Infrastruc- 2120-AA64) received February 4, 2004, pursu- 12(d)(3) (110 Stat. 783); to the Committee on ture. ant to 5 U.S.C. 801(a)(1)(A); to the Committee 6979. A letter from the Program Analyst, on Transportation and Infrastructure. Science. FAA, Department of Transportation, trans- 6988. A letter from the Paralegal Spe- 6997. A letter from the Assistant Secretary mitting the Department’s final rule — Prohi- cialist, FAA, Department of Transportation, for Legislative Affairs, Department of State, bition Against Certain Flights Within the transmitting the Department’s final rule — transmitting the Department’s Federal Territory and Airspace of Iraq [Docket No. Airworthiness Directives; Rolls-Royce plc Equal Opportunity Recruitment Program FAA-2003-14766; SFAR No. 77] received Feb- (RR) RB211-22B, RB211-524, and RB211-535 Se- (FEORP) Accomplishment Report and the ruary 4, 2004, pursuant to 5 U.S.C. ries Turbofan Engines [Docket No. 2001-NE- Disabled Veteran’s Affirmative Action Pro- 801(a)(1)(A); to the Committee on Transpor- 13-AD; Amendment 39-13435; AD 2004-01-21] gram (DVAAP) Report for the period of Sep- tation and Infrastructure. (RIN: 2120-AA64) received Febuary 4, 2004, tember 30, 2002 to September 30, 2003, pursu- 6980. A letter from the Program Analyst, pursuant to 5 U.S.C. 801(a)(1)(A); to the Com- ant to 22 U.S.C. 3905(d)(2); jointly to the FAA, Department of Transportation, trans- mittee on Transportation and Infrastruc- Committees on International Relations and mitting the Department’s final rule — Spe- ture. Government Reform. cialist Federal Aviation Regulation No. 36, 6989. A letter from the Paralegal Spe- Development of Major Repair Data [Docket cialist, FAA, Department of Transportation, 6998. A letter from the Administrator, No. FAA-2003-16527; Amendment No. SFAR transmitting the Department’s final rule — FAA, Department of Transportation, trans- 36-8] (RIN: 2120-AI09) received February 4, Airworthiness Directives; McDonnell Doug- mitting an additional copy of the ‘‘Federal 2004, pursuant to 5 U.S.C. 801(a)(1)(A); to the las Model 717-200 Airplanes [Docket No. 2003- Aviation Administration and National Air Committee on Transportation and Infra- NM-55-AD; Amendment 39-13429; AD 2004-01- Traffic Controllers Association Collective structure. 15] (RIN: 2120-AA64) received February 4, Bargaining Impasse Submission to Con- 6981. A letter from the Program Analyst, 2004, pursuant to 5 U.S.C. 801(a)(1)(A); to the gress,’’ pursuant to 49 U.S.C. 40122(a); jointly FAA, Department of Transportation, trans- Committee on Transportation and Infra- to the Committees on Transportation and In- mitting the Department’s final rule — Re- structure. frastructure and Government Reform.

VerDate jul 14 2003 02:20 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00075 Fmt 4634 Sfmt 0634 E:\CR\FM\L03MR7.000 H03PT1 H830 CONGRESSIONAL RECORD — HOUSE March 3, 2004 TIME LIMITATION OF REFERRED MCCARTHY of New York, Mrs. H.R. 1160: Mr. ACKERMAN. BILL NAPOLITANO, Mr. GREEN of Texas, Mr. H.R. 1179: Mr. GREEN of Wisconsin. FROST, Mr. MCNULTY, Mr. ORTIZ, Mr. H.R. 1214: Mr. ACKERMAN and Ms. HART. Pursuant to clause 2 of rule XII the KILDEE, Mr. TOWNS, and Ms. NORTON): H.R. 1336: Mr. WYNN, Mr. BROWN of South following action was taken by the H.R. 3887. A bill to amend the Public Carolina, Mr. HOEFFEL, Mr. BELL, Mr. COO- Speaker: Health Service Act to provide for the estab- PER, and Mr. MATHESON. [Omitted from the Record of March 2, 2004] lishment of a National Center for Social H.R. 1372: Mr. BACHUS. Work Research; to the Committee on Energy H.R. 1532: Ms. MCCARTHY of Missouri and H.R. 2802. Referral to the Committee on and Commerce. Mr. CLYBURN. Government Reform extended for a period By Mr. SANDERS (for himself, Mr. H.R. 1563: Mr. ETHERIDGE. ending not later than March 8, 2004. MICA, Mr. TAYLOR of Mississippi, Mr. H.R. 1582: Mr. TURNER of Texas. f PAUL, Ms. KAPTUR, Mr. GOODE, Mr. H.R. 1613: Mr. LIPINSKI, Mr. HINOJOSA, and PUBLIC BILLS AND RESOLUTIONS DEFAZIO, Mr. MICHAUD, Mr. OWENS, Mr. WEXLER. Mr. SERRANO, Mr. GRIJALVA, Ms. KIL- H.R. 1655: Mr. DEAL of Georgia. Under clause 2 of rule XII, public PATRICK, Ms. WOOLSEY, Mr. HOLDEN, H.R. 1676: Mr. BAIRD and Mr. BOUCHER. bills and resolutions were introduced Mr. BOUCHER, Mr. KUCINICH, Mr. STU- H.R. 1716: Mr. RENZI. and severally referred, as follows: PAK, Ms. SLAUGHTER, Mr. MCINTYRE, H.R. 1738: Mr. ENGEL. H.R. 1755: Mr. ROGERS of Kentucky. By Mr. YOUNG of Alaska: Mr. BROWN of Ohio, Mr. OLVER, Mr. H.R. 1769: Mr. TIERNEY, Mr. MCGOVERN, Mr. H.R. 3879. A bill to authorize appropria- STARK, Mr. PALLONE, Mr. BRADY of STUPAK, Mr. KUCINICH, Mr. ISRAEL, Mr. RUSH, tions for the Coast Guard for fiscal year 2005, Pennsylvania, Ms. CARSON of Indiana, Mr. STRICKLAND, Mr. OBERSTAR, Mr. ALLEN, to amend various laws administered by the Mr. NADLER, Mr. EVANS, Mr. WEXLER, and Ms. WOOLSEY. Coast Guard, and for other purposes; to the Mr. GREEN of Texas, Ms. MILLENDER- H.R. 1863: Mr. RUPPERSBERGER and Mr. Committee on Transportation and Infra- MCDONALD, Ms. CORRINE BROWN of MCGOVERN. structure. Florida, Ms. NORTON, Mr. LIPINSKI, H.R. 1873: Ms. KAPTUR. By Mr. TOM DAVIS of Virginia (for Mr. PETERSON of Minnesota, Mr. H.R. 1874: Mr. COOPER. himself and Mr. WAXMAN): ABERCROMBIE, Mr. KILDEE, Mr. CON- H.R. 1930: Mr. LYNCH. H.R. 3880. A bill to amend the Federal YERS, Mr. PAYNE, Ms. SCHAKOWSKY, H.R. 2011: Mr. BISHOP of Georgia. Food, Drug, and Cosmetic Act with respect Mr. GUTIERREZ, Mr. RYAN of Ohio, H.R. 2037: Mr. CONYERS. to the sale of prescription drugs through the Mr. MCGOVERN, Mr. BISHOP of Geor- H.R. 2068: Mr. PALLONE, Ms. MCCARTHY of Internet; to the Committee on Energy and gia, Mr. STRICKLAND, Mr. WYNN, Mr. Missouri, Mr. DICKS, Mr. LAMPSON, Ms. Commerce. TIERNEY, Mr. HASTINGS of Florida, SLAUGHTER, Mr. PASCRELL, and Mr. SERRANO. By Mr. SMITH of Washington (for him- Ms. LEE, Ms. SOLIS, Mr. UDALL of H.R. 2173: Mr. CLAY, Mr. FATTAH, and Ms. self, Mr. HOLDEN, Mr. INSLEE, Mr. New Mexico, Mr. VISCLOSKY, and Mr. CORRINE BROWN of Florida. RANGEL, Mr. LEVIN, Mr. MATSUI, Mr. PASCRELL): H.R. 2176: Mr. GREEN of Texas. STARK, Mr. CARDIN, Mr. MCDERMOTT, H.R. 3888. A bill to prohibit business enter- H.R. 2201: Mr. KIND, Mr. JACKSON of Illi- Mr. MCNULTY, Mr. BECERRA, Mrs. prises that lay-off a greater percentage of nois, Mr. DEFAZIO, Mr. BACA, Mr. FROST, Mr. JONES of Ohio, Mr. SPRATT, Mr. their United States workers than workers in RODRIGUEZ, Ms. LEE, Mr. RANGEL, Mr. GEORGE MILLER of California, Mr. other countries from receiving any Federal MCGOVERN, Mr. FALEOMAVAEGA, and Mr. DICKS, Mr. BAIRD, Mr. LARSEN of assistance, and for other purposes; to the CASE. Washington, and Ms. SLAUGHTER): Committee on Government Reform. H.R. 2215: Mr. NADLER, Ms. LINDA T. H.R. 3881. A bill to amend the Trade Act of By Mr. WOLF: SANCHEZ of California, Ms. SCHAKOWSKY, Mr. 1974 to extend the trade adjustment assist- H.R. 3889. A bill to transfer certain func- DEFAZIO, Mr. ANDREWS, and Mr. FROST. ance program to the service sector, and for tions from the United States Trade Rep- resentative to the Secretary of Commerce; H.R. 2233: Mr. MCGOVERN. other purposes; to the Committee on Ways H.R. 2298: Mr. GONZALEZ. and Means. to the Committee on Ways and Means. By Mr. UDALL of Colorado (for him- H.R. 2318: Ms. MAJETTE. By Mr. ENGLISH: H.R. 2426: Mr. BRADY of Pennsylvania. self, Mr. BARTLETT of Maryland, Mr. H.R. 3882. A bill to amend the Internal Rev- H.R. 2437: Ms. SCHAKOWSKY. GORDON, Mr. MCDERMOTT, Mr. HOYER, enue Code of 1986 to exempt from the harbor H.R. 2490: Mr. SERRANO. Mr. AKIN, Mr. LAMPSON, and Mr. maintenance tax certain truck cargo on a H.R. 2625: Mr. TURNER of Texas. RUPPERSBERGER): ferry operating between two ports for the H.R. 2743: Mr. FORBES, Mr. PUTNAM, Mrs. H. Res. 550. A resolution expressing the sole purpose of bypassing traffic congestion CAPITO, and Mr. GILLMOR. sense of the House of Representatives relat- on the nearest international bridge serving H.R. 2768: Mr. BASS. ing to the extraordinary contributions re- the area in which such ports are located; to H.R. 2821: Mrs. NAPOLITANO and Ms. MCCOL- sulting from the Hubble Space Telescope to the Committee on Ways and Means. LUM. scientific research and education, and to the By Mr. GILCHREST: H.R. 2823: Mr. BOUCHER and Mr. need to reconsider future service missions to H.R. 3883. A bill to reauthorize the Atlantic HOSTETTLER. the Hubble Space Telescope; to the Com- Striped Bass Conservation Act; to the Com- H.R. 2824: Mr. MILLER of Florida and Mr. mittee on Science. mittee on Resources. WAXMAN. By Mr. GONZALEZ: f H.R. 2863: Mr. PAYNE. H.R. 3884. A bill to designate the Federal H.R. 2864: Mr. HENSARLING. building and United States courthouse lo- ADDITIONAL SPONSORS H.R. 2900: Mrs. BONO. cated at 615 East Houston Street in San An- Under clause 7 of rule XII, sponsors H.R. 2928: Mr. HOEKSTRA, Mr. FILNER, and tonio, Texas, as the ‘‘Hipolito F. Garcia Fed- were added to public bills and resolu- Mr. CHOCOLA. eral Building and United States H.R. 2932: Mr. HINCHEY and Ms. ROYBAL-AL- tions as follows: Courthouse‘‘; to the Committee on Transpor- LARD. tation and Infrastructure. H.R. 284: Mr. BISHOP of Utah, Mrs. KELLY, H.R. 2967: Mr. SAXTON and Mr. WHITFIELD. By Mr. HOEKSTRA: and Mr. LAHOOD. H.R. 2997: Mr. BRADY of Pennsylvania, Ms. H.R. 3885. A bill to direct the Commandant H.R. 290: Mrs. NAPOLITANO. KAPTUR, and Mr. CRAMER. of the Coast Guard to convey a Coast Guard H.R. 339: Mr. TERRY. H.R. 3042: Mr. SAM JOHNSON of Texas. 44-foot Motor Life Boat to the city of H.R. 432: Mr. ENGEL. H.R. 3049: Mr. KUCINICH and Mr. RUSH. Ludington, Michigan; to the Committee on H.R. 545: Mr. ISAKSON. H.R. 3103: Mr. MCINTYRE and Ms. DELAURO. Transportation and Infrastructure. H.R. 577: Mr. BISHOP of Georgia and Mr. H.R. 3115: Mr. BEREUTER. By Mr. NEUGEBAUER: STRICKLAND. H.R. 3204: Mr. WEXLER and Mr. PALONE. H.R. 3886. A bill to amend the Food Secu- H.R. 594: Mr. MURTHA and Mr. WOLF. H.R. 3213: Mr. CALVERT, Mr. CULBERSON, rity Act of 1985 to expand the pilot program H.R. 677: Mr. THOMPSON of California and Mr. BONNER. for the enrollment of certain wetlands and H.R. 685: Mrs. NAPOLITANO. H.R. 3243: Mr. BOEHLERT and Mr. SNYDER. its buffer acreage in the conservation reserve H.R. 716: Mr. CUNNINGHAM and Mr. H.R. 3355: Mr. PAYNE. program to include the enrollment of certain MCDERMOTT. H.R. 3361: Mr. WAXMAN, Mr. OLVER, and Mr. playas and its buffer acreage, and for other H.R. 717: Mr. WU. PLATTS. purposes; to the Committee on Agriculture. H.R. 727: Mr. GONZALEZ. H.R. 3362: Mr. BISHOP of Georgia. By Mr. RODRIGUEZ (for himself, Ms. H.R. 745: Mr. BLUMENAUER. H.R. 3370: Mr. ANDREWS, Mr. PALLONE, Mr. ROYBAL-ALLARD, Ms. JACKSON-LEE of H.R. 857: Mr. MOORE. LANGEVIN, Mr. ISRAEL, Mr. BOEHLERT, Mr. Texas, Ms. LOFGREN, Mrs. TAUSCHER, H.R. 918: Mr. HALL and Mr. MARSHALL. ACKERMAN, Mr. NADLER, Mr. HOUGHTON, and Mrs. CHRISTENSEN, Mr. ENGEL, Mr. H.R. 973: Mr. ENGLISH and Mr. WALSH. Mr. OBERSTAR. ABERCROMBIE, Mr. DOGGETT, Mr. H.R. 976: Mr. GONZALEZ. H.R. 3403: Mr. ISAKSON. HOLDEN, Mr. WAXMAN, Mr. GREEN- H.R. 1064: Mr. TOWNS, Mr. OWENS, and Mr. H.R. 3416: Mr. PASTOR, Mr. ISRAEL, Mr. WOOD, Mr. DAVIS of Illinois, Mrs. ANDREWS. JEFFERSON, and Mrs. NAPOLITANO.

VerDate jul 14 2003 02:20 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00076 Fmt 4634 Sfmt 0634 E:\CR\FM\A03MR7.054 H03PT1 March 3, 2004 CONGRESSIONAL RECORD — HOUSE H831

H.R. 3425: Mr. STARK. Mrs. MCCARTHY of New York, and Ms. NOR- MATHESON, Mr. OLVER, Ms. ESHOO, Mr. H.R. 3441: Mr. ISRAEL, Mr. BACHUS, Ms. TON. GREEN of Texas, and Mr. CONYERS. ROS-LEHTINEN, Ms. EDDIE BERNICE JOHNSON H.R. 3737: Mr. VITTER and Mr. BAKER. H. Con. Res. 363: Mr. SAXTON. of Texas, Mr. SANDLIN, Mr. SIMMONS, Mr. H.R. 3743: Mr. HOUGHTON. H. Con. Res. 367: Mr. KIRK, Mr. ROHRABACHER, Ms. JACKSON-LEE of Texas, H.R. 3791: Mr. BURR. HOSTETTLER, Mr. HUNTER, and Mr. SKELTON. Mr. JEFFERSON, Mr. VISCLOSKY, Mr. FROST, H.R. 3795: Mr. PALLONE. H. Res. 60: Mr. GREENWOOD. and Mr. LEACH. H.R. 3800: Mr. PAUL, Mr. BAKER, Mr. JONES H. Res. 446: Mr. FEENEY. H.R. 3473: Ms. MCCARTHY of Missouri, Mr. of North Carolina, Mr. LINDER, Mr. FORBES, H. Res. 466: Ms. BERKLEY, Mr. KILDEE, Mrs. HAYWORTH, Mr. MCDERMOTT, Mr. CARDOZA, Mr. MANZULLO, and Mr. HOSTETTLER. BIGGERT, and Mr. KENNEDY of Rhode Island. and Mr. FATTAH. H.R. 3815: Mr. HASTINGS of Florida and Ms. H. Res. 514: Mr. GORDON. H.R. 3482: Mr. GORDON. NORTON. H. Res. 524: Mrs. LOWEY, Mr. GRIJALVA, Mr. H.R. 3507: Mrs. TAUSCHER, Ms. LINDA T. H.R. 3839: Mr. CASE. MCGOVERN, Mr. TOWNS, Mr. LEVIN, and Mr. SANCHEZ of California, and Ms. ESHOO. H.R. 3853: Mr. MILLER of Florida. SANDERS. H.R. 3865: Ms. SLAUGHTER, Mr. MCGOVERN, H.R. 3519: Mr. BROWN of Ohio, Mr. NADLER, H. Res. 540: Mr. BEREUTER, Mr. BLUNT, Ms. Mr. CASE, Mr. FILNER, Mr. HINCHEY, Ms. NOR- Ms. SCHAKOWSKY, Mr. MARKEY, and Mr. LAN- LEE, Mr. TANCREDO, and Mr. MCCOTTER. TOS. TON, Mr. MCDERMOTT, and Mr. BERRY. H.R. 3574: Mr. CRANE, Mr. ISRAEL, Mr. RYUN H.R. 3866: Mr. SCOTT of Virginia. of Kansas, Mr. ISSA, Ms. GINNY BROWN-WAITE H.R. 3867: Mr. OLVER. f of Florida, Ms. MCCARTHY of Missouri, and H. Con. Res. 173: Mr. VISCLOSKY. Mr. MEEHAN. H. Con. Res. 257: Mr. MILLER of Florida. AMENDMENTS H.R. 3658: Mr. SPRATT and Mrs. KELLY. H. Con. Res. 298: Mr. CRAMER. H.R. 3676: Mr. PALLONE and Mr. WYNN. H. Con. Res. 310: Mr. DEAL of Georgia. Under clause 8 of rule XVIII, pro- H.R. 3678: Mr. DAVIS of Illinois and Mrs. H. Con. Res. 332: Mr. GERLACH, Mr. FORD, posed amendments were submitted as DAVIS of California. Mr. MCCRERY, Mr. FRANKS of Arizona, Mr. follows: H.R. 3707: Ms. GINNY ROWN AITE ESSIONS ILL ALONEY B -W of Flor- S , Mr. H , and Mrs. M . H.R. 3752 ida, Mr. EDWARDS, Mrs. NAPOLITANO, Mr. H. Con. Res. 352: Mr. DAVIS of Florida, Mr. SANDLIN, Mr. GOODLATTE, Mr. HONDA, Ms. CARSON of Indiana, Mr. WEXLER, OFFERED BY: MR. FLAKE RUPPERSBERGER, Mr. CHANDLER, Mr. NEAL of Mr. MEEKS of New York, and Mr. STARK. AMENDMENT NO. 2: In section 3(c)(22), in Massachusetts, and Ms. SCHAKOWSKY. H. Con. Res. 356: Mr. SCHIFF, Mr. BISHOP of each of the proposed paragraphs (1), (2), and H.R. 3712: Mr. MCNULTY, Mr. WEXLER, Mr. Georgia, Mr. MCGOVERN, Ms. MILLENDER- (3), strike ‘‘such sums as may be necessary’’ NADLER, Ms. ROYBAL-ALLARD, Mr. TOWNS, MCDONALD, Ms. WATSON, Mr. FATTAH, Mr. and insert ‘‘$11,776,000’’.

VerDate jul 14 2003 03:46 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00077 Fmt 4634 Sfmt 0634 E:\CR\FM\A03MR7.058 H03PT1 E PL UR UM IB N U U S Congressional Record United States th of America PROCEEDINGS AND DEBATES OF THE 108 CONGRESS, SECOND SESSION

Vol. 150 WASHINGTON, WEDNESDAY, MARCH 3, 2004 No. 26 Senate The Senate met at 9:30 a.m, and was through the morning to begin working take concepts of business leadership called to order by the President pro through the amendments as they are and apply it to education K through 12. tempore (Mr. STEVENS). offered. As we all know, every successful Over the last couple of weeks we have company is led by a successful CEO. PRAYER been attempting to work out an agree- Successful schools, in turn, are really The Chaplain, Dr. Barry C. Black, of- ment for consideration of the bill with no different. Great principals make for fered the following prayer: the Democratic leadership. With the great schools. Really, it makes sense. Let us pray. March 1 deadline behind us, it is imper- New Leaders for New Schools trains Eternal Lord God, You are the source ative we attempt to consider this bill outstanding individuals to become out- of every blessing. Thank You for Your in an expeditious way. We have been standing school principals. The pro- unfailing love. Lord, we know that You unable, unfortunately, to reach agree- gram draws applicants from all walks want our hearts more than anything ment with our colleagues on the other of life, from former bankers and dot we have, and we would give them to side of the aisle to limit the nature of commers, to teachers and, indeed, re- You. Forgive us when we forget to see the amendments to the underlying bill. tired principals. What they share is a our challenges from a faith perspec- Thus, we are proceeding today in good deep belief in the potential of every tive. Remind us that You are an ever faith and hope we can consider related child to succeed. These committed in- present help for all our troubles. amendments in order to make progress. dividuals are sent into urban school Inspire our Senators today. May they Again, the March 1 deadline has passed. districts to turn around poor per- build their hope on You. As they are It is incumbent upon us to address this forming schools. As they prove their effectiveness, they can earn flexibility in pressed by many issues, help them to bill in an organized and expeditious hiring and carrying out reforms. slow down long enough to hear Your way. Rollcall votes can be expected today In Memphis, New Leaders for New voice. Cheer our hearts with the knowl- Schools will recruit and develop 60 new edge that You will always sustain us. in relation to the Jumpstart JOBS bill. We will alert all Members as the votes principals over 3 years to serve in the And, Lord, bless our military. public school system. City leaders are We pray this in Your holy Name. are scheduled. It is critical that we work aggressively on the bill Wednes- rightly excited about this great oppor- Amen. tunity. The No Child Left Behind Act day, Thursday, and Friday of this f does set high standards, and a strong week. Next week we will be going to and effective school principal is key to PLEDGE OF ALLEGIANCE the budget. meeting these goals. The PRESIDENT pro tempore led the f I should note that 45 percent of Mem- Pledge of Allegiance, as follows: NEW LEADERS FOR NEW SCHOOLS phis school principals are eligible for I pledge allegiance to the Flag of the retirement in the next 3 years. Train- Mr. FRIST. Mr. President, I want to United States of America, and to the Repub- ing the next generation of principals is take several minutes to comment on lic for which it stands, one nation under God, critical. indivisible, with liberty and justice for all. some good news from Tennessee, good I am excited for the parents and the f news from Tennessee that underscores teachers of Memphis. I am especially the importance of having a good, excited for the schoolchildren of Mem- RECOGNITION OF THE MAJORITY strong leader as principal of K through LEADER phis. With strong and motivated lead- 12 schools. ership at the top, they will have even The PRESIDENT pro tempore. The Last month, the national, nonprofit more opportunities to realize their po- majority leader is recognized. New Leaders for New Schools chose the tential. f city of Memphis to participate in its Every child can learn. Every child education program. Memphis joins SCHEDULE can succeed. New Leaders for New other cities—Chicago and New York Schools is one more step in moving our Mr. FRIST. Mr. President, this morn- and Washington—as a participant in education system forward. ing there will be a period of morning this new and innovative reform effort I yield the floor. business until 10:30 a.m. Following in education. The program is called f morning business, the Senate will New Leaders for New Schools. It is the begin consideration of S. 1637, the brainchild of John Schnur, a young so- RECOGNITION OF THE MINORITY Jumpstart JOBS or, as it is also cial entrepreneur and education expert. LEADER known, the FSC/ETI bill. Senators He came up with the idea while at Har- The PRESIDENT pro tempore. The GRASSLEY and BAUCUS will be here vard Business School. His idea was to Democratic leader is recognized.

∑ This ‘‘bullet’’ symbol identifies statements or insertions which are not spoken by a Member of the Senate on the floor.

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VerDate jul 14 2003 01:25 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00001 Fmt 4624 Sfmt 0634 E:\CR\FM\A03MR6.000 S03PT1 S2020 CONGRESSIONAL RECORD — SENATE March 3, 2004 IRAQ INTELLIGENCE AND There was a consensus among the in- tion officials: if addressed effectively, POSTWAR PLANNING telligence community that removing the transition will be smoother; if ig- Mr. DASCHLE. Mr. President, in re- Saddam would be the easiest part of nored, the transition will be more dif- cent weeks, Americans have witnessed our efforts to secure and rebuild Iraq. ficult. More difficult for our troops and a steady stream of reports that raise Our intelligence community, our more difficult for the Iraqi people. grave questions about the accuracy of military, and numerous independent Unfortunately, the administration statements made by senior Bush ad- groups all concurred in the assessment apparently chose to ignore these and ministration officials leading up to the that our gravest challenges would many other similar findings offered up war in Iraq. come in the days after Saddam was by other groups. In fact, news reports The unequivocal administration pro- ousted. indicate that White House and senior nouncements that Saddam Hussein The greatest difficulty, all agreed, Defense Department civilian officials possessed weapons of mass destruction, would come in the days following the actually worked to exclude people who was pursuing nuclear capabilities, and toppling of Saddam Hussein. Senior ad- worked on or shared the views con- had close ties with al-Qaida have not ministration policymakers were retained in the Future of Iraq report— been proven or been proven unequivo- peatedly warned by other officials views that have proven to be 100 per- cally wrong. within the government, as well as a cent correct. Implications of these intelligence raft of independent outside experts, to One of the most comprehensive re- failures are far-reaching. While Sad- plan accordingly. ports about this issue can be found in dam Hussein may be in prison, just this Months before the start of the con- James Fallows’ article in the January/ week CIA Director Tenet indicated flict, these officials and experts care- February 2004 Atlantic Monthly enti- America is still the target of terrorists fully examined these issues and offered tled ‘‘Blind into Baghdad.’’ who seek to kill as many Americans as concrete proposals to maximize our I highly commend this article to my possible in any way available to them. chances for bringing about a stable colleagues. At no time in our Nation’s history Iraq while minimizing the risks to our Unfortunately, the many warnings has the integrity of the people who use troops and our taxpayers. about post-war Iraq fell upon deaf ears intelligence and the people who For instance, as far back as March in the administration. For a variety of produce intelligence been more vital to 2002, a year before the invasion, the reasons, senior administration officials national security. Americans need to State Department was working on a $5 in the White House and senior civilians have confidence in both our policy- million project entitled the Future of in the Defense Department ignored makers and our intelligence commu- Iraq. Experience from previous con- these warnings, instead apparently opt- nity. To rebuild that confidence, Amer- flicts demonstrated the importance of ing to rely on dubious sources to back icans have a right to know how the ad- preparing in advance for our postwar up their rosy predictions about how our ministration and how our intelligence duties. troops would be received by Iraqis and community could have been so wrong And experience from the past gave us how smooth the transition would be. on matters of such grave import. For example, the administration was For a failure this massive, every as- all a guide as to what to expect in Iraq. Although there were many other offi- repeatedly pressed for an estimate be- pect of America’s national security fore the start of the war on the number policymaking process should be put cials and organizations making similar assessments, the State Department’s of troops and the cost of the operation. under the microscope: How we collect Even though press reports indicate information, how we analyze it, how it Future of Iraq project provides some useful insights into the information administration officials had signed off gets interpreted by administration offi- on a war plan in November 2002 that cials, and how the Senate performs its available to the administration had it spelled out the size of the forces nec- oversight responsibilities. chose to listen. essary for an Iraq mission, the admin- Much of the discussion about our In its 13-volume study plus a one-vol- Iraq intelligence failures thus far has ume summary and overview, the Fu- istration persistently claimed not to focused on our incorrect assessments of ture of Iraq project reached some pre- know the size of the forces needed or the threat posed by Saddam Hussein. scient conclusions. their cost. As late as February 2003, 2 months While important, there is another vital First, the project said Iraq would be piece of this story that has been over- disorderly after liberation and stressed after the President had authorized the looked until this point. That is, the ad- that the days immediately after libera- deployment of 200,000 troops to the re- ministration’s failure to plan for post- tion would be critical—to both those gion and less than 2 months before the war Iraq and the consequences that who seek to work with us and those start of the conflict, Deputy Defense would arise from toppling Saddam Hus- who do not. Secretary Wolfowitz said, ‘‘Fundamen- sein. The removal of Saddam’s regime will pro- tally, we have no idea what is needed The administration’s myopic ap- vide a power vacuum and create popular unless and until we get there on the proach to planning for post-Saddam anxieties about the viability of all Iraqi in- ground.’’ Iraq continues to have consequences stitutions . . . the traumatic and disruptive Even worse, the administration sug- for the safety of our troops and the events attendant to the regime change will gested that there would be no cost at long-term security of our Nation and affect all Iraqis, both Saddam’s conspirators all. and the general populace. its interests. As a result, it is critical Administration officials stated that that the Nation learn more about why Second, this report stressed the im- the proceeds from the sale of Iraqi oil the administration failed to plan for portance of restoring basic services as would be used to pay for the American the contingencies of a post-Saddam quickly as possible after the regime military presence. Iraq. As officials from the Bush admin- change. The report ‘‘stressed the im- On March 27, 8 days after the war had istration, the United Nations, and the portance of getting the electrical grid started, Wolfowitz was again pressed Iraq Governing Council seek to reach up and running immediately—[this is] on a figure and indicated that whatever agreement on the administration’s key to water systems, jobs. [This] it turned out to be, Iraq’s oil supplies third and latest proposal for forming could go a long way to determining would keep it low: ‘‘There’s a lot of the first official post-Saddam govern- Iraqis attitudes’ toward coalition money to pay for this. It doesn’t have ment, we would be wise to look back at forces.’’ to be U.S. taxpayer money. We are what went wrong. Third, the report warned about the dealing with a country that can really A thorough, bipartisan investigation problems created by a wholesale demo- finance its own reconstruction and rel- is warranted. bilization of the Iraqi military. atively soon.’’ What makes the unfolding evidence The decommissioning of hundreds of thou- In April, after more than a month of of insufficient post-war planning most sands of trained military personnel that [a conflict, Andrew Natsios, the director troubling is that, in this instance, con- rapid purge] implies could create social prob- of USAID, said the total cost to the trary to the questions of weapons of lems. taxpayer would be no more than $1.7 mass destruction, it appears that our Each of these conclusions should billion. ‘‘We have no plans for any fur- intelligence was right. have waved a red flag to administra- ther-on-funding for this.’’

VerDate jul 14 2003 01:25 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00002 Fmt 4624 Sfmt 0634 E:\CR\FM\G03MR6.004 S03PT1 March 3, 2004 CONGRESSIONAL RECORD — SENATE S2021 The administration either knew bet- in return, I cannot help but think: Did Mr. President, we will soon begin deter at the time or should have known we do right by them? Did we do every- bating the merits of the tax bill that better. thing possible to put them in a position will bring the United States into com- And our troops and the American to succeed at the least possible risk? pliance with our World Trade Organiza- people certainly deserved better. Over Did we provide them with a plan for tion’s obligations and assist domestic 500 Americans have been killed and success and the tools needed to carry it manufacturers. I understand this bill over 3,000 wounded in Iraq. Unfortu- out? has been renamed the Jumpstart JOBS nately, these numbers are likely to In a statement last year, General An- Act, referring to the number of manu- continue to grow before our mission thony Zinni, one of the most respected facturing jobs that have been lost in there is complete. and distinguished military leaders this the past few years, whether it is from We have already appropriated over country has produced, commented on businesses relocating their plants over- $150 billion for this operation, and this what we owed those who we placed in seas, the outsourcing of jobs, or in- cost could easily double before we are harm’s way. creased efficiency that does not require through. He said: as much manual labor. Let me take another example—the They should never be put on a battlefield I believe that every Senator in this administration’s statements about the without a strategic plan, not only for the body wants to help those Americans post-war environment we would en- fighting—our generals will take care of who have been laid off to find new em- that—but for the aftermath and winning counter and the challenges we would ployment and to provide assistance to that war. Where are we, the American peo- our domestic manufacturers that will face. ple, if we accept this, if we accept this level Although there are a few instances of sacrifice without that level of planning? lead to real job creation. But when we talk about job creation, too often this where administration officials went on The administration based its post- body overlooks a project that would the record before the war warning that war planning on blind hope, and hope is produce those jobs for Americans, that a war with Iraq could require a lengthy not a plan. We owe it to our troops and would create jobs in all 50 States, and commitment, administration officials ourselves to determine whether we did not just a few jobs but by at least one repeatedly painted the most optimistic everything we could to succeed in Iraq. estimate we would create over 1 mil- portrait possible in order to gain sup- Our success in Iraq and future conflicts lion jobs across the country. port for its strategy. depends on it. Our need to ensure that Vice President CHENEY’s remarks 3 Certainly, the number of jobs nation- we do right by our troops demands it. wide will at a minimum—at a min- days before the start of the war typify I yield the floor. imum—be in the thousands, and that much of what the administration was f telling the American public. project I am speaking of is the con- When asked if the American people MORNING BUSINESS struction of a natural gas pipeline from are prepared for a long, costly battle The PRESIDENT pro tempore. Under Alaska to the lower 48. with significant casualties, the Vice the previous order, there will be a pe- With the reality in mind that this project will lead to real job creation, I President said, ‘‘Well, I don’t think it’s riod for the transaction of morning would like to speak to the body this likely to unfold that way . . . because business until 10:30, with the time morning about three very exciting an- I really do believe we will be greeted as equally divided, and the time under Re- nouncements relating to the Alaska liberators.’’ publican control to be equally divided natural gas pipeline. This tragic miscalculation allowed between the Senator from Alaska, Ms. Three consortiums have filed applica- the administration to abandon the in- MURKOWSKI, and the Senator from tions to build a gas pipeline from Alas- telligence-based, analytical process Maine, Ms. COLLINS. Mr. REID. Mr. President, I have a ka’s North Slope. These proposals needed to plan successfully for the oc- would transport the 35 trillion cubic cupation of Iraq. The administration unanimous consent request I wish to make. feet of known technically recoverable sent a smaller force than our senior reserves to the starved markets in the military officials initially rec- The PRESIDENT pro tempore. The Senator is recognized. lower 48. This would happen at a rate ommended. of roughly 4.5 billion cubic feet per day. Our personnel were not suitably pre- Mr. REID. Mr. President, we have Many believe there is upwards of 100 pared for the immense economic, so- only 40 minutes left until 10:30 a.m. We trillion cubic feet of natural gas on the cial, and political complexities that we have on our side, and I am sure on the North Slope and quite possibly more should have known would inevitably other side, more than 20 minutes. On our side, the Senator from Oregon than that. arise after the fall of Saddam Hussein. The first announcement from And our troops and the American peo- wishes to speak for 15 minutes, the Senator from Connecticut wishes to MidAmerican Energy Holdings Com- ple were not adequately equipped for pany, a major U.S. pipeline company the guerrilla tactics that have become speak for 10 minutes, which is 25 minutes. I don’t know how much total and a subsidiary of Berkshire Hatha- all too common since President Bush way whose chief investor is financier declared an end to major combat oper- time the two Senators on the majority would like. I am sure it is more than 20 Warren Buffett. Partnering with ations. MidAmerican will be Cook Inlet Re- Overall, the administration’s overly minutes total. I ask unanimous consent that the gional Corporation and Pacific Star optimistic attitude about post-war Iraq time be extended to 25 minutes on each Energy, which is a consortium of Alas- has contributed to a far more costly side for morning business—not in addi- ka Native corporations. and arduous effort than needed to be tion to but 25 minutes total to each This is great news for Alaska, and it the case. side. is great news for America. Individual Mr. President, not long ago, many of The PRESIDENT pro tempore. On Alaskans, Alaska Native corporations, my colleagues and I had the honor of both sides, for a total of 50 minutes. and Alaska-owned corporations will having dinner with more than 100 sol- Mr. REID. A total of 50 minutes, yes, have ownership opportunities in the diers and their families at Walter Reed and that on our side, the Senator from pipeline under this proposal—this is Army Medical Center. These soldiers Connecticut be recognized for 10 min- good for Alaska’s economy—and over- had all been wounded while serving utes and the Senator from Oregon be sight of the main transportation their country in Iraq. I hope my col- recognized for 15 minutes. project that will be used to move Alas- leagues will take the opportunity to The PRESIDENT pro tempore. With- ka’s commonly owned resources to visit these young men and women. out objection, it is so ordered. The Sen- market. After seeing first-hand the kind of peo- ator from Alaska, Ms. MURKOWSKI, is Rather than just benefit from the ple our country has produced, I have recognized. jobs and influx of short-term construc- never been more proud to be an Amer- f tion spending, as we saw during the ican. construction of the Trans-Alaska pipe- As I think of my night with these ALASKA GAS PIPELINE—NO line, this represents a significant long- brave men and women who have sac- LONGER A PIPE DREAM term benefit to individual Alaskans rificed so much and asked for so little Ms. MURKOWSKI. I thank the Chair. and their families.

VerDate jul 14 2003 01:25 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00003 Fmt 4624 Sfmt 0634 E:\CR\FM\A03MR6.002 S03PT1 S2022 CONGRESSIONAL RECORD — SENATE March 3, 2004 Following MidAmerican’s applica- benefit that Alaska gas means for To allay the major concerns of Mem- tion, the three major producing compa- America. bers that led to the filibuster on the nies in Alaska—ConocoPhillips, BP Ex- We have seen the volatility in the conference report on H.R. 6, the Sen- ploration, and ExxonMobile—also filed natural gas prices that had significant ator from New Mexico has introduced a an application with the State. These negative impacts on businesses and on new Energy bill that has significantly three companies hold the lion’s share families struggling to make ends meet less impact on the Federal budget. The of the right to produce North Slope and to keep their homes warm in the new Energy bill streamlines the per- natural gas. winter. The Alaska natural gas pipe- mitting process for the Alaska natural Late last week, a third group, which line will bring welcome stability and a gas pipeline, expedites judicial review is the Alaska Gasline Port Authority, measure of predictability to the nat- and provides for Federal loan guaran- filed another application to build a ural gas marketplace, as well as ben- tees and accelerated depreciation to pipeline. This third option proposes a efit consumers across the United lessen the cost of financing the project. liquefied natural gas project that States. To those of my colleagues in the Sen- would take natural gas from the North A couple of weeks ago, I had an op- ate who want to see this project built, Slope, liquefy it at tidewater in south portunity to read an article by a gen- who want to stop the rise of natural central Alaska for transport to the tleman by the name of Douglas Rey- gas prices, who want to ensure a reli- west coast markets in the lower 48. nolds, an associate professor of oil and able supply of natural gas, who want to In the end, the project that best energy economics at the University of create hundreds of thousands of jobs meets the needs of Alaska and the mar- Alaska Fairbanks. Mr. President, you across the country, I say pass this new kets will get built, but too often in our have read his book, I know, and have Energy bill. discussions we overlook the proposed had good things to say about what he The fiscal and regulatory provisions LNG project in favor of the land route has written in the past. I have a copy in the Energy bill are a prerequisite to that goes through Canada. Two years of the article. the construction of this project. The ago, Alaska voters indicated their de- I ask unanimous consent that the ar- longer we wait, the longer we allow sire for construction of an LNG ticle be printed in the RECORD imme- this important policy to remain caught project, but we have to make sure the diately following my remarks. in congressional gridlock, the more our numbers make sense and the proposal The PRESIDENT pro tempore. With- economy is going to suffer. Senators is good for the State of Alaska. out objection, it is so ordered. should not accept the status quo when I inserted language in the omnibus (See exhibit 1.) it comes to energy production. We appropriations bill that provides the Ms. MURKOWSKI. Mr. President, Mr. should instead work to pass this En- opportunity for the loan guarantees in- Reynolds brought out the point, which ergy bill so we can tell the American cluded in the Energy bill to be avail- I would like to emphasize, that pro- people help is on the way, so we can able for the LNG project option; that viding the financial incentives for a begin to rationalize the energy mar- is, if the Secretary of Energy deter- natural gas pipeline is ‘‘like a futures kets, and so we can work to become mines that it is the best project for contract to insure a more reliable nat- less dependent on foreign sources of en- purposes of this provision. It is some- ural gas supply source.’’ ergy. thing that needs to be proven by the Then he went on to say: The Alaska natural gas pipeline will project sponsors. Again, it dem- Congress has the option to assure a future be the largest construction project of onstrates the need for passage of the supply of Alaska gas at a reasonable price, its kind ever completed. I believe the Energy bill. and to get that supply on line sooner than Federal Government should play a role In the meantime, we have three ap- markets alone will do it. in reducing the risk involved with this plicants that are vying to build a gas The effect would be to make Alaska’s project, just as the Federal Govern- pipeline along the Alaska-Canadian gas supply less reliant on NLG export- ment played a role in bringing afford- highway, with a possible spur to south ers with less chance for market manip- able electricity to the South and to the central Alaska for an LNG project. ulation. Pacific Northwest. They have come forward, put their To me, this just hits it right on the The PRESIDING OFFICER (Mr. names on paper, and they are willing to head. Consumers are facing increasing GRAHAM of South Carolina). The Sen- begin negotiations with the State. For prices of natural gas. We have the op- ator’s time has expired. Ms. MURKOWSKI. The provisions in all of these reasons, Alaskans are ex- portunity to access a reliable supply of the Energy bill fulfill the Federal Gov- cited. energy that will be produced under I need to back up and clarify. When some of the most stringent environ- ernment’s role in bringing this pipeline the initial announcements were made mental standards in the world and we to fruition. I yield the floor. about filing the applications, both can do it now, before we become de- MidAmerican and the producers pendent on foreign sources. EXHIBIT 1 stressed the need to enact the regu- Douglas Reynolds and I are not the [From the Fairbanks Daily News-Miner, Feb. 22, 2004] latory streamlining, the judicial only ones who agree with this view- GAS LINE WILL HAPPEN, BUT ALASKA MUST streamlining, and the fiscal incentives point. Recognizing the United States NEGOTIATE need for natural gas, the Federal Re- that are currently contained in the En- (By Douglas Reynolds) serve Board Chairman Alan Greenspan ergy bill for the construction of a nat- During winter break in the Lower 48, I ural gas pipeline to go forward. There testified before the Congress last year heard over and over again concerns about should be no misunderstanding about that natural gas supplies represent a the price of natural gas. It is currently about this; the provisions in the Energy bill ‘‘serious problem’’ to the national $7 per thousand cubic feet, when only a few relating to these issues must be en- economy. months ago it was $4. Some fear there is acted into law if we hope to see posi- He noted U.S. policy with respect to market manipulation since stocks of gas in tive movement on this project. natural gas is contradictory as we en- reserve are adequate and the winter has not These filings we have in place now in courage consumption more than pro- been colder than normal so far. Investiga- duction. The chairman of the Energy tions have already started. the State are not a guarantee that the However, there is a reason behind the price project will be built. These applica- and Natural Resources Committee, rise. While this year there may be adequate tions represent the beginning of a dia- Senator DOMENICI, has worked dili- supplies of natural gas, next year may be a log between the applicants and the gently for more than a year to craft a different story. As I explain in my book, State of Alaska, but no one should in- bill that promotes many forms of re- Lower 48 and Southern Canadian natural gas terpret these events to mean that we newable energy, encourages energy ef- production will decline and the United do not need to pass the Energy bill. ficiency in the Federal Government States will face a supply gap with prices A cornerstone of our national energy and consumer products, increases the climbing above $10. However, supply is declining faster than I policy is the production of Alaskan gas authorization of the low-income home anticipated. The market may merely be an- and delivery of the needed resources to energy assistance program, and moves ticipating next year’s supply gap—increasing markets in the lower 48. Members on us closer to construction of the Alaska prices now to conserve reserves and to in- both sides of the aisle recognize the natural gas pipeline. crease production later.

VerDate jul 14 2003 01:25 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00004 Fmt 4624 Sfmt 0634 E:\CR\FM\G03MR6.007 S03PT1 March 3, 2004 CONGRESSIONAL RECORD — SENATE S2023 Of course it is theoretically possible to AMERICA’S ECONOMIC ISSUES papers and to read what I thought have market manipulation. But this is ex- Mr. DODD. Mr. President, I rise to might happen. I did not wish it to hap- tremely difficult to do and only works if the pen, but I thought it might happen in supply system is uncompetitive. The inter- very briefly address two subject matters. As I understand it, we will be the island nation of Haiti. nal North American market is not. Over the past weekend, I warned, as moving later this morning to this ETI Interestingly enough, if people in the others did, if we did not step up and try bill, or the extraterritorial income leg- Lower 48 are upset now about alleged manip- to support a democratically elected ulation of the natural gas market, they sure islation. My fervent hope is that in ad- government, albeit a flawed one but a won’t be happy when the United States dition to debating the underlying bill starts depending more heavily on imported democratically elected government, we itself, we will also have an opportunity would end up reaping what we sow. And liquefied natural gas. This is because with to raise questions about a staggering imported LNG, the LNG exporters them- we are doing just that. selves will be able to manipulate natural gas set of issues that is unfolding in our In the headlines this morning we prices and do it with impunity. It will be like country, and that is the outsourcing of read things such as: Haiti rebel says he OPEC all over again. jobs all across this Nation to foreign is in charge and has taken over down There is a mechanism to reduce LNG ex- lands. there. The man’s name is Guy Philippe. porter’s ability to manipulate the gas mar- We all understand this happens from This is a person who has a dreadful ket. It is to get Alaska natural gas to mar- time to time, but the explosion that human rights record. These are people ket more quickly. Congress still has a has occurred in the last 36 months is who ran death squads and are involved chance to change the Energy Bill by putting deeply alarming to many Americans. in the drug trades. They are now tak- back in the natural gas credit provisions. I We now have lost some 2.6 million to know such a move is highly unlikely, but it ing over. Anarchy apparently is reign- is certainly something each Alaskan should 2.7 million jobs over the last 36 months ing in the island nation of Haiti. be clambering for. in the manufacturing sector alone. Parts of this article state the coun- Interestingly enough, some experts would Many of these jobs are showing up ei- try is in my hands, this so-called rebel actually like to put in tax credits for Lower ther offshore in places such as India, leader says. Although American offi- 48 gas producers rather than for Alaska gas Bangladesh, the People’s Republic of cials denounced the armed rebels and even though Lower 48 producers are making China, or elsewhere. There is great con- said they should have no role in ruling money hand over foot. If more gas existed in cern in this country that we are losing Haiti, the American forces did not take the Lower 48, the current incentives would a very important strategic base in our any action to counter them at all. already be pushing supplies higher. Nation, not to mention these critically They have now taken over in that The fact of the matter is, the Alaska pipe- important jobs which can never be re- country and are apparently in charge line tax credits that were cut from the en- placed. down there. Anarchy is reigning. There ergy bill are like a futures contract to insure I inform my colleagues, and I know are bodies in the streets of Port-au- a more reliable natural gas supply source. Prince. In other words, Congress has the option to others feel similarly as I do, when we get to this bill there will be some op- What I feared might happen if we did assure a future supply of Alaska gas at a rea- not stand up and support a democratic sonable price, and to get that supply on line portunities to offer amendments and to sooner than markets alone will do it. The ef- address the very issue of American government—and again I will say a fect would be to make America’s gas supply jobs. flawed one, but when the United States less reliant on LNG exporters with less When we hear the administration decided we were going to put a foot in chance for market manipulation. say, as the chairman of the President’s the back of this elected President and Since consumers are already complaining Council of Economic Advisers did just send him out of the country, we warned over high natural gas prices, I would think a few days ago, that outsourcing of the vacuum would be filled by the that having such tax credits and a more reli- jobs was a good thing for America, we worst elements. In fact, I read over last able source of natural gas would be to Amer- begin to understand the depths of con- evening and this morning that Baby ica’s advantage. As it stands, American con- Doc Duvalier, the worst oppressive sumers will undoubtedly begin to complain cern people have when the administration fails to understand, at least leader in that country, and his father, ever louder when it’s apparent that Alaska wants to come back to Haiti under this gas is stuck on the North Slope just waiting through its leadership, how critically new operation that is going on down for the time when prices reach outrageous important it is that we stand up and do there. levels before reserves are finally developed. what we can to preserve critically im- I am terribly disappointed the admin- Needless to say, our Alaska congressional portant jobs, although not at the ex- delegation has fought hard to help make the istration failed to step to the plate. I pense of international trade. We all un- knew it was going to be difficult, but if gas line a reality, but now it is up to the derstand the importance of trade in a state to take the initiative. we cannot support democratically global economy, but we also under- So will the gas line happen? Yes. But Alas- elected governments—and again I will ka may have to negotiate with the producers stand if we are going to be a vibrant repeat, whatever problems Aristide or other pipeline companies to get a deal. I participant in a global economy that had, they were not a few; they were believe the best strategy for the state is to we have to produce the goods or the many. Nonetheless, he was chosen by give a progressive royalty and severance tax services to compete. the people of that country on two dif- package for all natural gas production. If not only low-income jobs are given ferent occasions, overwhelmingly so. If That means a low royalty and tax percent away but also high-technology jobs, in- we are unwilling to stand and back during low prices and a high royalty and tax formation technology jobs, and engi- percent during high prices. This will give democratically elected governments in neering jobs, for instance, are leaving, this hemisphere and give a wink and a Alaska much more revenue than the current then the ability of this country to com- royalty and severance tax system would give nod to those who replace governments because of anticipated high prices. It will pete in the 21st century is going to be that have been duly elected, we will see also quicken the pace of developing a pipe- severely disadvantaged. a repetition of what occurred in Haiti line. It does however imply more risk in I look forward to the coming hours elsewhere. We are seeing it in Caracas, Alaska’s revenues over the years. today, tomorrow, and possibly Friday, Venezuela, because we are endorsing The future price of natural gas will not be to engage with my colleagues in some the notion that when we don’t like lower than $4 on the East Coast and will eas- of this debate and discussion. It will be leaders in certain countries, we will ig- ily stay in the $6 to $10 range. the first time since we have returned nore the chaos that can result from This is because Atlantic Basin LNG pro- that we are going to have a real debate changing of government other than ducers will be slow to ramp up production and discussion about jobs in this coun- even while Lower 48 production goes into de- through the normal means of elected try and what we might do in this body government. That is something that cline. Plus LNG exporters can manipulate to address those issues. market prices exactly the way domestic sup- can happen, and it has happened. pliers have been accused of doing. Alaska can f So I rise to express my deep dis- take advantage of this and negotiate to get appointment that once again the ad- a line done quickly and with greater profits. HAITI ministration, in this hemisphere, is The PRESIDING OFFICER. The Sen- Mr. DODD. Secondly, on an unrelated just failing terribly, and Haiti is a clas- ator from Connecticut is recognized for matter, I was alarmed but not terribly sic example of failure. We now have a 10 minutes. surprised to pick up the morning news- huge mess on our hands.

VerDate jul 14 2003 01:25 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00005 Fmt 4624 Sfmt 0634 E:\CR\FM\A03MR6.004 S03PT1 S2024 CONGRESSIONAL RECORD — SENATE March 3, 2004 I pointed out the other day, 30 per- ing. Third and fourth quarter gross do- additional tax on the cost of making cent of the population of the Bahamas mestic product figures are up dramati- goods here rather than overseas. To is now Haitian. Thirty percent of that cally, the best two quarters since 1984, compete, American manufacturers country is now occupied by people who and analysts expect the gross domestic must somehow do more with less, move have fled Haiti because of the repres- product to grow by 5.7 percent this operations overseas, or get out of man- sion and economic conditions in that year, which would make 2004 the best ufacturing altogether. The end result is nation. Twenty percent of children year in the past 20 years. fewer jobs, a weaker economy, and a never reach the age of 5 in Haiti. The But even so, I don’t have to tell you manufacturing sector in crisis. average income is $250. It is a poor that parts of our economy simply are I believe a healthy manufacturing Black country, and as a result I don’t not sharing in this good news. Nowhere base is essential to our Nation’s future. think we give it the kind of support we is this more true than in the manufac- Not only is manufacturing a key should have been giving it. turing sector, where we have seen a source of skilled high-paying jobs, but In fact, over the last 36 months we steady erosion of good jobs. The num- it is also critical to our economic and embargoed any assistance directed to ber of American manufacturing jobs national security that we have the the Government of Haiti. What kind of has declined each year since the end of ability to manufacture the goods we a country do we live in today that 1997. In fact, if you look at the past 84 need in this country. turns to a nation only 300 or 400 miles months, since March of 1997, the num- For all of these reasons, I am pro- off our shore, with people living in des- ber of manufacturing jobs has declined posing the Growing Our Manufacturing perate conditions, with the highest each and every month, except for 7. Employment Act. This bill would rate of AIDS in the hemisphere, and we This loss of jobs has occurred under eliminate that 22-percent cost differen- have virtually nothing to say to them. both Democratic and Republican ad- tial that American manufacturers face Here we have today, once again, these ministrations, so this is not a partisan by providing a variety of tax incen- impoverished, poor people down there, issue. The final 3 years of the Clinton tives. For example, a jobs tax credit who had to live under dreadful govern- administration saw 27 months of manu- would be provided to manufacturers ments over the years, finally get one facturing job losses, and the greatest that employ displaced workers who are they elect democratically, and because single monthly decline in manufac- receiving trade adjustment assistance. we don’t like it, it is a failed leadership turing jobs occurred in July of 1998 That would help get those workers in our view, we walk away from it, and when 219,000 American manufacturing back to work. now you have thugs running the place jobs disappeared. In Maine alone, nearly 60 manufac- As I mentioned, nowhere is the re- again. It is not all our fault but, Mr. turers are currently TAA-certified, and ality of this job loss in the manufac- President a large part is. I am terribly more than 4,200 Maine workers have turing sector more acute than in my disappointed about what has happened, been deemed eligible for benefits under home State of Maine. The job losses and I wanted to rise this morning to TAA since the beginning of 2002. The during the past 3 years in the manufac- credit would only be available to man- express those sentiments. turing sector in Maine represent more I yield the floor. ufacturers that increase their employ- than 22 percent of my State’s total The PRESIDING OFFICER. The Sen- ment level. The availability of this manufacturing employment, a higher ator from Maine. credit would be a powerful incentive to percentage of manufacturing jobs lost hire workers who are receiving benefits f than in any other State. because they have been displaced. Why are American manufacturing GROWING OUR MANUFACTURING As important as it is to assist work- jobs disappearing? According to a new EMPLOYMENT ACT ers who are eligible for benefits under study conducted for the National Asso- Ms. COLLINS. Mr. President, few trade adjustment assistance, however, ciation of Manufacturers, one answer is issues are as important to the Amer- this alone is not sufficient to address the disparity in manufacturing costs in ican people than the availability of the crisis facing America’s manufac- the United States versus other coun- good jobs in their communities. Manu- turers. That is why my bill also in- tries. In fact, compared to other coun- facturing jobs have long provided qual- tries, it costs an average of 22 percent cludes a 2-year, across-the-board deduc- ity employment for generations of more to manufacture goods here. tion of 9 percent on domestic manufac- Americans. Today, however, we are los- While it would surprise no one that turing income, a tax break that would ing these jobs at a terrible rate, and no American manufacturers face higher not be available for income earned on State has been hit harder than my costs of doing business than manufac- overseas operations. This, too, would home State of Maine. turers in countries such as China or be a powerful incentive, a powerful tax According to a study by the National Mexico, it would be a mistake to as- break, to help encourage manufactur- Association of Manufacturers, on a per- sume that wage rates alone explain ers to keep their operations in Amer- centage basis Maine has lost more those differences. They do not. In fact, ica. It would help offset that disparity manufacturing jobs in the past 3 years the productivity of the American work- in costs. than any other State in the Nation. We er is unrivaled, allowing American In Maine, the sector that provides have lost nearly 18,000 manufacturing workers to receive more value in wages the most manufacturing jobs is the for- jobs during that period, good jobs that for the goods they produce. est products industry, an industry that once provided lifelong employment to As the NAM study indicates, if wages is struggling. Paper plant after paper Mainers in towns such as Millinocket, were the only factor, then U.S. manu- plant in Maine has been laying off Wilton, Waterville, Fort Kent, Dexter, facturers would be far more dominant workers or closing down altogether, Westbrook, and Sanford. in the global markets than the current hurting our economy and leaving thou- In response to this loss of manufac- trade situation suggests. sands of hard-working skilled workers turing jobs, I have introduced legisla- It is other structural costs, such as without jobs. tion, the Growing Our Manufacturing the high corporate tax rate we impose My proposal includes provisions to Employment Act, which is aimed at re- on manufacturers, that make it more encourage the recovery of the forest invigorating the domestic manufac- expensive to manufacture goods in the products industry, which is critically turing sector, boosting the level of do- United States relative to the costs important not only to my State but to mestic manufacturing, and preventing elsewhere. Indeed, the NAM study many other States, as well. the further loss of these important shows it is significantly cheaper to My bill, for example, provides a tax jobs. produce goods, even in high-wage in- credit for reforestation expenses and Mr. President, I know this is a major dustrialized countries such as Japan changes the tax treatment for wood problem in your State as well, and we and France. This fact illustrates the harvested on nonindustrial woodlots. have had many conversations on what critical impact these high structural These changes would both encourage we might do to help. costs have on manufacturers in the sound forestry stewardship practices At the national level, we are finally United States. and also increase the wood supply by beginning to see the economic recovery In essence, these costs have the same removing artificial barriers to sound for which Americans have been long- effect as a tax, as imposing a 22-percent woodlot management. Taken together,

VerDate jul 14 2003 01:25 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00006 Fmt 4624 Sfmt 0634 E:\CR\FM\G03MR6.012 S03PT1 March 3, 2004 CONGRESSIONAL RECORD — SENATE S2025 these provisions will help to ensure an a.m. having arrived, the Senate will øSec. 216. Repeal of special capital gains tax affordable, reliable wood supply upon proceed to the consideration of S. 1637, on aliens present in the United which so many manufacturing jobs in which the clerk will report. States for 183 days or more. Maine depend. The assistant legislative clerk read øTITLE I—PROVISIONS RELATING TO RE- Finally, this bill is designed to en- as follows: PEAL OF EXCLUSION FOR EXTRATERRITORIAL INCOME sure that only companies that are help- A bill (S. 1637) to amend the Internal Rev- ø ing to build America’s manufacturing enue Code of 1986 to comply with the World SEC. 101. REPEAL OF EXCLUSION FOR EXTRATERRITORIAL INCOME. base obtain its benefits. It has both a Trade Organization rulings on the FSC/ETI ø(a) IN GENERAL.—Section 114 is hereby re- benefit in a manner that preserves jobs and carrot and a stick approach. Companies pealed. production activities in the United States, to that move jobs offshore will see their ø(b) CONFORMING AMENDMENTS.— reform and simplify the international tax- benefits reduced. For example, they ø(1)(A) Subpart E of part III of subchapter ation rules of the United States, and for will not be able to claim that 9-percent N of chapter 1 (relating to qualifying foreign other purposes. deduction on operations that are lo- trade income) is hereby repealed. cated in the United States. Companies The Senate proceeded to consider the ø(B) The table of subparts for such part III that choose to invert their corporate bill, which had been reported from the is amended by striking the item relating to structure altogether in order to avoid Committee on Finance, with an amend- subpart E. ø U.S. taxes will not be eligible for this ment to strike all after the enacting (2) The table of sections for part III of subchapter B of chapter 1 is amended by credit at all. clause and inserting in lieu thereof the following: striking the item relating to section 114. The crisis in the manufacturing sec- ø(3) The second sentence of section tor demands our attention. It did not (Strike the part shown in black 56(g)(4)(B)(i) is amended by striking ‘‘or start yesterday, and it will not be re- brackets and insert the part shown in under section 114’’. solved tomorrow. Solutions can and italic.) ø(4) Section 275(a) is amended— should be sought today. S. 1637 ø(A) by inserting ‘‘or’’ at the end of para- The bill I have introduced is a good Be it enacted by the Senate and House of Rep- graph (4)(A), by striking ‘‘or’’ at the end of start, but additional remedies are need- resentatives of the United States of America in paragraph (4)(B) and inserting a period, and ed. Manufacturing jobs arise in part be- Congress assembled, by striking subparagraph (C), and ø(B) by striking the last sentence. cause some of our trading partners øSECTION 1. SHORT TITLE; AMENDMENT OF 1986 ø(5) Paragraph (3) of section 864(e) is simply do not play by the rules. The CODE; TABLE OF CONTENTS. ø(a) SHORT TITLE.—This Act may be cited amended— Presiding Officer has been a leader in ø as the ‘‘Jumpstart Our Business Strength (A) by striking: ø this area. Our Nation’s manufacturers (JOBS) Act’’. ‘‘(3) TAX-EXEMPT ASSETS NOT TAKEN INTO can compete against the best in the ø(b) AMENDMENT OF 1986 CODE.—Except as ACCOUNT.— ø world, but they cannot compete otherwise expressly provided, whenever in ‘‘(A) IN GENERAL.—For purposes of’’; and against nations that provide huge sub- this Act an amendment or repeal is ex- inserting: ø sidies and other help to their manufac- pressed in terms of an amendment to, or re- ‘‘(3) TAX-EXEMPT ASSETS NOT TAKEN INTO peal of, a section or other provision, the ref- ACCOUNT.—For purposes of’’, and turers. ø erence shall be considered to be made to a (B) by striking subparagraph (B). I hear from manufacturers in my ø(6) Section 903 is amended by striking State time and again whose efforts to section or other provision of the Internal Revenue Code of 1986. ‘‘114, 164(a),’’ and inserting ‘‘164(a)’’. compete successfully in a global econ- ø ø(c) TABLE OF CONTENTS.— (7) Section 999(c)(1) is amended by strik- omy simply cannot overcome the prac- ing ‘‘941(a)(5),’’. øSec. 1. Short title; amendment of 1986 Code; tices of the illegal pricing and sub- ø(c) EFFECTIVE DATE.— table of contents. sidies of nations such as China. That is ø(1) IN GENERAL.—The amendments made øTITLE I—PROVISIONS RELATING TO RE- by this section shall apply to transactions why I will soon be introducing a second PEAL OF EXCLUSION FOR bill that will help ensure that nations occurring after the date of the enactment of EXTRATERRITORIAL INCOME this Act. such as China are held fully account- øSec. 101. Repeal of exclusion for ø(2) BINDING CONTRACTS.—The amendments able for their actions by our trade rem- extraterritorial income. made by this section shall not apply to any edy laws. Unfair market conditions øSec. 102. Deduction relating to income at- transaction in the ordinary course of a trade cannot continue to cause our manufac- tributable to United States pro- or business which occurs pursuant to a bind- turers to hemorrhage jobs. duction activities. ing contract— I am hopeful that working together øTITLE II—INTERNATIONAL TAX ø(A) which is between the taxpayer and a on this and other legislative and ad- PROVISIONS person who is not a related person (as defined in section 943(b)(3) of such Code, as in ministrative proposals, we can take the øSubtitle A—International Tax Reform effect on the day before the date of the en- important steps needed to strengthen ø Sec. 201. 20-year foreign tax credit actment of this Act), and American manufacturers, to preserve carryforward. ø(B) which is in effect on September 17, ø our manufacturing capacity, and most Sec. 202. Look-thru rules to apply to divi- 2003, and at all times thereafter. of all, to help ensure that hard-working dends from noncontrolled sec- ø(d) REVOCATION OF SECTION 943(e) ELEC- Americans have the jobs they need and tion 902 corporations. TIONS.— øSec. 203. Foreign tax credit under alter- deserve. ø(1) IN GENERAL.—In the case of a corpora- native minimum tax. tion that elected to be treated as a domestic The PRESIDING OFFICER. The Sen- øSec. 204. Recharacterization of overall do- ator from Oregon. corporation under section 943(e) of the Inter- mestic loss. nal Revenue Code of 1986 (as in effect on the Mr. WYDEN. I thank the Chair. ø Sec. 205. Interest expense allocation rules. day before the date of the enactment of this (The remarks of Mr. WYDEN per- øSec. 206. Determination of foreign personal taining to the introduction of S. 2160 Act)— holding company income with ø(A) the corporation may, during the 1- are located in today’s RECORD under respect to transactions in com- year period beginning on the date of the en- ‘‘Statements on Introduced Bills and modities. actment of this Act, revoke such election, ef- Joint Resolutions.’’) øSubtitle B—International Tax fective as of such date of enactment, and Mr. WYDEN. Mr. President, I yield Simplification ø(B) if the corporation does revoke such the floor. øSec. 211. Repeal of foreign personal holding election— ø f company rules and foreign in- (i) such corporation shall be treated as a vestment company rules. domestic corporation transferring (as of such CONCLUSION OF MORNING øSec. 212. Expansion of de minimis rule date of enactment) all of its property to a BUSINESS under subpart F. foreign corporation in connection with an The PRESIDING OFFICER. Morning øSec. 213. Attribution of stock ownership exchange described in section 354 of such business is closed. through partnerships to apply Code, and in determining section 902 and ø(ii) no gain or loss shall be recognized on f 960 credits. such transfer. JUMPSTART OUR BUSINESS øSec. 214. Application of uniform capitaliza- ø(2) EXCEPTION.—Subparagraph (B)(ii) of STRENGTH (JOBS) ACT tion rules to foreign persons. paragraph (1) shall not apply to gain on any øSec. 215. Repeal of withholding tax on divi- asset held by the revoking corporation if— The PRESIDING OFFICER. Under dends from certain foreign cor- ø(A) the basis of such asset is determined the previous order, the hour of 10:30 porations. in whole or in part by reference to the basis

VerDate jul 14 2003 01:25 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00007 Fmt 4624 Sfmt 0634 E:\CR\FM\G03MR6.015 S03PT1 S2026 CONGRESSIONAL RECORD — SENATE March 3, 2004

of such asset in the hands of the person from ø(6) SPECIAL RULE FOR FARM COOPERA- ø‘‘(1) IN GENERAL.—The portion of the whom the revoking corporation acquired TIVES.—Determinations under this sub- modified taxable income which is attrib- such asset, section with respect to an organization de- utable to domestic production activities is ø(B) the asset was acquired by transfer scribed in section 943(g)(1) of such Code, as in so much of the modified taxable income for (not as a result of the election under section effect on the day before the date of the en- the taxable year as does not exceed— 943(e) of such Code) occurring on or after the actment of this Act, shall be made at the co- ø‘‘(A) the taxpayer’s domestic production 1st day on which its election under section operative level and the purposes of this sub- gross receipts for such taxable year, reduced 943(e) of such Code was effective, and section shall be carried out in a manner by ø(C) a principal purpose of the acquisition similar to section 250(h) of such Code, as ø‘‘(B) the sum of— was the reduction or avoidance of tax (other added by this Act. Such determinations shall ø‘‘(i) the costs of goods sold that are allo- than a reduction in tax under section 114 of be in accordance with such requirements and cable to such receipts, such Code, as in effect on the day before the procedures as the Secretary may prescribe. ø‘‘(ii) other deductions, expenses, or losses date of the enactment of this Act). ø(7) CERTAIN RULES TO APPLY.—Rules simi- directly allocable to such receipts, and ø(e) GENERAL TRANSITION.— lar to the rules of section 41(f) of such Code ø‘‘(iii) a proper share of other deductions, ø(1) IN GENERAL.—In the case of a taxable shall apply for purposes of this subsection. expenses, and losses that are not directly al- year ending after the date of the enactment ø(8) COORDINATION WITH BINDING CONTRACT locable to such receipts or another class of of this Act and beginning before January 1, RULE.—The deduction determined under income. 2007, for purposes of chapter 1 of such Code, paragraph (1) for any taxable year shall be ø‘‘(2) ALLOCATION METHOD.—The Secretary a current FSC/ETI beneficiary shall be al- reduced by the phaseout percentage of any shall prescribe rules for the proper alloca- lowed a deduction equal to the transition FSC/ETI benefit realized for the taxable year tion of items of income, deduction, expense, amount determined under this subsection by reason of subsection (c)(2), except that for and loss for purposes of determining income with respect to such beneficiary for such purposes of this paragraph the phaseout per- attributable to domestic production activi- year. centage for 2003 shall be treated as being ties. ø(2) CURRENT FSC/ETI BENEFICIARY.—The equal to 100 percent. ø‘‘(3) SPECIAL RULES FOR DETERMINING term ‘‘current FSC/ETI beneficiary’’ means ø(9) SPECIAL RULE FOR TAXABLE YEAR WHICH COSTS.— ø any corporation which entered into one or INCLUDES DATE OF ENACTMENT.—In the case of ‘‘(A) IN GENERAL.—For purposes of deter- more transactions during its taxable year be- a taxable year which includes the date of the mining costs under clause (i) of paragraph ginning in calendar year 2002 with respect to enactment of this Act, the deduction allowed (1)(B), any item or service brought into the which FSC/ETI benefits were allowable. under this subsection to any current FSC/ United States without a transfer price meet- ø(3) TRANSITION AMOUNT.—For purposes of ETI beneficiary shall in no event exceed— ing the requirements of section 482 shall be this subsection— ø(A) 100 percent of such beneficiary’s base treated as acquired by purchase, and its cost ø(A) IN GENERAL.—The transition amount period amount for calendar year 2003, re- shall be treated as not less than its value applicable to any current FSC/ETI bene- duced by when it entered the United States. A similar ficiary for any taxable year is the phaseout ø(B) the aggregate FSC/ETI benefits of rule shall apply in determining the adjusted percentage of the base period amount. such beneficiary with respect to transactions basis of leased or rented property where the ø(B) PHASEOUT PERCENTAGE.— occurring during the portion of the taxable lease or rental gives rise to domestic produc- ø(i) IN GENERAL.—In the case of a taxpayer year ending on the date of the enactment of tion gross receipts. using the calendar year as its taxable year, this Act. ø‘‘(B) EXPORTS FOR FURTHER MANUFAC- the phaseout percentage shall be determined øSEC. 102. DEDUCTION RELATING TO INCOME AT- TURE.—In the case of any property described under the following table: TRIBUTABLE TO UNITED STATES in subparagraph (A) that had been exported by the taxpayer for further manufacture, the The phaseout PRODUCTION ACTIVITIES. ø N ENERAL increase in cost or adjusted basis under sub- øYears: percentage is: (a) I G .—Part VIII of subchapter ø2004 ...... 80 B of chapter 1 (relating to special deductions paragraph (A) shall not exceed the difference ø2005 ...... 80 for corporations) is amended by adding at between the value of the property when ex- ø2006 ...... 60. the end the following new section: ported and the value of the property when ø(ii) SPECIAL RULE FOR 2003.—The phaseout ø‘‘SEC. 250. INCOME ATTRIBUTABLE TO DOMES- brought back into the United States after percentage for 2003 shall be the amount that TIC PRODUCTION ACTIVITIES. the further manufacture. ø bears the same ratio to 100 percent as the ø‘‘(a) IN GENERAL.—In the case of a cor- ‘‘(4) MODIFIED TAXABLE INCOME.—The term number of days after the date of the enact- poration, there shall be allowed as a deduc- ‘modified taxable income’ means taxable in- ment of this Act bears to 365. tion an amount equal to 9 percent of the come computed without regard to the deduc- ø(iii) SPECIAL RULE FOR FISCAL YEAR TAX- qualified production activities income of the tion allowable under this section. ø PAYERS.—In the case of a taxpayer not using corporation for the taxable year. ‘‘(e) DOMESTIC PRODUCTION GROSS RE- the calendar year as its taxable year, the ø‘‘(b) PHASEIN.—In the case of taxable CEIPTS.—For purposes of this section, the phaseout percentage is the weighted average years beginning in 2004, 2005, 2006, 2007, or term ‘domestic production gross receipts’ of the phaseout percentages determined 2008, subsection (a) shall be applied by sub- means the gross receipts of the taxpayer which are derived from— under the preceding provisions of this para- stituting for the percentage contained there- ø‘‘(1) any sale, exchange, or other disposi- graph with respect to calendar years any in the transition percentage determined tion of, or portion of which is included in the tax- under the following table: ø‘‘(2) any lease, rental, or license of, payer’s taxable year. The weighted average ø‘‘Taxable years The transition qualifying production property which was shall be determined on the basis of the re- beginning in: percentage is: manufactured, produced, grown, or extracted spective portions of the taxable year in each ø2004 ...... 1 in whole or in significant part by the tax- calendar year. ø2005 ...... 2 payer within the United States. ø (4) BASE PERIOD AMOUNT.—For purposes of ø2006 ...... 3 ø‘‘(f) QUALIFYING PRODUCTION PROPERTY.— this subsection, the base period amount is ø2007 or 2008 ...... 6. For purposes of this section— the aggregate FSC/ETI benefits for the tax- ø‘‘(c) QUALIFIED PRODUCTION ACTIVITIES IN- ø‘‘(1) IN GENERAL.—Except as otherwise payer’s taxable year beginning in calendar COME.—For purposes of this section— provided in this paragraph, the term ‘quali- year 2002. ø‘‘(1) IN GENERAL.—The term ‘qualified pro- fying production property’ means— ø(5) FSC/ETI BENEFIT.—For purposes of duction activities income’ means an amount ø‘‘(A) any tangible personal property, this subsection, the term ‘‘FSC/ETI benefit’’ equal to the applicable percentage of the ø‘‘(B) any computer software, and means— portion of the modified taxable income of ø‘‘(C) any property described in section ø(A) amounts excludable from gross in- the taxpayer which is attributable to domes- 168(f) (3) or (4). come under section 114 of such Code, and tic production activities. ø‘‘(2) EXCLUSIONS FROM QUALIFYING PRODUC- ø (B) the exempt foreign trade income of re- ø‘‘(2) APPLICABLE PERCENTAGE.—For pur- TION PROPERTY.—The term ‘qualifying pro- lated foreign sales corporations from prop- poses of this subsection, the term ‘applicable duction property’ shall not include— erty acquired from the taxpayer (determined percentage’ means— ø‘‘(A) consumable property that is sold, without regard to section 923(a)(5) of such ø‘‘(A) in the case of taxable years begin- leased, or licensed by the taxpayer as an in- Code (relating to special rule for military ning before 2012, a percentage equal to the tegral part of the provision of services, property), as in effect on the day before the domestic/worldwide fraction, ø‘‘(B) oil or gas (or any primary product date of the enactment of the FSC Repeal and ø‘‘(B) in the case of taxable years begin- thereof), Extraterritorial Income Exclusion Act of ning in 2012, a percentage (not greater than ø‘‘(C) electricity, 2000). 100 percent) equal to twice the domestic/ ø‘‘(D) water supplied by pipeline to the In determining the FSC/ETI benefit there worldwide fraction, and consumer, shall be excluded any amount attributable to ø‘‘(C) in the case of taxable years begin- ø‘‘(E) any unprocessed timber which is a transaction with respect to which the tax- ning after 2012, 100 percent. softwood, payer is the lessor unless the leased property ø‘‘(d) DETERMINATION OF INCOME ATTRIB- ø‘‘(F) utility services, or was manufactured or produced in whole or in UTABLE TO DOMESTIC PRODUCTION ACTIVI- ø‘‘(G) any property (not described in para- part by the taxpayer. TIES.—For purposes of this section— graph (1)(B)) which is a film, tape, recording,

VerDate jul 14 2003 02:24 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00008 Fmt 4624 Sfmt 0634 E:\CR\FM\A03MR6.036 S03PT1 March 3, 2004 CONGRESSIONAL RECORD — SENATE S2027 book, magazine, newspaper, or similar prop- the payment period described in section chapter 1 is amended by adding at the end erty the market for which is primarily top- 1382(a), the following new item: ical or otherwise essentially transitory in then such person shall be allowed an exclu- ø‘‘Sec. 250. Income attributable to domestic nature. sion from gross income with respect to such production activities.’’ For purposes of subparagraph (E), the term amount. The taxable income of the organiza- ø(e) EFFECTIVE DATE.— ‘unprocessed timber’ means any log, cant, or tion shall not be reduced under section 1382 ø(1) IN GENERAL.—The amendments made similar form of timber. by the portion of any such amount with re- by this section shall apply to taxable years ø‘‘(g) DOMESTIC/WORLDWIDE FRACTION.—For spect to which an exclusion is allowable to a ending after the date of the enactment of purposes of this section— person by reason of this paragraph. this Act. ø‘‘(1) IN GENERAL.—The term ‘domestic/ ø‘‘(B) SPECIAL RULES.—For purposes of ap- ø(2) APPLICATION OF SECTION 15.—Section 15 worldwide fraction’ means a fraction— plying subparagraph (A), in determining the of the Internal Revenue Code of 1986 shall ø‘‘(A) the numerator of which is the value qualified production activities income of the apply to the amendments made by this sec- of the domestic production of the taxpayer, organization under this section— tion as if they were changes in a rate of tax. and ø‘‘(i) there shall not be taken into account ø‘‘(B) the denominator of which is the in computing the organization’s modified øTITLE II—INTERNATIONAL TAX value of the worldwide production of the tax- taxable income any deduction allowable PROVISIONS payer. under subsection (b) or (c) of section 1382 (re- øSubtitle A—International Tax Reform ø‘‘(2) VALUE OF DOMESTIC PRODUCTION.—The lating to patronage dividends, per-unit re- øSEC. 201. 20-YEAR FOREIGN TAX CREDIT value of domestic production is the excess tain allocations, and nonpatronage distribu- CARRYFORWARD. of— tions), and ø(a) GENERAL RULE.—Section 904(c) (relat- ø‘‘(A) the domestic production gross re- ø‘‘(ii) the organization shall be treated as ing to carryback and carryover of excess tax ceipts, over having manufactured, produced, grown, or paid) is amended by striking ‘‘in the first, ø‘‘(B) the cost of purchased inputs allo- extracted in whole or significant part any second, third, fourth, or fifth’’ and inserting cable to such receipts that are deductible qualifying production property marketed by ‘‘in any of the first 20’’. under this chapter for the taxable year. the organization which its patrons have so ø(b) EXCESS EXTRACTION TAXES.—Para- ø‘‘(3) PURCHASED INPUTS.— manufactured, produced, grown, or ex- graph (1) of section 907(f) is amended by ø‘‘(A) IN GENERAL.—Purchased inputs are tracted. striking ‘‘in the first, second, third, fourth, any of the following items acquired by pur- ø‘‘(2) SPECIAL RULE FOR PARTNERSHIPS.— or fifth’’ and inserting ‘‘in any of the first chase: For purposes of this section, a corporation’s 20’’. ø‘‘(i) Services (other than services of em- distributive share of any partnership item ø(c) EFFECTIVE DATE.—The amendments ployees) used in manufacture, production, shall be taken into account as if directly re- made by this section shall apply to excess growth, or extraction activities. alized by the corporation. foreign taxes which (without regard to the ø‘‘(ii) Items consumed in connection with ø‘‘(3) COORDINATION WITH MINIMUM TAX.— amendments made by this section) may be such activities. The deduction under this section shall be al- carried to any taxable year beginning after ø‘‘(iii) Items incorporated as part of the lowed for purposes of the tax imposed by sec- December 31, 2004. property being manufactured, produced, tion 55; except that for purposes of section øSEC. 202. LOOK-THRU RULES TO APPLY TO DIVI- grown, or extracted. 55, alternative minimum taxable income DENDS FROM NONCONTROLLED ø‘‘(B) SPECIAL RULE.—Rules similar to the shall be taken into account in determining SECTION 902 CORPORATIONS. rules of subsection (d)(3) shall apply for pur- the deduction under this section. ø(a) IN GENERAL.—Section 904(d)(4) (relat- poses of this subsection. ø‘‘(4) ORDERING RULE.—The amount of any ing to look-thru rules apply to dividends ø‘‘(4) VALUE OF WORLDWIDE PRODUCTION.— other deduction allowable under this chapter from noncontrolled section 902 corporations) ø‘‘(A) IN GENERAL.—The value of worldwide shall be determined as if this section had not is amended to read as follows: production shall be determined under the been enacted. ø‘‘(4) LOOK-THRU APPLIES TO DIVIDENDS principles of paragraph (2), except that— ø‘‘(5) COORDINATION WITH TRANSITION FROM NONCONTROLLED SECTION 902 CORPORA- ø‘‘(i) worldwide production gross receipts RULES.—For purposes of this section— TIONS.— shall be taken into account, and ø‘‘(A) domestic production gross receipts ø‘‘(A) IN GENERAL.—For purposes of this ø‘‘(ii) paragraph (3)(B) shall not apply. shall not include gross receipts from any subsection, any dividend from a noncon- ø‘‘(B) WORLDWIDE PRODUCTION GROSS RE- transaction if the binding contract transi- trolled section 902 corporation with respect CEIPTS.—The worldwide production gross re- tion relief of section 101(c)(2) of the to the taxpayer shall be treated as income ceipts is the amount that would be deter- Jumpstart Our Business Strength (JOBS) described in a subparagraph of paragraph (1) mined under subsection (e) if such subsection Act applies to such transaction, and in proportion to the ratio of— were applied without any reference to the ø‘‘(B) any deduction allowed under section ø‘‘(i) the portion of earnings and profits at- United States. 101(e) of such Act shall be disregarded in de- tributable to income described in such sub- ø‘‘(5) SPECIAL RULE FOR AFFILIATED termining the portion of the taxable income paragraph, to GROUPS.— which is attributable to domestic production ø‘‘(ii) the total amount of earnings and ø‘‘(A) IN GENERAL.—In the case of a tax- gross receipts.’’. profits. payer that is a member of an expanded affili- ø(b) DEDUCTION ALLOWED TO SHAREHOLDERS ø‘‘(B) SPECIAL RULES.—For purposes of this ated group, the domestic/worldwide fraction OF S CORPORATIONS.— paragraph— shall be the amount determined under the ø(1) IN GENERAL.—Section 1363(b) (relating ø‘‘(i) EARNINGS AND PROFITS.— preceding provisions of this subsection by to computation of S corporation’s taxable in- ø‘‘(I) IN GENERAL.—The rules of section 316 treating all members of such group as a sin- come) is amended by striking ‘‘and’’ at the shall apply. gle corporation. end of paragraph (3), by striking the period ø‘‘(II) REGULATIONS.—The Secretary may ø‘‘(B) EXPANDED AFFILIATED GROUP.—The at the end of paragraph (4) and inserting ‘‘, prescribe regulations regarding the treat- term ‘expanded affiliated group’ means an and’’, and by adding at the end the following ment of distributions out of earnings and affiliated group as defined in section 1504(a), new paragraph: profits for periods before the taxpayer’s ac- determined— ø‘‘(5) the deduction under section 250 shall quisition of the stock to which the distribu- ø‘‘(i) by substituting ‘50 percent’ for ‘80 be allowed to the S corporation.’’ tions relate. percent’ each place it appears, and ø(2) INCREASE IN BASIS.—Section 1367(a)(1) ø‘‘(ii) INADEQUATE SUBSTANTIATION.—If the ø‘‘(ii) without regard to paragraphs (2), (3), (relating to increases in basis) is amended by Secretary determines that the proper sub- (4), and (8) of section 1504(b). striking ‘‘and’’ at the end of subparagraph paragraph of paragraph (1) in which a divi- ø‘‘(h) DEFINITIONS AND SPECIAL RULES.— (B), by striking the period at the end of sub- dend is described has not been substantiated, ø‘‘(1) EXCLUSION FOR PATRONS OF AGRICUL- paragraph (C) and inserting ‘‘, and’’, and by such dividend shall be treated as income de- TURAL AND HORTICULTURAL COOPERATIVES.— adding at the end the following new subpara- scribed in paragraph (1)(A). ø‘‘(A) IN GENERAL.—If any amount de- graph: ø‘‘(iii) LOOK-THRU WITH RESPECT TO scribed in paragraph (1) or (3) of section 1385 ø‘‘(D) any deduction allowed under section CARRYFORWARDS OF CREDIT.—Rules similar to (a)— 250.’’ subparagraph (A) also shall apply to any ø‘‘(i) is received by a person from an orga- ø(c) MINIMUM TAX.—Section 56(g)(4)(C) (re- carryforward under subsection (c) from a nization to which part I of subchapter T ap- lating to disallowance of items not deduct- taxable year beginning before January 1, plies which is engaged in the marketing of ible in computing earnings and profits) is 2003, of tax allocable to a dividend from a agricultural or horticultural products, and amended by adding at the end the following noncontrolled section 902 corporation with ø‘‘(ii) is allocable to the portion of the new clause: respect to the taxpayer. The Secretary may qualified production activities income of the ø‘‘(v) DEDUCTION FOR DOMESTIC PRODUC- by regulations provide for the allocation of organization which is deductible under sub- TION.—Clause (i) shall not apply to any any carryback of tax allocable to a dividend section (a) (determined as if the organization amount allowable as a deduction under sec- from a noncontrolled section 902 corporation were a corporation if it is not) and des- tion 250.’’ to such a taxable year for purposes of allo- ignated as such by the organization in a ø(d) CLERICAL AMENDMENT.—The table of cating such dividend among the separate cat- written notice mailed to its patrons during sections for part VIII of subchapter B of egories in effect for such taxable year.

VerDate jul 14 2003 01:25 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00009 Fmt 4624 Sfmt 0634 E:\CR\FM\A03MR6.036 S03PT1 S2028 CONGRESSIONAL RECORD — SENATE March 3, 2004

ø‘‘(iv) COORDINATION WITH HIGH-TAXED IN- sources within the United States previously single corporation. For purposes of the pre- COME PROVISIONS.—Rules similar to the rules allocated to those income categories. ceding sentence, the term ‘affiliated group’ of paragraph (3)(F) shall apply for purposes ø‘‘(B) INCOME CATEGORY.—For purposes of has the meaning given such term by section of this paragraph.’’. this paragraph, the term ‘income category’ 1504 (determined without regard to para- ø(b) CONFORMING AMENDMENTS.— has the meaning given such term by sub- graph (4) of section 1504(b)). ø(1) Section 904(d)(2)(E) is amended— section (f)(5)(E)(i). ø‘‘(3) TREATMENT OF TAX-EXEMPT ASSETS; ø(A) by inserting ‘‘or (4)’’ after ‘‘paragraph ø‘‘(4) COORDINATION WITH SUBSECTION (f).— BASIS OF STOCK IN NONAFFILIATED 10-PERCENT (3)’’ in clause (i), and The Secretary shall prescribe such regula- OWNED CORPORATIONS.—The rules of para- ø(B) by striking clauses (ii) and (iv) and by tions as may be necessary to coordinate the graphs (3) and (4) of subsection (e) shall redesignating clause (iii) as clause (ii). provisions of this subsection with the provi- apply for purposes of this subsection; except ø(2) Clause (i) of section 864(d)(5)(A) is sions of subsection (f).’’ that paragraph (4) shall be applied on world- amended to read as follows: ø(b) CONFORMING AMENDMENTS.— wide affiliated group basis. ø‘‘(i) Subclause (I) of section ø(1) Section 535(d)(2) is amended by strik- ø‘‘(4) TREATMENT OF CERTAIN FINANCIAL IN- 904(d)(2)(B)(iii).’’ ing ‘‘section 904(g)(6)’’ and inserting ‘‘section STITUTIONS.— ø(c) EFFECTIVE DATE.—The amendments 904(h)(6)’’. ø‘‘(A) IN GENERAL.—For purposes of para- made by this section shall apply to taxable ø(2) Subparagraph (A) of section 936(a)(2) is graph (1), any corporation described in sub- years beginning after December 31, 2002. amended by striking ‘‘section 904(f)’’ and in- paragraph (B) shall be treated as an includ- øSEC. 203. FOREIGN TAX CREDIT UNDER ALTER- serting ‘‘subsections (f) and (g) of section ible corporation for purposes of section 1504 NATIVE MINIMUM TAX. 904’’. only for purposes of applying this subsection ø(c) EFFECTIVE DATE.—The amendments ø(a) IN GENERAL.— separately to corporations so described. made by this section shall apply to losses for ø ø(1) Subsection (a) of section 59 is amended ‘‘(B) DESCRIPTION.—A corporation is de- taxable years beginning after December 31, by striking paragraph (2) and by redesig- scribed in this subparagraph if— 2006. ø‘‘(i) such corporation is a financial insti- nating paragraphs (3) and (4) as paragraphs ø (2) and (3), respectively. SEC. 205. INTEREST EXPENSE ALLOCATION tution described in section 581 or 591, RULES. ø ø(2) Section 53(d)(1)(B)(i)(II) of such Code is ‘‘(ii) the business of such financial insti- ø(a) ELECTION TO ALLOCATE ON WORLDWIDE amended by striking ‘‘and if section 59(a)(2) tution is predominantly with persons other BASIS.— Section 864 is amended by redesig- did not apply’’. than related persons (within the meaning of nating subsection (f) as subsection (g) and by subsection (d)(4)) or their customers, and ø(b) EFFECTIVE DATE.—The amendments inserting after subsection (e) the following ø made by this section shall apply to taxable ‘‘(iii) such financial institution is re- new subsection: quired by State or Federal law to be oper- years beginning after December 31, 2004. ø ‘‘(f) ELECTION TO ALLOCATE INTEREST, ETC. ated separately from any other entity which øSEC. 204. RECHARACTERIZATION OF OVERALL ON WORLDWIDE BASIS.—For purposes of this is not such an institution. DOMESTIC LOSS. subchapter, at the election of the worldwide ø‘‘(C) TREATMENT OF BANK AND FINANCIAL ø(a) GENERAL RULE.—Section 904 is amend- affiliated group— HOLDING COMPANIES.—To the extent provided ed by redesignating subsections (g), (h), (i), ø‘‘(1) ALLOCATION AND APPORTIONMENT OF in regulations— (j), and (k) as subsections (h), (i), (j), (k), and INTEREST EXPENSE.— ø‘‘(i) a bank holding company (within the (l) respectively, and by inserting after sub- ø‘‘(A) IN GENERAL.—The taxable income of meaning of section 2(a) of the Bank Holding section (f) the following new subsection: each domestic corporation which is a mem- Company Act of 1956), ø‘‘(g) RECHARACTERIZATION OF OVERALL DO- ber of a worldwide affiliated group shall be ø‘‘(ii) a financial holding company (within MESTIC LOSS.— determined by allocating and apportioning the meaning of section 2(p) of the Bank Hold- ø‘‘(1) GENERAL RULE.—For purposes of this interest expense of each member as if all ing Company Act of 1956), and subpart and section 936, in the case of any members of such group were a single cor- ø‘‘(iii) any subsidiary of a financial institu- taxpayer who sustains an overall domestic poration. tion described in section 581 or 591, or of any loss for any taxable year beginning after De- ø‘‘(B) TREATMENT OF WORLDWIDE AFFILI- such bank or financial holding company, if cember 31, 2006, that portion of the tax- ATED GROUP.—The taxable income of the do- such subsidiary is predominantly engaged payer’s taxable income from sources within mestic members of a worldwide affiliated (directly or indirectly) in the active conduct the United States for each succeeding tax- group from sources outside the United States of a banking, financing, or similar business, able year which is equal to the lesser of— shall be determined by allocating and appor- ø‘‘(A) the amount of such loss (to the ex- tioning the interest expense of such domestic shall be treated as a corporation described in tent not used under this paragraph in prior members to such income in an amount equal subparagraph (B). taxable years), or to the excess (if any) of— ø‘‘(5) ELECTION TO EXPAND FINANCIAL INSTI- ø‘‘(B) 50 percent of the taxpayer’s taxable ø‘‘(i) the total interest expense of the TUTION GROUP OF WORLDWIDE GROUP.— income from sources within the United worldwide affiliated group multiplied by the ø‘‘(A) IN GENERAL.—If a worldwide affili- States for such succeeding taxable year, ratio which the foreign assets of the world- ated group elects the application of this sub- shall be treated as income from sources wide affiliated group bears to all the assets section, all financial corporations which— without the United States (and not as in- of the worldwide affiliated group, over ø‘‘(i) are members of such worldwide affili- come from sources within the United ø‘‘(ii) the interest expense of all foreign ated group, but States). corporations which are members of the ø‘‘(ii) are not corporations described in ø‘‘(2) OVERALL DOMESTIC LOSS DEFINED.— worldwide affiliated group to the extent such paragraph (4)(B), For purposes of this subsection— interest expense of such foreign corporations shall be treated as described in paragraph ø‘‘(A) IN GENERAL.—The term ‘overall do- would have been allocated and apportioned (4)(B) for purposes of applying paragraph mestic loss’ means any domestic loss to the to foreign source income if this subsection (4)(A). This subsection (other than this para- extent such loss offsets taxable income from were applied to a group consisting of all the graph) shall apply to any such group in the sources without the United States for the foreign corporations in such worldwide affili- same manner as this subsection (other than taxable year or for any preceding taxable ated group. this paragraph) applies to the pre-election year by reason of a carryback. For purposes ø‘‘(C) WORLDWIDE AFFILIATED GROUP.—For worldwide affiliated group of which such of the preceding sentence, the term ‘domes- purposes of this paragraph, the term ‘world- group is a part. tic loss’ means the amount by which the wide affiliated group’ means a group con- ø‘‘(B) FINANCIAL CORPORATION.—For pur- gross income for the taxable year from sisting of— poses of this paragraph, the term ‘financial sources within the United States is exceeded ø‘‘(i) the includible members of an affili- corporation’ means any corporation if at by the sum of the deductions properly appor- ated group (as defined in section 1504(a), de- least 80 percent of its gross income is income tioned or allocated thereto (determined termined without regard to paragraphs (2) described in section 904(d)(2)(D)(ii) and the without regard to any carryback from a sub- and (4) of section 1504(b)), and regulations thereunder which is derived from sequent taxable year). ø‘‘(ii) all controlled foreign corporations in transactions with persons who are not re- ø‘‘(B) TAXPAYER MUST HAVE ELECTED FOR- which such members in the aggregate meet lated (within the meaning of section 267(b) or EIGN TAX CREDIT FOR YEAR OF LOSS.—The the ownership requirements of section 707(b)(1)) to the corporation. For purposes of term ‘overall domestic loss’ shall not include 1504(a)(2) either directly or indirectly the preceding sentence, there shall be dis- any loss for any taxable year unless the tax- through applying paragraph (2) of section regarded any item of income or gain from a payer chose the benefits of this subpart for 958(a) or through applying rules similar to transaction or series of transactions a prin- such taxable year. the rules of such paragraph to stock owned cipal purpose of which is the qualification of ø‘‘(3) CHARACTERIZATION OF SUBSEQUENT IN- directly or indirectly by domestic partner- any corporation as a financial corporation. COME.— ships, trusts, or estates. ø‘‘(C) ANTIABUSE RULES.—In the case of a ø‘‘(A) IN GENERAL.—Any income from ø‘‘(2) ALLOCATION AND APPORTIONMENT OF corporation which is a member of an electing sources within the United States that is OTHER EXPENSES.—Expenses other than inter- financial institution group, to the extent treated as income from sources without the est which are not directly allocable or appor- that such corporation— United States under paragraph (1) shall be tioned to any specific income producing ac- ø‘‘(i) distributes dividends or makes other allocated among and increase the income tivity shall be allocated and apportioned as distributions with respect to its stock after categories in proportion to the loss from if all members of the affiliated group were a the date of the enactment of this paragraph

VerDate jul 14 2003 01:25 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00010 Fmt 4624 Sfmt 0634 E:\CR\FM\A03MR6.036 S03PT1 March 3, 2004 CONGRESSIONAL RECORD — SENATE S2029 to any member of the pre-election worldwide for such taxable year and all subsequent ø(A) by striking paragraph (5) and insert- affiliated group (other than to a member of years unless revoked with the consent of the ing the following: the electing financial institution group) in Secretary.’’. ø‘‘(5) a foreign corporation,’’, excess of the greater of— ø(b) EXPANSION OF REGULATORY AUTHOR- ø(B) by striking paragraphs (7) and (10) and ø‘‘(I) its average annual dividend (ex- ITY.—Paragraph (7) of section 864(e) is by redesignating paragraphs (8) and (9) as pressed as a percentage of current earnings amended— paragraphs (7) and (8), respectively, and profits) during the 5-taxable-year period ø(1) by inserting before the comma at the ø(C) by inserting ‘‘and’’ at the end of para- ending with the taxable year preceding the end of subparagraph (B) ‘‘and in other cir- graph (7) (as so redesignated), and taxable year, or cumstances where such allocation would be ø(D) by striking ‘‘; and’’ at the end of para- ø‘‘(II) 25 percent of its average annual appropriate to carry out the purposes of this graph (8) (as so redesignated) and inserting a earnings and profits for such 5-taxable-year subsection’’, and period. period, or ø(2) by striking ‘‘and’’ at the end of sub- ø(2) TREATMENT OF INCOME FROM PERSONAL ø‘‘(ii) deals with any person in any manner paragraph (E), by redesignating subpara- SERVICE CONTRACTS.—Paragraph (1) of section not clearly reflecting the income of the cor- graph (F) as subparagraph (G), and by insert- 954(c) is amended by adding at the end the poration (as determined under principles ing after subparagraph (E) the following new following new subparagraph: similar to the principles of section 482), subparagraph: ø‘‘(I) PERSONAL SERVICE CONTRACTS.— ø an amount of indebtedness of the electing fi- ‘‘(F) preventing assets or interest expense ø‘‘(i) Amounts received under a contract nancial institution group equal to the excess from being taken into account more than under which the corporation is to furnish distribution or the understatement or over- once, and’’. personal services if— ø statement of income, as the case may be, (c) EFFECTIVE DATE.—The amendments ø‘‘(I) some person other than the corpora- shall be recharacterized (for the taxable year made by this section shall apply to taxable tion has the right to designate (by name or and subsequent taxable years) for purposes of years beginning after December 31, 2009. by description) the individual who is to per- ø this paragraph as indebtedness of the world- SEC. 206. DETERMINATION OF FOREIGN PER- form the services, or wide affiliated group (excluding the electing SONAL HOLDING COMPANY INCOME ø‘‘(II) the individual who is to perform the WITH RESPECT TO TRANSACTIONS financial institution group). If a corporation services is designated (by name or by de- IN COMMODITIES. scription) in the contract, and has not been in existence for 5 taxable years, ø(a) IN GENERAL.—Clauses (i) and (ii) of ø‘‘(ii) amounts received from the sale or this subparagraph shall be applied with re- section 954(c)(1)(C) (relating to commodity other disposition of such a contract. spect to the period it was in existence. transactions) are amended to read as follows: ø‘‘(D) ELECTION.—An election under this ø‘‘(i) arise out of commodity hedging This subparagraph shall apply with respect paragraph with respect to any financial in- transactions (as defined in paragraph (6)(A)), to amounts received for services under a par- stitution group may be made only by the ø‘‘(ii) are active business gains or losses ticular contract only if at some time during common parent of the pre-election world- from the sale of commodities, but only if the taxable year 25 percent or more in value wide affiliated group and may be made only substantially all of the controlled foreign of the outstanding stock of the corporation for the first taxable year beginning after De- corporation’s commodities are property de- is owned, directly or indirectly, by or for the cember 31, 2009, in which such affiliated scribed in paragraph (1), (2), or (8) of section individual who has performed, is to perform, group includes 1 or more financial corpora- 1221(a), or’’. or may be designated (by name or by descriptions. Such an election, once made, shall ø(b) DEFINITION AND SPECIAL RULES.—Sub- tion) as the one to perform, such services.’’ apply to all financial corporations which are section (c) of section 954 is amended by add- ø(c) CONFORMING AMENDMENTS.— members of the electing financial institution ing after paragraph (5) the following new ø(1) Section 1(h) is amended— group for such taxable year and all subse- paragraph: ø(A) in paragraph (10), by inserting ‘‘and’’ quent years unless revoked with the consent ø‘‘(6) DEFINITION AND SPECIAL RULES RELAT- at the end of subparagraph (F), by striking of the Secretary. ING TO COMMODITY TRANSACTIONS.— subparagraph (G), and by redesignating sub- ø‘‘(E) DEFINITIONS RELATING TO GROUPS.— ø‘‘(A) COMMODITY HEDGING TRANSACTIONS.— paragraph (H) as subparagraph (G), and For purposes of this paragraph— For purposes of paragraph (1)(C)(i), the term ø(B) by striking ‘‘a foreign personal hold- ø‘‘(i) PRE-ELECTION WORLDWIDE AFFILIATED ‘commodity hedging transaction’ means any ing company (as defined in section 552), a for- GROUP.—The term ‘pre-election worldwide af- transaction with respect to a commodity if eign investment company (as defined in sec- filiated group’ means, with respect to a cor- such transaction— tion 1246(b)), or’’ in paragraph (11)(C)(iii). poration, the worldwide affiliated group of ø‘‘(i) is a hedging transaction as defined in ø(2) Paragraph (2) of section 171(c) is which such corporation would (but for an section 1221(b)(2), determined— amended— election under this paragraph) be a member ø‘‘(I) without regard to subparagraph ø(A) by striking ‘‘, or by a foreign personal for purposes of applying paragraph (1). (A)(ii) thereof, holding company, as defined in section 552’’, ø‘‘(ii) ELECTING FINANCIAL INSTITUTION ø‘‘(II) by applying subparagraph (A)(i) and GROUP.—The term ‘electing financial institu- thereof by substituting ‘ordinary property or ø(B) by striking ‘‘, or foreign personal tion group’ means the group of corporations property described in section 1231(b)’ for ‘or- holding company’’. to which this subsection applies separately dinary property’, and ø(3) Paragraph (2) of section 245(a) is by reason of the application of paragraph ø‘‘(III) by substituting ‘controlled foreign amended by striking ‘‘foreign personal hold- (4)(A) and which includes financial corpora- corporation’ for ‘taxpayer’ each place it ap- ing company or’’. tions by reason of an election under subpara- pears, and ø(4) Section 312 is amended by striking sub- graph (A). ø‘‘(ii) is clearly identified as such in ac- section (j). ø‘‘(F) REGULATIONS.—The Secretary shall cordance with section 1221(a)(7). ø(5) Subsection (m) of section 312 is amend- prescribe such regulations as may be appro- ø‘‘(B) REGULATIONS.—The Secretary shall ed by striking ‘‘, a foreign investment com- priate to carry out this subsection, including prescribe such regulations as are appropriate pany (within the meaning of section 1246(b)), regulations— to carry out the purposes of paragraph (1)(C) or a foreign personal holding company (with- ø‘‘(i) providing for the direct allocation of in the case of transactions involving related in the meaning of section 552)’’. interest expense in other circumstances parties.’’ ø(6) Subsection (e) of section 443 is amend- where such allocation would be appropriate ø(c) EFFECTIVE DATE.—The amendments ed by striking paragraph (3) and by redesig- to carry out the purposes of this subsection, made by this section shall apply to trans- nating paragraphs (4) and (5) as paragraphs ø‘‘(ii) preventing assets or interest expense actions entered into after December 31, 2004. (3) and (4), respectively. ø from being taken into account more than øSubtitle B—International Tax Simplification (7) Subparagraph (B) of section 465(c)(7) is once, and ø amended by adding ‘‘or’’ at the end of clause ø SEC. 211. REPEAL OF FOREIGN PERSONAL ‘‘(iii) dealing with changes in members of HOLDING COMPANY RULES AND (i), by striking clause (ii), and by redesig- any group (through acquisitions or other- FOREIGN INVESTMENT COMPANY nating clause (iii) as clause (ii). wise) treated under this paragraph as an af- RULES. ø(8) Paragraph (1) of section 543(b) is filiated group for purposes of this subsection. ø(a) GENERAL RULE.—The following provi- amended by inserting ‘‘and’’ at the end of ø‘‘(6) ELECTION.—An election to have this sions are hereby repealed: subparagraph (A), by striking ‘‘, and’’ at the subsection apply with respect to any world- ø(1) Part III of subchapter G of chapter 1 end of subparagraph (B) and inserting a pe- wide affiliated group may be made only by (relating to foreign personal holding compa- riod, and by striking subparagraph (C). the common parent of the domestic affili- nies). ø(9) Paragraph (1) of section 562(b) is ated group referred to in paragraph (1)(C) ø(2) Section 1246 (relating to gain on for- amended by striking ‘‘or a foreign personal and may be made only for the first taxable eign investment company stock). holding company described in section 552’’. year beginning after December 31, 2009, in ø(3) Section 1247 (relating to election by ø(10) Section 563 is amended— which a worldwide affiliated group exists foreign investment companies to distribute ø(A) by striking subsection (c), which includes such affiliated group and at income currently). ø(B) by redesignating subsection (d) as sub- least one foreign corporation. Such an elec- ø(b) EXEMPTION OF FOREIGN CORPORATIONS section (c), and tion, once made, shall apply to such common FROM PERSONAL HOLDING COMPANY RULES.— ø(C) by striking ‘‘subsection (a), (b), or (c)’’ parent and all other corporations which are ø(1) IN GENERAL.—Subsection (c) of section in subsection (c) (as so redesignated) and in- members of such worldwide affiliated group 542 (relating to exceptions) is amended— serting ‘‘subsection (a) or (b)’’.

VerDate jul 14 2003 01:25 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00011 Fmt 4624 Sfmt 0634 E:\CR\FM\A03MR6.036 S03PT1 S2030 CONGRESSIONAL RECORD — SENATE March 3, 2004 ø(11) Subsection (d) of section 751 is amend- ø(18) Paragraph (5) of section 1014(b) is United States shareholders of such corpora- ed by adding ‘‘and’’ at the end of paragraph amended by inserting ‘‘and before January 1, tions ending with or within such taxable (2), by striking paragraph (3), by redesig- 2005,’’ after ‘‘August 26, 1937,’’. years of such corporations. nating paragraph (4) as paragraph (3), and by ø(19) Subsection (a) of section 1016 is øSEC. 212. EXPANSION OF DE MINIMIS RULE striking ‘‘paragraph (1), (2), or (3)’’ in para- amended by striking paragraph (13). UNDER SUBPART F. ø graph (3) (as so redesignated) and inserting (20)(A) Paragraph (3) of section 1212(a) is ø(a) IN GENERAL.—Clause (ii) of section ‘‘paragraph (1) or (2)’’. amended to read as follows: 954(b)(3)(A) (relating to de minimis, etc., ø(12) Paragraph (2) of section 864(d) is ø‘‘(3) SPECIAL RULES ON CARRYBACKS.—A rules) is amended by striking ‘‘$1,000,000’’ amended by striking subparagraph (A) and net capital loss of a corporation shall not be and inserting ‘‘$5,000,000’’. by redesignating subparagraphs (B) and (C) carried back under paragraph (1)(A) to a tax- ø(b) TECHNICAL AMENDMENTS.— as subparagraphs (A) and (B), respectively. able year— ø(1) Clause (ii) of section 864(d)(5)(A) is ø ø (13)(A) Subparagraph (A) of section ‘‘(A) for which it is a regulated invest- amended by striking ‘‘$1,000,000’’ and insert- 898(b)(1) is amended to read as follows: ment company (as defined in section 851), or ing ‘‘$5,000,000’’. ø ø ‘‘(A) which is treated as a controlled for- ‘‘(B) for which it is a real estate invest- ø(2) Clause (i) of section 881(c)(5)(A) is eign corporation for any purpose under sub- ment trust (as defined in section 856).’’ amended by striking ‘‘$1,000,000’’ and insert- ø part F of part III of this subchapter, and’’. (B) The amendment made by subpara- ing ‘‘$5,000,000’’. ø(B) Subparagraph (B) of section 898(b)(2) is graph (A) shall apply to taxable years begin- ø(c) EFFECTIVE DATE.—The amendments amended by striking ‘‘and sections 551(f) and ning after December 31, 2004. made by this section shall apply to taxable 554, whichever are applicable,’’. ø(21) Section 1223 is amended by striking years of foreign corporations beginning after ø(C) Paragraph (3) of section 898(b) is paragraph (10) and by redesignating the fol- December 31, 2004, and taxable years of amended to read as follows: lowing paragraphs accordingly. United States shareholders of such corpora- ø‘‘(3) UNITED STATES SHAREHOLDER.—The ø(22) Subsection (d) of section 1248 is tions ending with or within such taxable term ‘United States shareholder’ has the amended by striking paragraph (5) and by re- years of such corporations. meaning given to such term by section designating paragraphs (6) and (7) as para- 951(b), except that, in the case of a foreign graphs (5) and (6), respectively. øSEC. 213. ATTRIBUTION OF STOCK OWNERSHIP corporation having related person insurance ø(23) Paragraph (2) of section 1260(c) is THROUGH PARTNERSHIPS TO APPLY IN DETERMINING SECTION 902 AND income (as defined in section 953(c)(2)), the amended by striking subparagraphs (H) and 960 CREDITS. Secretary may treat any person as a United (I) and by redesignating subparagraph (J) as ø(a) IN GENERAL.—Subsection (c) of section States shareholder for purposes of this sec- subparagraph (H). 902 is amended by redesignating paragraph tion if such person is treated as a United ø(24)(A) Subparagraph (F) of section (7) as paragraph (8) and by inserting after States shareholder under section 953(c)(1).’’ 1291(b)(3) is amended by striking ‘‘551(d), paragraph (6) the following new paragraph: ø(D) Subsection (c) of section 898 is amend- 959(a),’’ and inserting ‘‘959(a)’’. ø‘‘(7) CONSTRUCTIVE OWNERSHIP THROUGH ed to read as follows: ø(B) Subsection (e) of section 1291 is PARTNERSHIPS.—Stock owned, directly or in- ø‘‘(c) DETERMINATION OF REQUIRED YEAR.— amended by inserting ‘‘(as in effect on the directly, by or for a partnership shall be con- ø‘‘(1) IN GENERAL.—The required year is— day before the date of the enactment of the ø‘‘(A) the majority U.S. shareholder year, Jumpstart Our Business Strength (JOBS) sidered as being owned proportionately by or Act)’’ after ‘‘section 1246’’. its partners. Stock considered to be owned ø‘‘(B) if there is no majority U.S. share- ø(25) Paragraph (2) of section 1294(a) is by a person by reason of the preceding sen- holder year, the taxable year prescribed amended to read as follows: tence shall, for purposes of applying such under regulations. ø‘‘(2) ELECTION NOT PERMITTED WHERE sentence, be treated as actually owned by ø‘‘(2) 1-MONTH DEFERRAL ALLOWED.—A spec- AMOUNTS OTHERWISE INCLUDIBLE UNDER SEC- such person. The Secretary may prescribe ified foreign corporation may elect, in lieu of TION 951.—The taxpayer may not make an such regulations as may be necessary to the taxable year under paragraph (1)(A), a election under paragraph (1) with respect to carry out the purposes of this paragraph, in- taxable year beginning 1 month earlier than the undistributed PFIC earnings tax liability cluding rules to account for special partner- the majority U.S. shareholder year. attributable to a qualified electing fund for ship allocations of dividends, credits, and ø‘‘(3) MAJORITY U.S. SHAREHOLDER YEAR.— the taxable year if any amount is includible other incidents of ownership of stock in de- ø‘‘(A) IN GENERAL.—For purposes of this in the gross income of the taxpayer under termining proportionate ownership.’’ subsection, the term ‘majority U.S. share- section 951 with respect to such fund for such ø(b) CLARIFICATION OF COMPARABLE ATTRI- holder year’ means the taxable year (if any) taxable year.’’ BUTION UNDER SECTION 901(b)(5).—Paragraph which, on each testing day, constituted the ø(26) Section 6035 is hereby repealed. (5) of section 901(b) is amended by striking taxable year of— ø(27) Subparagraph (D) of section 6103(e)(1) ‘‘any individual’’ and inserting ‘‘any per- ø‘‘(i) each United States shareholder de- is amended by striking clause (iv) and redes- son’’. scribed in subsection (b)(2)(A), and ignating clauses (v) and (vi) as clauses (iv) ø(c) EFFECTIVE DATE.—The amendments ø‘‘(ii) each United States shareholder not and (v), respectively. made by this section shall apply to taxes of described in clause (i) whose stock was treat- ø(28) Subparagraph (B) of section 6501(e)(1) foreign corporations for taxable years of ed as owned under subsection (b)(2)(B) by any is amended to read as follows: such corporations beginning after the date of shareholder described in such clause. ø‘‘(B) CONSTRUCTIVE DIVIDENDS.—If the tax- the enactment of this Act. ø‘‘(B) TESTING DAY.—The testing days shall payer omits from gross income an amount øSEC. 214. APPLICATION OF UNIFORM CAPITAL- be— properly includible therein under section IZATION RULES TO FOREIGN PER- ø‘‘(i) the first day of the corporation’s tax- 951(a), the tax may be assessed, or a pro- SONS. able year (determined without regard to this ceeding in court for the collection of such ø(a) IN GENERAL.—Section 263A(c) (relating section), or tax may be done without assessing, at any to exceptions) is amended by adding at the ø‘‘(ii) the days during such representative time within 6 years after the return was end the following new paragraph: period as the Secretary may prescribe.’’ filed.’’ ø‘‘(7) FOREIGN PERSONS.—Except for pur- ø(14) Clause (ii) of section 904(d)(2)(A) is ø(29) Subsection (a) of section 6679 is poses of applying sections 871(b)(1) and amended to read as follows: amended— 882(a)(1), this section shall not apply to any ø‘‘(ii) CERTAIN AMOUNTS INCLUDED.—Except ø(A) by striking ‘‘6035, 6046, and 6046A’’ in taxpayer who is not a United States person if as provided in clause (iii), the term ‘passive paragraph (1) and inserting ‘‘6046 and 6046A’’, such taxpayer capitalizes costs of produced income’ includes, except as provided in sub- and property or property acquired for resale by paragraph (E)(iii) or paragraph (3)(I), any ø(B) by striking paragraph (3). applying the method used to ascertain the amount includible in gross income under sec- ø(30) Sections 170(f)(10)(A), 508(d), 4947, and income, profit, or loss for purposes of reports tion 1293 (relating to certain passive foreign 4948(c)(4) are each amended by striking or statements to shareholders, partners, investment companies).’’ ‘‘556(b)(2),’’ each place it appears. other proprietors, or beneficiaries, or for ø(15)(A) Subparagraph (A) of section ø(31) The table of parts for subchapter G of credit purposes.’’ 904(g)(1), as redesignated by section 204, is chapter 1 is amended by striking the item re- ø(b) EFFECTIVE DATE.— amended by adding ‘‘or’’ at the end of clause lating to part III. ø(1) IN GENERAL.—The amendment made by (i), by striking clause (ii), and by redesig- ø(32) The table of sections for part IV of subsection (a) shall apply to taxable years nating clause (iii) as clause (ii). subchapter P of chapter 1 is amended by beginning after December 31, 2004. ø(B) The paragraph heading of paragraph striking the items relating to sections 1246 ø(2) CHANGE IN METHOD OF ACCOUNTING.—In (2) of section 904(g), as so redesignated, is and 1247. the case of any taxpayer required by the amended by striking ‘‘FOREIGN PERSONAL ø(33) The table of sections for subpart A of amendment made by this section to change HOLDING OR’’. part III of subchapter A of chapter 61 is its method of accounting for its first taxable ø(16) Section 951 is amended by striking amended by striking the item relating to year beginning after December 31, 2004— subsections (c) and (d) and by redesignating section 6035. ø(A) such change shall be treated as initi- subsections (e) and (f) as subsections (c) and ø(d) EFFECTIVE DATE.—The amendments ated by the taxpayer, (d), respectively. made by this section shall apply to taxable ø(B) such change shall be treated as made ø(17) Paragraph (3) of section 989(b) is years of foreign corporations beginning after with the consent of the Secretary of the amended by striking ‘‘, 551(a),’’. December 31, 2004, and taxable years of Treasury, and

VerDate jul 14 2003 01:25 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00012 Fmt 4624 Sfmt 0634 E:\CR\FM\A03MR6.036 S03PT1 March 3, 2004 CONGRESSIONAL RECORD — SENATE S2031 ø(C) the net amount of the adjustments re- Subtitle C—Additional International Tax Sec. 332. Election to treat cutting of timber as a quired to be taken into account by the tax- Provisions sale or exchange. payer under section 481 of the Internal Rev- Sec. 221. Active leasing income from aircraft Sec. 333. Capital gain treatment under section enue Code of 1986 shall be taken into account and vessels. 631(b) to apply to outright sales in such first year. Sec. 222. Look-thru treatment of payments be- by landowners. øSEC. 215. REPEAL OF WITHHOLDING TAX ON tween related controlled foreign Sec. 334. Modification of safe harbor rules for DIVIDENDS FROM CERTAIN FOR- corporations under foreign per- timber REITS. EIGN CORPORATIONS. sonal holding company income TITLE IV—ADDITIONAL PROVISIONS ø(a) IN GENERAL.—Paragraph (2) of section rules. Subtitle A—Provisions Designed To Curtail Tax 871(i) (relating to tax not to apply to certain Sec. 223. Look-thru treatment for sales of part- Shelters interest and dividends) is amended by adding nership interests. Sec. 401. Clarification of economic substance at the end the following new subparagraph: Sec. 224. Election not to use average exchange ø‘‘(D) Dividends paid by a foreign corpora- doctrine. rate for foreign tax paid other Sec. 402. Penalty for failing to disclose report- tion which are treated under section than in functional currency. 861(a)(2)(B) as income from sources within able transaction. Sec. 225. Treatment of income tax base dif- Sec. 403. Accuracy-related penalty for listed the United States.’’. ferences. ø transactions and other reportable (b) EFFECTIVE DATE.—The amendment Sec. 226. Modification of exceptions under sub- made by this section shall apply to payments transactions having a significant part F for active financing. tax avoidance purpose. made after December 31, 2004. Sec. 227. United States property not to include øSEC. 216. REPEAL OF SPECIAL CAPITAL GAINS Sec. 404. Penalty for understatements attrib- certain assets of controlled foreign utable to transactions lacking TAX ON ALIENS PRESENT IN THE corporation. UNITED STATES FOR 183 DAYS OR economic substance, etc. MORE. Sec. 228. Provide equal treatment for interest Sec. 405. Modifications of substantial under- ø(a) IN GENERAL.—Subsection (a) of section paid by foreign partnerships and statement penalty for nonreport- 871 is amended by striking paragraph (2) and foreign corporations. able transactions. by redesignating paragraph (3) as paragraph Sec. 229. Clarification of treatment of certain Sec. 406. Tax shelter exception to confiden- (2). transfers of intangible property. tiality privileges relating to tax- ø(b) EFFECTIVE DATE.—The amendment Sec. 230. Modification of the treatment of cer- payer communications. made by this section shall apply to taxable tain REIT distributions attrib- Sec. 407. Disclosure of reportable transactions. years beginning after December 31, 2003.¿ utable to gain from sales or ex- Sec. 408. Modifications to penalty for failure to SECTION 1. SHORT TITLE; AMENDMENT OF 1986 changes of United States real register tax shelters. CODE; TABLE OF CONTENTS. property interests. Sec. 409. Modification of penalty for failure to (a) SHORT TITLE.—This Act may be cited as Sec. 231. Toll tax on excess qualified foreign maintain lists of investors. the ‘‘Jumpstart Our Business Strength (JOBS) distribution amount. Sec. 410. Modification of actions to enjoin cer- Act’’. Sec. 232. Exclusion of income derived from certain conduct related to tax shel- (b) AMENDMENT OF 1986 CODE.—Except as oth- tain wagers on horse races and ters and reportable transactions. erwise expressly provided, whenever in this Act dog races from gross income of Sec. 411. Understatement of taxpayer’s liability an amendment or repeal is expressed in terms of nonresident alien individuals. by income tax return preparer. an amendment to, or repeal of, a section or Sec. 233. Limitation of withholding tax for Sec. 412. Penalty on failure to report interests other provision, the reference shall be consid- Puerto Rico corporations. in foreign financial accounts. ered to be made to a section or other provision Sec. 234. Report on WTO dispute settlement Sec. 413. Frivolous tax submissions. of the Internal Revenue Code of 1986. panels and the appellate body. Sec. 414. Regulation of individuals practicing (c) TABLE OF CONTENTS.— Sec. 235. Study of impact of international tax before the Department of Treas- Sec. 1. Short title; amendment of 1986 Code; laws on taxpayers other than ury. table of contents. large corporations. Sec. 415. Penalty on promoters of tax shelters. Sec. 236. Consultative role for Senate Committee TITLE I—PROVISIONS RELATING TO RE- Sec. 416. Statute of limitations for taxable years on Finance in connection with PEAL OF EXCLUSION FOR for which required listed trans- the review of proposed tax trea- EXTRATERRITORIAL INCOME actions not reported. ties. Sec. 101. Repeal of exclusion for extraterritorial Sec. 417. Denial of deduction for interest on un- income. TITLE III—DOMESTIC MANUFACTURING derpayments attributable to non- Sec. 102. Deduction relating to income attrib- AND BUSINESS PROVISIONS disclosed reportable and non- utable to United States produc- Subtitle A—General Provisions economic substance transactions. tion activities. Sec. 301. Expansion of qualified small-issue Sec. 418. Authorization of appropriations for TITLE II—INTERNATIONAL TAX bond program. tax law enforcement. PROVISIONS Sec. 302. Expensing of broadband Internet ac- Subtitle B—Other Corporate Governance Subtitle A—International Tax Reform cess expenditures. Provisions Sec. 201. 20-year foreign tax credit carryover; 1- Sec. 303. Exemption of natural aging process in Sec. 421. Affirmation of consolidated return reg- year foreign tax credit carryback. determination of production pe- ulation authority. Sec. 202. Look-thru rules to apply to dividends riod for distilled spirits under sec- Sec. 422. Signing of corporate tax returns by from noncontrolled section 902 tion 263A. chief executive officer. corporations. Sec. 304. Modification of active business defini- Sec. 423. Denial of deduction for certain fines, Sec. 203. Foreign tax credit under alternative tion under section 355. penalties, and other amounts. minimum tax. Sec. 305. Exclusion of certain indebtedness of Sec. 424. Disallowance of deduction for punitive Sec. 204. Recharacterization of overall domestic small business investment compa- damages. loss. nies from acquisition indebted- Sec. 425. Increase in criminal monetary penalty Sec. 205. Interest expense allocation rules. ness. limitation for the underpayment Sec. 206. Determination of foreign personal Sec. 306. Modified taxation of imported archery or overpayment of tax due to holding company income with re- products. fraud. spect to transactions in commod- Sec. 307. Modification to cooperative marketing Subtitle C—Enron-Related Tax Shelter ities. rules to include value added proc- Provisions essing involving animals. Subtitle B—International Tax Simplification Sec. 431. Limitation on transfer or importation Sec. 211. Repeal of foreign personal holding Sec. 308. Extension of declaratory judgment procedures to farmers’ cooperative of built-in losses. company rules and foreign invest- Sec. 432. No reduction of basis under section 734 organizations. ment company rules. in stock held by partnership in Sec. 212. Expansion of de minimis rule under Sec. 309. Temporary suspension of personal holding company tax. corporate partner. subpart F. Sec. 433. Repeal of special rules for FASITs. Sec. 310. Increase in section 179 expensing. Sec. 213. Attribution of stock ownership Sec. 434. Expanded disallowance of deduction Sec. 311. Three-year carryback of net operating through partnerships to apply in for interest on convertible debt. losses. determining section 902 and 960 Sec. 435. Expanded authority to disallow tax credits. Subtitle B—Manufacturing Relating to Films benefits under section 269. Sec. 214. Application of uniform capitalization Sec. 321. Special rules for certain film and tele- Sec. 436. Modification of interaction between rules to foreign persons. vision productions. subpart F and passive foreign in- Sec. 215. Repeal of withholding tax on divi- Sec. 322. Modification of application of income vestment company rules. dends from certain foreign cor- forecast method of depreciation. porations. Subtitle D—Provisions To Discourage Sec. 216. Repeal of special capital gains tax on Subtitle C—Manufacturing Relating to Timber Expatriation aliens present in the United States Sec. 331. Expensing of certain reforestation ex- Sec. 441. Tax treatment of inverted corporate for 183 days or more. penditures. entities.

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Sec. 442. Imposition of mark-to-market tax on PART V—MISCELLANEOUS PROVISIONS (B) if the corporation does revoke such elec- individuals who expatriate. Sec. 491. Addition of vaccines against hepatitis tion— Sec. 443. Excise tax on stock compensation of A to list of taxable vaccines. (i) such corporation shall be treated as a do- insiders of inverted corporations. Sec. 492. Recognition of gain from the sale of a mestic corporation transferring (as of such date Sec. 444. Reinsurance of United States risks in principal residence acquired in a of enactment) all of its property to a foreign cor- foreign jurisdictions. like-kind exchange within 5 years poration in connection with an exchange de- Sec. 445. Reporting of taxable mergers and ac- of sale. scribed in section 354 of such Code, and quisitions. Sec. 493. Clarification of exemption from tax for (ii) no gain or loss shall be recognized on such Subtitle E—International Tax small property and casualty in- transfer. Sec. 451. Clarification of banking business for surance companies. (2) EXCEPTION.—Subparagraph (B)(ii) of purposes of determining invest- Sec. 494. Definition of insurance company for paragraph (1) shall not apply to gain on any ment of earnings in United States section 831. asset held by the revoking corporation if— property. Sec. 495. Limitations on deduction for chari- (A) the basis of such asset is determined in Sec. 452. Prohibition on nonrecognition of gain table contributions of patents and whole or in part by reference to the basis of through complete liquidation of similar property. such asset in the hands of the person from holding company. Sec. 496. Repeal of 10-percent rehabilitation tax whom the revoking corporation acquired such Sec. 453. Prevention of mismatching of interest credit. asset, and original issue discount deduc- Sec. 497. Increase in age of minor children (B) the asset was acquired by transfer (not as tions and income inclusions in whose unearned income is taxed a result of the election under section 943(e) of transactions with related foreign as if parent’s income. such Code) occurring on or after the 1st day on persons. TITLE I—PROVISIONS RELATING TO RE- which its election under section 943(e) of such Sec. 454. Effectively connected income to in- PEAL OF EXCLUSION FOR Code was effective, and clude certain foreign source in- (C) a principal purpose of the acquisition was EXTRATERRITORIAL INCOME come. the reduction or avoidance of tax (other than a Sec. 455. Recapture of overall foreign losses on SEC. 101. REPEAL OF EXCLUSION FOR reduction in tax under section 114 of such Code, sale of controlled foreign corpora- EXTRATERRITORIAL INCOME. as in effect on the day before the date of the en- tion. (a) IN GENERAL.—Section 114 is hereby re- actment of this Act). Sec. 456. Minimum holding period for foreign pealed. (e) GENERAL TRANSITION.— tax credit on withholding taxes on (b) CONFORMING AMENDMENTS.— (1) IN GENERAL.—In the case of a taxable year income other than dividends. (1)(A) Subpart E of part III of subchapter N of ending after the date of the enactment of this Subtitle F—Other Revenue Provisions chapter 1 (relating to qualifying foreign trade Act and beginning before January 1, 2007, for income) is hereby repealed. purposes of chapter 1 of such Code, a current PART I—FINANCIAL INSTRUMENTS (B) The table of subparts for such part III is Sec. 461. Treatment of stripped interests in bond FSC/ETI beneficiary shall be allowed a deduc- amended by striking the item relating to subpart tion equal to the transition amount determined and preferred stock funds, etc. E. Sec. 462. Application of earnings stripping rules under this subsection with respect to such bene- (2) The table of sections for part III of sub- ficiary for such year. to partnerships and S corpora- chapter B of chapter 1 is amended by striking tions. (2) CURRENT FSC/ETI BENEFICIARY.—The term the item relating to section 114. ‘‘current FSC/ETI beneficiary’’ means any cor- Sec. 463. Recognition of cancellation of indebt- (3) The second sentence of section edness income realized on satis- poration which entered into one or more trans- 56(g)(4)(B)(i) is amended by striking ‘‘or under actions during its taxable year beginning in cal- faction of debt with partnership section 114’’. interest. endar year 2002 with respect to which FSC/ETI (4) Section 275(a) is amended— benefits were allowable. Sec. 464. Modification of straddle rules. (A) by inserting ‘‘or’’ at the end of paragraph Sec. 465. Denial of installment sale treatment (3) TRANSITION AMOUNT.—For purposes of this (4)(A), by striking ‘‘or’’ at the end of paragraph for all readily tradeable debt. subsection— (4)(B) and inserting a period, and by striking PART II—CORPORATIONS AND PARTNERSHIPS (A) IN GENERAL.—The transition amount ap- subparagraph (C), and plicable to any current FSC/ETI beneficiary for Sec. 466. Modification of treatment of transfers (B) by striking the last sentence. any taxable year is the phaseout percentage of to creditors in divisive reorganiza- (5) Paragraph (3) of section 864(e) is amend- the base period amount. tions. ed— (B) PHASEOUT PERCENTAGE.— Sec. 467. Clarification of definition of non- (A) by striking: (i) IN GENERAL.—In the case of a taxpayer qualified preferred stock. ‘‘(3) TAX-EXEMPT ASSETS NOT TAKEN INTO AC- Sec. 468. Modification of definition of con- using the calendar year as its taxable year, the COUNT.— phaseout percentage shall be determined under trolled group of corporations. ‘‘(A) IN GENERAL.—For purposes of’’; and in- the following table: Sec. 469. Mandatory basis adjustments in con- serting: nection with partnership distribu- ‘‘(3) TAX-EXEMPT ASSETS NOT TAKEN INTO AC- The phaseout tions and transfers of partnership COUNT.—For purposes of’’, and percentage is: interests. (B) by striking subparagraph (B). Years: PART III—DEPRECIATION AND AMORTIZATION (6) Section 903 is amended by striking ‘‘114, 2004 ...... 80 2005 ...... 80 Sec. 471. Extension of amortization of intangi- 164(a),’’ and inserting ‘‘164(a)’’. 2006 ...... 60. bles to sports franchises. (7) Section 999(c)(1) is amended by striking Sec. 472. Services contracts treated in the same ‘‘941(a)(5),’’. (ii) SPECIAL RULE FOR 2003.—The phaseout per- manner as leases for rules relating (c) EFFECTIVE DATE.— centage for 2003 shall be the amount that bears to tax-exempt use of property. (1) IN GENERAL.—The amendments made by the same ratio to 100 percent as the number of Sec. 473. Class lives for utility grading costs. this section shall apply to transactions occur- days after the date of the enactment of this Act Sec. 474. Expansion of limitation on deprecia- ring after the date of the enactment of this Act. bears to 365. tion of certain passenger auto- (2) BINDING CONTRACTS.—The amendments (iii) SPECIAL RULE FOR FISCAL YEAR TAX- mobiles. made by this section shall not apply to any PAYERS.—In the case of a taxpayer not using Sec. 475. Consistent amortization of periods for transaction in the ordinary course of a trade or the calendar year as its taxable year, the phase- intangibles. business which occurs pursuant to a binding out percentage is the weighted average of the Sec. 476. Limitation on deductions allocable to contract— phaseout percentages determined under the pre- property used by governments or (A) which is between the taxpayer and a per- ceding provisions of this paragraph with respect other tax-exempt entities. son who is not a related person (as defined in to calendar years any portion of which is in- PART IV—ADMINISTRATIVE PROVISIONS section 943(b)(3) of such Code, as in effect on cluded in the taxpayer’s taxable year. The Sec. 481. Clarification of rules for payment of the day before the date of the enactment of this weighted average shall be determined on the estimated tax for certain deemed Act), and basis of the respective portions of the taxable asset sales. (B) which is in effect on September 17, 2003, year in each calendar year. Sec. 482. Extension of IRS user fees. and at all times thereafter. (C) SHORT TAXABLE YEAR.—The Secretary Sec. 483. Doubling of certain penalties, fines, (d) REVOCATION OF SECTION 943(e) ELEC- shall prescribe guidance for the computation of and interest on underpayments TIONS.— the transition amount in the case of a short tax- related to certain offshore finan- (1) IN GENERAL.—In the case of a corporation able year. cial arrangement. that elected to be treated as a domestic corpora- (4) BASE PERIOD AMOUNT.—For purposes of Sec. 484. Partial payment of tax liability in in- tion under section 943(e) of the Internal Rev- this subsection, the base period amount is the stallment agreements. enue Code of 1986 (as in effect on the day before FSC/ETI benefit for the taxpayer’s taxable year Sec. 485. Extension of customs user fees. the date of the enactment of this Act)— beginning in calendar year 2002. Sec. 486. Deposits made to suspend running of (A) the corporation may, during the 1-year pe- (5) FSC/ETI BENEFIT.—For purposes of this interest on potential underpay- riod beginning on the date of the enactment of subsection, the term ‘‘FSC/ETI benefit’’ means— ments. this Act, revoke such election, effective as of (A) amounts excludable from gross income Sec. 487. Qualified tax collection contracts. such date of enactment, and under section 114 of such Code, and

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(B) the exempt foreign trade income of related of employees of the taxpayer during the tax- ‘‘(e) DOMESTIC PRODUCTION GROSS RE- foreign sales corporations from property ac- payer’s taxable year. CEIPTS.—For purposes of this section— quired from the taxpayer (determined without ‘‘(3) SPECIAL RULES.— ‘‘(1) IN GENERAL.—The term ‘domestic produc- regard to section 923(a)(5) of such Code (relating ‘‘(A) PASS-THRU ENTITIES.—In the case of an S tion gross receipts’ means the gross receipts of to special rule for military property), as in effect corporation, partnership, estate or trust, or the taxpayer which are derived from— on the day before the date of the enactment of other pass-thru entity, the limitation under this ‘‘(A) any sale, exchange, or other disposition the FSC Repeal and Extraterritorial Income Ex- subsection shall apply at the entity level. of, or clusion Act of 2000). ‘‘(B) ACQUISITIONS AND DISPOSITIONS.—The ‘‘(B) any lease, rental, or license of, In determining the FSC/ETI benefit there shall Secretary shall provide for the application of qualifying production property which was man- be excluded any amount attributable to a trans- this subsection in cases where the taxpayer ac- ufactured, produced, grown, or extracted in action with respect to which the taxpayer is the quires, or disposes of, the major portion of a whole or in significant part by the taxpayer lessor unless the leased property was manufac- trade or business or the major portion of a sepa- within the United States. ‘‘(2) SPECIAL RULES FOR CERTAIN PROPERTY.— tured or produced in whole or in significant rate unit of a trade or business during the tax- In the case of any qualifying production prop- part by the taxpayer. able year. erty described in subsection (f)(1)(C)— (6) SPECIAL RULE FOR AGRICULTURAL AND HOR- ‘‘(c) QUALIFIED PRODUCTION ACTIVITIES IN- ‘‘(A) such property shall be treated for pur- TICULTURAL COOPERATIVES.—Determinations COME.—For purposes of this section— poses of paragraph (1) as produced in signifi- under this subsection with respect to an organi- ‘‘(1) IN GENERAL.—The term ‘qualified produc- cant part by the taxpayer within the United zation described in section 943(g)(1) of such tion activities income’ means an amount equal States if more than 50 percent of the aggregate Code, as in effect on the day before the date of to the portion of the modified taxable income of development and production costs are incurred the enactment of this Act, shall be made at the the taxpayer which is attributable to domestic by the taxpayer within the United States, and cooperative level and the purposes of this sub- production activities. ‘‘(B) if a taxpayer acquires such property be- section shall be carried out in a manner similar ‘‘(2) REDUCTION FOR TAXABLE YEARS BEGIN- fore such property begins to generate substan- to section 199(h)(2) of such Code, as added by NING BEFORE 2013.—The amount otherwise deter- tial gross receipts, any development or produc- this Act. Such determinations shall be in ac- mined under paragraph (1) (the ‘unreduced tion costs incurred before the acquisition shall cordance with such requirements and proce- amount’) shall not exceed— be treated as incurred by the taxpayer for pur- dures as the Secretary may prescribe. ‘‘(A) in the case of taxable years beginning be- poses of subparagraph (A) and paragraph (1). (7) CERTAIN RULES TO APPLY.—Rules similar to fore 2010, the product of the unreduced amount ‘‘(f) QUALIFYING PRODUCTION PROPERTY.—For the rules of section 41(f) of such Code shall and the domestic/worldwide fraction, and purposes of this section— apply for purposes of this subsection. ‘‘(B) in the case of taxable years beginning in ‘‘(1) IN GENERAL.—Except as otherwise pro- (8) COORDINATION WITH BINDING CONTRACT 2010, 2011, or 2012, an amount equal to the sum vided in this paragraph, the term ‘qualifying RULE.—The deduction determined under para- of— production property’ means— ‘‘(i) the product of the unreduced amount and graph (1) for any taxable year shall be reduced ‘‘(A) any tangible personal property, the domestic/worldwide fraction, plus by the phaseout percentage of any FSC/ETI ‘‘(B) any computer software, and benefit realized for the taxable year by reason of ‘‘(ii) the applicable percentage of an amount ‘‘(C) any property described in section 168(f) subsection (c)(2) or section 5(c)(1)(B) of the FSC equal to the unreduced amount minus the (3) or (4), including any underlying copyright or Repeal and Extraterritorial Income Exclusion amount determined under clause (i). trademark. Act of 2000, except that for purposes of this For purposes of subparagraph (B)(ii), the appli- ‘‘(2) EXCLUSIONS FROM QUALIFYING PRODUC- paragraph the phaseout percentage for 2003 cable percentage is 25 percent for 2010, 50 per- TION PROPERTY.—The term ‘qualifying produc- shall be treated as being equal to 100 percent. cent for 2011, and 75 percent for 2012. tion property’ shall not include— (9) SPECIAL RULE FOR TAXABLE YEAR WHICH ‘‘(d) DETERMINATION OF INCOME ATTRIB- ‘‘(A) consumable property that is sold, leased, INCLUDES DATE OF ENACTMENT.—In the case of a UTABLE TO DOMESTIC PRODUCTION ACTIVITIES.— or licensed by the taxpayer as an integral part taxable year which includes the date of the en- For purposes of this section— of the provision of services, actment of this Act, the deduction allowed ‘‘(1) IN GENERAL.—The portion of the modified ‘‘(B) oil or gas, under this subsection to any current FSC/ETI taxable income which is attributable to domestic ‘‘(C) electricity, beneficiary shall in no event exceed— production activities is so much of the modified ‘‘(D) water supplied by pipeline to the con- (A) 100 percent of such beneficiary’s base pe- taxable income for the taxable year as does not sumer, riod amount for calendar year 2003, reduced by exceed— ‘‘(E) utility services, or (B) the FSC/ETI benefit of such beneficiary ‘‘(A) the taxpayer’s domestic production gross ‘‘(F) any film, tape, recording, book, maga- with respect to transactions occurring during receipts for such taxable year, reduced by zine, newspaper, or similar property the market the portion of the taxable year ending on the ‘‘(B) the sum of— for which is primarily topical or otherwise es- date of the enactment of this Act. ‘‘(i) the costs of goods sold that are allocable sentially transitory in nature. SEC. 102. DEDUCTION RELATING TO INCOME AT- to such receipts, ‘‘(g) DOMESTIC/WORLDWIDE FRACTION.—For TRIBUTABLE TO UNITED STATES ‘‘(ii) other deductions, expenses, or losses di- purposes of this section— PRODUCTION ACTIVITIES. rectly allocable to such receipts, and ‘‘(1) IN GENERAL.—The term ‘domestic/world- (a) IN GENERAL.—Part VI of subchapter B of ‘‘(iii) a proper share of other deductions, ex- wide fraction’ means a fraction (not greater chapter 1 (relating to itemized deductions for in- penses, and losses that are not directly allocable than 1)— dividuals and corporations) is amended by add- to such receipts or another class of income. ‘‘(A) the numerator of which is the value of ing at the end the following new section: ‘‘(2) ALLOCATION METHOD.—The Secretary the domestic production of the taxpayer, and ‘‘SEC. 199. INCOME ATTRIBUTABLE TO DOMESTIC shall prescribe rules for the proper allocation of ‘‘(B) the denominator of which is the value of PRODUCTION ACTIVITIES. items of income, deduction, expense, and loss for the worldwide production of the taxpayer. ‘‘(2) VALUE OF DOMESTIC PRODUCTION.—The ‘‘(a) ALLOWANCE OF DEDUCTION.— purposes of determining income attributable to value of domestic production is the excess (if ‘‘(1) IN GENERAL.—There shall be allowed as a domestic production activities. any) of— deduction an amount equal to 9 percent of the ‘‘(3) SPECIAL RULES FOR DETERMINING COSTS.— ‘‘(A) the domestic production gross receipts, qualified production activities income of the tax- ‘‘(A) IN GENERAL.—For purposes of deter- over payer for the taxable year. mining costs under clause (i) of paragraph ‘‘(B) the cost of purchased inputs allocable to ‘‘(2) PHASEIN.—In the case of taxable years (1)(B), any item or service brought into the such receipts that are deductible under this beginning in 2003, 2004, 2005, 2006, 2007, or 2008, United States shall be treated as acquired by chapter for the taxable year. paragraph (1) shall be applied by substituting purchase, and its cost shall be treated as not for the percentage contained therein the transi- ‘‘(3) PURCHASED INPUTS.— less than its fair market value immediately after ‘‘(A) IN GENERAL.—Purchased inputs are any tion percentage determined under the following it entered the United States. A similar rule shall table: of the following items acquired by purchase: apply in determining the adjusted basis of ‘‘(i) Services (other than services of employees) ‘‘Taxable years begin- The transition leased or rented property where the lease or used in manufacture, production, growth, or ex- ning in: percentage is: rental gives rise to domestic production gross re- traction activities. 2003 or 2004 ...... 1 ceipts. ‘‘(ii) Items consumed in connection with such 2005 ...... 2 ‘‘(B) EXPORTS FOR FURTHER MANUFACTURE.— activities. 2006 ...... 3 In the case of any property described in sub- ‘‘(iii) Items incorporated as part of the prop- 2007 or 2008 ...... 6. paragraph (A) that had been exported by the erty being manufactured, produced, grown, or ‘‘(b) DEDUCTION LIMITED TO WAGES PAID.— taxpayer for further manufacture, the increase extracted. ‘‘(1) IN GENERAL.—The amount of the deduc- in cost or adjusted basis under subparagraph ‘‘(B) SPECIAL RULE.—Rules similar to the rules tion allowable under subsection (a) for any tax- (A) shall not exceed the difference between the of subsection (d)(3) shall apply for purposes of able year shall not exceed 50 percent of the W– value of the property when exported and the this subsection. 2 wages of the employer for the taxable year. value of the property when brought back into ‘‘(4) VALUE OF WORLDWIDE PRODUCTION.— ‘‘(2) W–2 WAGES.—For purposes of paragraph the United States after the further manufacture. ‘‘(A) IN GENERAL.—The value of worldwide (1), the term ‘W–2 wages’ means the sum of the ‘‘(4) MODIFIED TAXABLE INCOME.—The term production shall be determined under the prin- aggregate amounts the taxpayer is required to ‘modified taxable income’ means taxable income ciples of paragraph (2), except that— include on statements under paragraphs (3) and computed without regard to the deduction al- ‘‘(i) worldwide production gross receipts shall (8) of section 6051(a) with respect to employment lowable under this section. be taken into account, and

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‘‘(ii) paragraph (3)(B) shall not apply. ‘‘(6) TRADE OR BUSINESS REQUIREMENT.—This cess foreign taxes which (without regard to the ‘‘(B) WORLDWIDE PRODUCTION GROSS RE- section shall be applied by only taking into ac- amendments made by this section) may be car- CEIPTS.—The worldwide production gross re- count items which are attributable to the actual ried to any taxable year ending after the date of ceipts is the amount that would be determined conduct of a trade or business. the enactment of this Act. under subsection (e) if such subsection were ap- ‘‘(7) POSSESSIONS, ETC.— SEC. 202. LOOK-THRU RULES TO APPLY TO DIVI- plied without any reference to the United ‘‘(A) IN GENERAL.—For purposes of sub- DENDS FROM NONCONTROLLED States. sections (d) and (e), the term ‘United States’ in- SECTION 902 CORPORATIONS. ‘‘(h) DEFINITIONS AND SPECIAL RULES.— cludes the Commonwealth of Puerto Rico, (a) IN GENERAL.—Section 904(d)(4) (relating to ‘‘(1) APPLICATION OF SECTION TO PASS-THRU Guam, American Samoa, the Commonwealth of look-thru rules apply to dividends from noncon- ENTITIES.—In the case of an S corporation, part- the Northern Mariana Islands, and the Virgin trolled section 902 corporations) is amended to nership, estate or trust, or other pass-thru enti- Islands of the United States. read as follows: ty— ‘‘(B) SPECIAL RULES FOR APPLYING WAGE LIMI- ‘‘(4) LOOK-THRU APPLIES TO DIVIDENDS FROM ‘‘(A) subject to the provisions of paragraph (2) TATION.—For purposes of applying the limita- NONCONTROLLED SECTION 902 CORPORATIONS.— and subsection (b)(3)(A), this section shall be tion under subsection (b) for any taxable year— ‘‘(A) IN GENERAL.—For purposes of this sub- applied at the shareholder, partner, or similar ‘‘(i) the determination of W–2 wages of a tax- section, any dividend from a noncontrolled sec- level, and payer shall be made without regard to any ex- tion 902 corporation with respect to the taxpayer ‘‘(B) the Secretary shall prescribe rules for the clusion under section 3401(a)(8) for remunera- shall be treated as income described in a sub- application of this section, including rules relat- tion paid for services performed in a jurisdiction paragraph of paragraph (1) in proportion to the ing to— described in subparagraph (A), and ratio of— ‘‘(i) restrictions on the allocation of the de- ‘‘(ii) in determining the amount of any credit ‘‘(i) the portion of earnings and profits attrib- duction to taxpayers at the partner or similar allowable under section 30A or 936 for the tax- utable to income described in such subpara- level, and able year, there shall not be taken into account graph, to ‘‘(ii) additional reporting requirements. any wages which are taken into account in ap- ‘‘(ii) the total amount of earnings and profits. ‘‘(2) EXCLUSION FOR PATRONS OF AGRICUL- plying such limitation. ‘‘(B) EARNINGS AND PROFITS OF CONTROLLED TURAL AND HORTICULTURAL COOPERATIVES.— ‘‘(8) COORDINATION WITH TRANSITION RULES.— FOREIGN CORPORATIONS.—In the case of any dis- ‘‘(A) IN GENERAL.—If any amount described in For purposes of this section— tribution from a controlled foreign corporation paragraph (1) or (3) of section 1385 (a)— ‘‘(A) domestic production gross receipts shall to a United States shareholder, rules similar to ‘‘(i) is received by a person from an organiza- not include gross receipts from any transaction the rules of subparagraph (A) shall apply in de- tion to which part I of subchapter T applies if the binding contract transition relief of sec- termining the extent to which earnings and which is engaged in the marketing of agricul- tion 101(c)(2) of the Jumpstart Our Business profits of the controlled foreign corporation tural or horticultural products, and Strength (JOBS) Act applies to such trans- which are attributable to dividends received ‘‘(ii) is allocable to the portion of the qualified action, and from a noncontrolled section 902 corporation production activities income of the organization ‘‘(B) any deduction allowed under section may be treated as income in a separate category. which is deductible under subsection (a) and 101(e) of such Act shall be disregarded in deter- ‘‘(C) SPECIAL RULES.—For purposes of this designated as such by the organization in a mining the portion of the taxable income which paragraph— written notice mailed to its patrons during the is attributable to domestic production gross re- ‘‘(i) EARNINGS AND PROFITS.— payment period described in section 1382(d), ceipts.’’. ‘‘(I) IN GENERAL.—The rules of section 316 (b) MINIMUM TAX.—Section 56(g)(4)(C) (relat- shall apply. then such person shall be allowed an exclusion ing to disallowance of items not deductible in ‘‘(II) REGULATIONS.—The Secretary may pre- from gross income with respect to such amount. computing earnings and profits) is amended by scribe regulations regarding the treatment of The taxable income of the organization shall not adding at the end the following new clause: distributions out of earnings and profits for pe- be reduced under section 1382 by the portion of ‘‘(v) DEDUCTION FOR DOMESTIC PRODUCTION.— riods before the taxpayer’s acquisition of the any such amount with respect to which an ex- Clause (i) shall not apply to any amount allow- stock to which the distributions relate. clusion is allowable to a person by reason of this able as a deduction under section 199.’’. ‘‘(ii) INADEQUATE SUBSTANTIATION.—If the paragraph. (c) CLERICAL AMENDMENT.—The table of sec- Secretary determines that the proper subpara- ‘‘(B) SPECIAL RULES.—For purposes of apply- tions for part VI of subchapter B of chapter 1 is graph of paragraph (1) in which a dividend is ing subparagraph (A), in determining the quali- amended by adding at the end the following described has not been substantiated, such divi- fied production activities income of the organi- new item: dend shall be treated as income described in zation under this section— paragraph (1)(A). ‘‘(i) there shall not be taken into account in ‘‘Sec. 199. Income attributable to domestic pro- ‘‘(iii) COORDINATION WITH HIGH-TAXED INCOME computing the organization’s modified taxable duction activities.’’. PROVISIONS.—Rules similar to the rules of para- income any deduction allowable under sub- (d) EFFECTIVE DATE.— graph (3)(F) shall apply for purposes of this section (b) or (c) of section 1382 (relating to pa- (1) IN GENERAL.—The amendments made by paragraph. tronage dividends, per-unit retain allocations, this section shall apply to taxable years ending ‘‘(iv) LOOK-THRU WITH RESPECT TO CARRYOVER and nonpatronage distributions), and after the date of the enactment of this Act. OF CREDIT.—Rules similar to subparagraph (A) ‘‘(ii) the organization shall be treated as hav- (2) APPLICATION OF SECTION 15.—Section 15 of also shall apply to any carryforward under sub- ing manufactured, produced, grown, or ex- the Internal Revenue Code of 1986 shall apply to section (c) from a taxable year beginning before tracted in whole or significant part any quali- the amendments made by this section as if they January 1, 2003, of tax allocable to a dividend fying production property marketed by the orga- were changes in a rate of tax. from a noncontrolled section 902 corporation nization which its patrons have so manufac- TITLE II—INTERNATIONAL TAX with respect to the taxpayer. The Secretary may tured, produced, grown, or extracted. PROVISIONS by regulations provide for the allocation of any ‘‘(3) SPECIAL RULE FOR AFFILIATED GROUPS.— Subtitle A—International Tax Reform carryback of tax allocable to a dividend from a ‘‘(A) IN GENERAL.—All members of an ex- noncontrolled section 902 corporation to such a panded affiliated group shall be treated as a SEC. 201. 20-YEAR FOREIGN TAX CREDIT CARRY- taxable year for purposes of allocating such div- single corporation for purposes of this section. OVER; 1-YEAR FOREIGN TAX CREDIT CARRYBACK. idend among the separate categories in effect for ‘‘(B) EXPANDED AFFILIATED GROUP.—The term (a) GENERAL RULE.—Section 904(c) (relating to such taxable year.’’. ‘expanded affiliated group’ means an affiliated carryback and carryover of excess tax paid) is (b) CONFORMING AMENDMENTS.— group as defined in section 1504(a), deter- amended— (1) Subparagraph (E) of section 904(d)(1) is mined— (1) by striking ‘‘in the second preceding tax- hereby repealed. ‘‘(i) by substituting ‘50 percent’ for ‘80 per- able year,’’, and (2) Section 904(d)(2)(C)(iii) is amended by add- cent’ each place it appears, and (2) by striking ‘‘, and in the first, second, ing ‘‘and’’ at the end of subclause (I), by strik- ‘‘(ii) without regard to paragraphs (2) and (4) third, fourth, or fifth’’ and inserting ‘‘and in ing subclause (II), and by redesignating sub- of section 1504(b). any of the first 20’’. clause (III) as subclause (II). For purposes of determining the domestic/world- (b) EXCESS EXTRACTION TAXES.—Paragraph (3) The last sentence of section 904(d)(2)(D) is wide fraction under subsection (g), clause (ii) (1) of section 907(f) is amended— amended to read as follows: ‘‘Such term does shall be applied by also disregarding paragraphs (1) by striking ‘‘in the second preceding tax- not include any financial services income.’’. (3) and (8) of section 1504(b). able year,’’, (4) Section 904(d)(2)(E) is amended— ‘‘(4) COORDINATION WITH MINIMUM TAX.—The (2) by striking ‘‘, and in the first, second, (A) by inserting ‘‘or (4)’’ after ‘‘paragraph deduction under this section shall be allowed for third, fourth, or fifth’’ and inserting ‘‘and in (3)’’ in clause (i), and purposes of the tax imposed by section 55; except any of the first 20’’, and (B) by striking clauses (ii) and (iv) and by re- that for purposes of section 55, alternative min- (3) by striking the last sentence. designating clause (iii) as clause (ii). imum taxable income shall be taken into ac- (c) EFFECTIVE DATE.— (5) Section 904(d)(3)(F) is amended by striking count in determining the deduction under this (1) CARRYBACK.—The amendments made by ‘‘(D), or (E)’’ and inserting ‘‘or (D)’’. section. subsections (a)(1) and (b)(1) shall apply to ex- (6) Section 864(d)(5)(A)(i) is amended by strik- ‘‘(5) ORDERING RULE.—The amount of any cess foreign taxes arising in taxable years begin- ing ‘‘(C)(iii)(III)’’ and inserting ‘‘(C)(iii)(II)’’. other deduction allowable under this chapter ning after the date of the enactment of this Act. (c) EFFECTIVE DATE.—The amendments made shall be determined as if this section had not (2) CARRYOVER.—The amendments made by by this section shall apply to taxable years be- been enacted. subsections (a)(2) and (b)(2) shall apply to ex- ginning after December 31, 2002.

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SEC. 203. FOREIGN TAX CREDIT UNDER ALTER- subsection (f) as subsection (g) and by inserting ‘‘(C) TREATMENT OF BANK AND FINANCIAL NATIVE MINIMUM TAX. after subsection (e) the following new sub- HOLDING COMPANIES.—To the extent provided in (a) IN GENERAL.— section: regulations— (1) Subsection (a) of section 59 is amended by ‘‘(f) ELECTION TO ALLOCATE INTEREST, ETC. ‘‘(i) a bank holding company (within the striking paragraph (2) and by redesignating ON WORLDWIDE BASIS.—For purposes of this meaning of section 2(a) of the Bank Holding paragraphs (3) and (4) as paragraphs (2) and subchapter, at the election of the worldwide af- Company Act of 1956 (12 U.S.C. 1841(a)), (3), respectively. filiated group— ‘‘(ii) a financial holding company (within the (2) Section 53(d)(1)(B)(i)(II) is amended by ‘‘(1) ALLOCATION AND APPORTIONMENT OF IN- meaning of section 2(p) of the Bank Holding striking ‘‘and if section 59(a)(2) did not apply’’. TEREST EXPENSE.— Company Act of 1956 (12 U.S.C. 1841(p)), and (b) EFFECTIVE DATE.—The amendments made ‘‘(A) IN GENERAL.—The taxable income of each ‘‘(iii) any subsidiary of a financial institution by this section shall apply to taxable years be- domestic corporation which is a member of a described in section 581 or 591, or of any such ginning after December 31, 2004. worldwide affiliated group shall be determined bank or financial holding company, if such sub- SEC. 204. RECHARACTERIZATION OF OVERALL by allocating and apportioning interest expense sidiary is predominantly engaged (directly or in- DOMESTIC LOSS. of each member as if all members of such group directly) in the active conduct of a banking, fi- (a) GENERAL RULE.—Section 904 is amended by redesignating subsections (g), (h), (i), (j), and were a single corporation. nancing, or similar business, ‘‘(B) TREATMENT OF WORLDWIDE AFFILIATED (k) as subsections (h), (i), (j), (k), and (l) respec- shall be treated as a corporation described in GROUP.—The taxable income of the domestic tively, and by inserting after subsection (f) the subparagraph (B). members of a worldwide affiliated group from following new subsection: ‘‘(5) ELECTION TO EXPAND FINANCIAL INSTITU- ‘‘(g) RECHARACTERIZATION OF OVERALL DO- sources outside the United States shall be deter- TION GROUP OF WORLDWIDE GROUP.— MESTIC LOSS.— mined by allocating and apportioning the inter- ‘‘(A) IN GENERAL.—If a worldwide affiliated ‘‘(1) GENERAL RULE.—For purposes of this est expense of such domestic members to such in- group elects the application of this subsection, subpart and section 936, in the case of any tax- come in an amount equal to the excess (if any) all financial corporations which— payer who sustains an overall domestic loss for of— ‘‘(i) are members of such worldwide affiliated any taxable year beginning after December 31, ‘‘(i) the total interest expense of the world- group, but 2006, that portion of the taxpayer’s taxable in- wide affiliated group multiplied by the ratio ‘‘(ii) are not corporations described in para- come from sources within the United States for which the foreign assets of the worldwide affili- graph (4)(B), ated group bears to all the assets of the world- each succeeding taxable year which is equal to shall be treated as described in paragraph (4)(B) wide affiliated group, over the lesser of— for purposes of applying paragraph (4)(A). This ‘‘(ii) the interest expense of all foreign cor- ‘‘(A) the amount of such loss (to the extent subsection (other than this paragraph) shall porations which are members of the worldwide not used under this paragraph in prior taxable apply to any such group in the same manner as affiliated group to the extent such interest ex- years), or this subsection (other than this paragraph) ap- ‘‘(B) 50 percent of the taxpayer’s taxable in- pense of such foreign corporations would have plies to the pre-election worldwide affiliated come from sources within the United States for been allocated and apportioned to foreign group of which such group is a part. such succeeding taxable year, source income if this subsection were applied to ‘‘(B) FINANCIAL CORPORATION.—For purposes a group consisting of all the foreign corpora- shall be treated as income from sources without of this paragraph, the term ‘financial corporations in such worldwide affiliated group. the United States (and not as income from tion’ means any corporation if at least 80 per- ‘‘(C) WORLDWIDE AFFILIATED GROUP.—For sources within the United States). cent of its gross income is income described in ‘‘(2) OVERALL DOMESTIC LOSS DEFINED.—For purposes of this paragraph, the term ‘worldwide section 904(d)(2)(C)(ii) and the regulations purposes of this subsection— affiliated group’ means a group consisting of— thereunder which is derived from transactions ‘‘(A) IN GENERAL.—The term ‘overall domestic ‘‘(i) the includible members of an affiliated loss’ means any domestic loss to the extent such group (as defined in section 1504(a), determined with persons who are not related (within the loss offsets taxable income from sources without without regard to paragraphs (2) and (4) of sec- meaning of section 267(b) or 707(b)(1)) to the cor- the United States for the taxable year or for any tion 1504(b)), and poration. For purposes of the preceding sen- preceding taxable year by reason of a ‘‘(ii) all controlled foreign corporations in tence, there shall be disregarded any item of in- carryback. For purposes of the preceding sen- which such members in the aggregate meet the come or gain from a transaction or series of tence, the term ‘domestic loss’ means the amount ownership requirements of section 1504(a)(2) ei- transactions a principal purpose of which is the by which the gross income for the taxable year ther directly or indirectly through applying qualification of any corporation as a financial from sources within the United States is exceed- paragraph (2) of section 958(a) or through ap- corporation. ed by the sum of the deductions properly appor- plying rules similar to the rules of such para- ‘‘(C) ANTIABUSE RULES.—In the case of a cor- tioned or allocated thereto (determined without graph to stock owned directly or indirectly by poration which is a member of an electing finan- regard to any carryback from a subsequent tax- domestic partnerships, trusts, or estates. cial institution group, to the extent that such able year). ‘‘(2) ALLOCATION AND APPORTIONMENT OF corporation— ‘‘(i) distributes dividends or makes other dis- ‘‘(B) TAXPAYER MUST HAVE ELECTED FOREIGN OTHER EXPENSES.—Expenses other than interest TAX CREDIT FOR YEAR OF LOSS.—The term ‘over- which are not directly allocable or apportioned tributions with respect to its stock after the date all domestic loss’ shall not include any loss for to any specific income producing activity shall of the enactment of this paragraph to any mem- any taxable year unless the taxpayer chose the be allocated and apportioned as if all members ber of the pre-election worldwide affiliated benefits of this subpart for such taxable year. of the affiliated group were a single corporation. group (other than to a member of the electing fi- ‘‘(3) CHARACTERIZATION OF SUBSEQUENT IN- For purposes of the preceding sentence, the term nancial institution group) in excess of the great- COME.— ‘affiliated group’ has the meaning given such er of— ‘‘(A) IN GENERAL.—Any income from sources term by section 1504 (determined without regard ‘‘(I) its average annual dividend (expressed as within the United States that is treated as in- to paragraph (4) of section 1504(b)). a percentage of current earnings and profits) come from sources without the United States ‘‘(3) TREATMENT OF TAX-EXEMPT ASSETS; BASIS during the 5-taxable-year period ending with under paragraph (1) shall be allocated among OF STOCK IN NONAFFILIATED 10-PERCENT OWNED the taxable year preceding the taxable year, or and increase the income categories in proportion ‘‘(II) 25 percent of its average annual earn- CORPORATIONS.—The rules of paragraphs (3) to the loss from sources within the United States and (4) of subsection (e) shall apply for pur- ings and profits for such 5-taxable-year period, previously allocated to those income categories. poses of this subsection, except that paragraph or ‘‘(B) INCOME CATEGORY.—For purposes of this ‘‘(ii) deals with any person in any manner not paragraph, the term ‘income category’ has the (4) shall be applied on a worldwide affiliated group basis. clearly reflecting the income of the corporation meaning given such term by subsection (as determined under principles similar to the ‘‘(4) TREATMENT OF CERTAIN FINANCIAL INSTI- (f)(5)(E)(i). principles of section 482), ‘‘(4) COORDINATION WITH SUBSECTION (f).—The TUTIONS.— an amount of indebtedness of the electing finan- Secretary shall prescribe such regulations as ‘‘(A) IN GENERAL.—For purposes of paragraph cial institution group equal to the excess dismay be necessary to coordinate the provisions of (1), any corporation described in subparagraph tribution or the understatement or overstate- this subsection with the provisions of subsection (B) shall be treated as an includible corporation ment of income, as the case may be, shall be re- (f).’’. for purposes of section 1504 only for purposes of (b) CONFORMING AMENDMENTS.— applying this subsection separately to corpora- characterized (for the taxable year and subse- (1) Section 535(d)(2) is amended by striking tions so described. quent taxable years) for purposes of this para- ‘‘section 904(g)(6)’’ and inserting ‘‘section ‘‘(B) DESCRIPTION.—A corporation is described graph as indebtedness of the worldwide affili- 904(h)(6)’’. in this subparagraph if— ated group (excluding the electing financial in- (2) Subparagraph (A) of section 936(a)(2) is ‘‘(i) such corporation is a financial institution stitution group). If a corporation has not been amended by striking ‘‘section 904(f)’’ and insert- described in section 581 or 591, in existence for 5 taxable years, this subpara- ing ‘‘subsections (f) and (g) of section 904’’. ‘‘(ii) the business of such financial institution graph shall be applied with respect to the period (c) EFFECTIVE DATE.—The amendments made is predominantly with persons other than reit was in existence. by this section shall apply to losses for taxable lated persons (within the meaning of subsection ‘‘(D) ELECTION.—An election under this para- years beginning after December 31, 2006. (d)(4)) or their customers, and graph with respect to any financial institution SEC. 205. INTEREST EXPENSE ALLOCATION ‘‘(iii) such financial institution is required by group may be made only by the common parent RULES. State or Federal law to be operated separately of the pre-election worldwide affiliated group (a) ELECTION TO ALLOCATE ON WORLDWIDE from any other entity which is not such an in- and may be made only for the first taxable year BASIS.—Section 864 is amended by redesignating stitution. beginning after December 31, 2008, in which

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such affiliated group includes 1 or more finan- ‘‘(A) COMMODITY HEDGING TRANSACTIONS.— year 25 percent or more in value of the out- cial corporations. Such an election, once made, For purposes of paragraph (1)(C)(i), the term standing stock of the corporation is owned, di- shall apply to all financial corporations which ‘commodity hedging transaction’ means any rectly or indirectly, by or for the individual who are members of the electing financial institution transaction with respect to a commodity if such has performed, is to perform, or may be des- group for such taxable year and all subsequent transaction— ignated (by name or by description) as the one years unless revoked with the consent of the ‘‘(i) is a hedging transaction as defined in sec- to perform, such services.’’. Secretary. tion 1221(b)(2), determined— (c) CONFORMING AMENDMENTS.— ‘‘(E) DEFINITIONS RELATING TO GROUPS.—For ‘‘(I) without regard to subparagraph (A)(ii) (1) Section 1(h) is amended— purposes of this paragraph— thereof, (A) in paragraph (10), by inserting ‘‘and’’ at ‘‘(i) PRE-ELECTION WORLDWIDE AFFILIATED ‘‘(II) by applying subparagraph (A)(i) thereof the end of subparagraph (F), by striking sub- GROUP.—The term ‘pre-election worldwide affili- by substituting ‘ordinary property or property paragraph (G), and by redesignating subpara- ated group’ means, with respect to a corpora- described in section 1231(b)’ for ‘ordinary prop- graph (H) as subparagraph (G), and tion, the worldwide affiliated group of which erty’, and (B) by striking ‘‘a foreign personal holding such corporation would (but for an election ‘‘(III) by substituting ‘controlled foreign cor- company (as defined in section 552), a foreign under this paragraph) be a member for purposes poration’ for ‘taxpayer’ each place it appears, investment company (as defined in section of applying paragraph (1). and 1246(b)), or’’ in paragraph (11)(C)(iii). ‘‘(ii) ELECTING FINANCIAL INSTITUTION ‘‘(ii) is clearly identified as such in accord- (2) Section 163(e)(3)(B), as amended by this GROUP.—The term ‘electing financial institution ance with section 1221(a)(7). Act, is amended by striking ‘‘which is a foreign group’ means the group of corporations to ‘‘(B) TREATMENT OF DEALER ACTIVITIES UNDER personal holding company (as defined in section which this subsection applies separately by rea- PARAGRAPH (1)(C).—Commodities with respect to 552), a controlled foreign corporation (as defined son of the application of paragraph (4)(A) and which gains and losses are not taken into ac- in section 957), or’’ and inserting ‘‘which is a which includes financial corporations by reason count under paragraph (2)(C) in computing a controlled foreign corporation (as defined in sec- of an election under subparagraph (A). controlled foreign corporation’s foreign personal tion 957) or’’. ‘‘(F) REGULATIONS.—The Secretary shall pre- holding company income shall not be taken into (3) Paragraph (2) of section 171(c) is amend- scribe such regulations as may be appropriate to account in applying the substantially all test ed— carry out this subsection, including regula- under paragraph (1)(C)(ii) to such corporation. (A) by striking ‘‘, or by a foreign personal holding company, as defined in section 552’’, tions— ‘‘(C) REGULATIONS.—The Secretary shall pre- ‘‘(i) providing for the direct allocation of in- scribe such regulations as are appropriate to and (B) by striking ‘‘, or foreign personal holding terest expense in other circumstances where carry out the purposes of paragraph (1)(C) in such allocation would be appropriate to carry company’’. the case of transactions involving related par- (4) Paragraph (2) of section 245(a) is amended out the purposes of this subsection, ties.’’. by striking ‘‘foreign personal holding company ‘‘(ii) preventing assets or interest expense from (c) MODIFICATION OF EXCEPTION FOR DEAL- or’’. being taken into account more than once, and ERS.—Clause (i) of section 954(c)(2)(C) is amend- (5) Section 267(a)(3)(B), as amended by this ‘‘(iii) dealing with changes in members of any ed by inserting ‘‘and transactions involving Act, is amended by striking ‘‘to a foreign per- group (through acquisitions or otherwise) treat- physical settlement’’ after ‘‘(including hedging sonal holding company (as defined in section ed under this paragraph as an affiliated group transactions’’. 552), a controlled foreign corporation (as defined for purposes of this subsection. (d) EFFECTIVE DATE.—The amendments made in section 957), or’’ and inserting ‘‘to a con- ‘‘(6) ELECTION.—An election to have this sub- by this section shall apply to transactions en- trolled foreign corporation (as defined in section section apply with respect to any worldwide af- tered into after December 31, 2004. 957) or’’. filiated group may be made only by the common Subtitle B—International Tax Simplification (6) Section 312 is amended by striking sub- parent of the domestic affiliated group referred SEC. 211. REPEAL OF FOREIGN PERSONAL HOLD- section (j). to in paragraph (1)(C) and may be made only (7) Subsection (m) of section 312 is amended by for the first taxable year beginning after Decem- ING COMPANY RULES AND FOREIGN INVESTMENT COMPANY RULES. striking ‘‘, a foreign investment company (with- ber 31, 2008, in which a worldwide affiliated (a) GENERAL RULE.—The following provisions in the meaning of section 1246(b)), or a foreign group exists which includes such affiliated are hereby repealed: personal holding company (within the meaning group and at least 1 foreign corporation. Such (1) Part III of subchapter G of chapter 1 (re- of section 552)’’. an election, once made, shall apply to such com- lating to foreign personal holding companies). (8) Subsection (e) of section 443 is amended by mon parent and all other corporations which (2) Section 1246 (relating to gain on foreign in- striking paragraph (3) and by redesignating are members of such worldwide affiliated group vestment company stock). paragraphs (4) and (5) as paragraphs (3) and for such taxable year and all subsequent years (3) Section 1247 (relating to election by foreign (4), respectively. unless revoked with the consent of the Sec- investment companies to distribute income cur- (9) Subparagraph (B) of section 465(c)(7) is retary.’’. rently). amended by adding ‘‘or’’ at the end of clause (b) EXPANSION OF REGULATORY AUTHORITY.— (b) EXEMPTION OF FOREIGN CORPORATIONS (i), by striking clause (ii), and by redesignating Paragraph (7) of section 864(e) is amended— FROM PERSONAL HOLDING COMPANY RULES.— clause (iii) as clause (ii). (1) by inserting before the comma at the end (1) IN GENERAL.—Subsection (c) of section 542 (10) Paragraph (1) of section 543(b) is amend- of subparagraph (B) ‘‘and in other cir- (relating to exceptions) is amended— ed by inserting ‘‘and’’ at the end of subpara- cumstances where such allocation would be ap- (A) by striking paragraph (5) and inserting graph (A), by striking ‘‘, and’’ at the end of propriate to carry out the purposes of this sub- the following: subparagraph (B) and inserting a period, and section’’, and ‘‘(5) a foreign corporation,’’, by striking subparagraph (C). (2) by striking ‘‘and’’ at the end of subpara- (B) by striking paragraphs (7) and (10) and by (11) Paragraph (1) of section 562(b) is amend- graph (E), by redesignating subparagraph (F) redesignating paragraphs (8) and (9) as para- ed by striking ‘‘or a foreign personal holding as subparagraph (G), and by inserting after sub- graphs (7) and (8), respectively, company described in section 552’’. paragraph (E) the following new subparagraph: (C) by inserting ‘‘and’’ at the end of para- (12) Section 563 is amended— ‘‘(F) preventing assets or interest expense from graph (7) (as so redesignated), and (A) by striking subsection (c), being taken into account more than once, and’’. (B) by redesignating subsection (d) as sub- (D) by striking ‘‘; and’’ at the end of para- (c) EFFECTIVE DATE.—The amendments made section (c), and graph (8) (as so redesignated) and inserting a by this section shall apply to taxable years be- (C) by striking ‘‘subsection (a), (b), or (c)’’ in period. ginning after December 31, 2008. subsection (c) (as so redesignated) and inserting (2) TREATMENT OF INCOME FROM PERSONAL SEC. 206. DETERMINATION OF FOREIGN PER- ‘‘subsection (a) or (b)’’. SERVICE CONTRACTS.—Paragraph (1) of section SONAL HOLDING COMPANY INCOME (13) Subsection (d) of section 751 is amended WITH RESPECT TO TRANSACTIONS 954(c) is amended by adding at the end the fol- by adding ‘‘and’’ at the end of paragraph (2), IN COMMODITIES. lowing new subparagraph: by striking paragraph (3), by redesignating ‘‘(I) PERSONAL SERVICE CONTRACTS.— (a) IN GENERAL.—Clauses (i) and (ii) of sec- paragraph (4) as paragraph (3), and by striking ‘‘(i) Amounts received under a contract under tion 954(c)(1)(C) (relating to commodity trans- ‘‘paragraph (1), (2), or (3)’’ in paragraph (3) (as which the corporation is to furnish personal actions) are amended to read as follows: so redesignated) and inserting ‘‘paragraph (1) or services if— ‘‘(i) arise out of commodity hedging trans- (2)’’. actions (as defined in paragraph (4)(A)), ‘‘(I) some person other than the corporation (14) Paragraph (2) of section 864(d) is amend- ‘‘(ii) are active business gains or losses from has the right to designate (by name or by deed by striking subparagraph (A) and by redesig- the sale of commodities, but only if substantially scription) the individual who is to perform the nating subparagraphs (B) and (C) as subpara- all of the controlled foreign corporation’s com- services, or graphs (A) and (B), respectively. modities are property described in paragraph ‘‘(II) the individual who is to perform the (15)(A) Subparagraph (A) of section 898(b)(1) (1), (2), or (8) of section 1221(a), or’’. services is designated (by name or by descrip- is amended to read as follows: (b) DEFINITION AND SPECIAL RULES.—Sub- tion) in the contract, and ‘‘(A) which is treated as a controlled foreign section (c) of section 954 is amended by adding ‘‘(ii) amounts received from the sale or other corporation for any purpose under subpart F of after paragraph (3) the following new para- disposition of such a contract. part III of this subchapter, and’’. graph: This subparagraph shall apply with respect to (B) Subparagraph (B) of section 898(b)(2) is ‘‘(4) DEFINITION AND SPECIAL RULES RELATING amounts received for services under a particular amended by striking ‘‘and sections 551(f) and TO COMMODITY TRANSACTIONS.— contract only if at some time during the taxable 554, whichever are applicable,’’.

VerDate jul 14 2003 01:25 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00018 Fmt 4624 Sfmt 6333 E:\CR\FM\A03MR6.037 S03PT1 March 3, 2004 CONGRESSIONAL RECORD — SENATE S2037 (C) Paragraph (3) of section 898(b) is amended paragraphs (6) and (7) as paragraphs (5) and paragraph (8) and by inserting after paragraph to read as follows: (6), respectively. (6) the following new paragraph: ‘‘(3) UNITED STATES SHAREHOLDER.—The term (25) Paragraph (2) of section 1260(c) is amend- ‘‘(7) CONSTRUCTIVE OWNERSHIP THROUGH ‘United States shareholder’ has the meaning ed by striking subparagraphs (H) and (I) and by PARTNERSHIPS.—Stock owned, directly or indi- given to such term by section 951(b), except that, redesignating subparagraph (J) as subpara- rectly, by or for a partnership shall be consid- in the case of a foreign corporation having re- graph (H). ered as being owned proportionately by its part- lated person insurance income (as defined in (26)(A) Subparagraph (F) of section 1291(b)(3) ners. Stock considered to be owned by a person section 953(c)(2)), the Secretary may treat any is amended by striking ‘‘551(d), 959(a),’’ and in- by reason of the preceding sentence shall, for person as a United States shareholder for pur- serting ‘‘959(a)’’. purposes of applying such sentence, be treated poses of this section if such person is treated as (B) Subsection (e) of section 1291 is amended as actually owned by such person. The Sec- a United States shareholder under section by inserting ‘‘(as in effect on the day before the retary may prescribe such regulations as may be 953(c)(1).’’. date of the enactment of the Jumpstart Our necessary to carry out the purposes of this para- (D) Subsection (c) of section 898 is amended to Business Strength (JOBS) Act)’’ after ‘‘section graph, including rules to account for special read as follows: 1246’’. partnership allocations of dividends, credits, ‘‘(c) DETERMINATION OF REQUIRED YEAR.— (27) Paragraph (2) of section 1294(a) is amend- and other incidents of ownership of stock in de- ‘‘(1) IN GENERAL.—The required year is— ed to read as follows: termining proportionate ownership.’’. ‘‘(A) the majority U.S. shareholder year, or ‘‘(2) ELECTION NOT PERMITTED WHERE (b) CLARIFICATION OF COMPARABLE ATTRIBU- ‘‘(B) if there is no majority U.S. shareholder AMOUNTS OTHERWISE INCLUDIBLE UNDER SECTION TION UNDER SECTION 901(b)(5).—Paragraph (5) year, the taxable year prescribed under regula- 951.—The taxpayer may not make an election tions. of section 901(b) is amended by striking ‘‘any in- under paragraph (1) with respect to the undis- dividual’’ and inserting ‘‘any person’’. ‘‘(2) 1-MONTH DEFERRAL ALLOWED.—A speci- tributed PFIC earnings tax liability attributable (c) EFFECTIVE DATE.—The amendments made fied foreign corporation may elect, in lieu of the to a qualified electing fund for the taxable year by this section shall apply to taxes of foreign taxable year under paragraph (1)(A), a taxable if any amount is includible in the gross income corporations for taxable years of such corpora- year beginning 1 month earlier than the major- of the taxpayer under section 951 with respect to tions beginning after the date of the enactment ity U.S. shareholder year. such fund for such taxable year.’’. ‘‘(3) MAJORITY U.S. SHAREHOLDER YEAR.— (28) Section 6035 is hereby repealed. of this Act. ‘‘(A) IN GENERAL.—For purposes of this sub- (29) Subparagraph (D) of section 6103(e)(1) is SEC. 214. APPLICATION OF UNIFORM CAPITALIZA- section, the term ‘majority U.S. shareholder amended by striking clause (iv) and redesig- TION RULES TO FOREIGN PERSONS. year’ means the taxable year (if any) which, on nating clauses (v) and (vi) as clauses (iv) and (a) IN GENERAL.—Section 263A(c) (relating to each testing day, constituted the taxable year (v), respectively. exceptions) is amended by adding at the end the of— (30) Subparagraph (B) of section 6501(e)(1) is following new paragraph: ‘‘(i) each United States shareholder described amended to read as follows: ‘‘(7) FOREIGN PERSONS.—Except for purposes in subsection (b)(2)(A), and ‘‘(B) CONSTRUCTIVE DIVIDENDS.—If the tax- of applying sections 871(b)(1) and 882(a)(1), this ‘‘(ii) each United States shareholder not de- payer omits from gross income an amount prop- section shall not apply to any taxpayer who is scribed in clause (i) whose stock was treated as erly includible therein under section 951(a), the not a United States person if such taxpayer cap- owned under subsection (b)(2)(B) by any share- tax may be assessed, or a proceeding in court for italizes costs of produced property or property holder described in such clause. the collection of such tax may be done without acquired for resale by applying the method used ‘‘(B) TESTING DAY.—The testing days shall assessing, at any time within 6 years after the to ascertain the income, profit, or loss for pur- be— return was filed.’’. ‘‘(i) the first day of the corporation’s taxable poses of reports or statements to shareholders, (31) Subsection (a) of section 6679 is amend- year (determined without regard to this section), partners, other proprietors, or beneficiaries, or ed— for credit purposes.’’. or (A) by striking ‘‘6035, 6046, and 6046A’’ in ‘‘(ii) the days during such representative pe- (b) EFFECTIVE DATE.— paragraph (1) and inserting ‘‘6046 and 6046A’’, riod as the Secretary may prescribe.’’. (1) IN GENERAL.—The amendment made by and (16) Clause (ii) of section 904(d)(2)(A) is subsection (a) shall apply to taxable years be- (B) by striking paragraph (3). amended to read as follows: ginning after December 31, 2004. (32) Sections 170(f)(10)(A), 508(d), 4947, and ‘‘(ii) CERTAIN AMOUNTS INCLUDED.—Except as 4948(c)(4) are each amended by striking (2) CHANGE IN METHOD OF ACCOUNTING.—In provided in clause (iii), the term ‘passive in- ‘‘556(b)(2),’’ each place it appears. the case of any taxpayer required by the amend- come’ includes, except as provided in subpara- (33) The table of parts for subchapter G of ment made by this section to change its method graph (E)(iii) or paragraph (3)(I), any amount chapter 1 is amended by striking the item relat- of accounting for its first taxable year beginning includible in gross income under section 1293 ing to part III. after December 31, 2004— (relating to certain passive foreign investment (34) The table of sections for part IV of sub- (A) such change shall be treated as initiated companies).’’. chapter P of chapter 1 is amended by striking by the taxpayer, (17)(A) Subparagraph (A) of section 904(g)(1), (B) such change shall be treated as made with as redesignated by section 204, is amended by the items relating to sections 1246 and 1247. (35) The table of sections for subpart A of part the consent of the Secretary of the Treasury, adding ‘‘or’’ at the end of clause (i), by striking III of subchapter A of chapter 61 is amended by and clause (ii), and by redesignating clause (iii) as striking the item relating to section 6035. (C) the net amount of the adjustments re- clause (ii). (B) The paragraph heading of paragraph (2) (d) EFFECTIVE DATE.—The amendments made quired to be taken into account by the taxpayer of section 904(g), as so redesignated, is amended by this section shall apply to taxable years of under section 481 of the Internal Revenue Code foreign corporations beginning after December of 1986 shall be taken into account in such first by striking ‘‘FOREIGN PERSONAL HOLDING OR’’. (18) Section 951 is amended by striking sub- 31, 2004, and to taxable years of United States year. sections (c) and (d) and by redesignating sub- shareholders with or within which such taxable SEC. 215. REPEAL OF WITHHOLDING TAX ON DIVI- sections (e) and (f) as subsections (c) and (d), years of foreign corporations end. DENDS FROM CERTAIN FOREIGN respectively. SEC. 212. EXPANSION OF DE MINIMIS RULE CORPORATIONS. (19) Paragraph (3) of section 989(b) is amend- UNDER SUBPART F. (a) IN GENERAL.—Paragraph (2) of section ed by striking ‘‘, 551(a),’’. (a) IN GENERAL.—Clause (ii) of section 871(i) (relating to tax not to apply to certain in- (20) Paragraph (5) of section 1014(b) is amend- 954(b)(3)(A) (relating to de minimis, etc., rules) terest and dividends) is amended by adding at ed by inserting ‘‘and before January 1, 2005,’’ is amended by striking ‘‘$1,000,000’’ and insert- the end the following new subparagraph: after ‘‘August 26, 1937,’’. ing ‘‘$5,000,000’’. ‘‘(D) Dividends paid by a foreign corporation (21) Subsection (a) of section 1016 is amended (b) TECHNICAL AMENDMENTS.— which are treated under section 861(a)(2)(B) as by striking paragraph (13). (1) Clause (ii) of section 864(d)(5)(A) is amend- income from sources within the United States.’’. ed by striking ‘‘$1,000,000’’ and inserting (22)(A) Paragraph (3) of section 1212(a) is (b) EFFECTIVE DATE.—The amendment made ‘‘$5,000,000’’. amended to read as follows: by this section shall apply to payments made (2) Clause (i) of section 881(c)(5)(A) is amend- ‘‘(3) SPECIAL RULES ON CARRYBACKS.—A net after December 31, 2004. capital loss of a corporation shall not be carried ed by striking ‘‘$1,000,000’’ and inserting back under paragraph (1)(A) to a taxable year— ‘‘$5,000,000’’. SEC. 216. REPEAL OF SPECIAL CAPITAL GAINS ‘‘(A) for which it is a regulated investment (c) EFFECTIVE DATE.—The amendments made TAX ON ALIENS PRESENT IN THE by this section shall apply to taxable years of UNITED STATES FOR 183 DAYS OR company (as defined in section 851), or MORE. ‘‘(B) for which it is a real estate investment foreign corporations beginning after December trust (as defined in section 856).’’. 31, 2004, and to taxable years of United States (a) IN GENERAL.—Subsection (a) of section 871 (B) The amendment made by subparagraph shareholders with or within which such taxable is amended by striking paragraph (2) and by re- (A) shall apply to taxable years beginning after years of foreign corporations end. designating paragraph (3) as paragraph (2). (b) CONFORMING AMENDMENT.—Section 1441(g) December 31, 2004. SEC. 213. ATTRIBUTION OF STOCK OWNERSHIP (23) Section 1223 is amended by striking para- THROUGH PARTNERSHIPS TO APPLY is amended is amended by striking ‘‘section graph (10) and by redesignating the following IN DETERMINING SECTION 902 AND 871(a)(3)’’ and inserting ‘‘section 871(a)(2)’’. paragraphs accordingly. 960 CREDITS. (c) EFFECTIVE DATE.—The amendments made (24) Subsection (d) of section 1248 is amended (a) IN GENERAL.—Subsection (c) of section 902 by this section shall apply to taxable years be- by striking paragraph (5) and by redesignating is amended by redesignating paragraph (7) as ginning after December 31, 2003.

VerDate jul 14 2003 01:25 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00019 Fmt 4624 Sfmt 6333 E:\CR\FM\A03MR6.037 S03PT1 S2038 CONGRESSIONAL RECORD — SENATE March 3, 2004 Subtitle C—Additional International Tax tions providing for coordination of this para- ‘‘(ii) the activity is performed in the home Provisions graph with the provisions of subchapter K. country of the related person, and SEC. 221. ACTIVE LEASING INCOME FROM AIR- ‘‘(B) 25-PERCENT OWNER.—For purposes of this ‘‘(iii) the related person is compensated on an CRAFT AND VESSELS. paragraph, the term ‘25-percent owner’ means a arm’s-length basis for the performance of the ac- (a) IN GENERAL.—Section 954(c)(2) is amended controlled foreign corporation which owns di- tivity by its employees and such compensation is by adding at the end the following new sub- rectly 25 percent or more of the capital or profits treated as earned by such person in its home paragraph: interest in a partnership. For purposes of the country for purposes of the home country’s tax ‘‘(D) CERTAIN RENTS, ETC.— preceding sentence, if a controlled foreign cor- laws.’’. FFECTIVE ATE ‘‘(i) IN GENERAL.—Foreign personal holding poration is a shareholder or partner of a cor- (b) E D .—The amendment made company income shall not include qualified poration or partnership, the controlled foreign by this section shall apply to taxable years of leasing income derived from or in connection corporation shall be treated as owning directly such foreign corporations beginning after De- with the leasing or rental of any aircraft or ves- its proportionate share of any such capital or cember 31, 2004, and to taxable years of United sel. profits interest held directly or indirectly by States shareholders with or within which such ‘‘(ii) QUALIFIED LEASING INCOME.—For pur- such corporation or partnership’’. taxable years of such foreign corporations end. poses of this subparagraph, the term ‘qualified (b) EFFECTIVE DATE.—The amendment made SEC. 227. UNITED STATES PROPERTY NOT TO IN- leasing income’ means rents and gains derived by this section shall apply to taxable years of CLUDE CERTAIN ASSETS OF CON- TROLLED FOREIGN CORPORATION. in the active conduct of a trade or business of foreign corporations beginning after December (a) IN GENERAL.—Section 956(c)(2) (relating to leasing with respect to which the controlled for- 31, 2004, and to taxable years of United States exceptions from property treated as United eign corporation conducts substantial activity, shareholders with or within which such taxable States property) is amended by striking ‘‘and’’ but only if— years of foreign corporations end. at the end of subparagraph (J), by striking the ‘‘(I) the leased property is used by the lessee SEC. 224. ELECTION NOT TO USE AVERAGE EX- period at the end of subparagraph (K) and in- or other end-user in foreign commerce and pre- CHANGE RATE FOR FOREIGN TAX serting a semicolon, and by adding at the end dominantly outside the United States, and PAID OTHER THAN IN FUNCTIONAL CURRENCY. the following new subparagraphs: ‘‘(II) the lessee or other end-user is not a re- (a) IN GENERAL.—Paragraph (1) of section ‘‘(L) securities acquired and held by a con- lated person (as defined in subsection (d)(3)). 986(a) (relating to determination of foreign taxes trolled foreign corporation in the ordinary Any amount not treated as foreign personal and foreign corporation’s earnings and profits) course of its business as a dealer in securities holding income under this subparagraph shall is amended by redesignating subparagraph (D) if— not be treated as foreign base company shipping as subparagraph (E) and by inserting after sub- ‘‘(i) the dealer accounts for the securities as income.’’. paragraph (C) the following new subparagraph: securities held primarily for sale to customers in (b) CONFORMING AMENDMENT.—Section ‘‘(D) ELECTIVE EXCEPTION FOR TAXES PAID the ordinary course of business, and 954(c)(1)(B) is amended by inserting ‘‘or (2)(D)’’ OTHER THAN IN FUNCTIONAL CURRENCY.— ‘‘(ii) the dealer disposes of the securities (or after ‘‘paragraph (2)(A)’’. ‘‘(i) IN GENERAL.—At the election of the tax- such securities mature while held by the dealer) (c) EFFECTIVE DATE.—The amendments made payer, subparagraph (A) shall not apply to any within a period consistent with the holding of by this section shall apply to taxable years of foreign income taxes the liability for which is securities for sale to customers in the ordinary foreign corporations beginning after December denominated in any currency other than in the course of business; and 31, 2006, and to taxable years of United States taxpayer’s functional currency. ‘‘(M) an obligation of a United States person shareholders with or within which such taxable ‘‘(ii) APPLICATION TO QUALIFIED BUSINESS which— years of foreign corporations end. UNITS.—An election under this subparagraph ‘‘(i) is not a domestic corporation, and ‘‘(ii) is not— SEC. 222. LOOK-THRU TREATMENT OF PAYMENTS may apply to foreign income taxes attributable ‘‘(I) a United States shareholder (as defined BETWEEN RELATED CONTROLLED to a qualified business unit in accordance with in section 951(b)) of the controlled foreign cor- FOREIGN CORPORATIONS UNDER regulations prescribed by the Secretary. poration, or FOREIGN PERSONAL HOLDING COM- ‘‘(iii) ELECTION.—Any such election shall ‘‘(II) a partnership, estate, or trust in which PANY INCOME RULES. apply to the taxable year for which made and the controlled foreign corporation, or any re- (a) IN GENERAL.—Subsection (c) of section 954, all subsequent taxable years unless revoked with lated person (as defined in section 954(d)(3)), is as amended by this Act, is amended by adding the consent of the Secretary.’’. a partner, beneficiary, or trustee immediately after paragraph (4) the following new para- (b) EFFECTIVE DATE.—The amendments made after the acquisition of any obligation of such graph: by this section shall apply to taxable years be- partnership, estate, or trust by the controlled ‘‘(5) LOOK-THRU IN THE CASE OF RELATED CON- ginning after December 31, 2004. TROLLED FOREIGN CORPORATIONS.—For purposes foreign corporation.’’. SEC. 225. TREATMENT OF INCOME TAX BASE DIF- (b) CONFORMING AMENDMENT.—Section of this subsection, dividends, interest, rents, and FERENCES. 956(c)(2) is amended by striking ‘‘and (K)’’ in royalties received or accrued from a controlled (a) IN GENERAL.—Paragraph (2) of section the last sentence and inserting ‘‘, (K), and (L)’’. foreign corporation which is a related person (as 904(d) is amended by redesignating subpara- defined in subsection (b)(9)) shall not be treated (c) EFFECTIVE DATE.—The amendments made graphs (H) and (I) as subparagraphs (I) and (J), by this section shall apply to taxable years of as foreign personal holding company income to respectively, and by inserting after subpara- the extent attributable or properly allocable (de- foreign corporations beginning after December graph (G) the following new subparagraph: 31, 2004, and to taxable years of United States termined under rules similar to the rules of sub- ‘‘(H) TREATMENT OF INCOME TAX BASE DIF- paragraphs (C) and (D) of section 904(d)(3)) to shareholders with or within which such taxable FERENCES.— years of foreign corporations end. income of the related person which is not sub- ‘‘(i) IN GENERAL.—A taxpayer may elect to part F income (as defined in section 952). The treat tax imposed under the law of a foreign SEC. 228. PROVIDE EQUAL TREATMENT FOR IN- TEREST PAID BY FOREIGN PARTNER- Secretary shall prescribe such regulations as country or possession of the United States on an may be appropriate to prevent the abuse of the SHIPS AND FOREIGN CORPORA- amount which does not constitute income under TIONS. purposes of this paragraph.’’. United States tax principles as tax imposed on (a) IN GENERAL.—Paragraph (1) of section (b) EFFECTIVE DATE.—The amendment made income described in subparagraph (C) or (I) of 861(a) is amended by striking ‘‘and’’ at the end by this section shall apply to taxable years of paragraph (1). of subparagraph (A), by striking the period at foreign corporations beginning after December ‘‘(ii) ELECTION IRREVOCABLE.—Any such elec- the end of subparagraph (B) and inserting ‘‘, 31, 2004, and to taxable years of United States tion shall apply to the taxable year for which and’’, and by adding at the end the following shareholders with or within which such taxable made and all subsequent taxable years unless new subparagraph: years of foreign corporations end. revoked with the consent of the Secretary.’’. ‘‘(C) in the case of a foreign partnership in SEC. 223. LOOK-THRU TREATMENT FOR SALES OF (b) EFFECTIVE DATE.—The amendments made which United States persons do not hold di- PARTNERSHIP INTERESTS. by this section shall apply to taxable years end- rectly or indirectly 20 percent or more of either (a) IN GENERAL.—Section 954(c) (defining for- ing after the date of the enactment of this Act. the capital or profits interests, any interest not eign personal holding company income), as SEC. 226. MODIFICATION OF EXCEPTIONS UNDER paid by a trade or business engaged in by the amended by this Act, is amended by adding SUBPART F FOR ACTIVE FINANCING. partnership in the United States and not allo- after paragraph (5) the following new para- (a) IN GENERAL.—Section 954(h)(3) is amended cable to income which is effectively connected graph: by adding at the end the following: (or treated as effectively connected) with the ‘‘(6) LOOK-THRU RULE FOR CERTAIN PARTNER- ‘‘(E) DIRECT CONDUCT OF ACTIVITIES.—For conduct of a trade or business in the United SHIP SALES.— purposes of subparagraph (A)(ii)(II), an activity States.’’. ‘‘(A) IN GENERAL.—In the case of any sale by shall be treated as conducted directly by an eli- (b) EFFECTIVE DATE.—The amendments made a controlled foreign corporation of an interest in gible controlled foreign corporation or qualified by this section shall apply to taxable years be- a partnership with respect to which such cor- business unit in its home country if the activity ginning after December 31, 2003. poration is a 25-percent owner, such corporation is performed by employees of a related person SEC. 229. CLARIFICATION OF TREATMENT OF shall be treated for purposes of this subsection and— CERTAIN TRANSFERS OF INTAN- as selling the proportionate share of the assets ‘‘(i) the related person is an eligible controlled GIBLE PROPERTY. of the partnership attributable to such interest. foreign corporation the home country of which (a) IN GENERAL.—Subparagraph (C) of section The Secretary shall prescribe such regulations is the same as the home country of the corpora- 367(d)(2) is amended by adding at the end the as may be appropriate to prevent abuse of the tion or unit to which subparagraph (A)(ii)(II) is following new sentence: ‘‘For purposes of apply- purposes of this paragraph, including regula- being applied, ing section 904(d), any such amount shall be

VerDate jul 14 2003 01:25 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00020 Fmt 4624 Sfmt 6333 E:\CR\FM\A03MR6.037 S03PT1 March 3, 2004 CONGRESSIONAL RECORD — SENATE S2039 treated in the same manner as if such amount payment for executive compensation), including filing a consolidated return under section 1501 were a royalty.’’. as a source for the funding of worker hiring and shall be treated as a single taxpayer for pur- (b) EFFECTIVE DATE.—The amendment made training, infrastructure, research and develop- poses of this section. by this section shall apply to amounts treated as ment, capital investments, or the financial sta- ‘‘(7) DESIGNATION OF DIVIDENDS.—Subject to received pursuant to section 367(d)(2) of the In- bilization of the corporation for the purposes of subsection (b)(2), the taxpayer shall designate ternal Revenue Code of 1986 on or after August job retention or creation, over the particular dividends received during the tax- 5, 1997. ‘‘(B) the base dividend amount. able year from 1 or more corporations which are SEC. 230. MODIFICATION OF THE TREATMENT OF ‘‘(2) BASE DIVIDEND AMOUNT.—The term ‘base controlled foreign corporations in which it is a CERTAIN REIT DISTRIBUTIONS AT- dividend amount’ means an amount designated United States shareholder which are dividends TRIBUTABLE TO GAIN FROM SALES under subsection (c)(7), but not less than the av- excluded from the excess qualified foreign dis- OR EXCHANGES OF UNITED STATES erage amount of dividends received during the tribution amount. The total amount of such des- REAL PROPERTY INTERESTS. fixed base period from 1 or more corporations ignated dividends shall equal the base dividend (a) IN GENERAL.—Paragraph (1) of section which are controlled foreign corporations in amount. 897(h) (relating to look-through of distributions) which the taxpayer is a United States share- is amended by adding at the end the following ‘‘(8) TREATMENT OF EXPENSES, LOSSES, AND holder on the date such dividends are paid. DEDUCTIONS.—Any expenses, losses, or deduc- new sentence: ‘‘Notwithstanding the preceding ‘‘(3) FIXED BASE PERIOD.— sentence, any distribution by a REIT with re- tions of the taxpayer allowable under sub- ‘‘(A) IN GENERAL.—The term ‘fixed base pe- chapter B— spect to any class of stock which is regularly riod’ means each of 3 taxable years which are traded on an established securities market lo- ‘‘(A) shall not be applied to reduce the among the 5 most recent taxable years of the amounts described in subsection (a)(1), and cated in the United States shall not be treated taxpayer ending on or before December 31, 2002, as gain recognized from the sale or exchange of ‘‘(B) shall be applied to reduce other income determined by disregarding— of the taxpayer (determined without regard to a United States real property interest if the ‘‘(i) the 1 taxable year for which the taxpayer the amounts described in subsection (a)(1)). shareholder did not own more than 5 percent of had the highest amount of dividends from 1 or ‘‘(d) ELECTION.— such class of stock at any time during the tax- more corporations which are controlled foreign ‘‘(1) IN GENERAL.—An election under this sec- able year.’’. corporations relative to the other 4 taxable tion shall be made on the taxpayer’s timely filed (b) CONFORMING AMENDMENT.—Paragraph (3) years, and of section 857(b) (relating to capital gains) is ‘‘(ii) the 1 taxable year for which the taxpayer income tax return for the first taxable year (de- amended by adding at the end the following had the lowest amount of dividends from such termined by taking extensions into account) new subparagraph: corporations relative to the other 4 taxable ending 120 days or more after the date of the en- ‘‘(F) CERTAIN DISTRIBUTIONS.—In the case of years. actment of this section, and, once made, may be a shareholder of a real estate investment trust to ‘‘(B) SHORTER PERIOD.—If the taxpayer has revoked only with the consent of the Secretary. whom section 897 does not apply by reason of fewer than 5 taxable years ending on or before ‘‘(2) ALL CONTROLLED FOREIGN CORPORA- the second sentence of section 897(h)(1), the December 31, 2002, then in lieu of applying sub- TIONS.—The election shall apply to all corpora- amount which would be included in computing paragraph (A), the fixed base period shall in- tions which are controlled foreign corporations long-term capital gains for such shareholder clude all the taxable years of the taxpayer end- in which the taxpayer is a United States share- under subparagraph (B) or (D) (without regard ing on or before December 31, 2002. holder during the taxable year. to this subparagraph)— ‘‘(c) DEFINITIONS AND SPECIAL RULES.—For ‘‘(3) CONSOLIDATED GROUPS.—If a taxpayer is ‘‘(i) shall not be included in computing such purposes of this section— a member of an affiliated group of corporations shareholder’s long-term capital gains, and ‘‘(1) DIVIDENDS.—The term ‘dividend’ has the filing a consolidated return under section 1501 ‘‘(ii) shall be included in such shareholder’s meaning given such term by section 316, except for the taxable year, an election under this sec- gross income as a dividend from the real estate that the term shall include amounts described in tion shall be made by the common parent of the investment trust.’’. section 951(a)(1)(B), but shall not include affiliated group which includes the taxpayer (c) EFFECTIVE DATE.—The amendments made amounts described in sections 78 and 959. and shall apply to all members of the affiliated by this section shall apply to taxable years be- ‘‘(2) CONTROLLED FOREIGN CORPORATIONS AND group. ginning after the date of the enactment of this UNITED STATES SHAREHOLDERS.—The term ‘con- ‘‘(e) REGULATIONS.—The Secretary shall pre- Act. trolled foreign corporation’ has the meaning scribe such regulations as may be necessary and SEC. 231. TOLL TAX ON EXCESS QUALIFIED FOR- given such term by section 957(a) and the term appropriate to carry out the purposes of this EIGN DISTRIBUTION AMOUNT. ‘United States shareholder’ has the meaning section, including regulations under section 55 (a) IN GENERAL.—Subpart F of part III of sub- given such term by section 951(b). and regulations addressing corporations which, chapter N of chapter 1 is amended by adding at ‘‘(3) FOREIGN TAX CREDITS.—The amount of during the fixed base period or thereafter, join the end the following new section: any income, war, profits, or excess profit taxes or leave an affiliated group of corporations fil- ‘‘SEC. 965. TOLL TAX IMPOSED ON EXCESS QUALI- paid (or deemed paid under sections 902 and 960) ing a consolidated return.’’. FIED FOREIGN DISTRIBUTION or accrued by the taxpayer with respect to the (b) CONFORMING AMENDMENT.—The table of AMOUNT. excess qualified foreign distribution amount for sections for subpart F of part III of subchapter ‘‘(a) TOLL TAX IMPOSED ON EXCESS QUALIFIED which a credit would be allowable under section N of chapter 1 is amended by adding at the end FOREIGN DISTRIBUTION AMOUNT.—If a corpora- 901 in the absence of this section, shall be re- the following new item: tion elects the application of this section, a tax duced by 85 percent. No deduction shall be al- shall be imposed on the taxpayer in an amount ‘‘Sec. 965. Toll tax imposed on excess qualified lowed under this chapter for the portion of any equal to 5.25 percent of— foreign distribution amount.’’. ‘‘(1) the taxpayer’s excess qualified foreign tax for which credit is not allowable by reason distribution amount, and of the preceding sentence. (c) EFFECTIVE DATE.—The amendments made ‘‘(2) the amount determined under section 78 ‘‘(4) FOREIGN TAX CREDIT LIMITATION.—For by this section shall apply only to the first tax- which is attributable to such excess qualified purposes of section 904, there shall be dis- able year of the electing taxpayer ending 120 foreign distribution amount. regarded 85 percent of— days or more after the date of the enactment of ‘‘(A) the excess qualified foreign distribution this Act. Such tax shall be imposed in lieu of the tax im- amount, SEC. 232. EXCLUSION OF INCOME DERIVED FROM posed under section 11 or 55 on the amounts de- ‘‘(B) the amount determined under section 78 scribed in paragraphs (1) and (2) for such tax- CERTAIN WAGERS ON HORSE RACES which is attributable to such excess qualified AND DOG RACES FROM GROSS IN- able year. foreign distribution amount, and COME OF NONRESIDENT ALIEN INDI- ‘‘(b) EXCESS QUALIFIED FOREIGN DISTRIBU- ‘‘(C) the amounts (including assets, gross in- VIDUALS. TION AMOUNT.—For purposes of this section— come, and other relevant bases of apportion- (a) IN GENERAL.—Subsection (b) of section 872 ‘‘(1) IN GENERAL.—The term ‘excess qualified ment) which are attributable to the excess quali- (relating to exclusions) is amended by redesig- foreign distribution amount’ means the excess (if fied foreign distribution amount which would, nating paragraphs (5), (6), and (7) as para- any) of— ‘‘(A) the aggregate dividends received by the determined without regard to this section, be graphs (6), (7), and (8), respectively, and insert- taxpayer during the taxable year which are— used to apportion the expenses, losses, and de- ing after paragraph (4) the following new para- ‘‘(i) from 1 or more corporations which are ductions of the taxpayer under section 861 and graph: controlled foreign corporations in which the 864 in determining its taxable income from ‘‘(5) INCOME DERIVED FROM WAGERING TRANS- taxpayer is a United States shareholder on the sources without the United States. ACTIONS IN CERTAIN PARIMUTUEL POOLS.—Gross date such dividends are paid, and For purposes of applying subparagraph (C), the income derived by a nonresident alien indi- ‘‘(ii) described in a domestic reinvestment plan principles of section 864(e)(3)(A) shall apply. vidual from a legal wagering transaction initi- which— ‘‘(5) TREATMENT OF ACQUISITIONS AND DISPOSI- ated outside the United States in a parimutuel ‘‘(I) is approved by the taxpayer’s president, TIONS.—Rules similar to the rules of section pool with respect to a live horse race or dog race chief executive officer, or comparable official be- 41(f)(3) shall apply in the case of acquisitions or in the United States.’’. fore the payment of such dividends and subse- dispositions of controlled foreign corporations (b) CONFORMING AMENDMENT.—Section quently approved by the taxpayer’s board of di- occurring on or after the first day of the earliest 883(a)(4) is amended by striking ‘‘(5), (6), and rectors, management committee, executive com- taxable year taken into account in determining (7)’’ and inserting ‘‘(6), (7), and (8)’’. mittee, or similar body, and the fixed base period. (c) EFFECTIVE DATE.—The amendments made ‘‘(II) provides for the reinvestment of such ‘‘(6) TREATMENT OF CONSOLIDATED GROUPS.— by this section shall apply to wagers made after dividends in the United States (other than as Members of an affiliated group of corporations the date of the enactment of this Act.

VerDate jul 14 2003 01:25 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00021 Fmt 4624 Sfmt 6333 E:\CR\FM\A03MR6.037 S03PT1 S2040 CONGRESSIONAL RECORD — SENATE March 3, 2004 SEC. 233. LIMITATION OF WITHHOLDING TAX FOR shall report to the Committee on Finance of the incurred with respect to the launching of any PUERTO RICO CORPORATIONS. Senate and the Committee on Ways and Means satellite equipment. (a) IN GENERAL.—Subsection (b) of section 881 of the House of Representatives the results of ‘‘(3) LEASED EQUIPMENT.—Such term shall in- is amended by redesignating paragraph (2) as the study conducted under subsection (a), include so much of the purchase price paid by the paragraph (3) and by inserting after paragraph cluding any recommendations for legislative or lessor of qualified equipment subject to a lease (1) the following new paragraph: administrative changes to reduce the compliance described in subsection (c)(2)(B) as is attrib- ‘‘(2) COMMONWEALTH OF PUERTO RICO.—If burden on taxpayers other than large corpora- utable to expenditures incurred by the lessee dividends are received during a taxable year by tions and for such other purposes as the Sec- which would otherwise be described in para- a corporation— retary determines appropriate. graph (1). ‘‘(A) created or organized in, or under the law SEC. 236. CONSULTATIVE ROLE FOR SENATE COM- ‘‘(c) WHEN EXPENDITURES TAKEN INTO AC- of, the Commonwealth of Puerto Rico, and MITTEE ON FINANCE IN CONNEC- COUNT.—For purposes of this section— ‘‘(B) with respect to which the requirements of TION WITH THE REVIEW OF PRO- ‘‘(1) IN GENERAL.—Qualified broadband ex- subparagraphs (A), (B), and (C) of paragraph POSED TAX TREATIES. penditures with respect to qualified equipment (1) are met for the taxable year, Paragraph 1(j) of Rule XXV of the Standing shall be taken into account with respect to the subsection (a) shall be applied for such taxable Rules of the Senate is amended by adding at the first taxable year in which— year by substituting ‘10 percent’ for ‘30 per- end the following: ‘‘(A) current generation broadband services cent’.’’. ‘‘(3)(A) Notwithstanding any other rule of the are provided through such equipment to quali- (b) WITHHOLDING.—Subsection (c) of section Senate, the Committee on Foreign Relations fied subscribers, or 1442 (relating to withholding of tax on foreign shall consult with the Committee on Finance ‘‘(B) next generation broadband services are corporations) is amended— with respect to any proposed treaty on taxation provided through such equipment to qualified (1) by striking ‘‘For purposes’’ and inserting prior to reporting such treaty to the Senate. subscribers. the following: ‘‘(B) The Committee on Foreign Relations ‘‘(2) LIMITATION.— ‘‘(1) GUAM, AMERICAN SAMOA, THE NORTHERN shall request in writing the views of the Com- ‘‘(A) IN GENERAL.—Qualified expenditures MARIANA ISLANDS, AND THE VIRGIN ISLANDS.—For mittee on Finance with respect to any proposed shall be taken into account under paragraph (1) purposes’’, and treaty on taxation which is referred to the Com- only with respect to qualified equipment— (2) by adding at the end the following new mittee on Foreign Relations. Not less than 120 ‘‘(i) the original use of which commences with paragraph: days after the date on which such request is the taxpayer, and ‘‘(2) COMMONWEALTH OF PUERTO RICO.—If made, the Committee on Finance shall respond ‘‘(ii) which is placed in service, after Decem- dividends are received during a taxable year by to such request in writing. If the Committee on ber 31, 2003. a corporation— Finance does not provide such written response ‘‘(B) SALE-LEASEBACKS.—For purposes of sub- ‘‘(A) created or organized in, or under the law during such 120 day period, the Committee on paragraph (A), if property— of, the Commonwealth of Puerto Rico, and Finance shall be deemed to have waived the op- ‘‘(i) is originally placed in service after De- ‘‘(B) with respect to which the requirements of portunity to submit such views. cember 31, 2003, by any person, and subparagraphs (A), (B), and (C) of section ‘‘(C) The Committee on Foreign Relations ‘‘(ii) sold and leased back by such person 881(b)(1) are met for the taxable year, shall consider the views submitted by the Com- within 3 months after the date such property subsection (a) shall be applied for such taxable mittee on Finance and shall include such views was originally placed in service, year by substituting ‘10 percent’ for ‘30 per- in any report of the treaty to the Senate.’’. such property shall be treated as originally cent’.’’. TITLE III—DOMESTIC MANUFACTURING placed in service not earlier than the date on (b) CONFORMING AMENDMENTS.— AND BUSINESS PROVISIONS which such property is used under the leaseback (1) Subsection (b) of section 881 is amended by Subtitle A—General Provisions referred to in clause (ii). striking ‘‘GUAM AND VIRGIN ISLANDS CORPORA- ‘‘(d) SPECIAL ALLOCATION RULES.— SEC. 301. EXPANSION OF QUALIFIED SMALL- TIONS’’ in the heading and inserting ‘‘POSSES- ISSUE BOND PROGRAM. ‘‘(1) CURRENT GENERATION BROADBAND SERV- SIONS’’. (a) IN GENERAL.—Subparagraph (F) of section ICES.—For purposes of determining the amount (2) Paragraph (1) of section 881(b) is amended 144(a)(4) (relating to $10,000,000 limit in certain of qualified broadband expenditures under sub- by striking ‘‘IN GENERAL’’ in the heading and cases) is amended to read as follows: section (a)(1) with respect to qualified equip- inserting ‘‘GUAM, AMERICAN SAMOA, THE NORTH- ‘‘(F) ADDITIONAL CAPITAL EXPENDITURES NOT ment through which current generation ERN MARIANA ISLANDS, AND THE VIRGIN IS- TAKEN INTO ACCOUNT.—With respect to any broadband services are provided, if the qualified LANDS’’. issue, in addition to any capital expenditure de- equipment is capable of serving both qualified (c) EFFECTIVE DATE.—The amendments made scribed in subparagraph (C), capital expendi- subscribers and other subscribers, the qualified by this section shall apply to dividends paid tures of not to exceed $10,000,000 shall not be broadband expenditures shall be multiplied by a after the date of the enactment of this Act. taken into account for purposes of applying fraction— SEC. 234. REPORT ON WTO DISPUTE SETTLEMENT subparagraph (A)(ii).’’. ‘‘(A) the numerator of which is the sum of the PANELS AND THE APPELLATE BODY. (b) EFFECTIVE DATE.—The amendment made number of potential qualified subscribers within Not later than March 31, 2004, the Secretary by this section shall apply to bonds issued after the rural areas and the underserved areas of Commerce, in consultation with the United the date of the enactment of this Act. which the equipment is capable of serving with States Trade Representative, shall transmit a re- SEC. 302. EXPENSING OF BROADBAND INTERNET current generation broadband services, and port to the Committee on Finance of the Senate ACCESS EXPENDITURES. ‘‘(B) the denominator of which is the total po- and the Committee on Ways and Means of the (a) IN GENERAL.—Part VI of subchapter B of tential subscriber population of the area which House of Representatives, regarding whether chapter 1 (relating to itemized deductions for in- the equipment is capable of serving with current dispute settlement panels and the Appellate dividuals and corporations) is amended by in- generation broadband services. Body of the World Trade Organization have— serting after section 190 the following new sec- ‘‘(2) NEXT GENERATION BROADBAND SERV- (1) added to or diminished the rights of the tion: ICES.—For purposes of determining the amount of qualified broadband expenditures under sub- United States by imposing obligations or restric- ‘‘SEC. 191. BROADBAND EXPENDITURES. section (a)(1) with respect to qualified equip- tions on the use of antidumping, countervailing, ‘‘(a) TREATMENT OF EXPENDITURES.— and safeguard measures not agreed to under the ‘‘(1) IN GENERAL.—A taxpayer may elect to ment through which next generation broadband Agreement on Implementation of Article VI of treat any qualified broadband expenditure services are provided, if the qualified equipment the General Agreement on Tariffs and Trade of which is paid or incurred by the taxpayer as an is capable of serving both qualified subscribers 1994, the Agreement on Subsidies and Counter- expense which is not chargeable to capital ac- and other subscribers, the qualified expenditures vailing Measures, and the Agreement on Safe- count. Any expenditure which is so treated shall shall be multiplied by a fraction— guards; be allowed as a deduction. ‘‘(A) the numerator of which is the sum of— (2) appropriately applied the standard of re- ‘‘(2) ELECTION.—An election under paragraph ‘‘(i) the number of potential qualified sub- view contained in Article 17.6 of the Agreement (1) shall be made at such time and in such man- scribers within the rural areas and underserved on Implementation of Article VI of the General ner as the Secretary may prescribe by regula- areas, plus Agreement on Tariffs and Trade of 1994; or tion. ‘‘(ii) the number of potential qualified sub- (3) exceeded their authority or terms of ref- ‘‘(b) QUALIFIED BROADBAND EXPENDITURES.— scribers within the area consisting only of resi- erence under the Agreements referred to in For purposes of this section— dential subscribers not described in clause (i), paragraph (1). ‘‘(1) IN GENERAL.—The term ‘qualified which the equipment is capable of serving with SEC. 235. STUDY OF IMPACT OF INTERNATIONAL broadband expenditure’ means, with respect to next generation broadband services, and TAX LAWS ON TAXPAYERS OTHER any taxable year, any direct or indirect costs in- ‘‘(B) the denominator of which is the total po- THAN LARGE CORPORATIONS. curred during 2004 and properly taken into ac- tential subscriber population of the area which (a) STUDY.—The Secretary of the Treasury or count for such taxable year with respect to— the equipment is capable of serving with next the Secretary’s delegate shall conduct a study of ‘‘(A) the purchase or installation of qualified generation broadband services. the impact of Federal international tax rules on equipment (including any upgrades thereto), ‘‘(e) DEFINITIONS.—For purposes of this sec- taxpayers other than large corporations, includ- and tion— ing the burdens placed on such taxpayers in ‘‘(B) the connection of such qualified equip- ‘‘(1) ANTENNA.—The term ‘antenna’ means complying with such rules. ment to any qualified subscriber. any device used to transmit or receive signals (b) REPORT.—Not later than 180 days after the ‘‘(2) CERTAIN SATELLITE EXPENDITURES EX- through the electromagnetic spectrum, including date of the enactment of this Act, the Secretary CLUDED.—Such term shall not include any costs satellite equipment.

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‘‘(2) CABLE OPERATOR.—The term ‘cable oper- ‘‘(i) at least a majority of the time during peri- ‘‘(B) is not within a county or county equiva- ator’ has the meaning given such term by sec- ods of maximum demand to each subscriber who lent which has an overall population density of tion 602(5) of the Communications Act of 1934 is utilizing such services, and more than 500 people per square mile of land. (47 U.S.C. 522(5)). ‘‘(ii) in a manner substantially the same as ‘‘(17) RURAL SUBSCRIBER.—The term ‘rural ‘‘(3) COMMERCIAL MOBILE SERVICE CARRIER.— such services are provided by the provider to subscriber’ means any residential subscriber re- The term ‘commercial mobile service carrier’ subscribers through equipment with respect to siding in a dwelling located in a rural area or means any person authorized to provide com- which no deduction is allowed under subsection nonresidential subscriber maintaining a perma- mercial mobile radio service as defined in section (a)(1). nent place of business located in a rural area. 20.3 of title 47, Code of Federal Regulations. ‘‘(B) ONLY CERTAIN INVESTMENT TAKEN INTO ‘‘(18) SATELLITE CARRIER.—The term ‘satellite ‘‘(4) CURRENT GENERATION BROADBAND SERV- ACCOUNT.—Except as provided in subparagraph carrier’ means any person using the facilities of ICE.—The term ‘current generation broadband (C) or (D), equipment shall be taken into ac- a satellite or satellite service licensed by the service’ means the transmission of signals at a count under subparagraph (A) only to the ex- Federal Communications Commission and oper- rate of at least 1,000,000 bits per second to the tent it— ating in the Fixed-Satellite Service under part subscriber and at least 128,000 bits per second ‘‘(i) extends from the last point of switching to 25 of title 47 of the Code of Federal Regulations from the subscriber. the outside of the unit, building, dwelling, or of- or the Direct Broadcast Satellite Service under ‘‘(5) MULTIPLEXING OR DEMULTIPLEXING.—The fice owned or leased by a subscriber in the case part 100 of title 47 of such Code to establish and term ‘multiplexing’ means the transmission of 2 of a telecommunications carrier, operate a channel of communications for dis- or more signals over a single channel, and the ‘‘(ii) extends from the customer side of the mo- tribution of signals, and owning or leasing a ca- term ‘demultiplexing’ means the separation of 2 bile telephone switching office to a transmission/ pacity or service on a satellite in order to pro- or more signals previously combined by compat- receive antenna (including such antenna) vide such point-to-multipoint distribution. ible multiplexing equipment. owned or leased by a subscriber in the case of a ‘‘(19) SATURATED MARKET.—The term ‘satu- commercial mobile service carrier, ‘‘(6) NEXT GENERATION BROADBAND SERVICE.— rated market’ means any census tract in which, ‘‘(iii) extends from the customer side of the The term ‘next generation broadband service’ as of the date of the enactment of this section— headend to the outside of the unit, building, means the transmission of signals at a rate of at ‘‘(A) current generation broadband services dwelling, or office owned or leased by a sub- least 22,000,000 bits per second to the subscriber have been provided by a single provider to 85 scriber in the case of a cable operator or open and at least 5,000,000 bits per second from the percent or more of the total number of potential video system operator, or residential subscribers residing in dwellings lo- subscriber. ‘‘(iv) extends from a transmission/receive an- ‘‘(7) NONRESIDENTIAL SUBSCRIBER.—The term cated within such census tract, and tenna (including such antenna) which transmits ‘‘(B) such services can be utilized— ‘nonresidential subscriber’ means any person and receives signals to or from multiple sub- who purchases broadband services which are ‘‘(i) at least a majority of the time during peri- scribers, to a transmission/receive antenna (in- ods of maximum demand by each such sub- delivered to the permanent place of business of cluding such antenna) on the outside of the such person. scriber who is utilizing such services, and unit, building, dwelling, or office owned or ‘‘(ii) in a manner substantially the same as ‘‘(8) OPEN VIDEO SYSTEM OPERATOR.—The leased by a subscriber in the case of a satellite term ‘open video system operator’ means any such services are provided by the provider to carrier or other wireless carrier, unless such subscribers through equipment with respect to person authorized to provide service under sec- other wireless carrier is also a telecommuni- tion 653 of the Communications Act of 1934 (47 which no deduction is allowed under subsection cations carrier. (a)(1). U.S.C. 573). ‘‘(C) PACKET SWITCHING EQUIPMENT.—Packet ‘‘(20) SUBSCRIBER.—The term ‘subscriber’ ‘‘(9) OTHER WIRELESS CARRIER.—The term switching equipment, regardless of location, ‘other wireless carrier’ means any person (other means any person who purchases current gen- shall be taken into account under subparagraph eration broadband services or next generation than a telecommunications carrier, commercial (A) only if it is deployed in connection with mobile service carrier, cable operator, open video broadband services. equipment described in subparagraph (B) and is ‘‘(21) TELECOMMUNICATIONS CARRIER.—The system operator, or satellite carrier) providing uniquely designed to perform the function of current generation broadband services or next term ‘telecommunications carrier’ has the mean- packet switching for current generation ing given such term by section 3(44) of the Com- generation broadband service to subscribers broadband services or next generation through the radio transmission of energy. munications Act of 1934 (47 U.S.C. 153(44)), broadband services, but only if such packet but— ‘‘(10) PACKET SWITCHING.—The term ‘packet switching is the last in a series of such functions switching’ means controlling or routing the path ‘‘(A) includes all members of an affiliated performed in the transmission of a signal to a group of which a telecommunications carrier is of any digitized transmission signal which is as- subscriber or the first in a series of such func- sembled into packets or cells. a member, and tions performed in the transmission of a signal ‘‘(B) does not include a commercial mobile ‘‘(11) PROVIDER.—The term ‘provider’ means, from a subscriber. with respect to any qualified equipment— service carrier. ‘‘(D) MULTIPLEXING AND DEMULTIPLEXING ‘‘(22) TOTAL POTENTIAL SUBSCRIBER POPU- ‘‘(A) a cable operator, EQUIPMENT.—Multiplexing and demultiplexing LATION.—The term ‘total potential subscriber ‘‘(B) a commercial mobile service carrier, equipment shall be taken into account under population’ means, with respect to any area and ‘‘(C) an open video system operator, subparagraph (A) only to the extent it is debased on the most recent census data, the total ‘‘(D) a satellite carrier, ployed in connection with equipment described number of potential residential subscribers resid- ‘‘(E) a telecommunications carrier, or in subparagraph (B) and is uniquely designed to ing in dwellings located in such area and poten- ‘‘(F) any other wireless carrier, perform the function of multiplexing and tial nonresidential subscribers maintaining per- providing current generation broadband services demultiplexing packets or cells of data and mak- manent places of business located in such area. or next generation broadband services to sub- ing associated application adaptions, but only if ‘‘(23) UNDERSERVED AREA.—The term ‘under- scribers through such qualified equipment. such multiplexing or demultiplexing equipment served area’ means— ‘‘(12) PROVISION OF SERVICES.—A provider is located between packet switching equipment ‘‘(A) any census tract which is located in— shall be treated as providing services to 1 or described in subparagraph (C) and the sub- ‘‘(i) an empowerment zone or enterprise com- more subscribers if— scriber’s premises. munity designated under section 1391, or ‘‘(A) such a subscriber has been passed by the ‘‘(14) QUALIFIED SUBSCRIBER.—The term ‘‘(ii) the District of Columbia Enterprise Zone provider’s equipment and can be connected to ‘qualified subscriber’ means— established under section 1400, or such equipment for a standard connection fee, ‘‘(A) with respect to the provision of current ‘‘(B) any census tract— ‘‘(B) the provider is physically able to deliver generation broadband services— ‘‘(i) the poverty level of which is at least 30 ‘‘(i) any nonresidential subscriber maintain- current generation broadband services or next percent (based on the most recent census data), ing a permanent place of business in a rural generation broadband services, as applicable, to and area or underserved area, or such a subscriber without making more than an ‘‘(ii) the median family income of which does ‘‘(ii) any residential subscriber residing in a insignificant investment with respect to such not exceed— dwelling located in a rural area or underserved subscriber, ‘‘(I) in the case of a census tract located in a area which is not a saturated market, and ‘‘(C) the provider has made reasonable efforts ‘‘(B) with respect to the provision of next gen- metropolitan statistical area, 70 percent of the to make such subscribers aware of the avail- eration broadband services— greater of the metropolitan area median family ability of such services, ‘‘(i) any nonresidential subscriber maintain- income or the statewide median family income, ‘‘(D) such services have been purchased by 1 ing a permanent place of business in a rural and or more such subscribers, and area or underserved area, or ‘‘(II) in the case of a census tract located in ‘‘(E) such services are made available to such ‘‘(ii) any residential subscriber. a nonmetropolitan statistical area, 70 percent of subscribers at average prices comparable to ‘‘(15) RESIDENTIAL SUBSCRIBER.—The term the nonmetropolitan statewide median family those at which the provider makes available ‘residential subscriber’ means any individual income. similar services in any areas in which the pro- who purchases broadband services which are ‘‘(24) UNDERSERVED SUBSCRIBER.—The term vider makes available such services. delivered to such individual’s dwelling. ‘underserved subscriber’ means any residential ‘‘(13) QUALIFIED EQUIPMENT.— ‘‘(16) RURAL AREA.—The term ‘rural area’ subscriber residing in a dwelling located in an ‘‘(A) IN GENERAL.—The term ‘qualified equip- means any census tract which— underserved area or nonresidential subscriber ment’ means equipment which provides current ‘‘(A) is not within 10 miles of any incor- maintaining a permanent place of business lo- generation broadband services or next genera- porated or census designated place containing cated in an underserved area. tion broadband services— more than 25,000 people, and ‘‘(f) SPECIAL RULES.—

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‘‘(1) PROPERTY USED OUTSIDE THE UNITED applicable providers not later than 30 days after (b) CONFORMING AMENDMENTS.— STATES, ETC., NOT QUALIFIED.—No expenditures the last date such submissions are allowed (1) Subparagraph (A) of section 355(b)(2) is shall be taken into account under subsection under clause (i). amended to read as follows: (a)(1) with respect to the portion of the cost of (B) NO SUBSEQUENT LISTS REQUIRED.—The ‘‘(A) it is engaged in the active conduct of a any property referred to in section 50(b) or with Secretary of the Treasury shall not be required trade or business,’’. respect to the portion of the cost of any property to publish any list of census tracts meeting such (2) Section 355(b)(2) is amended by striking the specified in an election under section 179. criteria subsequent to the list described in sub- last sentence. FFECTIVE ATE ‘‘(2) BASIS REDUCTION.— paragraph (A)(ii). (c) E D .— (1) IN GENERAL.—The amendments made by ‘‘(A) IN GENERAL.—For purposes of this title, (e) OTHER REGULATORY MATTERS.— the basis of any property shall be reduced by (1) PROHIBITION.—No Federal or State agency this section shall apply— (A) to distributions after the date of the enact- the portion of the cost of such property taken or instrumentality shall adopt regulations or ment of this Act, and into account under subsection (a)(1). ratemaking procedures that would have the effect of eliminating or reducing any deduction or (B) for purposes of determining the continued ‘‘(B) ORDINARY INCOME RECAPTURE.—For pur- qualification under section 355(b)(2)(A) of the poses of section 1245, the amount of the deduc- portion thereof allowed under section 191 of the Internal Revenue Code of 1986 (as added by this Internal Revenue Code of 1986 (as amended by tion allowable under subsection (a)(1) with re- subsection (b)(1)) of distributions made before spect to any property which is of a character section) or otherwise subverting the purpose of this section. such date, as a result of an acquisition, disposi- subject to the allowance for depreciation shall tion, or other restructuring after such date. be treated as a deduction allowed for deprecia- (2) TREASURY REGULATORY AUTHORITY.—It is the intent of Congress in providing the election (2) TRANSITION RULE.—The amendments made tion under section 167. by this section shall not apply to any distribu- ‘‘(3) COORDINATION WITH SECTION 38.—No to deduct qualified broadband expenditures under section 191 of the Internal Revenue Code tion pursuant to a transaction which is— credit shall be allowed under section 38 with re- (A) made pursuant to an agreement which of 1986 (as added by this section) to provide inspect to any amount for which a deduction is was binding on such date of enactment and at centives for the purchase, installation, and con- allowed under subsection (a)(1).’’. all times thereafter, nection of equipment and facilities offering ex- (b) SPECIAL RULE FOR MUTUAL OR COOPERA- (B) described in a ruling request submitted to panded broadband access to the Internet for TIVE TELEPHONE COMPANIES.—Section the Internal Revenue Service on or before such users in certain low income and rural areas of 501(c)(12)(B) (relating to list of exempt organiza- date, or tions) is amended by striking ‘‘or’’ at the end of the United States, as well as to residential users (C) described on or before such date in a pub- clause (iii), by striking the period at the end of nationwide, in a manner that maintains com- lic announcement or in a filing with the Securi- clause (iv) and inserting ‘‘, or’’, and by adding petitive neutrality among the various classes of ties and Exchange Commission. at the end the following: providers of broadband services. Accordingly, (3) ELECTION TO HAVE AMENDMENTS APPLY.— ‘‘(v) from the sale of property subject to a the Secretary of the Treasury shall prescribe Paragraph (2) shall not apply if the distributing lease described in section 191(c)(2)(B), but only such regulations as may be necessary or appro- corporation elects not to have such paragraph to the extent such income does not in any year priate to carry out the purposes of section 191 of apply to distributions of such corporation. Any exceed an amount equal to the qualified such Code, including— such election, once made, shall be irrevocable. (A) regulations to determine how and when a broadband expenditures which would be taken SEC. 305. EXCLUSION OF CERTAIN INDEBTED- into account under section 191 for such year if taxpayer that incurs qualified broadband ex- NESS OF SMALL BUSINESS INVEST- the mutual or cooperative telephone company penditures satisfies the requirements of section MENT COMPANIES FROM ACQUISI- was not exempt from taxation and was treated 191 of such Code to provide broadband services, TION INDEBTEDNESS. as the owner of the property subject to such and (a) IN GENERAL.—Section 514(c) (relating to lease.’’. (B) regulations describing the information, acquisition indebtedness) is amended by adding (c) CONFORMING AMENDMENTS.— records, and data taxpayers are required to pro- at the end the following new paragraph: (1) Section 263(a)(1) (relating to capital ex- vide the Secretary to substantiate compliance ‘‘(10) CERTAIN INDEBTEDNESS OF SMALL BUSI- penditures) is amended by striking ‘‘or’’ at the with the requirements of section 191 of such NESS INVESTMENT COMPANIES.—For purposes of end of subparagraph (G), by striking the period Code. this section, the term ‘acquisition indebtedness’ at the end of subparagraph (H) and inserting ‘‘, (f) EFFECTIVE DATE.—The amendments made does not include any indebtedness incurred by a or’’, and by adding at the end the following new by this section shall apply to expenditures in- small business investment company licensed subparagraph: curred after December 31, 2003. under the Small Business Investment Act of 1958 ‘‘(I) expenditures for which a deduction is al- SEC. 303. EXEMPTION OF NATURAL AGING PROC- which is evidenced by a debenture— lowed under section 191.’’. ESS IN DETERMINATION OF PRO- ‘‘(A) issued by such company under section DUCTION PERIOD FOR DISTILLED (2) Section 1016(a) of such Code is amended by 303(a) of such Act, and SPIRITS UNDER SECTION 263A. ‘‘(B) held or guaranteed by the Small Busi- striking ‘‘and’’ at the end of paragraph (27), by (a) IN GENERAL.—Section 263A(f) of the Inter- striking the period at the end of paragraph (28) ness Administration.’’. nal Revenue Code of 1986 (relating to general (b) EFFECTIVE DATE.—The amendment made and inserting ‘‘, and’’, and by adding at the end exceptions) is amended by adding at the end the by this section shall apply to any indebtedness the following new paragraph: following new paragraph: ‘‘(29) to the extent provided in section incurred after December 31, 2003, by a small ‘‘(5) EXEMPTION OF NATURAL AGING PROCESS IN business investment company described in sec- 191(f)(2).’’. DETERMINATION OF PRODUCTION PERIOD FOR DIS- (3) The table of sections for part VI of sub- tion 514(c)(10) of the Internal Revenue Code of TILLED SPIRITS.—For purposes of this sub- 1986 (as added by this section) with respect to chapter A of chapter 1 of such Code is amended section, the production period for distilled spir- by inserting after the item relating to section 190 property acquired by such company after such its shall be determined without regard to any date. the following new item: period allocated to the natural aging process.’’. ‘‘Sec. 191. Broadband expenditures.’’. SEC. 306. MODIFIED TAXATION OF IMPORTED (b) EFFECTIVE DATE.—The amendment made ARCHERY PRODUCTS. (d) DESIGNATION OF CENSUS TRACTS.— by this section shall apply to production periods (a) BOWS.—Paragraph (1) of section 4161(b) (1) IN GENERAL.—The Secretary of the Treas- beginning after the date of the enactment of this (relating to bows) is amended to read as follows: ury shall, not later than 90 days after the date Act. ‘‘(1) BOWS.— of the enactment of this Act, designate and pub- SEC. 304. MODIFICATION OF ACTIVE BUSINESS ‘‘(A) IN GENERAL.—There is hereby imposed on lish those census tracts meeting the criteria de- DEFINITION UNDER SECTION 355. the sale by the manufacturer, producer, or im- scribed in paragraphs (16), (22), and (23) of sec- (a) IN GENERAL.—Section 355(b) (defining ac- porter of any bow which has a peak draw tion 191(e) of the Internal Revenue Code of 1986 tive conduct of a trade or business) is amended weight of 30 pounds or more, a tax equal to 11 (as added by this section). In making such des- by adding at the end the following new para- percent of the price for which so sold. ignations, the Secretary of the Treasury shall graph: ‘‘(B) ARCHERY EQUIPMENT.—There is hereby consult with such other departments and agen- ‘‘(3) SPECIAL RULES RELATING TO ACTIVE BUSI- imposed on the sale by the manufacturer, pro- cies as the Secretary determines appropriate. NESS REQUIREMENT.— ducer, or importer— (2) SATURATED MARKET.— ‘‘(A) IN GENERAL.—For purposes of deter- ‘‘(i) of any part or accessory suitable for in- (A) IN GENERAL.—For purposes of designating mining whether a corporation meets the require- clusion in or attachment to a bow described in and publishing those census tracts meeting the ment of paragraph (2)(A), all members of such subparagraph (A), and criteria described in subsection (e)(19) of such corporation’s separate affiliated group shall be ‘‘(ii) of any quiver or broadhead suitable for section 191— treated as one corporation. For purposes of the use with an arrow described in paragraph (2), (i) the Secretary of the Treasury shall pre- preceding sentence, a corporation’s separate af- a tax equal to 11 percent of the price for which scribe not later than 30 days after the date of filiated group is the affiliated group which so sold.’’. the enactment of this Act the form upon which would be determined under section 1504(a) if (b) ARROWS.—Subsection (b) of section 4161 any provider which takes the position that it such corporation were the common parent and (relating to bows and arrows, etc.) is amended meets such criteria with respect to any census section 1504(b) did not apply. by redesignating paragraph (3) as paragraph (4) tract shall submit a list of such census tracts ‘‘(B) CONTROL.—For purposes of paragraph and inserting after paragraph (2) the following: (and any other information required by the Sec- (2)(D), all distributee corporations which are ‘‘(3) ARROWS.— retary) not later than 60 days after the date of members of the same affiliated group (as defined ‘‘(A) IN GENERAL.—There is hereby imposed on the publication of such form, and in section 1504(a) without regard to section the sale by the manufacturer, producer, or im- (ii) the Secretary of the Treasury shall publish 1504(b)) shall be treated as one distributee cor- porter of any arrow, a tax equal to 12 percent of an aggregate list of such census tracts and the poration.’’. the price for which so sold.

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‘‘(B) EXCEPTION.—In the case of any arrow of SEC. 311. THREE-YEAR CARRYBACK OF NET OPER- production as an expense which is not charge- which the shaft or any other component has ATING LOSSES. able to capital account. Any cost so treated been previously taxed under paragraph (1) or (a) IN GENERAL.—Paragraph (1) of section shall be allowed as a deduction. (2)— 172(b) (relating to years to which loss may be ‘‘(2) DOLLAR LIMITATION.— ‘‘(i) section 6416(b)(3) shall not apply, and carried) is amended by adding at the end the ‘‘(A) IN GENERAL.—The aggregate cost which ‘‘(ii) the tax imposed by subparagraph (A) following new subparagraph: may be taken into account under paragraph (1) shall be an amount equal to the excess (if any) ‘‘(I) SPECIAL RULE FOR 2003.—In the case of a with respect to each qualified film or television of— net operating loss for any taxable year ending production shall not exceed $15,000,000. ‘‘(I) the amount of tax imposed by this para- during 2003, subparagraph (A)(i) shall be ap- ‘‘(B) HIGHER DOLLAR LIMITATION FOR PRODUC- graph (determined without regard to this sub- plied by substituting ‘3’ for ‘2’.’’. TIONS IN CERTAIN AREAS.—In the case of any paragraph), over (b) ELECTION TO DISREGARD 3-YEAR qualified film or television production the aggre- ‘‘(II) the amount of tax paid with respect to CARRYBACK.—Section 172 (relating to net oper- gate cost of which is significantly incurred in an the tax imposed under paragraph (1) or (2) on ating loss deduction) is amended by redesig- area eligible for designation as— such shaft or component. nating subsection (k) as subsection (l) and by ‘‘(i) a low-income community under section ‘‘(C) ARROW.—For purposes of this para- inserting after subsection (j) the following new 45D, or graph, the term ‘arrow’ means any shaft de- subsection: ‘‘(ii) a distressed county or isolated area of scribed in paragraph (2) to which additional ‘‘(k) ELECTION TO DISREGARD 3-YEAR distress by the Delta Regional Authority estab- components are attached.’’. CARRYBACK FOR CERTAIN NET OPERATING lished under section 2009aa–1 of title 7, United (c) CONFORMING AMENDMENTS.—Section LOSSES.—Any taxpayer entitled to a 3-year States Code, 4161(b)(2) is amended— carryback under subsection (b)(1)(I) from any (1) by inserting ‘‘(other than broadheads)’’ subparagraph (A) shall be applied by sub- loss year may elect to have the carryback period after ‘‘point’’, and stituting ‘$20,000,000’ for ‘$15,000,000’. with respect to such loss year determined with- ‘‘(b) AMORTIZATION OF REMAINING COSTS.— (2) by striking ‘‘ARROWS.—’’ in the heading out regard to subsection (b)(1)(I). Such election ‘‘(1) IN GENERAL.—If an election is made and inserting ‘‘ARROW COMPONENTS.—’’. shall be made in such manner as may be pre- (d) EFFECTIVE DATE.—The amendments made under subsection (a) with respect to any quali- by this section shall apply to articles sold by the scribed by the Secretary and shall be made by fied film or television production, that portion of manufacturer, producer, or importer after De- the due date (including extensions of time) for the basis of such production in excess of the cember 31, 2003. filing the taxpayer’s return for the taxable year amount taken into account under subsection (a) of the net operating loss. Such election, once shall be allowed as a deduction ratably over the SEC. 307. MODIFICATION TO COOPERATIVE MAR- KETING RULES TO INCLUDE VALUE made for any taxable year, shall be irrevocable 36-month period beginning with the month in ADDED PROCESSING INVOLVING for such taxable year.’’. which such production is placed in service. ANIMALS. (c) TEMPORARY SUSPENSION OF 90 PERCENT ‘‘(2) NO OTHER DEDUCTION OR AMORTIZATION (a) IN GENERAL.—Section 1388 (relating to LIMIT ON CERTAIN NOL CARRYOVERS.— DEDUCTION ALLOWABLE.—With respect to the definitions and special rules) is amended by (1) IN GENERAL.—Section 56(d)(1)(A)(ii)(I) (re- basis of any qualified film or television produc- adding at the end the following new subsection: lating to general rule defining alternative tax tion described in paragraph (1), no other depre- ‘‘(k) COOPERATIVE MARKETING INCLUDES net operating loss deduction) is amended— ciation or amortization deduction shall be al- VALUE-ADDED PROCESSING INVOLVING ANI- (A) by striking ‘‘or 2002’’ and inserting ‘‘, lowable. MALS.—For purposes of section 521 and this sub- 2002, or 2003’’, and ‘‘(c) ELECTION.— chapter, the marketing of the products of mem- (B) by striking ‘‘and 2002’’ and inserting ‘‘, ‘‘(1) IN GENERAL.—An election under sub- bers or other producers shall include the feeding 2002, and 2003’’. section (a) with respect to any qualified film or of such products to cattle, hogs, fish, chickens, (d) TECHNICAL CORRECTIONS.— television production shall be made in such or other animals and the sale of the resulting (1) Subparagraph (H) of section 172(b)(1) is manner as prescribed by the Secretary and by animals or animal products.’’. amended by striking ‘‘a taxpayer which has’’. the due date (including extensions) for filing the (b) CONFORMING AMENDMENT.—Section 521(b) (2) Section 102(c)(2) of the Job Creation and taxpayer’s return of tax under this chapter for is amended by adding at the end the following Worker Assistance Act of 2002 (Public Law 107– the taxable year in which costs of the produc- new paragraph: 147) is amended by striking ‘‘before January 1, tion are first incurred. ‘‘(7) CROSS REFERENCE.— 2003’’ and inserting ‘‘after December 31, 1990’’. ‘‘(2) REVOCATION OF ELECTION.—Any election ‘‘For treatment of value-added processing (3)(A) Subclause (I) of section 56(d)(1)(A)(i) is made under subsection (a) may not be revoked involving animals, see section 1388(k).’’. amended by striking ‘‘attributable to without the consent of the Secretary. (c) EFFECTIVE DATE.—The amendments made carryovers’’. ‘‘(d) QUALIFIED FILM OR TELEVISION PRODUC- by this section shall apply to taxable years be- (B) Subclause (I) of section 56(d)(1)(A)(ii) is TION.—For purposes of this section— ginning after the date of the enactment of this amended— ‘‘(1) IN GENERAL.—The term ‘qualified film or Act. (i) by striking ‘‘for taxable years’’ and insert- television production’ means any production de- SEC. 308. EXTENSION OF DECLARATORY JUDG- ing ‘‘from taxable years’’, and scribed in paragraph (2) if 75 percent of the MENT PROCEDURES TO FARMERS’ (ii) by striking ‘‘carryforwards’’ and inserting total compensation of the production is qualified COOPERATIVE ORGANIZATIONS. ‘‘carryovers’’. compensation. (a) IN GENERAL.—Section 7428(a)(1) (relating (e) EFFECTIVE DATES.— ‘‘(2) PRODUCTION.— to declaratory judgments of tax exempt organi- (1) IN GENERAL.—Except as provided in para- ‘‘(A) IN GENERAL.—A production is described zations) is amended by striking ‘‘or’’ at the end graph (2), the amendments made by this section in this paragraph if such production is property of subparagraph (B) and by adding at the end shall apply to net operating losses for taxable described in section 168(f)(3). For purposes of a the following new subparagraph: years ending after December 31, 2002. television series, only the first 44 episodes of ‘‘(D) with respect to the initial classification (2) TECHNICAL CORRECTIONS.—The amend- such series may be taken into account. or continuing classification of a cooperative as ments made by subsection (d) shall take effect as ‘‘(B) EXCEPTION.—A production is not dean organization described in section 521(b) if included in the amendments made by section scribed in this paragraph if records are required which is exempt from tax under section 521(a), 102 of the Job Creation and Worker Assistance under section 2257 of title 18, United States or’’. Act of 2002. Code, to be maintained with respect to any per- (b) EFFECTIVE DATE.—The amendments made (3) ELECTION.—In the case of a net operating former in such production. by this section shall apply with respect to plead- loss for a taxable year ending during 2003— ‘‘(3) QUALIFIED COMPENSATION.—For purposes ings filed after the date of the enactment of this (A) any election made under section 172(b)(3) of paragraph (1)— Act. of such Code may (notwithstanding such sec- ‘‘(A) IN GENERAL.—The term ‘qualified com- SEC. 309. TEMPORARY SUSPENSION OF PER- tion) be revoked before April 15, 2004, and pensation’ means compensation for services per- SONAL HOLDING COMPANY TAX. (B) any election made under section 172(k) (as formed in the United States by actors, directors, (a) IN GENERAL.—Section 541 (relating to im- added by this section) of such Code shall (not- producers, and other relevant production per- position of personal holding company tax) is withstanding such section) be treated as timely sonnel. amended by adding at the end the following made if made before April 15, 2004. ‘‘(B) PARTICIPATIONS AND RESIDUALS EX- new sentence: ‘‘The preceding sentence shall not CLUDED.—The term ‘compensation’ does not in- Subtitle B—Manufacturing Relating to Films apply with respect to any taxable year to which clude participations and residuals (as defined in section 1(h)(11) (as in effect on the date of the SEC. 321. SPECIAL RULES FOR CERTAIN FILM AND section 167(g)(7)(B)). enactment of this sentence) applies.’’. TELEVISION PRODUCTIONS. ‘‘(e) APPLICATION OF CERTAIN OTHER (b) EFFECTIVE DATE.—The amendment made (a) IN GENERAL.—Part VI of subchapter B of RULES.—For purposes of this section, rules simi- by this section shall apply to taxable years be- chapter 1 is amended by inserting after section lar to the rules of subsections (b)(2) and (c)(4) of ginning after December 31, 2003. 180 the following new section: section 194 shall apply. SEC. 310. INCREASE IN SECTION 179 EXPENSING. ‘‘SEC. 181. TREATMENT OF QUALIFIED FILM AND ‘‘(f) TERMINATION.—This section shall not (a) IN GENERAL.—Section 179(b)(2) (relating to TELEVISION PRODUCTIONS. apply to qualified film and television produc- reduction in limitation) is amended by inserting ‘‘(a) ELECTION TO TREAT CERTAIN COSTS OF tions commencing after December 31, 2008.’’. ‘‘50 percent of’’ before ‘‘the amount’’. QUALIFIED FILM AND TELEVISION PRODUCTIONS (b) CONFORMING AMENDMENT.—The table of (b) EFFECTIVE DATE.—The amendment made AS EXPENSES.— sections for part VI of subchapter B of chapter by this section shall apply to taxable years be- ‘‘(1) IN GENERAL.—A taxpayer may elect to 1 is amended by inserting after the item relating ginning after December 31, 2002. treat the cost of any qualified film or television to section 180 the following new item:

VerDate jul 14 2003 01:25 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00025 Fmt 4624 Sfmt 6333 E:\CR\FM\A03MR6.038 S03PT1 S2044 CONGRESSIONAL RECORD — SENATE March 3, 2004 ‘‘Sec. 181. Treatment of qualified film and tele- taxpayer has made (in accordance with regula- SEC. 332. ELECTION TO TREAT CUTTING OF TIM- vision productions.’’. tions prescribed by the Secretary) an election BER AS A SALE OR EXCHANGE. Any election under section 631(a) of the Inter- (c) EFFECTIVE DATE.—The amendments made under this subsection, the taxpayer shall treat nal Revenue Code of 1986 made for a taxable by this section shall apply to qualified film and reforestation expenditures which are paid or in- year ending on or before the date of the enact- television productions (as defined in section curred during the taxable year with respect to ment of this Act may be revoked by the taxpayer 181(d)(1) of the Internal Revenue Code of 1986, such property as an expense which is not for any taxable year ending after such date. For as added by this section) commencing after the chargeable to capital account. The reforestation purposes of determining whether the taxpayer date of the enactment of this Act. expenditures so treated shall be allowed as a deduction. may make a further election under such section, SEC. 322. MODIFICATION OF APPLICATION OF IN- such election (and any revocation under this COME FORECAST METHOD OF DE- ‘‘(B) DOLLAR LIMITATION.—The aggregate PRECIATION. amount of reforestation expenditures which may section) shall not be taken into account. (a) IN GENERAL.—Section 167(g) (relating to be taken into account under subparagraph (A) SEC. 333. CAPITAL GAIN TREATMENT UNDER SEC- depreciation under income forecast method) is with respect to each qualified timber property TION 631(b) TO APPLY TO OUTRIGHT amended by adding at the end the following for any taxable year shall not exceed $10,000 SALES BY LANDOWNERS. new paragraph: ($5,000 in the case of a separate return by a (a) IN GENERAL.—The first sentence of section ‘‘(7) TREATMENT OF PARTICIPATIONS AND RE- married individual (as defined in section 631(b) (relating to disposal of timber with a re- SIDUALS.— 7703)).’’. tained economic interest) is amended by striking ‘‘(A) IN GENERAL.—For purposes of deter- (b) NET AMORTIZABLE BASIS.—Section ‘‘retains an economic interest in such timber’’ mining the depreciation deduction allowable 194(c)(2) (defining amortizable basis) is amended and inserting ‘‘either retains an economic inter- with respect to a property under this subsection, by inserting ‘‘which have not been taken into est in such timber or makes an outright sale of the taxpayer may include participations and re- account under subsection (b)’’ after ‘‘expendi- such timber’’. siduals with respect to such property in the ad- tures’’. (b) CONFORMING AMENDMENTS.— justed basis of such property for the taxable (c) CONFORMING AMENDMENTS.— (1) The third sentence of section 631(b) is year in which the property is placed in service, (1) Section 194(b) is amended by striking para- amended by striking ‘‘The date of disposal’’ and but only to the extent that such participations graphs (3) and (4). inserting ‘‘In the case of disposal of timber with and residuals relate to income estimated (for (2) Section 194(b)(2) is amended by striking a retained economic interest, the date of dis- purposes of this subsection) to be earned in con- ‘‘paragraph (1)’’ both places it appears and in- posal’’. nection with the property before the close of the serting ‘‘paragraph (1)(B)’’. (2) The heading for section 631(b) is amended 10th taxable year referred to in paragraph (3) Section 194(c) is amended by striking para- by striking ‘‘WITH A RETAINED ECONOMIC INTER- (1)(A). graph (4) and inserting the following new para- EST’’. ‘‘(B) PARTICIPATIONS AND RESIDUALS.—For graphs: (c) EFFECTIVE DATE.—The amendments made purposes of this paragraph, the term ‘participa- ‘‘(4) TREATMENT OF TRUSTS AND ESTATES.— by this section shall apply to sales after the date tions and residuals’ means, with respect to any ‘‘(A) IN GENERAL.—Except as provided in sub- of the enactment of this Act. property, costs the amount of which by contract paragraph (B), this section shall not apply to SEC. 334. MODIFICATION OF SAFE HARBOR RULES varies with the amount of income earned in con- trusts and estates. FOR TIMBER REITS. nection with such property. ‘‘(B) AMORTIZATION DEDUCTION ALLOWED TO (a) EXPANSION OF PROHIBITED TRANSACTION ‘‘(C) SPECIAL RULES RELATING TO RECOMPUTA- ESTATES.—The benefit of the deduction for am- SAFE HARBOR.—Section 857(b)(6) (relating to in- TION YEARS.—If the adjusted basis of any prop- ortization provided by subsection (a) shall be al- come from prohibited transactions) is amended erty is determined under this paragraph, para- lowed to estates in the same manner as in the by redesignating subparagraphs (D) and (E) as graph (4) shall be applied by substituting ‘for case of an individual. The allowable deduction subparagraphs (E) and (F), respectively, and by each taxable year in such period’ for ‘for such shall be apportioned between the income bene- inserting after subparagraph (C) the following period’. ficiary and the fiduciary under regulations pre- new subparagraph: ‘‘(D) OTHER SPECIAL RULES.— scribed by the Secretary. Any amount so appor- ‘‘(D) CERTAIN SALES NOT TO CONSTITUTE PRO- ‘‘(i) PARTICIPATIONS AND RESIDUALS.—Not- tioned to a beneficiary shall be taken into ac- HIBITED TRANSACTIONS.—For purposes of this withstanding subparagraph (A), the taxpayer count for purposes of determining the amount part, the term ‘prohibited transaction’ does not may exclude participations and residuals from allowable as a deduction under subsection (a) to include a sale of property which is a real estate the adjusted basis of such property and deduct such beneficiary. asset (as defined in section 856(c)(5)(B)) if— such participations and residuals in the taxable ‘‘(5) APPLICATION WITH OTHER DEDUCTIONS.— ‘‘(i) the trust held the property for not less year that such participations and residuals are No deduction shall be allowed under any other than 4 years in connection with the trade or paid. provision of this chapter with respect to any ex- business of producing timber, ‘‘(ii) COORDINATION WITH OTHER RULES.—De- penditure with respect to which a deduction is ‘‘(ii) the aggregate expenditures made by the ductions computed in accordance with this allowed or allowable under this section to the trust, or a partner of the trust, during the 4- paragraph shall be allowable notwithstanding taxpayer .’’. year period preceding the date of sale which— paragraph (1)(B) or sections 263, 263A, 404, 419, (4) The heading for section 194 is amended by ‘‘(I) are includible in the basis of the property or 461(h). striking ‘‘AMORTIZATION’’ and inserting (other than timberland acquisition expendi- ‘‘(E) AUTHORITY TO MAKE ADJUSTMENTS.—The ‘‘TREATMENT’’. tures), and Secretary shall prescribe appropriate adjust- (5) The item relating to section 194 in the table ‘‘(II) are directly related to operation of the ments to the basis of property and to the look- of sections for part VI of subchapter B of chap- property for the production of timber or for the back method for the additional amounts allow- ter 1 is amended by striking ‘‘Amortization’’ and preservation of the property for use as able as a deduction solely by reason of this inserting ‘‘Treatment’’. timberland, paragraph.’’. (d) REPEAL OF REFORESTATION CREDIT.— do not exceed 30 percent of the net selling price (b) DETERMINATION OF INCOME.—Section (1) IN GENERAL.—Section 46 (relating to of the property, 167(g)(5) (relating to special rules) is amended amount of credit) is amended— ‘‘(iii) the aggregate expenditures made by the by redesignating subparagraphs (E) and (F) as (A) by adding ‘‘and’’ at the end of paragraph trust, or a partner of the trust, during the 4- subparagraphs (F) and (G), respectively, and in- (1), year period preceding the date of sale which— serting after subparagraph (D) the following (B) by striking ‘‘, and ’’ at the end of para- ‘‘(I) are includible in the basis of the property new subparagraph: graph (2) and inserting a period, and (other than timberland acquisition expendi- ‘‘(E) TREATMENT OF DISTRIBUTION COSTS.—For (C) by striking paragraph (3). tures), and purposes of this subsection, the income with re- (2) CONFORMING AMENDMENTS.— ‘‘(II) are not directly related to operation of spect to any property shall be the taxpayer’s (A) Section 48 is amended— the property for the production of timber, or for gross income from such property.’’. (i) by striking subsection (b), the preservation of the property for use as (c) EFFECTIVE DATE.—The amendments made (ii) by striking ‘‘this subsection’’ in paragraph timberland, by this section shall apply to property placed in (5) of subsection (a) and inserting ‘‘subsection do not exceed 5 percent of the net selling price service after the date of the enactment of this (a)’’, and of the property, Act. (iii) by redesignating such paragraph (5) as ‘‘(iv)(I) during the taxable year the trust does Subtitle C—Manufacturing Relating to subsection (b). not make more than 7 sales of property (other Timber (B) The heading for section 48 is amended by than sales of foreclosure property or sales to SEC. 331. EXPENSING OF CERTAIN REFOREST- striking ‘‘; REFORESTATION CREDIT’’. which section 1033 applies), or ATION EXPENDITURES. (C) The item relating to section 48 in the table ‘‘(II) the aggregate adjusted bases (as deter- (a) IN GENERAL.—So much of subsection (b) of of sections for subpart E of part IV of sub- mined for purposes of computing earnings and section 194 (relating to amortization of reforest- chapter A of chapter 1 is amended by striking ‘‘, profits) of property (other than sales of fore- ation expenditures) as precedes paragraph (2) is reforestation credit’’. closure property or sales to which section 1033 amended to read as follows: (D) Section 50(c)(3) is amended by striking ‘‘or applies) sold during the taxable year does not ‘‘(b) TREATMENT AS EXPENSES.— reforestation credit’’. exceed 10 percent of the aggregate bases (as so ‘‘(1) ELECTION TO TREAT CERTAIN REFOREST- (e) EFFECTIVE DATE.—The amendments made determined) of all of the assets of the trust as of ATION EXPENDITURES AS EXPENSES.— by this section shall apply with respect to ex- the beginning of the taxable year, ‘‘(A) IN GENERAL.—In the case of any quali- penditures paid or incurred after the date of the ‘‘(v) in the case that the requirement of clause fied timber property with respect to which the enactment of this Act. (iv)(I) is not satisfied, substantially all of the

VerDate jul 14 2003 02:24 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00026 Fmt 4624 Sfmt 6333 E:\CR\FM\A03MR6.038 S03PT1 March 3, 2004 CONGRESSIONAL RECORD — SENATE S2045 marketing expenditures with respect to the prop- a tax-indifferent party shall not be respected ‘‘(i) a large entity, or erty were made through an independent con- if— ‘‘(ii) a high net worth individual, tractor (as defined in section 856(d)(3)) from ‘‘(i) it results in an allocation of income or the penalty under paragraph (1) or (2) shall be whom the trust itself does not derive or receive gain to the tax-indifferent party in excess of twice the amount determined without regard to any income, and such party’s economic income or gain, or this paragraph. ‘‘(vi) the sales price of the property sold by ‘‘(ii) it results in a basis adjustment or shift- ‘‘(B) LARGE ENTITY.—For purposes of sub- the trust is not based in whole or in part on in- ing of basis on account of overstating the in- paragraph (A), the term ‘large entity’ means, come or profits, including income or profits de- come or gain of the tax-indifferent party. with respect to any taxable year, a person rived from the sale or operation of such prop- ‘‘(3) DEFINITIONS AND SPECIAL RULES.—For (other than a natural person) with gross re- erty.’’. purposes of this subsection— ceipts in excess of $10,000,000 for the taxable (b) EFFECTIVE DATE.—The amendments made ‘‘(A) ECONOMIC SUBSTANCE DOCTRINE.—The year in which the reportable transaction occurs by this section shall apply to taxable years be- term ‘economic substance doctrine’ means the or the preceding taxable year. Rules similar to ginning after the date of the enactment of this common law doctrine under which tax benefits the rules of paragraph (2) and subparagraphs Act. under subtitle A with respect to a transaction (B), (C), and (D) of paragraph (3) of section are not allowable if the transaction does not TITLE IV—ADDITIONAL PROVISIONS 448(c) shall apply for purposes of this subpara- have economic substance or lacks a business graph. Subtitle A—Provisions Designed To Curtail purpose. Tax Shelters ‘‘(C) HIGH NET WORTH INDIVIDUAL.—For pur- ‘‘(B) TAX-INDIFFERENT PARTY.—The term ‘tax- poses of subparagraph (A), the term ‘high net SEC. 401. CLARIFICATION OF ECONOMIC SUB- indifferent party’ means any person or entity worth individual’ means, with respect to a re- STANCE DOCTRINE. not subject to tax imposed by subtitle A. A per- portable transaction, a natural person whose (a) IN GENERAL.—Section 7701 is amended by son shall be treated as a tax-indifferent party net worth exceeds $2,000,000 immediately before redesignating subsection (n) as subsection (o) with respect to a transaction if the items taken the transaction. and by inserting after subsection (m) the fol- into account with respect to the transaction ‘‘(c) DEFINITIONS.—For purposes of this sec- lowing new subsection: have no substantial impact on such person’s li- tion— ‘‘(n) CLARIFICATION OF ECONOMIC SUBSTANCE ability under subtitle A. ‘‘(1) REPORTABLE TRANSACTION.—The term ‘re- DOCTRINE; ETC.— ‘‘(C) EXCEPTION FOR PERSONAL TRANSACTIONS portable transaction’ means any transaction ‘‘(1) GENERAL RULES.— OF INDIVIDUALS.—In the case of an individual, with respect to which information is required to ‘‘(A) IN GENERAL.—In any case in which a this subsection shall apply only to transactions be included with a return or statement because, court determines that the economic substance entered into in connection with a trade or busi- as determined under regulations prescribed doctrine is relevant for purposes of this title to ness or an activity engaged in for the produc- under section 6011, such transaction is of a type a transaction (or series of transactions), such tion of income. which the Secretary determines as having a po- transaction (or series of transactions) shall have ‘‘(D) TREATMENT OF LESSORS.—In applying tential for tax avoidance or evasion. economic substance only if the requirements of paragraph (1)(B)(ii) to the lessor of tangible ‘‘(2) LISTED TRANSACTION.—Except as pro- this paragraph are met. property subject to a lease— vided in regulations, the term ‘listed trans- ‘‘(B) DEFINITION OF ECONOMIC SUBSTANCE.— ‘‘(i) the expected net tax benefits with respect action’ means a reportable transaction which is For purposes of subparagraph (A)— to the leased property shall not include the ben- the same as, or substantially similar to, a trans- ‘‘(i) IN GENERAL.—A transaction has economic efits of— substance only if— ‘‘(I) depreciation, action specifically identified by the Secretary as ‘‘(I) the transaction changes in a meaningful ‘‘(II) any tax credit, or a tax avoidance transaction for purposes of sec- way (apart from Federal tax effects) the tax- ‘‘(III) any other deduction as provided in tion 6011. ‘‘(d) AUTHORITY TO RESCIND PENALTY.— payer’s economic position, and guidance by the Secretary, and ‘‘(1) IN GENERAL.—The Commissioner of Inter- ‘‘(II) the taxpayer has a substantial nontax ‘‘(ii) subclause (II) of paragraph (1)(B)(ii) nal Revenue may rescind all or any portion of purpose for entering into such transaction and shall be disregarded in determining whether any any penalty imposed by this section with respect the transaction is a reasonable means of accom- of such benefits are allowable. to any violation if— plishing such purpose. ‘‘(4) OTHER COMMON LAW DOCTRINES NOT AF- FECTED.—Except as specifically provided in this ‘‘(A) the violation is with respect to a report- In applying subclause (II), a purpose of achiev- subsection, the provisions of this subsection able transaction other than a listed transaction, ing a financial accounting benefit shall not be shall not be construed as altering or sup- ‘‘(B) the person on whom the penalty is im- taken into account in determining whether a planting any other rule of law, and the require- posed has a history of complying with the re- transaction has a substantial nontax purpose if ments of this subsection shall be construed as quirements of this title, the origin of such financial accounting benefit being in addition to any such other rule of law. ‘‘(C) it is shown that the violation is due to an is a reduction of income tax. ‘‘(5) REGULATIONS.—The Secretary shall pre- unintentional mistake of fact; ‘‘(ii) SPECIAL RULE WHERE TAXPAYER RELIES scribe such regulations as may be necessary or ‘‘(D) imposing the penalty would be against ON PROFIT POTENTIAL.—A transaction shall not appropriate to carry out the purposes of this equity and good conscience, and be treated as having economic substance by rea- subsection. Such regulations may include ex- ‘‘(E) rescinding the penalty would promote son of having a potential for profit unless— emptions from the application of this sub- compliance with the requirements of this title ‘‘(I) the present value of the reasonably ex- section.’’. and effective tax administration. pected pre-tax profit from the transaction is (b) EFFECTIVE DATE.—The amendments made ‘‘(2) DISCRETION.—The exercise of authority substantial in relation to the present value of by this section shall apply to transactions en- under paragraph (1) shall be at the sole discre- the expected net tax benefits that would be al- tered into after the date of the enactment of this tion of the Commissioner and may be delegated lowed if the transaction were respected, and Act. only to the head of the Office of Tax Shelter ‘‘(II) the reasonably expected pre-tax profit Analysis. The Commissioner, in the Commis- from the transaction exceeds a risk-free rate of SEC. 402. PENALTY FOR FAILING TO DISCLOSE REPORTABLE TRANSACTION. sioner’s sole discretion, may establish a proce- return. (a) IN GENERAL.—Part I of subchapter B of dure to determine if a penalty should be referred ‘‘(C) TREATMENT OF FEES AND FOREIGN chapter 68 (relating to assessable penalties) is to the Commissioner or the head of such Office TAXES.—Fees and other transaction expenses amended by inserting after section 6707 the fol- for a determination under paragraph (1). and foreign taxes shall be taken into account as lowing new section: ‘‘(3) NO APPEAL.—Notwithstanding any other expenses in determining pre-tax profit under provision of law, any determination under this subparagraph (B)(ii). ‘‘SEC. 6707A. PENALTY FOR FAILURE TO INCLUDE REPORTABLE TRANSACTION INFOR- subsection may not be reviewed in any adminis- PECIAL RULES FOR TRANSACTIONS WITH ‘‘(2) S MATION WITH RETURN OR STATE- trative or judicial proceeding. TAX-INDIFFERENT PARTIES.— MENT. ‘‘(4) RECORDS.—If a penalty is rescinded ‘‘(A) SPECIAL RULES FOR FINANCING TRANS- ‘‘(a) IMPOSITION OF PENALTY.—Any person under paragraph (1), the Commissioner shall ACTIONS.—The form of a transaction which is in who fails to include on any return or statement place in the file in the Office of the Commis- substance the borrowing of money or the acqui- any information with respect to a reportable sioner the opinion of the Commissioner or the sition of financial capital directly or indirectly transaction which is required under section 6011 head of the Office of Tax Shelter Analysis with from a tax-indifferent party shall not be re- to be included with such return or statement respect to the determination, including— spected if the present value of the deductions to shall pay a penalty in the amount determined ‘‘(A) the facts and circumstances of the trans- be claimed with respect to the transaction is under subsection (b). action, substantially in excess of the present value of ‘‘(b) AMOUNT OF PENALTY.— ‘‘(B) the reasons for the rescission, and the anticipated economic returns of the person ‘‘(1) IN GENERAL.—Except as provided in para- ‘‘(C) the amount of the penalty rescinded. lending the money or providing the financial graphs (2) and (3), the amount of the penalty ‘‘(5) REPORT.—The Commissioner shall each capital. A public offering shall be treated as a under subsection (a) shall be $50,000. year report to the Committee on Ways and borrowing, or an acquisition of financial cap- ‘‘(2) LISTED TRANSACTION.—The amount of the Means of the House of Representatives and the ital, from a tax-indifferent party if it is reason- penalty under subsection (a) with respect to a Committee on Finance of the Senate— ably expected that at least 50 percent of the of- listed transaction shall be $100,000. ‘‘(A) a summary of the total number and ag- fering will be placed with tax-indifferent par- ‘‘(3) INCREASE IN PENALTY FOR LARGE ENTITIES gregate amount of penalties imposed, and re- ties. AND HIGH NET WORTH INDIVIDUALS.— scinded, under this section, and ‘‘(B) ARTIFICIAL INCOME SHIFTING AND BASIS ‘‘(A) IN GENERAL.—In the case of a failure ‘‘(B) a description of each penalty rescinded ADJUSTMENTS.—The form of a transaction with under subsection (a) by— under this subsection and the reasons therefor.

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‘‘(e) PENALTY REPORTED TO SEC.—In the case ‘‘(B) any reportable transaction (other than a is amended by adding at the end the following of a person— listed transaction) if a significant purpose of flush sentence: ‘‘(1) which is required to file periodic reports such transaction is the avoidance or evasion of ‘‘The excess under the preceding sentence shall under section 13 or 15(d) of the Securities Ex- Federal income tax. be determined without regard to items to which change Act of 1934 or is required to be consoli- ‘‘(c) HIGHER PENALTY FOR NONDISCLOSED section 6662A applies and without regard to dated with another person for purposes of such LISTED AND OTHER AVOIDANCE TRANSACTIONS.— items with respect to which a penalty is imposed reports, and ‘‘(1) IN GENERAL.—Subsection (a) shall be ap- by section 6662B.’’. ‘‘(2) which— plied by substituting ‘30 percent’ for ‘20 percent’ (c) REASONABLE CAUSE EXCEPTION.— ‘‘(A) is required to pay a penalty under this with respect to the portion of any reportable (1) IN GENERAL.—Section 6664 is amended by section with respect to a listed transaction, transaction understatement with respect to adding at the end the following new subsection: ‘‘(B) is required to pay a penalty under sec- which the requirement of section 6664(d)(2)(A) is ‘‘(d) REASONABLE CAUSE EXCEPTION FOR RE- tion 6662A with respect to any reportable trans- not met. PORTABLE TRANSACTION UNDERSTATEMENTS.— action at a rate prescribed under section ‘‘(2) RULES APPLICABLE TO ASSERTION AND ‘‘(1) IN GENERAL.—No penalty shall be im- 6662A(c), or COMPROMISE OF PENALTY.— posed under section 6662A with respect to any ‘‘(C) is required to pay a penalty under sec- ‘‘(A) IN GENERAL.—Only upon the approval by portion of a reportable transaction understate- tion 6662B with respect to any noneconomic sub- the Chief Counsel for the Internal Revenue ment if it is shown that there was a reasonable stance transaction, Service or the Chief Counsel’s delegate at the cause for such portion and that the taxpayer the requirement to pay such penalty shall be national office of the Internal Revenue Service acted in good faith with respect to such portion. disclosed in such reports filed by such person for may a penalty to which paragraph (1) applies ‘‘(2) SPECIAL RULES.—Paragraph (1) shall not such periods as the Secretary shall specify. Fail- be included in a 1st letter of proposed deficiency apply to any reportable transaction understate- ure to make a disclosure in accordance with the which allows the taxpayer an opportunity for ment unless— preceding sentence shall be treated as a failure administrative review in the Internal Revenue ‘‘(A) the relevant facts affecting the tax treat- to which the penalty under subsection (b)(2) ap- Service Office of Appeals. If such a letter is pro- ment of the item are adequately disclosed in ac- plies. vided to the taxpayer, only the Commissioner of cordance with the regulations prescribed under ‘‘(f) COORDINATION WITH OTHER PENALTIES.— Internal Revenue may compromise all or any section 6011, The penalty imposed by this section is in addi- portion of such penalty. ‘‘(B) there is or was substantial authority for tion to any penalty imposed under this title.’’. ‘‘(B) APPLICABLE RULES.—The rules of para- such treatment, and (b) CONFORMING AMENDMENT.—The table of graphs (2), (3), (4), and (5) of section 6707A(d) ‘‘(C) the taxpayer reasonably believed that sections for part I of subchapter B of chapter 68 shall apply for purposes of subparagraph (A). such treatment was more likely than not the is amended by inserting after the item relating ‘‘(d) DEFINITIONS OF REPORTABLE AND LISTED proper treatment. TRANSACTIONS.—For purposes of this section, to section 6707 the following: A taxpayer failing to adequately disclose in ac- the terms ‘reportable transaction’ and ‘listed ‘‘Sec. 6707A. Penalty for failure to include re- cordance with section 6011 shall be treated as transaction’ have the respective meanings given portable transaction information meeting the requirements of subparagraph (A) if to such terms by section 6707A(c). with return or statement.’’. the penalty for such failure was rescinded under ‘‘(e) SPECIAL RULES.— section 6707A(d). (c) EFFECTIVE DATE.—The amendments made ‘‘(1) COORDINATION WITH PENALTIES, ETC., ON ‘‘(3) RULES RELATING TO REASONABLE BE- by this section shall apply to returns and state- OTHER UNDERSTATEMENTS.—In the case of an LIEF.—For purposes of paragraph (2)(C)— ments the due date for which is after the date of understatement (as defined in section ‘‘(A) IN GENERAL.—A taxpayer shall be treated the enactment of this Act. 6662(d)(2))— as having a reasonable belief with respect to the SEC. 403. ACCURACY-RELATED PENALTY FOR ‘‘(A) the amount of such understatement (de- tax treatment of an item only if such belief— LISTED TRANSACTIONS AND OTHER termined without regard to this paragraph) ‘‘(i) is based on the facts and law that exist at REPORTABLE TRANSACTIONS HAV- shall be increased by the aggregate amount of the time the return of tax which includes such ING A SIGNIFICANT TAX AVOIDANCE reportable transaction understatements and PURPOSE. tax treatment is filed, and noneconomic substance transaction understate- (a) IN GENERAL.—Subchapter A of chapter 68 ‘‘(ii) relates solely to the taxpayer’s chances of ments for purposes of determining whether such is amended by inserting after section 6662 the success on the merits of such treatment and does understatement is a substantial understatement following new section: not take into account the possibility that a re- under section 6662(d)(1), and turn will not be audited, such treatment will not ‘‘SEC. 6662A. IMPOSITION OF ACCURACY-RELATED ‘‘(B) the addition to tax under section 6662(a) be raised on audit, or such treatment will be re- PENALTY ON UNDERSTATEMENTS shall apply only to the excess of the amount of WITH RESPECT TO REPORTABLE solved through settlement if it is raised. the substantial understatement (if any) after the TRANSACTIONS. ‘‘(B) CERTAIN OPINIONS MAY NOT BE RELIED application of subparagraph (A) over the aggre- ‘‘(a) IMPOSITION OF PENALTY.—If a taxpayer UPON.— gate amount of reportable transaction under- has a reportable transaction understatement for ‘‘(i) IN GENERAL.—An opinion of a tax advisor statements and noneconomic substance trans- any taxable year, there shall be added to the tax may not be relied upon to establish the reason- action understatements. an amount equal to 20 percent of the amount of able belief of a taxpayer if— ‘‘(2) COORDINATION WITH OTHER PENALTIES.— such understatement. ‘‘(I) the tax advisor is described in clause (ii), ‘‘(A) APPLICATION OF FRAUD PENALTY.—Ref- ‘‘(b) REPORTABLE TRANSACTION UNDERSTATE- or erences to an underpayment in section 6663 MENT.—For purposes of this section— ‘‘(II) the opinion is described in clause (iii). shall be treated as including references to a re- ‘‘(1) IN GENERAL.—The term ‘reportable trans- ‘‘(ii) DISQUALIFIED TAX ADVISORS.—A tax ad- action understatement’ means the sum of— portable transaction understatement and a non- visor is described in this clause if the tax advi- ‘‘(A) the product of— economic substance transaction understatement. sor— O DOUBLE PENALTY.—This section shall ‘‘(i) the amount of the increase (if any) in tax- ‘‘(B) N ‘‘(I) is a material advisor (within the meaning not apply to any portion of an understatement able income which results from a difference be- of section 6111(b)(1)) who participates in the or- on which a penalty is imposed under section tween the proper tax treatment of an item to ganization, management, promotion, or sale of 6662B or 6663. which this section applies and the taxpayer’s the transaction or who is related (within the ‘‘(3) SPECIAL RULE FOR AMENDED RETURNS.— treatment of such item (as shown on the tax- meaning of section 267(b) or 707(b)(1)) to any Except as provided in regulations, in no event payer’s return of tax), and person who so participates, shall any tax treatment included with an ‘‘(ii) the highest rate of tax imposed by section ‘‘(II) is compensated directly or indirectly by amendment or supplement to a return of tax be 1 (section 11 in the case of a taxpayer which is a material advisor with respect to the trans- taken into account in determining the amount a corporation), and action, of any reportable transaction understatement or ‘‘(B) the amount of the decrease (if any) in ‘‘(III) has a fee arrangement with respect to noneconomic substance transaction understate- the aggregate amount of credits determined the transaction which is contingent on all or ment if the amendment or supplement is filed under subtitle A which results from a difference part of the intended tax benefits from the trans- after the earlier of the date the taxpayer is first between the taxpayer’s treatment of an item to action being sustained, or contacted by the Secretary regarding the exam- which this section applies (as shown on the tax- ‘‘(IV) as determined under regulations pre- ination of the return or such other date as is payer’s return of tax) and the proper tax treat- scribed by the Secretary, has a disqualifying fi- specified by the Secretary. ment of such item. nancial interest with respect to the transaction. ‘‘(4) NONECONOMIC SUBSTANCE TRANSACTION For purposes of subparagraph (A), any reduc- ‘‘(iii) DISQUALIFIED OPINIONS.—For purposes UNDERSTATEMENT.—For purposes of this sub- tion of the excess of deductions allowed for the of clause (i), an opinion is disqualified if the section, the term ‘noneconomic substance trans- taxable year over gross income for such year, opinion— action understatement’ has the meaning given and any reduction in the amount of capital ‘‘(I) is based on unreasonable factual or legal such term by section 6662B(c). losses which would (without regard to section assumptions (including assumptions as to future ‘‘(5) CROSS REFERENCE.— 1211) be allowed for such year, shall be treated events), as an increase in taxable income. ‘‘For reporting of section 6662A(c) penalty to ‘‘(II) unreasonably relies on representations, ‘‘(2) ITEMS TO WHICH SECTION APPLIES.—This the Securities and Exchange Commission, see statements, findings, or agreements of the tax- section shall apply to any item which is attrib- section 6707A(e).’’. payer or any other person, utable to— (b) DETERMINATION OF OTHER UNDERSTATE- ‘‘(III) does not identify and consider all rel- ‘‘(A) any listed transaction, and MENTS.—Subparagraph (A) of section 6662(d)(2) evant facts, or

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TAX SHELTER EXCEPTION TO CON- the Secretary may prescribe.’’. or the transaction was not respected under sec- FIDENTIALITY PRIVILEGES RELAT- (2) CONFORMING AMENDMENT.—The heading tion 7701(n)(2), or ING TO TAXPAYER COMMUNICA- TIONS. for subsection (c) of section 6664 is amended by ‘‘(B) the transaction fails to meet the require- (a) IN GENERAL.—Section 7525(b) (relating to inserting ‘‘FOR UNDERPAYMENTS’’ after ‘‘EXCEP- ments of any similar rule of law. section not to apply to communications regard- TION’’. ‘‘(d) RULES APPLICABLE TO COMPROMISE OF ing corporate tax shelters) is amended to read as (d) CONFORMING AMENDMENTS.— PENALTY.— follows: (1) Subparagraph (C) of section 461(i)(3) is ‘‘(1) IN GENERAL.—If the 1st letter of proposed ‘‘(b) SECTION NOT TO APPLY TO COMMUNICA- amended by striking ‘‘section 6662(d)(2)(C)(iii)’’ deficiency which allows the taxpayer an oppor- and inserting ‘‘section 1274(b)(3)(C)’’. TIONS REGARDING TAX SHELTERS.—The privilege tunity for administrative review in the Internal under subsection (a) shall not apply to any (2) Paragraph (3) of section 1274(b) is amend- Revenue Service Office of Appeals has been sent ed— written communication which is— with respect to a penalty to which this section ‘‘(1) between a federally authorized tax prac- (A) by striking ‘‘(as defined in section applies, only the Commissioner of Internal Rev- 6662(d)(2)(C)(iii))’’ in subparagraph (B)(i), and titioner and— enue may compromise all or any portion of such ‘‘(A) any person, (B) by adding at the end the following new penalty. subparagraph: ‘‘(B) any director, officer, employee, agent, or ‘‘(2) APPLICABLE RULES.—The rules of para- ‘‘(C) TAX SHELTER.—For purposes of subpara- representative of the person, or graphs (2), (3), (4), and (5) of section 6707A(d) graph (B), the term ‘tax shelter’ means— ‘‘(C) any other person holding a capital or shall apply for purposes of paragraph (1). ‘‘(i) a partnership or other entity, profits interest in the person, and ‘‘(ii) any investment plan or arrangement, or ‘‘(e) COORDINATION WITH OTHER PENALTIES.— ‘‘(2) in connection with the promotion of the ‘‘(iii) any other plan or arrangement, Except as otherwise provided in this part, the direct or indirect participation of the person in penalty imposed by this section shall be in addi- any tax shelter (as defined in section if a significant purpose of such partnership, en- tion to any other penalty imposed by this title. tity, plan, or arrangement is the avoidance or 1274(b)(3)(C)).’’. ‘‘(f) CROSS REFERENCES.— evasion of Federal income tax.’’. (b) EFFECTIVE DATE.—The amendment made (3) Section 6662(d)(2) is amended by striking ‘‘(1) For coordination of penalty with under- by this section shall apply to communications subparagraphs (C) and (D). statements under section 6662 and other spe- made on or after the date of the enactment of (4) Section 6664(c)(1) is amended by striking cial rules, see section 6662A(e). this Act. ‘‘this part’’ and inserting ‘‘section 6662 or 6663’’. ‘‘(2) For reporting of penalty imposed under SEC. 407. DISCLOSURE OF REPORTABLE TRANS- (5) Subsection (b) of section 7525 is amended this section to the Securities and Exchange ACTIONS. by striking ‘‘section 6662(d)(2)(C)(iii)’’ and in- Commission, see section 6707A(e).’’. (a) IN GENERAL.—Section 6111 (relating to registration of tax shelters) is amended to read as serting ‘‘section 1274(b)(3)(C)’’. (b) CLERICAL AMENDMENT.—The table of sec- (6)(A) The heading for section 6662 is amended tions for part II of subchapter A of chapter 68 follows: to read as follows: is amended by inserting after the item relating ‘‘SEC. 6111. DISCLOSURE OF REPORTABLE TRANS- ‘‘SEC. 6662. IMPOSITION OF ACCURACY-RELATED to section 6662A the following new item: ACTIONS. PENALTY ON UNDERPAYMENTS.’’. ‘‘(a) IN GENERAL.—Each material advisor with (B) The table of sections for part II of sub- ‘‘Sec. 6662B. Penalty for understatements attrib- respect to any reportable transaction shall make chapter A of chapter 68 is amended by striking utable to transactions lacking a return (in such form as the Secretary may pre- the item relating to section 6662 and inserting economic substance, etc.’’. scribe) setting forth— the following new items: (c) EFFECTIVE DATE.—The amendments made ‘‘(1) information identifying and describing by this section shall apply to transactions en- the transaction, ‘‘Sec. 6662. Imposition of accuracy-related pen- ‘‘(2) information describing any potential tax alty on underpayments. tered into after the date of the enactment of this Act. benefits expected to result from the transaction, ‘‘Sec. 6662A. Imposition of accuracy-related pen- and alty on understatements with re- SEC. 405. MODIFICATIONS OF SUBSTANTIAL UN- ‘‘(3) such other information as the Secretary DERSTATEMENT PENALTY FOR NON- spect to reportable transactions.’’. REPORTABLE TRANSACTIONS. may prescribe. (e) EFFECTIVE DATE.—The amendments made (a) SUBSTANTIAL UNDERSTATEMENT OF COR- Such return shall be filed not later than the by this section shall apply to taxable years end- PORATIONS.—Section 6662(d)(1)(B) (relating to date specified by the Secretary. ing after the date of the enactment of this Act. special rule for corporations) is amended to read ‘‘(b) DEFINITIONS.—For purposes of this sec- SEC. 404. PENALTY FOR UNDERSTATEMENTS AT- as follows: tion— TRIBUTABLE TO TRANSACTIONS ‘‘(B) SPECIAL RULE FOR CORPORATIONS.—In ‘‘(1) MATERIAL ADVISOR.— LACKING ECONOMIC SUBSTANCE, the case of a corporation other than an S cor- ‘‘(A) IN GENERAL.—The term ‘material advisor’ ETC. poration or a personal holding company (as de- means any person— (a) IN GENERAL.—Subchapter A of chapter 68 fined in section 542), there is a substantial un- ‘‘(i) who provides any material aid, assist- is amended by inserting after section 6662A the derstatement of income tax for any taxable year ance, or advice with respect to organizing, man- following new section: if the amount of the understatement for the tax- aging, promoting, selling, implementing, or car- ‘‘SEC. 6662B. PENALTY FOR UNDERSTATEMENTS able year exceeds the lesser of— rying out any reportable transaction, and ATTRIBUTABLE TO TRANSACTIONS ‘‘(i) 10 percent of the tax required to be shown ‘‘(ii) who directly or indirectly derives gross LACKING ECONOMIC SUBSTANCE, income in excess of the threshold amount for ETC. on the return for the taxable year (or, if greater, $10,000), or such aid, assistance, or advice. ‘‘(a) IMPOSITION OF PENALTY.—If a taxpayer ‘‘(B) THRESHOLD AMOUNT.—For purposes of ‘‘(ii) $10,000,000.’’. has an noneconomic substance transaction un- subparagraph (A), the threshold amount is— (b) REDUCTION FOR UNDERSTATEMENT OF TAX- derstatement for any taxable year, there shall be ‘‘(i) $50,000 in the case of a reportable trans- PAYER DUE TO POSITION OF TAXPAYER OR DIS- added to the tax an amount equal to 40 percent action substantially all of the tax benefits from CLOSED ITEM.— of the amount of such understatement. which are provided to natural persons, and ‘‘(b) REDUCTION OF PENALTY FOR DISCLOSED (1) IN GENERAL.—Section 6662(d)(2)(B)(i) (re- ‘‘(ii) $250,000 in any other case. lating to substantial authority) is amended to TRANSACTIONS.—Subsection (a) shall be applied ‘‘(2) REPORTABLE TRANSACTION.—The term ‘re- by substituting ‘20 percent’ for ‘40 percent’ with read as follows: portable transaction’ has the meaning given to respect to the portion of any noneconomic sub- ‘‘(i) the tax treatment of any item by the tax- such term by section 6707A(c). stance transaction understatement with respect payer if the taxpayer had reasonable belief that ‘‘(c) REGULATIONS.—The Secretary may pre- to which the relevant facts affecting the tax the tax treatment was more likely than not the scribe regulations which provide— treatment of the item are adequately disclosed in proper treatment, or’’. ‘‘(1) that only 1 person shall be required to the return or a statement attached to the return. (2) CONFORMING AMENDMENT.—Section 6662(d) meet the requirements of subsection (a) in cases ‘‘(c) NONECONOMIC SUBSTANCE TRANSACTION is amended by adding at the end the following in which 2 or more persons would otherwise be UNDERSTATEMENT.—For purposes of this sec- new paragraph: required to meet such requirements, tion— ‘‘(3) SECRETARIAL LIST.—For purposes of this ‘‘(2) exemptions from the requirements of this ‘‘(1) IN GENERAL.—The term ‘noneconomic subsection, section 6664(d)(2), and section section, and substance transaction understatement’ means 6694(a)(1), the Secretary may prescribe a list of ‘‘(3) such rules as may be necessary or appro- any amount which would be an understatement positions for which the Secretary believes there priate to carry out the purposes of this sec- under section 6662A(b)(1) if section 6662A were is not substantial authority or there is no rea- tion.’’. applied by taking into account items attrib- sonable belief that the tax treatment is more (b) CONFORMING AMENDMENTS.— utable to noneconomic substance transactions likely than not the proper tax treatment. Such (1) The item relating to section 6111 in the rather than items to which section 6662A would list (and any revisions thereof) shall be pub- table of sections for subchapter B of chapter 61 apply without regard to this paragraph. lished in the Federal Register or the Internal is amended to read as follows: ‘‘(2) NONECONOMIC SUBSTANCE TRANSACTION.— Revenue Bulletin.’’. The term ‘noneconomic substance transaction’ (c) EFFECTIVE DATE.—The amendments made ‘‘Sec. 6111. Disclosure of reportable trans- means any transaction if— by this section shall apply to taxable years be- actions.’’. ‘‘(A) there is a lack of economic substance ginning after the date of the enactment of this (2)(A) So much of section 6112 as precedes sub- (within the meaning of section 7701(n)(1)) for Act. section (c) thereof is amended to read as follows:

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‘‘SEC. 6112. MATERIAL ADVISORS OF REPORTABLE ‘‘(2) LISTED TRANSACTIONS.—The penalty im- (b) CONFORMING AMENDMENTS.— TRANSACTIONS MUST KEEP LISTS posed under subsection (a) with respect to any (1) The heading for section 7408 is amended to OF ADVISEES. listed transaction shall be an amount equal to read as follows: ‘‘(a) IN GENERAL.—Each material advisor (as the greater of— ‘‘SEC. 7408. ACTIONS TO ENJOIN SPECIFIED CON- defined in section 6111) with respect to any re- ‘‘(A) $200,000, or DUCT RELATED TO TAX SHELTERS portable transaction (as defined in section ‘‘(B) 50 percent of the gross income derived by AND REPORTABLE TRANSACTIONS.’’. 6707A(c)) shall maintain, in such manner as the such person with respect to aid, assistance, or (2) The table of sections for subchapter A of Secretary may by regulations prescribe, a list— advice which is provided with respect to the list- chapter 67 is amended by striking the item relat- ‘‘(1) identifying each person with respect to ed transaction before the date the return including to section 7408 and inserting the following whom such advisor acted as such a material ad- ing the transaction is filed under section 6111. new item: visor with respect to such transaction, and Subparagraph (B) shall be applied by sub- ‘‘Sec. 7408. Actions to enjoin specified con- ‘‘(2) containing such other information as the stituting ‘75 percent’ for ‘50 percent’ in the case duct related to tax shelters and Secretary may by regulations require. of an intentional failure or act described in sub- reportable transactions.’’. This section shall apply without regard to section (a). (c) EFFECTIVE DATE.—The amendment made whether a material advisor is required to file a ERTAIN RULES TO APPLY.—The provi- ‘‘(c) C by this section shall take effect on the day after return under section 6111 with respect to such sions of section 6707A(d) shall apply to any pen- the date of the enactment of this Act. transaction.’’. alty imposed under this section. (B) Section 6112 is amended by redesignating ‘‘(d) REPORTABLE AND LISTED TRANS- SEC. 411. UNDERSTATEMENT OF TAXPAYER’S LI- ABILITY BY INCOME TAX RETURN subsection (c) as subsection (b). ACTIONS.—The terms ‘reportable transaction’ PREPARER. (C) Section 6112(b), as redesignated by sub- and ‘listed transaction’ have the respective (a) STANDARDS CONFORMED TO TAXPAYER paragraph (B), is amended— meanings given to such terms by section STANDARDS.—Section 6694(a) (relating to under- (i) by inserting ‘‘written’’ before ‘‘request’’ in 6707A(c).’’. statements due to unrealistic positions) is paragraph (1)(A), and (b) CLERICAL AMENDMENT.—The item relating amended— (ii) by striking ‘‘shall prescribe’’ in paragraph to section 6707 in the table of sections for part (1) by striking ‘‘realistic possibility of being (2) and inserting ‘‘may prescribe’’. I of subchapter B of chapter 68 is amended by sustained on its merits’’ in paragraph (1) and (D) The item relating to section 6112 in the striking ‘‘tax shelters’’ and inserting ‘‘reportable inserting ‘‘reasonable belief that the tax treat- table of sections for subchapter B of chapter 61 transactions’’. ment in such position was more likely than not is amended to read as follows: (c) EFFECTIVE DATE.—The amendments made by this section shall apply to returns the due the proper treatment’’, ‘‘Sec. 6112. Material advisors of reportable date for which is after the date of the enactment (2) by striking ‘‘or was frivolous’’ in para- transactions must keep lists of of this Act. graph (3) and inserting ‘‘or there was no rea- advisees.’’. sonable basis for the tax treatment of such posi- SEC. 409. MODIFICATION OF PENALTY FOR FAIL- tion’’, and (3)(A) The heading for section 6708 is amended URE TO MAINTAIN LISTS OF INVES- to read as follows: TORS. (3) by striking ‘‘UNREALISTIC’’ in the heading and inserting ‘‘IMPROPER’’. ‘‘SEC. 6708. FAILURE TO MAINTAIN LISTS OF (a) IN GENERAL.—Subsection (a) of section (b) AMOUNT OF PENALTY.—Section 6694 is ADVISEES WITH RESPECT TO RE- 6708 is amended to read as follows: PORTABLE TRANSACTIONS.’’. ‘‘(a) IMPOSITION OF PENALTY.— amended— (B) The item relating to section 6708 in the ‘‘(1) IN GENERAL.—If any person who is re- (1) by striking ‘‘$250’’ in subsection (a) and table of sections for part I of subchapter B of quired to maintain a list under section 6112(a) inserting ‘‘$1,000’’, and chapter 68 is amended to read as follows: fails to make such list available upon written re- (2) by striking ‘‘$1,000’’ in subsection (b) and quest to the Secretary in accordance with sec- inserting ‘‘$5,000’’. ‘‘Sec. 6708. Failure to maintain lists of advisees tion 6112(b)(1)(A) within 20 business days after (c) EFFECTIVE DATE.—The amendments made with respect to reportable trans- the date of the Secretary’s request, such person by this section shall apply to documents pre- actions.’’. shall pay a penalty of $10,000 for each day of pared after the date of the enactment of this (c) REQUIRED DISCLOSURE NOT SUBJECT TO such failure after such 20th day. Act. CLAIM OF CONFIDENTIALITY.—Subparagraph (A) ‘‘(2) REASONABLE CAUSE EXCEPTION.—No pen- SEC. 412. PENALTY ON FAILURE TO REPORT IN- of section 6112(b)(1), as redesignated by sub- alty shall be imposed by paragraph (1) with re- TERESTS IN FOREIGN FINANCIAL AC- section (b)(2)(B), is amended by adding at the spect to the failure on any day if such failure is COUNTS. end the following new flush sentence: due to reasonable cause.’’. (a) IN GENERAL.—Section 5321(a)(5) of title 31, (b) EFFECTIVE DATE.—The amendment made United States Code, is amended to read as fol- ‘‘For purposes of this section, the identity of lows: any person on such list shall not be privileged.’’. by this section shall apply to requests made ‘‘(5) FOREIGN FINANCIAL AGENCY TRANSACTION (d) EFFECTIVE DATE.— after the date of the enactment of this Act. VIOLATION.— (1) IN GENERAL.—Except as provided in para- SEC. 410. MODIFICATION OF ACTIONS TO ENJOIN ‘‘(A) PENALTY AUTHORIZED.—The Secretary of graph (2), the amendments made by this section CERTAIN CONDUCT RELATED TO TAX SHELTERS AND REPORTABLE the Treasury may impose a civil money penalty shall apply to transactions with respect to TRANSACTIONS. on any person who violates, or causes any vio- which material aid, assistance, or advice re- (a) IN GENERAL.—Section 7408 (relating to ac- lation of, any provision of section 5314. ferred to in section 6111(b)(1)(A)(i) of the Inter- tion to enjoin promoters of abusive tax shelters, ‘‘(B) AMOUNT OF PENALTY.— nal Revenue Code of 1986 (as added by this sec- etc.) is amended by redesignating subsection (c) ‘‘(i) IN GENERAL.—Except as provided in sub- tion) is provided after the date of the enactment as subsection (d) and by striking subsections (a) paragraph (C), the amount of any civil penalty of this Act. and (b) and inserting the following new sub- imposed under subparagraph (A) shall not ex- (2) NO CLAIM OF CONFIDENTIALITY AGAINST sections: ceed $5,000. DISCLOSURE .—The amendment made by sub- ‘‘(a) AUTHORITY TO SEEK INJUNCTION.—A civil ‘‘(ii) REASONABLE CAUSE EXCEPTION.—No pen- section (c) shall take effect as if included in the action in the name of the United States to en- alty shall be imposed under subparagraph (A) amendments made by section 142 of the Deficit join any person from further engaging in speci- with respect to any violation if— Reduction Act of 1984. fied conduct may be commenced at the request ‘‘(I) such violation was due to reasonable SEC. 408. MODIFICATIONS TO PENALTY FOR FAIL- of the Secretary. Any action under this section cause, and URE TO REGISTER TAX SHELTERS. shall be brought in the district court of the ‘‘(II) the amount of the transaction or the bal- (a) IN GENERAL.—Section 6707 (relating to United States for the district in which such per- ance in the account at the time of the trans- failure to furnish information regarding tax son resides, has his principal place of business, action was properly reported. shelters) is amended to read as follows: or has engaged in specified conduct. The court ‘‘(C) WILLFUL VIOLATIONS.—In the case of ‘‘SEC. 6707. FAILURE TO FURNISH INFORMATION may exercise its jurisdiction over such action (as any person willfully violating, or willfully caus- REGARDING REPORTABLE TRANS- provided in section 7402(a)) separate and apart ing any violation of, any provision of section ACTIONS. from any other action brought by the United 5314— ‘‘(a) IN GENERAL.—If a person who is required States against such person. ‘‘(i) the maximum penalty under subpara- to file a return under section 6111(a) with re- ‘‘(b) ADJUDICATION AND DECREE.—In any ac- graph (B)(i) shall be increased to the greater spect to any reportable transaction— tion under subsection (a), if the court finds— of— ‘‘(1) fails to file such return on or before the ‘‘(1) that the person has engaged in any speci- ‘‘(I) $25,000, or date prescribed therefor, or fied conduct, and ‘‘(II) the amount (not exceeding $100,000) de- ‘‘(2) files false or incomplete information with ‘‘(2) that injunctive relief is appropriate to termined under subparagraph (D), and the Secretary with respect to such transaction, prevent recurrence of such conduct, ‘‘(ii) subparagraph (B)(ii) shall not apply. such person shall pay a penalty with respect to the court may enjoin such person from engaging ‘‘(D) AMOUNT.—The amount determined under such return in the amount determined under in such conduct or in any other activity subject this subparagraph is— subsection (b). to penalty under this title. ‘‘(i) in the case of a violation involving a ‘‘(b) AMOUNT OF PENALTY.— ‘‘(c) SPECIFIED CONDUCT.—For purposes of transaction, the amount of the transaction, or ‘‘(1) IN GENERAL.—Except as provided in para- this section, the term ‘specified conduct’ means ‘‘(ii) in the case of a violation involving a fail- graph (2), the penalty imposed under subsection any action, or failure to take action, subject to ure to report the existence of an account or any (a) with respect to any failure shall be $50,000. penalty under section 6700, 6701, 6707, or 6708.’’. identifying information required to be provided

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with respect to an account, the balance in the hearing before levy) is amended by adding at (b) TAX SHELTER OPINIONS, ETC.—Section 330 account at the time of the violation.’’. the end the following new subsection: of such title 31 is amended by adding at the end (b) EFFECTIVE DATE.—The amendment made ‘‘(g) FRIVOLOUS REQUESTS FOR HEARING, the following new subsection: by this section shall apply to violations occur- ETC.—Notwithstanding any other provision of ‘‘(d) Nothing in this section or in any other ring after the date of the enactment of this Act. this section, if the Secretary determines that provision of law shall be construed to limit the SEC. 413. FRIVOLOUS TAX SUBMISSIONS. any portion of a request for a hearing under authority of the Secretary of the Treasury to im- (a) CIVIL PENALTIES.—Section 6702 is amended this section or section 6320 meets the require- pose standards applicable to the rendering of to read as follows: ment of clause (i) or (ii) of section 6702(b)(2)(A), written advice with respect to any entity, trans- then the Secretary may treat such portion as if action plan or arrangement, or other plan or ar- ‘‘SEC. 6702. FRIVOLOUS TAX SUBMISSIONS. it were never submitted and such portion shall rangement, which is of a type which the Sec- ‘‘(a) CIVIL PENALTY FOR FRIVOLOUS TAX RE- not be subject to any further administrative or retary determines as having a potential for tax TURNS.—A person shall pay a penalty of $5,000 judicial review.’’. avoidance or evasion.’’. if— (2) PRECLUSION FROM RAISING FRIVOLOUS SEC. 415. PENALTY ON PROMOTERS OF TAX SHEL- ‘‘(1) such person files what purports to be a ISSUES AT HEARING.—Section 6330(c)(4) is amend- return of a tax imposed by this title but which— TERS. ed— (a) PENALTY ON PROMOTING ABUSIVE TAX ‘‘(A) does not contain information on which (A) by striking ‘‘(A)’’ and inserting ‘‘(A)(i)’’; SHELTERS.—Section 6700(a) is amended by add- the substantial correctness of the self-assessment (B) by striking ‘‘(B)’’ and inserting ‘‘(ii)’’; may be judged, or (C) by striking the period at the end of the ing at the end the following new sentence: ‘‘Not- ‘‘(B) contains information that on its face in- first sentence and inserting ‘‘; or’’; and withstanding the first sentence, if an activity dicates that the self-assessment is substantially (D) by inserting after subparagraph (A)(ii) (as with respect to which a penalty imposed under incorrect; and so redesignated) the following: this subsection involves a statement described in ‘‘(2) the conduct referred to in paragraph ‘‘(B) the issue meets the requirement of clause paragraph (2)(A), the amount of the penalty (1)— (i) or (ii) of section 6702(b)(2)(A).’’. shall be equal to 50 percent of the gross income ‘‘(A) is based on a position which the Sec- (3) STATEMENT OF GROUNDS.—Section derived (or to be derived) from such activity by retary has identified as frivolous under sub- 6330(b)(1) is amended by striking ‘‘under sub- the person on which the penalty is imposed.’’. section (c), or section (a)(3)(B)’’ and inserting ‘‘in writing (b) EFFECTIVE DATE.—The amendment made ‘‘(B) reflects a desire to delay or impede the under subsection (a)(3)(B) and states the by this section shall apply to activities after the administration of Federal tax laws. grounds for the requested hearing’’. date of the enactment of this Act. (c) TREATMENT OF FRIVOLOUS REQUESTS FOR ‘‘(b) CIVIL PENALTY FOR SPECIFIED FRIVOLOUS SEC. 416. STATUTE OF LIMITATIONS FOR TAX- HEARINGS UPON FILING OF NOTICE OF LIEN.— ABLE YEARS FOR WHICH REQUIRED SUBMISSIONS.— Section 6320 is amended— LISTED TRANSACTIONS NOT RE- ‘‘(1) IMPOSITION OF PENALTY.—Except as pro- (1) in subsection (b)(1), by striking ‘‘under PORTED. vided in paragraph (3), any person who submits subsection (a)(3)(B)’’ and inserting ‘‘in writing (a) IN GENERAL.—Section 6501(c) (relating to a specified frivolous submission shall pay a pen- under subsection (a)(3)(B) and states the exceptions) is amended by adding at the end the alty of $5,000. grounds for the requested hearing’’, and following new paragraph: ‘‘(2) SPECIFIED FRIVOLOUS SUBMISSION.—For (2) in subsection (c), by striking ‘‘and (e)’’ ‘‘(10) LISTED TRANSACTIONS.—If a taxpayer purposes of this section— and inserting ‘‘(e), and (g)’’. fails to include on any return or statement for ‘‘(A) SPECIFIED FRIVOLOUS SUBMISSION.—The (d) TREATMENT OF FRIVOLOUS APPLICATIONS any taxable year any information with respect term ‘specified frivolous submission’ means a FOR OFFERS-IN-COMPROMISE AND INSTALLMENT to a listed transaction (as defined in section specified submission if any portion of such sub- AGREEMENTS.—Section 7122 is amended by add- 6707A(c)(2)) which is required under section 6011 mission— ing at the end the following new subsection: to be included with such return or statement, ‘‘(i) is based on a position which the Secretary ‘‘(e) FRIVOLOUS SUBMISSIONS, ETC.—Notwith- the time for assessment of any tax imposed by has identified as frivolous under subsection (c), standing any other provision of this section, if this title with respect to such transaction shall or the Secretary determines that any portion of an not expire before the date which is 1 year after ‘‘(ii) reflects a desire to delay or impede the application for an offer-in-compromise or in- the earlier of— administration of Federal tax laws. stallment agreement submitted under this sec- ‘‘(A) the date on which the Secretary is fur- ‘‘(B) SPECIFIED SUBMISSION.—The term ‘speci- tion or section 6159 meets the requirement of nished the information so required; or fied submission’ means— clause (i) or (ii) of section 6702(b)(2)(A), then the ‘‘(B) the date that a material advisor (as de- ‘‘(i) a request for a hearing under— Secretary may treat such portion as if it were fined in section 6111) meets the requirements of ‘‘(I) section 6320 (relating to notice and oppor- never submitted and such portion shall not be section 6112 with respect to a request by the Sec- tunity for hearing upon filing of notice of lien), subject to any further administrative or judicial retary under section 6112(b) relating to such review.’’. or transaction with respect to such taxpayer.’’. (e) CLERICAL AMENDMENT.—The table of sec- ‘‘(II) section 6330 (relating to notice and op- (b) EFFECTIVE DATE.—The amendment made tions for part I of subchapter B of chapter 68 is portunity for hearing before levy), and by this section shall apply to taxable years with amended by striking the item relating to section ‘‘(ii) an application under— respect to which the period for assessing a defi- 6702 and inserting the following new item: ‘‘(I) section 6159 (relating to agreements for ciency did not expire before the date of the en- payment of tax liability in installments), ‘‘Sec. 6702. Frivolous tax submissions.’’. actment of this Act. ‘‘(II) section 7122 (relating to compromises), or (f) EFFECTIVE DATE.—The amendments made SEC. 417. DENIAL OF DEDUCTION FOR INTEREST ‘‘(III) section 7811 (relating to taxpayer assist- by this section shall apply to submissions made ON UNDERPAYMENTS ATTRIB- ance orders). and issues raised after the date on which the UTABLE TO NONDISCLOSED RE- ‘‘(3) OPPORTUNITY TO WITHDRAW SUBMIS- Secretary first prescribes a list under section PORTABLE AND NONECONOMIC SUB- SION.—If the Secretary provides a person with STANCE TRANSACTIONS. 6702(c) of the Internal Revenue Code of 1986, as notice that a submission is a specified frivolous amended by subsection (a). (a) IN GENERAL.—Section 163 (relating to de- submission and such person withdraws such duction for interest) is amended by redesig- SEC. 414. REGULATION OF INDIVIDUALS PRAC- submission within 30 days after such notice, the TICING BEFORE THE DEPARTMENT nating subsection (m) as subsection (n) and by penalty imposed under paragraph (1) shall not OF TREASURY. inserting after subsection (l) the following new apply with respect to such submission. (a) CENSURE; IMPOSITION OF PENALTY.— subsection: ‘‘(c) LISTING OF FRIVOLOUS POSITIONS.—The (1) IN GENERAL.—Section 330(b) of title 31, ‘‘(m) INTEREST ON UNPAID TAXES ATTRIB- Secretary shall prescribe (and periodically re- United States Code, is amended— UTABLE TO NONDISCLOSED REPORTABLE TRANS- vise) a list of positions which the Secretary has (A) by inserting ‘‘, or censure,’’ after ‘‘Depart- ACTIONS AND NONECONOMIC SUBSTANCE TRANS- identified as being frivolous for purposes of this ment’’, and ACTIONS.—No deduction shall be allowed under subsection. The Secretary shall not include in (B) by adding at the end the following new this chapter for any interest paid or accrued such list any position that the Secretary deter- flush sentence: under section 6601 on any underpayment of tax mines meets the requirement of section ‘‘The Secretary may impose a monetary penalty which is attributable to— 6662(d)(2)(B)(ii)(II). on any representative described in the preceding ‘‘(1) the portion of any reportable transaction ‘‘(d) REDUCTION OF PENALTY.—The Secretary sentence. If the representative was acting on be- understatement (as defined in section 6662A(b)) may reduce the amount of any penalty imposed half of an employer or any firm or other entity with respect to which the requirement of section under this section if the Secretary determines in connection with the conduct giving rise to 6664(d)(2)(A) is not met, or that such reduction would promote compliance such penalty, the Secretary may impose a mone- ‘‘(2) any noneconomic substance transaction with and administration of the Federal tax tary penalty on such employer, firm, or entity if understatement (as defined in section laws. it knew, or reasonably should have known, of 6662B(c)).’’. ‘‘(e) PENALTIES IN ADDITION TO OTHER PEN- such conduct. Such penalty shall not exceed the (b) EFFECTIVE DATE.—The amendments made ALTIES.—The penalties imposed by this section gross income derived (or to be derived) from the by this section shall apply to transactions in shall be in addition to any other penalty pro- conduct giving rise to the penalty and may be in taxable years beginning after the date of the en- vided by law.’’. addition to, or in lieu of, any suspension, dis- actment of this Act. (b) TREATMENT OF FRIVOLOUS REQUESTS FOR barment, or censure of the representative.’’. SEC. 418. AUTHORIZATION OF APPROPRIATIONS HEARINGS BEFORE LEVY.— (2) EFFECTIVE DATE.—The amendments made FOR TAX LAW ENFORCEMENT. (1) FRIVOLOUS REQUESTS DISREGARDED.—Sec- by this subsection shall apply to actions taken There is authorized to be appropriated tion 6330 (relating to notice and opportunity for after the date of the enactment of this Act. $300,000,000 for each fiscal year beginning after

VerDate jul 14 2003 01:29 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00031 Fmt 4624 Sfmt 6333 E:\CR\FM\A03MR6.039 S03PT1 S2050 CONGRESSIONAL RECORD — SENATE March 3, 2004 September 30, 2003, for the purpose of carrying ‘‘(A) a nongovernmental entity which exer- payment (as defined in section 6401(a)) of tax out tax law enforcement to combat tax avoid- cises self-regulatory powers (including imposing required to be shown on a return is attributable ance transactions and other tax shelters, includ- sanctions) in connection with a qualified board to fraudulent action described in subsection (a), ing the use of offshore financial accounts to or exchange (as defined in section 1256(g)(7)), or the applicable dollar amount under subsection conceal taxable income. ‘‘(B) to the extent provided in regulations, a (a) shall in no event be less than an amount Subtitle B—Other Corporate Governance nongovernmental entity which exercises self-reg- equal to such portion. A rule similar to the rule Provisions ulatory powers (including imposing sanctions) under section 6663(b) shall apply for purposes of as part of performing an essential governmental determining the portion so attributable.’’. SEC. 421. AFFIRMATION OF CONSOLIDATED RE- (b) INCREASE IN PENALTIES.— TURN REGULATION AUTHORITY. function.’’. (b) EFFECTIVE DATE.—The amendment made (1) ATTEMPT TO EVADE OR DEFEAT TAX.—Sec- (a) IN GENERAL.—Section 1502 (relating to by this section shall apply to amounts paid or tion 7201 is amended— consolidated return regulations) is amended by incurred after April 27, 2003, except that such (A) by striking ‘‘$100,000’’ and inserting adding at the end the following new sentence: amendment shall not apply to amounts paid or ‘‘$250,000’’, ‘‘In prescribing such regulations, the Secretary incurred under any binding order or agreement (B) by striking ‘‘$500,000’’ and inserting may prescribe rules applicable to corporations entered into on or before April 27, 2003. Such ex- ‘‘$1,000,000’’, and filing consolidated returns under section 1501 ception shall not apply to an order or agreement (C) by striking ‘‘5 years’’ and inserting ‘‘10 that are different from other provisions of this requiring court approval unless the approval years’’. title that would apply if such corporations filed was obtained on or before April 27, 2003. (2) WILLFUL FAILURE TO FILE RETURN, SUPPLY separate returns.’’. INFORMATION, OR PAY TAX.—Section 7203 is (b) RESULT NOT OVERTURNED.—Notwith- SEC. 424. DISALLOWANCE OF DEDUCTION FOR PUNITIVE DAMAGES. amended— standing subsection (a), the Internal Revenue (A) in the first sentence— (a) DISALLOWANCE OF DEDUCTION.— Code of 1986 shall be construed by treating (i) by striking ‘‘misdemeanor’’ and inserting (1) IN GENERAL.—Section 162(g) (relating to Treasury regulation § 1.1502–20(c)(1)(iii) (as in ‘‘felony’’, and treble damage payments under the antitrust effect on January 1, 2001) as being inapplicable (ii) by striking ‘‘1 year’’ and inserting ‘‘10 laws) is amended by adding at the end the fol- to the type of factual situation in 255 F.3d 1357 years’’, and (Fed. Cir. 2001). lowing new paragraph: (B) by striking the third sentence. ‘‘(2) PUNITIVE DAMAGES.—No deduction shall (c) EFFECTIVE DATE.—The provisions of this (3) FRAUD AND FALSE STATEMENTS.—Section section shall apply to taxable years beginning be allowed under this chapter for any amount 7206(a) (as redesignated by subsection (a)) is before, on, or after the date of the enactment of paid or incurred for punitive damages in con- amended— this Act. nection with any judgment in, or settlement of, (A) by striking ‘‘$100,000’’ and inserting any action. This paragraph shall not apply to SEC. 422. SIGNING OF CORPORATE TAX RETURNS ‘‘$250,000’’, BY CHIEF EXECUTIVE OFFICER. punitive damages described in section 104(c).’’. (B) by striking ‘‘$500,000’’ and inserting (2) CONFORMING AMENDMENTS.— (a) IN GENERAL.—Section 6062 (relating to ‘‘$1,000,000’’, and (A) Section 162(g) is amended— signing of corporation returns) is amended by (C) by striking ‘‘3 years’’ and inserting ‘‘5 (i) by striking ‘‘If’’ and inserting: inserting after the first sentence the following years’’. ‘‘(1) TREBLE DAMAGES.—If’’, and new sentences: ‘‘The return of a corporation (c) EFFECTIVE DATE.—The amendments made (ii) by redesignating paragraphs (1) and (2) as with respect to income shall also include a dec- by this section shall apply to underpayments subparagraphs (A) and (B), respectively. laration signed by the chief executive officer of and overpayments attributable to actions occur- (B) The heading for section 162(g) is amended such corporation (or other such officer of the ring after the date of the enactment of this Act. by inserting ‘‘OR PUNITIVE DAMAGES’’ after corporation as the Secretary may designate if Subtitle C—Enron-Related Tax Shelter ‘‘LAWS’’. the corporation does not have a chief executive Provisions (b) INCLUSION IN INCOME OF PUNITIVE DAM- officer), under penalties of perjury, that the AGES PAID BY INSURER OR OTHERWISE.— SEC. 431. LIMITATION ON TRANSFER OR IMPOR- chief executive officer ensures that such return TATION OF BUILT-IN LOSSES. (1) IN GENERAL.—Part II of subchapter B of complies with this title and that the chief execu- chapter 1 (relating to items specifically included (a) IN GENERAL.—Section 362 (relating to basis tive officer was provided reasonable assurance in gross income) is amended by adding at the to corporations) is amended by adding at the of the accuracy of all material aspects of such end the following new section: end the following new subsection: return. The preceding sentence shall not apply ‘‘(e) LIMITATIONS ON BUILT-IN LOSSES.— ‘‘SEC. 91. PUNITIVE DAMAGES COMPENSATED BY to any return of a regulated investment com- ‘‘(1) LIMITATION ON IMPORTATION OF BUILT-IN INSURANCE OR OTHERWISE. pany (within the meaning of section 851).’’. LOSSES.— ‘‘Gross income shall include any amount paid (b) EFFECTIVE DATE.—The amendment made ‘‘(A) IN GENERAL.—If in any transaction de- by this section shall apply to returns filed after to or on behalf of a taxpayer as insurance or scribed in subsection (a) or (b) there would (but the date of the enactment of this Act. otherwise by reason of the taxpayer’s liability for this subsection) be an importation of a net (or agreement) to pay punitive damages.’’. SEC. 423. DENIAL OF DEDUCTION FOR CERTAIN built-in loss, the basis of each property de- (2) REPORTING REQUIREMENTS.—Section 6041 FINES, PENALTIES, AND OTHER scribed in subparagraph (B) which is acquired AMOUNTS. (relating to information at source) is amended in such transaction shall (notwithstanding sub- by adding at the end the following new sub- (a) IN GENERAL.—Subsection (f) of section 162 sections (a) and (b)) be its fair market value im- (relating to trade or business expenses) is section: mediately after such transaction. ‘‘(f) SECTION TO APPLY TO PUNITIVE DAMAGES amended to read as follows: ‘‘(B) PROPERTY DESCRIBED.—For purposes of OMPENSATION ‘‘(f) FINES, PENALTIES, AND OTHER C .—This section shall apply to subparagraph (A), property is described in this AMOUNTS.— payments by a person to or on behalf of another subparagraph if— ‘‘(1) IN GENERAL.—Except as provided in para- person as insurance or otherwise by reason of ‘‘(i) gain or loss with respect to such property graph (2), no deduction otherwise allowable the other person’s liability (or agreement) to pay is not subject to tax under this subtitle in the shall be allowed under this chapter for any punitive damages.’’. hands of the transferor immediately before the amount paid or incurred (whether by suit, (3) CONFORMING AMENDMENT.—The table of transfer, and agreement, or otherwise) to, or at the direction sections for part II of subchapter B of chapter ‘‘(ii) gain or loss with respect to such property of, a government or entity described in para- 1 is amended by adding at the end the following is subject to such tax in the hands of the trans- graph (4) in relation to the violation of any law new item: feree immediately after such transfer. or the investigation or inquiry by such govern- ‘‘Sec. 91. Punitive damages compensated by in- In any case in which the transferor is a partner- ment or entity into the potential violation of surance or otherwise.’’. ship, the preceding sentence shall be applied by any law. (c) EFFECTIVE DATE.—The amendments made treating each partner in such partnership as ‘‘(2) EXCEPTION FOR AMOUNTS CONSTITUTING by this section shall apply to damages paid or holding such partner’s proportionate share of RESTITUTION.—Paragraph (1) shall not apply to incurred on or after the date of the enactment the property of such partnership. any amount which the taxpayer establishes con- of this Act. ‘‘(C) IMPORTATION OF NET BUILT-IN LOSS.—For stitutes restitution for damage or harm caused SEC. 425. INCREASE IN CRIMINAL MONETARY purposes of subparagraph (A), there is an im- by the violation of any law or the potential vio- PENALTY LIMITATION FOR THE UN- portation of a net built-in loss in a transaction lation of any law. This paragraph shall not DERPAYMENT OR OVERPAYMENT OF if the transferee’s aggregate adjusted bases of apply to any amount paid or incurred as reim- TAX DUE TO FRAUD. property described in subparagraph (B) which is bursement to the government or entity for the (a) IN GENERAL.—Section 7206 (relating to transferred in such transaction would (but for costs of any investigation or litigation. fraud and false statements) is amended— this paragraph) exceed the fair market value of ‘‘(3) EXCEPTION FOR AMOUNTS PAID OR IN- (1) by striking ‘‘Any person who—’’ and in- such property immediately after such trans- CURRED AS THE RESULT OF CERTAIN COURT OR- serting ‘‘(a) IN GENERAL.—Any person who—’’, action.’’. DERS.—Paragraph (1) shall not apply to any and ‘‘(2) LIMITATION ON TRANSFER OF BUILT-IN amount paid or incurred by order of a court in (2) by adding at the end the following new LOSSES IN SECTION 351 TRANSACTIONS.— a suit in which no government or entity de- subsection: ‘‘(A) IN GENERAL.—If— scribed in paragraph (4) is a party. ‘‘(b) INCREASE IN MONETARY LIMITATION FOR ‘‘(i) property is transferred by a transferor in ‘‘(4) CERTAIN NONGOVERNMENTAL REGULATORY UNDERPAYMENT OR OVERPAYMENT OF TAX DUE any transaction which is described in subsection ENTITIES.—An entity is described in this para- TO FRAUD.—If any portion of any under- (a) and which is not described in paragraph (1) graph if it is— payment (as defined in section 6664(a)) or over- of this subsection, and

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‘‘(ii) the transferee’s aggregate adjusted bases (b) CONFORMING AMENDMENTS.— promptly and appropriately reduced to the ex- of such property so transferred would (but for (1) Paragraph (6) of section 56(g) is amended tent the amount held in such reserve is no this paragraph) exceed the fair market value of by striking ‘‘REMIC, or FASIT’’ and inserting longer reasonably required for purposes speci- such property immediately after such trans- ‘‘or REMIC’’. fied in clause (i) or (ii) of paragraph (3)(A).’’. action, (2) Clause (ii) of section 382(l)(4)(B) is amend- (9) Subparagraph (C) of section 1202(e)(4) is then, notwithstanding subsection (a), the trans- ed by striking ‘‘a REMIC to which part IV of amended by striking ‘‘REMIC, or FASIT’’ and feree’s aggregate adjusted bases of the property subchapter M applies, or a FASIT to which part inserting ‘‘or REMIC’’. so transferred shall not exceed the fair market V of subchapter M applies,’’ and inserting ‘‘or (10) Section 1272(a)(6)(B) is amended by add- value of such property immediately after such a REMIC to which part IV of subchapter M ap- ing at the end the following new flush sentence: transaction. plies,’’. ‘‘For purposes of clause (iii), the Secretary shall ‘‘(B) ALLOCATION OF BASIS REDUCTION.—The (3) Paragraph (1) of section 582(c) is amended prescribe regulations permitting the use of a aggregate reduction in basis by reason of sub- by striking ‘‘, and any regular interest in a current prepayment assumption, determined as paragraph (A) shall be allocated among the FASIT,’’. of the close of the accrual period (or such other property so transferred in proportion to their re- (4) Subparagraph (E) of section 856(c)(5) is time as the Secretary may prescribe during the spective built-in losses immediately before the amended by striking the last sentence. taxable year in which the accrual period transaction. (5)(A) Section 860G(a)(1) is amended by add- ends).’’. ‘‘(C) EXCEPTION FOR TRANSFERS WITHIN AF- ing at the end the following new sentence: ‘‘An (11) Subparagraph (C) of section 7701(a)(19) is FILIATED GROUP.—Subparagraph (A) shall not interest shall not fail to qualify as a regular in- amended by adding ‘‘and’’ at the end of clause apply to any transaction if the transferor owns terest solely because the specified principal (ix), by striking ‘‘, and’’ at the end of clause (x) stock in the transferee meeting the requirements amount of the regular interest (or the amount of and inserting a period, and by striking clause of section 1504(a)(2). In the case of property to interest accrued on the regular interest) can be (xi). which subparagraph (A) does not apply by rea- reduced as a result of the nonoccurrence of 1 or (12) The table of parts for subchapter M of son of the preceding sentence, the transferor’s more contingent payments with respect to any chapter 1 is amended by striking the item relat- basis in the stock received for such property reverse mortgage loan held by the REMIC if, on ing to part V. shall not exceed its fair market value imme- the startup day for the REMIC, the sponsor rea- (c) EFFECTIVE DATE.— diately after the transfer.’’. sonably believes that all principal and interest (1) IN GENERAL.—Except as provided in para- (b) COMPARABLE TREATMENT WHERE LIQUIDA- due under the regular interest will be paid at or graph (2), the amendments made by this section TION.—Paragraph (1) of section 334(b) (relating prior to the liquidation of the REMIC.’’. shall take effect on February 14, 2003. to liquidation of subsidiary) is amended to read (B) The last sentence of section 860G(a)(3) is (2) EXCEPTION FOR EXISTING FASITS.— as follows: amended by inserting ‘‘, and any reverse mort- (A) IN GENERAL.—Paragraph (1) shall not ‘‘(1) IN GENERAL.—If property is received by a gage loan (and each balance increase on such apply to any FASIT in existence on the date of corporate distributee in a distribution in a com- loan meeting the requirements of subparagraph the enactment of this Act to the extent that reg- plete liquidation to which section 332 applies (or (A)(iii)) shall be treated as an obligation secured ular interests issued by the FASIT before such in a transfer described in section 337(b)(1)), the by an interest in real property’’ before the pe- date continue to remain outstanding in accord- basis of such property in the hands of such dis- riod at the end. ance with the original terms of issuance. tributee shall be the same as it would be in the (6) Paragraph (3) of section 860G(a) is amend- (B) TRANSFER OF ADDITIONAL ASSETS NOT PER- hands of the transferor; except that the basis of ed by adding ‘‘and’’ at the end of subparagraph MITTED.—Except as provided in regulations pre- such property in the hands of such distributee (B), by striking ‘‘, and’’ at the end of subpara- scribed by the Secretary of the Treasury or the shall be the fair market value of the property at graph (C) and inserting a period, and by strik- Secretary’s delegate, subparagraph (A) shall the time of the distribution— ing subparagraph (D). cease to apply as of the earliest date after the ‘‘(A) in any case in which gain or loss is rec- (7) Section 860G(a)(3), as amended by para- date of the enactment of this Act that any prop- ognized by the liquidating corporation with re- graph (6), is amended by adding at the end the erty is transferred to the FASIT. spect to such property, or following new sentence: ‘‘For purposes of sub- SEC. 434. EXPANDED DISALLOWANCE OF DEDUC- ‘‘(B) in any case in which the liquidating cor- paragraph (A), if more than 50 percent of the poration is a foreign corporation, the corporate TION FOR INTEREST ON CONVERT- obligations transferred to, or purchased by, the IBLE DEBT. distributee is a domestic corporation, and the REMIC are originated by the United States or corporate distributee’s aggregate adjusted bases (a) IN GENERAL.—Paragraph (2) of section any State (or any political subdivision, agency, 163(l) is amended by striking ‘‘or a related of property described in section 362(e)(1)(B) or instrumentality of the United States or any which is distributed in such liquidation would party’’ and inserting ‘‘or equity held by the State) and are principally secured by an interest issuer (or any related party) in any other per- (but for this subparagraph) exceed the fair marin real property, then each obligation trans- ket value of such property immediately after son’’. ferred to, or purchased by, the REMIC shall be (b) CAPITALIZATION ALLOWED WITH RESPECT such liquidation.’’. treated as secured by an interest in real prop- (c) EFFECTIVE DATE.—The amendments made TO EQUITY OF PERSONS OTHER THAN ISSUER AND erty.’’. by this section shall apply to transactions after RELATED PARTIES.—Section 163(l) is amended by (8)(A) Section 860G(a)(3)(A) is amended by February 13, 2003. redesignating paragraphs (4) and (5) as para- striking ‘‘or’’ at the end of clause (i), by insert- graphs (5) and (6) and by inserting after para- SEC. 432. NO REDUCTION OF BASIS UNDER SEC- ing ‘‘or’’ at the end of clause (ii), and by insert- TION 734 IN STOCK HELD BY PART- graph (3) the following new paragraph: NERSHIP IN CORPORATE PARTNER. ing after clause (ii) the following new clause: ‘‘(4) CAPITALIZATION ALLOWED WITH RESPECT (a) IN GENERAL.—Section 755 is amended by ‘‘(iii) represents an increase in the principal TO EQUITY OF PERSONS OTHER THAN ISSUER AND adding at the end the following new subsection: amount under the original terms of an obliga- RELATED PARTIES.—If the disqualified debt in- ‘‘(c) NO ALLOCATION OF BASIS DECREASE TO tion described in clause (i) or (ii) if such instrument of a corporation is payable in equity STOCK OF CORPORATE PARTNER.—In making an crease— held by the issuer (or any related party) in any allocation under subsection (a) of any decrease ‘‘(I) is attributable to an advance made to the other person (other than a related party), the in the adjusted basis of partnership property obligor pursuant to the original terms of the ob- basis of such equity shall be increased by the under section 734(b)— ligation, amount not allowed as a deduction by reason of ‘‘(1) no allocation may be made to stock in a ‘‘(II) occurs after the startup day, and paragraph (1) with respect to the instrument.’’. corporation (or any person which is related ‘‘(III) is purchased by the REMIC pursuant to (c) EXCEPTION FOR CERTAIN INSTRUMENTS (within the meaning of section 267(b) or a fixed price contract in effect on the startup ISSUED BY DEALERS IN SECURITIES.—Section 707(b)(1)) to such corporation) which is a part- day.’’. 163(l), as amended by subsection (b), is amended ner in the partnership, and (B) Section 860G(a)(7)(B) is amended to read by redesignating paragraphs (5) and (6) as para- ‘‘(2) any amount not allocable to stock by rea- as follows: graphs (6) and (7) and by inserting after para- son of paragraph (1) shall be allocated under ‘‘(B) QUALIFIED RESERVE FUND.—For purposes graph (4) the following new paragraph: subsection (a) to other partnership property in of subparagraph (A), the term ‘qualified reserve ‘‘(5) EXCEPTION FOR CERTAIN INSTRUMENTS such manner as the Secretary may prescribe. fund’ means any reasonably required reserve ISSUED BY DEALERS IN SECURITIES.—For purposes Gain shall be recognized to the partnership to to— of this subsection, the term ‘disqualified debt in- the extent that the amount required to be allo- ‘‘(i) provide for full payment of expenses of strument’ does not include indebtedness issued cated under paragraph (2) to other partnership the REMIC or amounts due on regular interests by a dealer in securities (or a related party) property exceeds the aggregate adjusted basis of in the event of defaults on qualified mortgages which is payable in, or by reference to, equity such other property immediately before the allo- or lower than expected returns on cash flow in- (other than equity of the issuer or a related cation required by paragraph (2).’’. vestments, or party) held by such dealer in its capacity as a (b) EFFECTIVE DATE.—The amendment made ‘‘(ii) provide a source of funds for the pur- dealer in securities. For purposes of this para- by this section shall apply to distributions after chase of obligations described in clause (ii) or graph, the term ‘dealer in securities’ has the February 13, 2003. (iii) of paragraph (3)(A). meaning given such term by section 475.’’. SEC. 433. REPEAL OF SPECIAL RULES FOR FASITS. The aggregate fair market value of the assets (c) CONFORMING AMENDMENTS.—Paragraph (a) IN GENERAL.—Part V of subchapter M of held in any such reserve shall not exceed 50 per- (3) of section 163(l) is amended— chapter 1 (relating to financial asset cent of the aggregate fair market value of all of (1) by striking ‘‘or a related party’’ in the ma- securitization investment trusts) is hereby re- the assets of the REMIC on the startup day, terial preceding subparagraph (A) and inserting pealed. and the amount of any such reserve shall be ‘‘or any other person’’, and

VerDate jul 14 2003 01:29 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00033 Fmt 4624 Sfmt 6333 E:\CR\FM\A03MR6.039 S03PT1 S2052 CONGRESSIONAL RECORD — SENATE March 3, 2004 (2) by striking ‘‘or interest’’ each place it ap- holders of the domestic corporation by reason of in paragraph (1) only to the extent such tax ex- pears. holding stock in the domestic corporation, or ceeds the product of— (d) EFFECTIVE DATE.—The amendments made ‘‘(ii) in the case of an acquisition with respect ‘‘(A) the amount of the inversion gain for the by this section shall apply to debt instruments to a domestic partnership, by former partners of taxable year, and issued after February 13, 2003. the domestic partnership by reason of holding a ‘‘(B) the highest rate of tax specified in sec- SEC. 435. EXPANDED AUTHORITY TO DISALLOW capital or profits interest in the domestic part- tion 11(b)(1). TAX BENEFITS UNDER SECTION 269. nership, and For purposes of determining the credit allowed (a) IN GENERAL.—Subsection (a) of section 269 ‘‘(C) the expanded affiliated group which by section 901 inversion gain shall be treated as (relating to acquisitions made to evade or avoid after the acquisition includes the entity does not from sources within the United States. income tax) is amended to read as follows: have substantial business activities in the for- ‘‘(3) SPECIAL RULES FOR PARTNERSHIPS.—In ‘‘(a) IN GENERAL.—If— eign country in which or under the law of the case of an acquired entity which is a part- ‘‘(1)(A) any person or persons acquire, di- which the entity is created or organized when nership— rectly or indirectly, control of a corporation, or compared to the total business activities of such ‘‘(A) the limitations of this subsection shall ‘‘(B) any corporation acquires, directly or in- expanded affiliated group. directly, property of another corporation and apply at the partner rather than the partner- the basis of such property, in the hands of the Except as provided in regulations, an acquisi- ship level, acquiring corporation, is determined by ref- tion of properties of a domestic corporation shall ‘‘(B) the inversion gain of any partner for any erence to the basis in the hands of the trans- not be treated as described in subparagraph (A) taxable year shall be equal to the sum of— feror corporation, and if none of the corporation’s stock was readily ‘‘(i) the partner’s distributive share of inver- ‘‘(2) the principal purpose for which such ac- tradeable on an established securities market at sion gain of the partnership for such taxable quisition was made is evasion or avoidance of any time during the 4-year period ending on the year, plus Federal income tax, date of the acquisition. ‘‘(ii) income or gain required to be recognized ‘‘(b) PRESERVATION OF DOMESTIC TAX BASE IN for the taxable year by the partner under sec- then the Secretary may disallow such deduction, CERTAIN INVERSION TRANSACTIONS TO WHICH tion 367(a), 741, or 1001, or under any other pro- credit, or other allowance. For purposes of para- SUBSECTION (a) DOES NOT APPLY.— vision of chapter 1, by reason of the transfer graph (1)(A), control means the ownership of ‘‘(1) IN GENERAL.—If a foreign incorporated during the applicable period of any partnership stock possessing at least 50 percent of the total entity would be treated as an inverted domestic interest of the partner in such partnership to combined voting power of all classes of stock en- corporation with respect to an acquired entity if the foreign incorporated entity, and titled to vote or at least 50 percent of the total either— ‘‘(C) the highest rate of tax specified in the value of all shares of all classes of stock of the ‘‘(A) subsection (a)(2)(A) were applied by sub- rate schedule applicable to the partner under corporation.’’. stituting ‘after December 31, 1996, and on or be- chapter 1 shall be substituted for the rate of tax (b) EFFECTIVE DATE.—The amendment made under paragraph (2)(B). by this section shall apply to stock and property fore March 20, 2002’ for ‘after March 20, 2002’ ‘‘(4) INVERSION GAIN.—For purposes of this acquired after February 13, 2003. and subsection (a)(2)(B) were applied by substituting ‘more than 50 percent’ for ‘at least 80 section, the term ‘inversion gain’ means any in- SEC. 436. MODIFICATION OF INTERACTION BE- come or gain required to be recognized under TWEEN SUBPART F AND PASSIVE percent’, or FOREIGN INVESTMENT COMPANY ‘‘(B) subsection (a)(2)(B) were applied by subsection 304, 311(b), 367, 1001, or 1248, or under RULES. stituting ‘more than 50 percent’ for ‘at least 80 any other provision of chapter 1, by reason of (a) LIMITATION ON EXCEPTION FROM PFIC percent’, the transfer during the applicable period of RULES FOR UNITED STATES SHAREHOLDERS OF then the rules of subsection (c) shall apply to stock or other properties by an acquired entity— CONTROLLED FOREIGN CORPORATIONS.—Para- any inversion gain of the acquired entity during ‘‘(A) as part of the acquisition described in graph (2) of section 1297(e) (relating to passive the applicable period and the rules of subsection subsection (a)(2)(A) to which subsection (b) ap- foreign investment company) is amended by (d) shall apply to any related party transaction plies, or adding at the end the following flush sentence: of the acquired entity during the applicable pe- ‘‘(B) after such acquisition to a foreign re- ‘‘Such term shall not include any period if the riod. This subsection shall not apply for any lated person. earning of subpart F income by such corpora- taxable year if subsection (a) applies to such The Secretary may provide that income or gain tion during such period would result in only a foreign incorporated entity for such taxable from the sale of inventories or other trans- remote likelihood of an inclusion in gross in- year. actions in the ordinary course of a trade or come under section 951(a)(1)(A)(i).’’. ‘‘(2) ACQUIRED ENTITY.—For purposes of this business shall not be treated as inversion gain (b) EFFECTIVE DATE.—The amendment made section— under subparagraph (B) to the extent the Sec- by this section shall apply to taxable years of ‘‘(A) IN GENERAL.—The term ‘acquired entity’ retary determines such treatment would not be controlled foreign corporations beginning after means the domestic corporation or partnership inconsistent with the purposes of this section. February 13, 2003, and to taxable years of substantially all of the properties of which are ‘‘(5) COORDINATION WITH SECTION 172 AND MIN- United States shareholders with or within which directly or indirectly acquired in an acquisition IMUM TAX.—Rules similar to the rules of para- such taxable years of controlled foreign corpora- described in subsection (a)(2)(A) to which this graphs (3) and (4) of section 860E(a) shall apply tions end. subsection applies. for purposes of this section. Subtitle D—Provisions to Discourage ‘‘(B) AGGREGATION RULES.—Any domestic per- ‘‘(6) STATUTE OF LIMITATIONS.— Expatriation son bearing a relationship described in section ‘‘(A) IN GENERAL.—The statutory period for 267(b) or 707(b) to an acquired entity shall be the assessment of any deficiency attributable to SEC. 441. TAX TREATMENT OF INVERTED COR- PORATE ENTITIES treated as an acquired entity with respect to the the inversion gain of any taxpayer for any pre- (a) IN GENERAL.—Subchapter C of chapter 80 acquisition described in subparagraph (A). inversion year shall not expire before the expira- (relating to provisions affecting more than one ‘‘(3) APPLICABLE PERIOD.—For purposes of tion of 3 years from the date the Secretary is no- subtitle) is amended by adding at the end the this section— tified by the taxpayer (in such manner as the following new section: ‘‘(A) IN GENERAL.—The term ‘applicable pe- Secretary may prescribe) of the acquisition de- riod’ means the period— scribed in subsection (a)(2)(A) to which such ‘‘SEC. 7874. RULES RELATING TO INVERTED COR- PORATE ENTITIES ‘‘(i) beginning on the first date properties are gain relates and such deficiency may be assessed ‘‘(a) INVERTED CORPORATIONS TREATED AS acquired as part of the acquisition described in before the expiration of such 3-year period not- DOMESTIC CORPORATIONS.— subsection (a)(2)(A) to which this subsection ap- withstanding the provisions of any other law or ‘‘(1) IN GENERAL.—If a foreign incorporated plies, and rule of law which would otherwise prevent such entity is treated as an inverted domestic cor- ‘‘(ii) ending on the date which is 10 years assessment. poration, then, notwithstanding section after the last date properties are acquired as ‘‘(B) PRE-INVERSION YEAR.—For purposes of 7701(a)(4), such entity shall be treated for pur- part of such acquisition. subparagraph (A), the term ‘pre-inversion year’ poses of this title as a domestic corporation. ‘‘(B) SPECIAL RULE FOR INVERSIONS OCCURRING means any taxable year if— ‘‘(2) INVERTED DOMESTIC CORPORATION.—For BEFORE MARCH 21, 2002.—In the case of any ac- ‘‘(i) any portion of the applicable period is in- purposes of this section, a foreign incorporated quired entity to which paragraph (1)(A) applies, cluded in such taxable year, and entity shall be treated as an inverted domestic the applicable period shall be the 10-year period ‘‘(ii) such year ends before the taxable year in corporation if, pursuant to a plan (or a series of beginning on January 1, 2003. which the acquisition described in subsection related transactions)— ‘‘(c) TAX ON INVERSION GAINS MAY NOT BE (a)(2)(A) is completed. ‘‘(A) the entity completes after March 20, 2002, OFFSET.—If subsection (b) applies— ‘‘(d) SPECIAL RULES APPLICABLE TO ACQUIRED the direct or indirect acquisition of substantially ‘‘(1) IN GENERAL.—The taxable income of an ENTITIES TO WHICH SUBSECTION (b) APPLIES.— all of the properties held directly or indirectly acquired entity (or any expanded affiliated ‘‘(1) INCREASES IN ACCURACY-RELATED PEN- by a domestic corporation or substantially all of group which includes such entity) for any tax- ALTIES.—In the case of any underpayment of the properties constituting a trade or business of able year which includes any portion of the ap- tax of an acquired entity to which subsection (b) a domestic partnership, plicable period shall in no event be less than the applies— ‘‘(B) after the acquisition at least 80 percent inversion gain of the entity for the taxable year. ‘‘(A) section 6662(a) shall be applied with re- of the stock (by vote or value) of the entity is ‘‘(2) CREDITS NOT ALLOWED AGAINST TAX ON spect to such underpayment by substituting ‘30 held— INVERSION GAIN.—Credits shall be allowed percent’ for ‘20 percent’, and ‘‘(i) in the case of an acquisition with respect against the tax imposed by this chapter on an ‘‘(B) if such underpayment is attributable to to a domestic corporation, by former share- acquired entity for any taxable year described one or more gross valuation understatements,

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the increase in the rate of penalty under section ‘‘(B) REQUIREMENTS.—The requirements of the sale to the extent otherwise provided by this 6662(h) shall be to 50 percent rather than 40 per- subparagraph are met with respect to a trans- title, except that section 1091 shall not apply to cent. action involving any acquisition described in any such loss. ‘‘(2) MODIFICATIONS OF LIMITATION ON INTER- subparagraph (A) if— Proper adjustment shall be made in the amount EST DEDUCTION.—In the case of an acquired en- ‘‘(i) before such transaction the domestic cor- of any gain or loss subsequently realized for tity to which subsection (b) applies, section poration did not have a relationship described gain or loss taken into account under the pre- 163(j) shall be applied— in section 267(b) or 707(b), and was not under ceding sentence. ‘‘(A) without regard to paragraph (2)(A)(ii) common control (within the meaning of section ‘‘(3) EXCLUSION FOR CERTAIN GAIN.— thereof, and 482), with the acquired entity, or any member of ‘‘(A) IN GENERAL.—The amount which, but for ‘‘(B) by substituting ‘25 percent’ for ‘50 per- an expanded affiliated group including such en- this paragraph, would be includible in the gross cent’ each place it appears in paragraph (2)(B) tity, and income of any individual by reason of this sec- thereof. ‘‘(ii) after such transaction, such acquired en- tion shall be reduced (but not below zero) by ‘‘(e) OTHER DEFINITIONS AND SPECIAL tity— $600,000. For purposes of this paragraph, allo- RULES.—For purposes of this section— ‘‘(I) is a member of the same expanded affili- cable expatriation gain taken into account ‘‘(1) RULES FOR APPLICATION OF SUBSECTION ated group which includes the domestic corpora- under subsection (f)(2) shall be treated in the (a)(2).—In applying subsection (a)(2) for pur- tion or has such a relationship or is under such same manner as an amount required to be in- poses of subsections (a) and (b), the following common control with any member of such group, cludible in gross income. rules shall apply: and ‘‘(B) COST-OF-LIVING ADJUSTMENT.— ‘‘(A) CERTAIN STOCK DISREGARDED.—There ‘‘(II) is not a member of, and does not have ‘‘(i) IN GENERAL.—In the case of an expatria- shall not be taken into account in determining such a relationship and is not under such com- tion date occurring in any calendar year after ownership for purposes of subsection (a)(2)(B)— mon control with any member of, the expanded 2003, the $600,000 amount under subparagraph ‘‘(i) stock held by members of the expanded af- affiliated group which before such acquisition filiated group which includes the foreign incor- (A) shall be increased by an amount equal to— included such entity. ‘‘(I) such dollar amount, multiplied by porated entity, or ‘‘(f) REGULATIONS.—The Secretary shall pro- ‘‘(II) the cost-of-living adjustment determined ‘‘(ii) stock of such entity which is sold in a vide such regulations as are necessary to carry public offering or private placement related to under section 1(f)(3) for such calendar year, de- out this section, including regulations providing termined by substituting ‘calendar year 2002’ for the acquisition described in subsection (a)(2)(A). for such adjustments to the application of this ‘‘(B) PLAN DEEMED IN CERTAIN CASES.—If a ‘calendar year 1992’ in subparagraph (B) there- section as are necessary to prevent the avoid- of. foreign incorporated entity acquires directly or ance of the purposes of this section, including indirectly substantially all of the properties of a ‘‘(ii) ROUNDING RULES.—If any amount after the avoidance of such purposes through— adjustment under clause (i) is not a multiple of domestic corporation or partnership during the ‘‘(1) the use of related persons, pass-thru or $1,000, such amount shall be rounded to the next 4-year period beginning on the date which is 2 other noncorporate entities, or other inter- lower multiple of $1,000. years before the ownership requirements of sub- mediaries, or ‘‘(4) ELECTION TO CONTINUE TO BE TAXED AS section (a)(2)(B) are met with respect to such ‘‘(2) transactions designed to have persons UNITED STATES CITIZEN.— domestic corporation or partnership, such ac- cease to be (or not become) members of expanded ‘‘(A) IN GENERAL.—If a covered expatriate tions shall be treated as pursuant to a plan. affiliated groups or related persons.’’. elects the application of this paragraph— ‘‘(C) CERTAIN TRANSFERS DISREGARDED.—The (b) INFORMATION REPORTING.—The Secretary ‘‘(i) this section (other than this paragraph transfer of properties or liabilities (including by of the Treasury shall exercise the Secretary’s and subsection (i)) shall not apply to the expa- contribution or distribution) shall be dis- authority under the Internal Revenue Code of triate, but regarded if such transfers are part of a plan a 1986 to require entities involved in transactions ‘‘(ii) in the case of property to which this sec- principal purpose of which is to avoid the pur- to which section 7874 of such Code (as added by tion would apply but for such election, the ex- poses of this section. subsection (a)) applies to report to the Sec- patriate shall be subject to tax under this title in ‘‘(D) SPECIAL RULE FOR RELATED PARTNER- retary, shareholders, partners, and such other the same manner as if the individual were a SHIPS.—For purposes of applying subsection persons as the Secretary may prescribe such in- United States citizen. (a)(2) to the acquisition of a domestic partner- formation as is necessary to ensure the proper EQUIREMENTS.—Subparagraph (A) shall ship, except as provided in regulations, all part- ‘‘(B) R tax treatment of such transactions. not apply to an individual unless the indi- nerships which are under common control (with- (c) CONFORMING AMENDMENT.—The table of vidual— in the meaning of section 482) shall be treated as sections for subchapter C of chapter 80 is ‘‘(i) provides security for payment of tax in 1 partnership. amended by adding at the end the following such form and manner, and in such amount, as ‘‘(E) TREATMENT OF CERTAIN RIGHTS.—The new item: Secretary shall prescribe such regulations as the Secretary may require, ‘‘Sec. 7874. Rules relating to inverted corporate ‘‘(ii) consents to the waiver of any right of the may be necessary— ‘‘(i) to treat warrants, options, contracts to entities.’’. individual under any treaty of the United States acquire stock, convertible debt instruments, and (d) TRANSITION RULE FOR CERTAIN REGU- which would preclude assessment or collection other similar interests as stock, and LATED INVESTMENT COMPANIES AND UNIT IN- of any tax which may be imposed by reason of ‘‘(ii) to treat stock as not stock. VESTMENT TRUSTS.—Notwithstanding section this paragraph, and ‘‘(2) EXPANDED AFFILIATED GROUP.—The term 7874 of the Internal Revenue Code of 1986 (as ‘‘(iii) complies with such other requirements as ‘expanded affiliated group’ means an affiliated added by subsection (a)), a regulated investment the Secretary may prescribe. group as defined in section 1504(a) but without company, or other pooled fund or trust specified ‘‘(C) ELECTION.—An election under subpara- regard to section 1504(b)(3), except that section by the Secretary of the Treasury, may elect to graph (A) shall apply to all property to which 1504(a) shall be applied by substituting ‘more recognize gain by reason of section 367(a) of this section would apply but for the election than 50 percent’ for ‘at least 80 percent’ each such Code with respect to a transaction under and, once made, shall be irrevocable. Such elec- place it appears. which a foreign incorporated entity is treated as tion shall also apply to property the basis of ‘‘(3) FOREIGN INCORPORATED ENTITY.—The an inverted domestic corporation under section which is determined in whole or in part by ref- term ‘foreign incorporated entity’ means any en- 7874(a) of such Code by reason of an acquisition erence to the property with respect to which the tity which is, or but for subsection (a)(1) would completed after March 20, 2002, and before Jan- election was made. be, treated as a foreign corporation for purposes uary 1, 2004. ‘‘(b) ELECTION TO DEFER TAX.— of this title. ‘‘(1) IN GENERAL.—If the taxpayer elects the SEC. 442. IMPOSITION OF MARK-TO-MARKET TAX application of this subsection with respect to ‘‘(4) FOREIGN RELATED PERSON.—The term ON INDIVIDUALS WHO EXPATRIATE. any property treated as sold by reason of sub- ‘foreign related person’ means, with respect to (a) IN GENERAL.—Subpart A of part II of sub- any acquired entity, a foreign person which— chapter N of chapter 1 is amended by inserting section (a), the payment of the additional tax ‘‘(A) bears a relationship to such entity de- after section 877 the following new section: attributable to such property shall be postponed until the due date of the return for the taxable scribed in section 267(b) or 707(b), or ‘‘SEC. 877A. TAX RESPONSIBILITIES OF EXPATRIA- ‘‘(B) is under the same common control (with- TION. year in which such property is disposed of (or, in the meaning of section 482) as such entity. ‘‘(a) GENERAL RULES.—For purposes of this in the case of property disposed of in a trans- ‘‘(5) SUBSEQUENT ACQUISITIONS BY UNRELATED subtitle— action in which gain is not recognized in whole DOMESTIC CORPORATIONS.— ‘‘(1) MARK TO MARKET.—Except as provided in or in part, until such other date as the Sec- ‘‘(A) IN GENERAL.—Subject to such conditions, subsections (d) and (f), all property of a covered retary may prescribe). limitations, and exceptions as the Secretary may expatriate to whom this section applies shall be ‘‘(2) DETERMINATION OF TAX WITH RESPECT TO prescribe, if, after an acquisition described in treated as sold on the day before the expatria- PROPERTY.—For purposes of paragraph (1), the subsection (a)(2)(A) to which subsection (b) ap- tion date for its fair market value. additional tax attributable to any property is an plies, a domestic corporation stock of which is ‘‘(2) RECOGNITION OF GAIN OR LOSS.—In the amount which bears the same ratio to the addi- traded on an established securities market ac- case of any sale under paragraph (1)— tional tax imposed by this chapter for the tax- quires directly or indirectly any properties of ‘‘(A) notwithstanding any other provision of able year solely by reason of subsection (a) as one or more acquired entities in a transaction this title, any gain arising from such sale shall the gain taken into account under subsection with respect to which the requirements of sub- be taken into account for the taxable year of the (a) with respect to such property bears to the paragraph (B) are met, this section shall cease sale, and total gain taken into account under subsection to apply to any such acquired entity with re- ‘‘(B) any loss arising from such sale shall be (a) with respect to all property to which sub- spect to which such requirements are met. taken into account for the taxable year of the section (a) applies.

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‘‘(3) TERMINATION OF POSTPONEMENT.—No tax any interest in a retirement plan to which this relinquishment is subsequently approved by the may be postponed under this subsection later paragraph applies— issuance to the individual of a certificate of loss than the due date for the return of tax imposed ‘‘(i) such interest shall not be treated as sold of nationality by the United States Department by this chapter for the taxable year which infor purposes of subsection (a)(1), but of State. cludes the date of death of the expatriate (or, if ‘‘(ii) an amount equal to the present value of ‘‘(4) LONG-TERM RESIDENT.—The term ‘long- earlier, the time that the security provided with the expatriate’s nonforfeitable accrued benefit term resident’ has the meaning given to such respect to the property fails to meet the require- shall be treated as having been received by such term by section 877(e)(2). ments of paragraph (4), unless the taxpayer cor- individual on such date as a distribution under ‘‘(f) SPECIAL RULES APPLICABLE TO BENE- rects such failure within the time specified by the plan. FICIARIES’ INTERESTS IN TRUST.— the Secretary). ‘‘(B) TREATMENT OF SUBSEQUENT DISTRIBU- ‘‘(1) IN GENERAL.—Except as provided in para- ‘‘(4) SECURITY.— TIONS.—In the case of any distribution on or graph (2), if an individual is determined under ‘‘(A) IN GENERAL.—No election may be made after the expatriation date to or on behalf of the paragraph (3) to hold an interest in a trust on under paragraph (1) with respect to any prop- covered expatriate from a plan from which the the day before the expatriation date— erty unless adequate security is provided to the expatriate was treated as receiving a distribu- ‘‘(A) the individual shall not be treated as Secretary with respect to such property. tion under subparagraph (A), the amount other- having sold such interest, ‘‘(B) ADEQUATE SECURITY.—For purposes of wise includible in gross income by reason of the ‘‘(B) such interest shall be treated as a sepa- subparagraph (A), security with respect to any subsequent distribution shall be reduced by the rate share in the trust, and property shall be treated as adequate security excess of the amount includible in gross income ‘‘(C)(i) such separate share shall be treated as if— under subparagraph (A) over any portion of a separate trust consisting of the assets allo- ‘‘(i) it is a bond in an amount equal to the de- such amount to which this subparagraph pre- cable to such share, ferred tax amount under paragraph (2) for the viously applied. ‘‘(ii) the separate trust shall be treated as property, or ‘‘(C) TREATMENT OF SUBSEQUENT DISTRIBU- having sold its assets on the day before the ex- ‘‘(ii) the taxpayer otherwise establishes to the TIONS BY PLAN.—For purposes of this title, a repatriation date for their fair market value and satisfaction of the Secretary that the security is tirement plan to which this paragraph applies, as having distributed all of its assets to the indi- adequate. and any person acting on the plan’s behalf, vidual as of such time, and ‘‘(5) WAIVER OF CERTAIN RIGHTS.—No election shall treat any subsequent distribution described ‘‘(iii) the individual shall be treated as having may be made under paragraph (1) unless the in subparagraph (B) in the same manner as recontributed the assets to the separate trust. taxpayer consents to the waiver of any right such distribution would be treated without re- Subsection (a)(2) shall apply to any income, under any treaty of the United States which gard to this paragraph. gain, or loss of the individual arising from a dis- would preclude assessment or collection of any ‘‘(D) APPLICABLE PLANS.—This paragraph tribution described in subparagraph (C)(ii). In tax imposed by reason of this section. shall apply to— determining the amount of such distribution, ‘‘(6) ELECTIONS.—An election under para- ‘‘(i) any qualified retirement plan (as defined proper adjustments shall be made for liabilities graph (1) shall only apply to property described in section 4974(c)), of the trust allocable to an individual’s share in in the election and, once made, is irrevocable. ‘‘(ii) an eligible deferred compensation plan the trust. An election may be made under paragraph (1) (as defined in section 457(b)) of an eligible em- ‘‘(2) SPECIAL RULES FOR INTERESTS IN QUALI- with respect to an interest in a trust with re- ployer described in section 457(e)(1)(A), and FIED TRUSTS.— spect to which gain is required to be recognized ‘‘(iii) to the extent provided in regulations, ‘‘(A) IN GENERAL.—If the trust interest de- under subsection (f)(1). any foreign pension plan or similar retirement scribed in paragraph (1) is an interest in a ‘‘(7) INTEREST.—For purposes of section 6601— arrangements or programs. qualified trust— ‘‘(A) the last date for the payment of tax shall ‘‘(e) DEFINITIONS.—For purposes of this sec- ‘‘(i) paragraph (1) and subsection (a) shall not be determined without regard to the election tion— apply, and under this subsection, and ‘‘(1) EXPATRIATE.—The term ‘expatriate’ ‘‘(ii) in addition to any other tax imposed by ‘‘(B) section 6621(a)(2) shall be applied by sub- means— this title, there is hereby imposed on each dis- stituting ‘5 percentage points’ for ‘3 percentage ‘‘(A) any United States citizen who relin- tribution with respect to such interest a tax in points’ in subparagraph (B) thereof. quishes citizenship, and the amount determined under subparagraph ‘‘(c) COVERED EXPATRIATE.—For purposes of ‘‘(B) any long-term resident of the United (B). this section— States who— ‘‘(B) AMOUNT OF TAX.—The amount of tax ‘‘(1) IN GENERAL.—Except as provided in para- ‘‘(i) ceases to be a lawful permanent resident under subparagraph (A)(ii) shall be equal to the graph (2), the term ‘covered expatriate’ means of the United States (within the meaning of sec- lesser of— an expatriate. tion 7701(b)(6)), or ‘‘(i) the highest rate of tax imposed by section ‘‘(2) EXCEPTIONS.—An individual shall not be ‘‘(ii) commences to be treated as a resident of 1(e) for the taxable year which includes the day treated as a covered expatriate if— a foreign country under the provisions of a tax before the expatriation date, multiplied by the ‘‘(A) the individual— treaty between the United States and the for- ‘‘(i) became at birth a citizen of the United amount of the distribution, or eign country and who does not waive the bene- States and a citizen of another country and, as ‘‘(ii) the balance in the deferred tax account fits of such treaty applicable to residents of the of the expatriation date, continues to be a cit- immediately before the distribution determined foreign country. izen of, and is taxed as a resident of, such other without regard to any increases under subpara- ‘‘(2) EXPATRIATION DATE.—The term ‘expatria- graph (C)(ii) after the 30th day preceding the country, and tion date’ means— ‘‘(ii) has not been a resident of the United distribution. ‘‘(A) the date an individual relinquishes States (as defined in section 7701(b)(1)(A)(ii)) ‘‘(C) DEFERRED TAX ACCOUNT.—For purposes United States citizenship, or of subparagraph (B)(ii)— during the 5 taxable years ending with the tax- ‘‘(B) in the case of a long-term resident of the able year during which the expatriation date oc- ‘‘(i) OPENING BALANCE.—The opening balance United States, the date of the event described in in a deferred tax account with respect to any curs, or clause (i) or (ii) of paragraph (1)(B). ‘‘(B)(i) the individual’s relinquishment of trust interest is an amount equal to the tax ‘‘(3) RELINQUISHMENT OF CITIZENSHIP.—A cit- United States citizenship occurs before such in- which would have been imposed on the allocable izen shall be treated as relinquishing United expatriation gain with respect to the trust inter- dividual attains age 181⁄2, and States citizenship on the earliest of— ‘‘(ii) the individual has been a resident of the est if such gain had been included in gross in- ‘‘(A) the date the individual renounces such United States (as so defined) for not more than come under subsection (a). individual’s United States nationality before a 5 taxable years before the date of relinquish- ‘‘(ii) INCREASE FOR INTEREST.—The balance in diplomatic or consular officer of the United ment. the deferred tax account shall be increased by States pursuant to paragraph (5) of section ‘‘(d) EXEMPT PROPERTY; SPECIAL RULES FOR the amount of interest determined (on the bal- 349(a) of the Immigration and Nationality Act (8 PENSION PLANS.— ance in the account at the time the interest ac- ‘‘(1) EXEMPT PROPERTY.—This section shall U.S.C. 1481(a)(5)), crues), for periods after the 90th day after the not apply to the following: ‘‘(B) the date the individual furnishes to the expatriation date, by using the rates and meth- ‘‘(A) UNITED STATES REAL PROPERTY INTER- United States Department of State a signed od applicable under section 6621 for underpay- ESTS.—Any United States real property interest statement of voluntary relinquishment of United ments of tax for such periods, except that sec- (as defined in section 897(c)(1)), other than States nationality confirming the performance tion 6621(a)(2) shall be applied by substituting ‘5 stock of a United States real property holding of an act of expatriation specified in paragraph percentage points’ for ‘3 percentage points’ in corporation which does not, on the day before (1), (2), (3), or (4) of section 349(a) of the Immi- subparagraph (B) thereof. the expatriation date, meet the requirements of gration and Nationality Act (8 U.S.C. ‘‘(iii) DECREASE FOR TAXES PREVIOUSLY section 897(c)(2). 1481(a)(1)–(4)), PAID.—The balance in the tax deferred account ‘‘(B) SPECIFIED PROPERTY.—Any property or ‘‘(C) the date the United States Department of shall be reduced— interest in property not described in subpara- State issues to the individual a certificate of loss ‘‘(I) by the amount of taxes imposed by sub- graph (A) which the Secretary specifies in regu- of nationality, or paragraph (A) on any distribution to the person lations. ‘‘(D) the date a court of the United States holding the trust interest, and ‘‘(2) SPECIAL RULES FOR CERTAIN RETIREMENT cancels a naturalized citizen’s certificate of nat- ‘‘(II) in the case of a person holding a non- PLANS.— uralization. vested interest, to the extent provided in regula- ‘‘(A) IN GENERAL.—If a covered expatriate Subparagraph (A) or (B) shall not apply to any tions, by the amount of taxes imposed by sub- holds on the day before the expatriation date individual unless the renunciation or voluntary paragraph (A) on distributions from the trust

VerDate jul 14 2003 01:29 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00036 Fmt 4624 Sfmt 6333 E:\CR\FM\A03MR6.040 S03PT1 March 3, 2004 CONGRESSIONAL RECORD — SENATE S2055 with respect to nonvested interests not held by trust, or estate, the shareholders, partners, or income) is amended by adding at the end the such person. beneficiaries shall be deemed to be the trust following new subsection: ‘‘(D) ALLOCABLE EXPATRIATION GAIN.—For beneficiaries for purposes of this section. ‘‘(d) GIFTS AND INHERITANCES FROM COVERED purposes of this paragraph, the allocable expa- ‘‘(ii) TAXPAYER RETURN POSITION.—A tax- EXPATRIATES.— triation gain with respect to any beneficiary’s payer shall clearly indicate on its income tax re- ‘‘(1) IN GENERAL.—Subsection (a) shall not ex- interest in a trust is the amount of gain which turn— clude from gross income the value of any prop- would be allocable to such beneficiary’s vested ‘‘(I) the methodology used to determine that erty acquired by gift, bequest, devise, or inherit- and nonvested interests in the trust if the bene- taxpayer’s trust interest under this section, and ance from a covered expatriate after the expa- ficiary held directly all assets allocable to such ‘‘(II) if the taxpayer knows (or has reason to triation date. For purposes of this subsection, interests. know) that any other beneficiary of such trust any term used in this subsection which is also ‘‘(E) TAX DEDUCTED AND WITHHELD.— is using a different methodology to determine used in section 877A shall have the same mean- ‘‘(i) IN GENERAL.—The tax imposed by sub- such beneficiary’s trust interest under this sec- ing as when used in section 877A. paragraph (A)(ii) shall be deducted and with- tion. ‘‘(2) EXCEPTIONS FOR TRANSFERS OTHERWISE held by the trustees from the distribution to ‘‘(g) TERMINATION OF DEFERRALS, ETC.—In SUBJECT TO ESTATE OR GIFT TAX.—Paragraph (1) which it relates. the case of any covered expatriate, notwith- shall not apply to any property if either— ‘‘(ii) EXCEPTION WHERE FAILURE TO WAIVE standing any other provision of this title— ‘‘(A) the gift, bequest, devise, or inheritance TREATY RIGHTS.—If an amount may not be de- ‘‘(1) any period during which recognition of is— ducted and withheld under clause (i) by reason income or gain is deferred shall terminate on the ‘‘(i) shown on a timely filed return of tax im- of the distributee failing to waive any treaty day before the expatriation date, and posed by chapter 12 as a taxable gift by the cov- right with respect to such distribution— ‘‘(2) any extension of time for payment of tax ered expatriate, or ‘‘(I) the tax imposed by subparagraph (A)(ii) shall cease to apply on the day before the expa- ‘‘(ii) included in the gross estate of the cov- shall be imposed on the trust and each trustee triation date and the unpaid portion of such tax ered expatriate for purposes of chapter 11 and shall be personally liable for the amount of such shall be due and payable at the time and in the shown on a timely filed return of tax imposed by tax, and manner prescribed by the Secretary. chapter 11 of the estate of the covered expa- ‘‘(II) any other beneficiary of the trust shall ‘‘(h) IMPOSITION OF TENTATIVE TAX.— triate, or be entitled to recover from the distributee the ‘‘(1) IN GENERAL.—If an individual is required ‘‘(B) no such return was timely filed but no amount of such tax imposed on the other bene- to include any amount in gross income under such return would have been required to be filed ficiary. subsection (a) for any taxable year, there is even if the covered expatriate were a citizen or ‘‘(F) DISPOSITION.—If a trust ceases to be a hereby imposed, immediately before the expa- long-term resident of the United States.’’. qualified trust at any time, a covered expatriate triation date, a tax in an amount equal to the (c) DEFINITION OF TERMINATION OF UNITED disposes of an interest in a qualified trust, or a amount of tax which would be imposed if the STATES CITIZENSHIP.—Section 7701(a) is amend- covered expatriate holding an interest in a taxable year were a short taxable year ending ed by adding at the end the following new para- qualified trust dies, then, in lieu of the tax im- on the expatriation date. graph: posed by subparagraph (A)(ii), there is hereby ‘‘(2) DUE DATE.—The due date for any tax im- ‘‘(48) TERMINATION OF UNITED STATES CITIZEN- imposed a tax equal to the lesser of— posed by paragraph (1) shall be the 90th day SHIP.— ‘‘(i) the tax determined under paragraph (1) after the expatriation date. ‘‘(A) IN GENERAL.—An individual shall not as if the day before the expatriation date were ‘‘(3) TREATMENT OF TAX.—Any tax paid under cease to be treated as a United States citizen be- the date of such cessation, disposition, or death, paragraph (1) shall be treated as a payment of fore the date on which the individual’s citizen- whichever is applicable, or the tax imposed by this chapter for the taxable ship is treated as relinquished under section ‘‘(ii) the balance in the tax deferred account year to which subsection (a) applies. 877A(e)(3). immediately before such date. ‘‘(4) DEFERRAL OF TAX.—The provisions of ‘‘(B) DUAL CITIZENS.—Under regulations pre- Such tax shall be imposed on the trust and each subsection (b) shall apply to the tax imposed by scribed by the Secretary, subparagraph (A) shall trustee shall be personally liable for the amount this subsection to the extent attributable to gain not apply to an individual who became at birth of such tax and any other beneficiary of the includible in gross income by reason of this sec- a citizen of the United States and a citizen of trust shall be entitled to recover from the cov- tion. another country.’’. ered expatriate or the estate the amount of such ‘‘(i) SPECIAL LIENS FOR DEFERRED TAX (d) INELIGIBILITY FOR VISA OR ADMISSION TO tax imposed on the other beneficiary. AMOUNTS.— UNITED STATES.— ‘‘(G) DEFINITIONS AND SPECIAL RULES.—For ‘‘(1) IMPOSITION OF LIEN.— (1) IN GENERAL.—Section 212(a)(10)(E) of the purposes of this paragraph— ‘‘(A) IN GENERAL.—If a covered expatriate Immigration and Nationality Act (8 U.S.C. ‘‘(i) QUALIFIED TRUST.—The term ‘qualified makes an election under subsection (a)(4) or (b) 1182(a)(10)(E)) is amended to read as follows: trust’ means a trust which is described in sec- which results in the deferral of any tax imposed ‘‘(E) FORMER CITIZENS NOT IN COMPLIANCE tion 7701(a)(30)(E). by reason of subsection (a), the deferred amount WITH EXPATRIATION REVENUE PROVISIONS.—Any ‘‘(ii) VESTED INTEREST.—The term ‘vested in- (including any interest, additional amount, ad- alien who is a former citizen of the United terest’ means any interest which, as of the day dition to tax, assessable penalty, and costs at- States who relinquishes United States citizen- before the expatriation date, is vested in the tributable to the deferred amount) shall be a ship (within the meaning of section 877A(e)(3) of beneficiary. lien in favor of the United States on all property the Internal Revenue Code of 1986) and who is ‘‘(iii) NONVESTED INTEREST.—The term ‘non- of the expatriate located in the United States not in compliance with section 877A of such vested interest’ means, with respect to any bene- (without regard to whether this section applies Code (relating to expatriation).’’. ficiary, any interest in a trust which is not a to the property). (2) AVAILABILITY OF INFORMATION.— vested interest. Such interest shall be deter- ‘‘(B) DEFERRED AMOUNT.—For purposes of (A) IN GENERAL.—Section 6103(l) (relating to mined by assuming the maximum exercise of dis- this subsection, the deferred amount is the disclosure of returns and return information for cretion in favor of the beneficiary and the oc- amount of the increase in the covered expatri- purposes other than tax administration) is currence of all contingencies in favor of the ben- ate’s income tax which, but for the election amended by adding at the end the following eficiary. under subsection (a)(4) or (b), would have oc- new paragraph: ‘‘(iv) ADJUSTMENTS.—The Secretary may pro- curred by reason of this section for the taxable ‘‘(19) DISCLOSURE TO DENY VISA OR ADMISSION vide for such adjustments to the bases of assets year including the expatriation date. TO CERTAIN EXPATRIATES.—Upon written request in a trust or a deferred tax account, and the ‘‘(2) PERIOD OF LIEN.—The lien imposed by of the Attorney General or the Attorney Gen- timing of such adjustments, in order to ensure this subsection shall arise on the expatriation eral’s delegate, the Secretary shall disclose that gain is taxed only once. date and continue until— whether an individual is in compliance with sec- ‘‘(v) COORDINATION WITH RETIREMENT PLAN ‘‘(A) the liability for tax by reason of this section 877A (and if not in compliance, any items RULES.—This subsection shall not apply to an tion is satisfied or has become unenforceable by of noncompliance) to officers and employees of interest in a trust which is part of a retirement reason of lapse of time, or the Federal agency responsible for administering plan to which subsection (d)(2) applies. ‘‘(B) it is established to the satisfaction of the section 212(a)(10)(E) of the Immigration and Na- ‘‘(3) DETERMINATION OF BENEFICIARIES’ INTER- Secretary that no further tax liability may arise tionality Act solely for the purpose of, and to EST IN TRUST.— by reason of this section. the extent necessary in, administering such sec- ‘‘(A) DETERMINATIONS UNDER PARAGRAPH ‘‘(3) CERTAIN RULES APPLY.—The rules set tion 212(a)(10)(E).’’. (1).—For purposes of paragraph (1), a bene- forth in paragraphs (1), (3), and (4) of section (B) SAFEGUARDS.— ficiary’s interest in a trust shall be based upon 6324A(d) shall apply with respect to the lien im- (i) TECHNICAL AMENDMENTS.—Paragraph (4) all relevant facts and circumstances, including posed by this subsection as if it were a lien im- of section 6103(p) of the Internal Revenue Code the terms of the trust instrument and any letter posed by section 6324A. of 1986, as amended by section 202(b)(2)(B) of of wishes or similar document, historical pat- ‘‘(j) REGULATIONS.—The Secretary shall pre- the Trade Act of 2002 (Public Law 107–210; 116 terns of trust distributions, and the existence of scribe such regulations as may be necessary or Stat. 961), is amended by striking ‘‘or (17)’’ after and functions performed by a trust protector or appropriate to carry out the purposes of this ‘‘any other person described in subsection any similar adviser. section.’’. (l)(16)’’ each place it appears and inserting ‘‘or ‘‘(B) OTHER DETERMINATIONS.—For purposes (b) INCLUSION IN INCOME OF GIFTS AND BE- (18)’’. of this section— QUESTS RECEIVED BY UNITED STATES CITIZENS (ii) CONFORMING AMENDMENTS.—Section ‘‘(i) CONSTRUCTIVE OWNERSHIP.—If a bene- AND RESIDENTS FROM EXPATRIATES.—Section 6103(p)(4) (relating to safeguards), as amended ficiary of a trust is a corporation, partnership, 102 (relating to gifts, etc. not included in gross by clause (i), is amended by striking ‘‘or (18)’’

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after ‘‘any other person described in subsection time during the 12-month period beginning on ‘‘(B) EXCEPTIONS.—Such term shall not in- (l)(16)’’ each place it appears and inserting the date which is 6 months before the inversion clude— ‘‘(18), or (19)’’. date. ‘‘(i) any option to which part II of subchapter (3) EFFECTIVE DATES.— ‘‘(b) VALUE.—For purposes of subsection (a)— D of chapter 1 applies, or (A) IN GENERAL.—Except as provided in sub- ‘‘(1) IN GENERAL.—The value of specified stock ‘‘(ii) any payment or right to payment from a paragraph (B), the amendments made by this compensation shall be— plan referred to in section 280G(b)(6). subsection shall apply to individuals who relin- ‘‘(A) in the case of a stock option (or other ‘‘(4) EXPANDED AFFILIATED GROUP.—The term quish United States citizenship on or after the similar right) or any stock appreciation right, ‘expanded affiliated group’ means an affiliated date of the enactment of this Act. the fair value of such option or right, and group (as defined in section 1504(a) without re- (B) TECHNICAL AMENDMENTS.—The amend- ‘‘(B) in any other case, the fair market value gard to section 1504(b)(3)); except that section ments made by paragraph (2)(B)(i) shall take ef- of such compensation. 1504(a) shall be applied by substituting ‘more fect as if included in the amendments made by ‘‘(2) DATE FOR DETERMINING VALUE.—The de- than 50 percent’ for ‘at least 80 percent’ each section 202(b)(2)(B) of the Trade Act of 2002 termination of value shall be made— place it appears. (Public Law 107–210; 116 Stat. 961). ‘‘(A) in the case of specified stock compensa- ‘‘(f) SPECIAL RULES.—For purposes of this sec- (e) CONFORMING AMENDMENTS.— tion held on the inversion date, on such date, tion— (1) Section 877 is amended by adding at the ‘‘(B) in the case of such compensation which ‘‘(1) CANCELLATION OF RESTRICTION.—The end the following new subsection: is canceled during the 6 months before the inver- cancellation of a restriction which by its terms ‘‘(g) APPLICATION.—This section shall not sion date, on the day before such cancellation, will never lapse shall be treated as a grant. apply to an expatriate (as defined in section and ‘‘(2) PAYMENT OR REIMBURSEMENT OF TAX BY 877A(e)) whose expatriation date (as so defined) ‘‘(C) in the case of such compensation which CORPORATION TREATED AS SPECIFIED STOCK COM- occurs on or after February 5, 2003.’’. is granted after the inversion date, on the date PENSATION.—Any payment of the tax imposed by (2) Section 2107 is amended by adding at the such compensation is granted. this section directly or indirectly by the inverted end the following new subsection: ‘‘(c) TAX TO APPLY ONLY IF SHAREHOLDER corporation or by any member of the expanded ‘‘(f) APPLICATION.—This section shall not GAIN RECOGNIZED.—Subsection (a) shall apply affiliated group which includes such corpora- apply to any expatriate subject to section to any disqualified individual with respect to an tion— ‘‘(A) shall be treated as specified stock com- 877A.’’. inverted corporation only if gain (if any) on any (3) Section 2501(a)(3) is amended by adding at stock in such corporation is recognized in whole pensation, and ‘‘(B) shall not be allowed as a deduction the end the following new subparagraph: or part by any shareholder by reason of the ac- under any provision of chapter 1. ‘‘(F) APPLICATION.—This paragraph shall not quisition referred to in section 7874(a)(2)(A) (de- ‘‘(3) CERTAIN RESTRICTIONS IGNORED.—Wheth- apply to any expatriate subject to section termined by substituting ‘July 10, 2002’ for ‘March 20, 2002’) with respect to such corpora- er there is specified stock compensation, and the 877A.’’. value thereof, shall be determined without re- (4)(A) Paragraph (1) of section 6039G(d) is tion. ‘‘(d) EXCEPTION WHERE GAIN RECOGNIZED ON gard to any restriction other than a restriction amended by inserting ‘‘or 877A’’ after ‘‘section which by its terms will never lapse. 877’’. COMPENSATION.—Subsection (a) shall not apply to— ‘‘(4) PROPERTY TRANSFERS.—Any transfer of (B) The second sentence of section 6039G(e) is property shall be treated as a payment and any amended by inserting ‘‘or who relinquishes ‘‘(1) any stock option which is exercised on the inversion date or during the 6-month period right to a transfer of property shall be treated as United States citizenship (within the meaning of a right to a payment. section 877A(e)(3))’’ after ‘‘877(a))’’. before such date and to the stock acquired in such exercise, if income is recognized under sec- ‘‘(5) OTHER ADMINISTRATIVE PROVISIONS.—For (C) Section 6039G(f) is amended by inserting purposes of subtitle F, any tax imposed by this ‘‘or 877A(e)(2)(B)’’ after ‘‘877(e)(1)’’. tion 83 on or before the inversion date with respect to the stock acquired pursuant to such ex- section shall be treated as a tax imposed by sub- (f) CLERICAL AMENDMENT.—The table of sec- title A. tions for subpart A of part II of subchapter N of ercise, and ‘‘(2) any specified stock compensation which ‘‘(g) REGULATIONS.—The Secretary shall pre- chapter 1 is amended by inserting after the item scribe such regulations as may be necessary or relating to section 877 the following new item: is exercised, sold, exchanged, distributed, cashed out, or otherwise paid during such period in a appropriate to carry out the purposes of this ‘‘Sec. 877A. Tax responsibilities of expatria- transaction in which gain or loss is recognized section.’’. (b) DENIAL OF DEDUCTION.— tion.’’. in full. (1) IN GENERAL.—Paragraph (6) of section ‘‘(e) DEFINITIONS.—For purposes of this sec- (g) EFFECTIVE DATE.— 275(a) is amended by inserting ‘‘48,’’ after ‘‘46,’’. tion— (1) IN GENERAL.—Except as provided in this (2) $1,000,000 LIMIT ON DEDUCTIBLE COMPENSA- ‘‘(1) DISQUALIFIED INDIVIDUAL.—The term subsection, the amendments made by this sec- TION REDUCED BY PAYMENT OF EXCISE TAX ON ‘disqualified individual’ means, with respect to tion shall apply to expatriates (within the SPECIFIED STOCK COMPENSATION.—Paragraph (4) a corporation, any individual who, at any time meaning of section 877A(e) of the Internal Rev- of section 162(m) is amended by adding at the during the 12-month period beginning on the enue Code of 1986, as added by this section) end the following new subparagraph: date which is 6 months before the inversion whose expatriation date (as so defined) occurs ‘‘(G) COORDINATION WITH EXCISE TAX ON SPEC- date— on or after February 5, 2003. IFIED STOCK COMPENSATION.—The dollar limita- (2) GIFTS AND BEQUESTS.—Section 102(d) of the ‘‘(A) is subject to the requirements of section tion contained in paragraph (1) with respect to Internal Revenue Code of 1986 (as added by sub- 16(a) of the Securities Exchange Act of 1934 with any covered employee shall be reduced (but not section (b)) shall apply to gifts and bequests re- respect to such corporation, or below zero) by the amount of any payment ‘‘(B) would be subject to such requirements if ceived on or after February 5, 2003, from an in- (with respect to such employee) of the tax im- such corporation were an issuer of equity secu- dividual or the estate of an individual whose exposed by section 5000A directly or indirectly by rities referred to in such section. patriation date (as so defined) occurs after such the inverted corporation (as defined in such sec- ‘‘(2) INVERTED CORPORATION; INVERSION date. tion) or by any member of the expanded affili- DATE.— (3) DUE DATE FOR TENTATIVE TAX.—The due ated group (as defined in such section) which ‘‘(A) INVERTED CORPORATION.—The term ‘in- date under section 877A(h)(2) of the Internal includes such corporation.’’. verted corporation’ means any corporation to Revenue Code of 1986, as added by this section, (c) CONFORMING AMENDMENTS.— shall in no event occur before the 90th day after which subsection (a) or (b) of section 7874 ap- (1) The last sentence of section 3121(v)(2)(A) is the date of the enactment of this Act. plies determined— amended by inserting before the period ‘‘or to ‘‘(i) by substituting ‘July 10, 2002’ for ‘March any specified stock compensation (as defined in SEC. 443. EXCISE TAX ON STOCK COMPENSATION 20, 2002’ in section 7874(a)(2)(A), and OF INSIDERS IN INVERTED COR- section 5000A) on which tax is imposed by sec- ‘‘(ii) without regard to subsection (b)(1)(A). PORATIONS. tion 5000A’’. (a) IN GENERAL.—Subtitle D is amended by Such term includes any predecessor or successor (2) The table of chapters for subtitle D is adding at the end the following new chapter: of such a corporation. amended by adding at the end the following ‘‘(B) INVERSION DATE.—The term ‘inversion new item: ‘‘CHAPTER 48—STOCK COMPENSATION OF date’ means, with respect to a corporation, the INSIDERS IN INVERTED CORPORATIONS date on which the corporation first becomes an ‘‘Chapter 48. Stock compensation of insiders in ‘‘Sec. 5000A. Stock compensation of insiders in inverted corporation. inverted corporations.’’. inverted corporations entities. ‘‘(3) SPECIFIED STOCK COMPENSATION.— (d) EFFECTIVE DATE.—The amendments made ‘‘SEC. 5000A. STOCK COMPENSATION OF INSIDERS ‘‘(A) IN GENERAL.—The term ‘specified stock by this section shall take effect on July 11, 2002; IN INVERTED CORPORATIONS. compensation’ means payment (or right to pay- except that periods before such date shall not be ‘‘(a) IMPOSITION OF TAX.—In the case of an ment) granted by the inverted corporation (or by taken into account in applying the periods in individual who is a disqualified individual with any member of the expanded affiliated group subsections (a) and (e)(1) of section 5000A of the respect to any inverted corporation, there is which includes such corporation) to any person Internal Revenue Code of 1986, as added by this hereby imposed on such person a tax equal to 20 in connection with the performance of services section. percent of the value (determined under sub- by a disqualified individual for such corporation SEC. 444. REINSURANCE OF UNITED STATES section (b)) of the specified stock compensation or member if the value of such payment or right RISKS IN FOREIGN JURISDICTIONS. held (directly or indirectly) by or for the benefit is based on (or determined by reference to) the (a) IN GENERAL.—Section 845(a) (relating to of such individual or a member of such individ- value (or change in value) of stock in such cor- allocation in case of reinsurance agreement in- ual’s family (as defined in section 267) at any poration (or any such member). volving tax avoidance or evasion) is amended by

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striking ‘‘source and character’’ and inserting (d) EFFECTIVE DATE.—The amendments made eign person) is amended by redesignating sub- ‘‘amount, source, or character’’. by this section shall apply to acquisitions after paragraph (B) as subparagraph (C) and by in- (b) EFFECTIVE DATE.—The amendments made the date of the enactment of this Act. serting after subparagraph (A) the following by this section shall apply to any risk reinsured Subtitle E—International Tax new subparagraph: after April 11, 2002. ‘‘(B) SPECIAL RULE FOR CERTAIN FOREIGN EN- SEC. 451. CLARIFICATION OF BANKING BUSINESS SEC. 445. REPORTING OF TAXABLE MERGERS AND FOR PURPOSES OF DETERMINING TITIES.— ACQUISITIONS. INVESTMENT OF EARNINGS IN ‘‘(i) IN GENERAL.—In the case of any debt in- (a) IN GENERAL.—Subpart B of part III of sub- UNITED STATES PROPERTY. strument having original issue discount which is chapter A of chapter 61 is amended by inserting (a) IN GENERAL.—Subparagraph (A) of section held by a related foreign person which is a for- after section 6043 the following new section: 956(c)(2) is amended to read as follows: eign personal holding company (as defined in ‘‘SEC. 6043A. TAXABLE MERGERS AND ACQUISI- ‘‘(A) obligations of the United States, money, section 552), a controlled foreign corporation (as TIONS. or deposits with— defined in section 957), or a passive foreign in- ‘‘(a) IN GENERAL.—The acquiring corporation ‘‘(i) any bank (as defined by section 2(c) of vestment company (as defined in section 1297), a in any taxable acquisition shall make a return the Bank Holding Company Act of 1956 (12 deduction shall be allowable to the issuer with (according to the forms or regulations prescribed U.S.C. 1841(c)), without regard to subpara- respect to such original issue discount for any by the Secretary) setting forth— graphs (C) and (G) of paragraph (2) of such sec- taxable year before the taxable year in which ‘‘(1) a description of the acquisition, tion), or paid only to the extent such original issue dis- ‘‘(2) the name and address of each share- ‘‘(ii) any corporation not described in clause count is included during such prior taxable year holder of the acquired corporation who is re- (i) with respect to which a bank holding com- in the gross income of a United States person quired to recognize gain (if any) as a result of pany (as defined by section 2(a) of such Act) or who owns (within the meaning of section 958(a)) the acquisition, financial holding company (as defined by sec- stock in such corporation. ‘‘(3) the amount of money and the fair market tion 2(p) of such Act) owns directly or indirectly ‘‘(ii) SECRETARIAL AUTHORITY.—The Secretary value of other property transferred to each such more than 80 percent by vote or value of the may by regulation exempt transactions from the shareholder as part of such acquisition, and stock of such corporation;’’. application of clause (i), including any trans- ‘‘(4) such other information as the Secretary (b) EFFECTIVE DATE.—The amendment made action which is entered into by a payor in the may prescribe. by this section shall take effect on the date of ordinary course of a trade or business in which the enactment of this Act. the payor is predominantly engaged.’’. To the extent provided by the Secretary, the re- (b) INTEREST AND OTHER DEDUCTIBLE quirements of this section applicable to the ac- SEC. 452. PROHIBITION ON NONRECOGNITION OF GAIN THROUGH COMPLETE LIQUIDA- AMOUNTS.—Section 267(a)(3) is amended— quiring corporation shall be applicable to the TION OF HOLDING COMPANY. (1) by striking ‘‘The Secretary’’ and inserting: acquired corporation and not to the acquiring (a) IN GENERAL.—Section 332 is amended by ‘‘(A) IN GENERAL.—The Secretary’’, and corporation. adding at the end the following new subsection: (2) by adding at the end the following new ‘‘(b) NOMINEE REPORTING.—Any person who ‘‘(d) RECOGNITION OF GAIN ON LIQUIDATION OF subparagraph: holds stock as a nominee for another person CERTAIN HOLDING COMPANIES.— ‘‘(B) SPECIAL RULE FOR CERTAIN FOREIGN EN- shall furnish in the manner prescribed by the ‘‘(1) IN GENERAL.—In the case of any distribu- TITIES.— Secretary to such other person the information tion to a foreign corporation in complete liq- ‘‘(i) IN GENERAL.—Notwithstanding subpara- provided by the corporation under subsection uidation of an applicable holding company— graph (A), in the case of any amount payable to (d). ‘‘(A) subsection (a) and section 331 shall not a foreign personal holding company (as defined ‘‘(c) TAXABLE ACQUISITION.—For purposes of apply to such distribution, and in section 552), a controlled foreign corporation this section, the term ‘taxable acquisition’ ‘‘(B) such distribution shall be treated as a (as defined in section 957), or a passive foreign means any acquisition by a corporation of stock distribution to which section 301 applies. investment company (as defined in section 1297), in or property of another corporation if any ‘‘(2) APPLICABLE HOLDING COMPANY.—For a deduction shall be allowable to the payor with shareholder of the acquired corporation is re- purposes of this subsection— respect to such amount for any taxable year be- quired to recognize gain (if any) as a result of ‘‘(A) IN GENERAL.—The term ‘applicable hold- fore the taxable year in which paid only to the such acquisition. ing company’ means any domestic corporation— extent such amount is included during such ‘‘(d) STATEMENTS TO BE FURNISHED TO ‘‘(i) which is a common parent of an affiliated prior taxable year in the gross income of a SHAREHOLDERS.—Every person required to make group, United States person who owns (within the a return under subsection (a) shall furnish to ‘‘(ii) stock of which is directly owned by the meaning of section 958(a)) stock in such cor- each shareholder whose name is required to be distributee foreign corporation, poration. set forth in such return a written statement ‘‘(iii) substantially all of the assets of which ‘‘(ii) SECRETARIAL AUTHORITY.—The Secretary showing— consist of stock in other members of such affili- may by regulation exempt transactions from the ‘‘(1) the name, address, and phone number of ated group, and application of clause (i), including any trans- the information contact of the person required ‘‘(iv) which has not been in existence at all action which is entered into by a payor in the to make such return, times during the 5 years immediately preceding ordinary course of a trade or business in which ‘‘(2) the information required to be shown on the date of the liquidation. the payor is predominantly engaged and in such return with respect to such shareholder, ‘‘(B) AFFILIATED GROUP.—For purposes of this which the payment of the accrued amounts oc- and subsection, the term ‘affiliated group’ has the curs within 81⁄2 months after accrual or within ‘‘(3) such other information as the Secretary meaning given such term by section 1504(a) such other period as the Secretary may pre- may prescribe. (without regard to paragraphs (2) and (4) of sec- scribe.’’. The written statement required under the pre- tion 1504(b)). (c) EFFECTIVE DATE.—The amendments made ceding sentence shall be furnished to the share- ‘‘(3) COORDINATION WITH SUBPART F.—If the by this section shall apply to payments accrued holder on or before January 31 of the year fol- distributee of a distribution described in para- on or after the date of the enactment of this Act. lowing the calendar year during which the tax- graph (1) is a controlled foreign corporation (as defined in section 957), then notwithstanding SEC. 454. EFFECTIVELY CONNECTED INCOME TO able acquisition occurred.’’. INCLUDE CERTAIN FOREIGN (b) ASSESSABLE PENALTIES.— paragraph (1) or subsection (a), such distribu- SOURCE INCOME. tion shall be treated as a distribution to which (1) Subparagraph (B) of section 6724(d)(1) (re- (a) IN GENERAL.—Section 864(c)(4)(B) (relat- lating to definitions) is amended by redesig- section 331 applies. ing to treatment of income from sources without nating clauses (ii) through (xvii) as clauses (iii) ‘‘(4) REGULATIONS.—The Secretary shall pro- the United States as effectively connected in- through (xviii), respectively, and by inserting vide such regulations as appropriate to prevent come) is amended by adding at the end the fol- after clause (i) the following new clause: the abuse of this subsection, including regula- lowing new flush sentence: ‘‘(ii) section 6043A(a) (relating to returns re- tions which provide, for the purposes of clause ‘‘Any income or gain which is equivalent to any lating to taxable mergers and acquisitions),’’. (iv) of paragraph (2)(A), that a corporation is item of income or gain described in clause (i), (2) Paragraph (2) of section 6724(d) is amend- not in existence for any period unless it is en- (ii), or (iii) shall be treated in the same manner ed by redesignating subparagraphs (F) through gaged in the active conduct of a trade or busi- as such item for purposes of this subpara- (AA) as subparagraphs (G) through (BB), re- ness or owns a significant ownership interest in graph.’’. spectively, and by inserting after subparagraph another corporation so engaged.’’. (b) EFFECTIVE DATE.—The amendment made (E) the following new subparagraph: (b) EFFECTIVE DATE.—The amendment made by this section shall apply to taxable years be- ‘‘(F) subsections (b) and (d) of section 6043A by this section shall apply to distributions in ginning after the date of the enactment of this (relating to returns relating to taxable mergers complete liquidation occurring on or after the Act. and acquisitions).’’. date of the enactment of this Act. (c) CLERICAL AMENDMENT.—The table of sec- SEC. 453. PREVENTION OF MISMATCHING OF IN- SEC. 455. RECAPTURE OF OVERALL FOREIGN tions for subpart B of part III of subchapter A TEREST AND ORIGINAL ISSUE DIS- LOSSES ON SALE OF CONTROLLED FOREIGN CORPORATION. of chapter 61 is amended by inserting after the COUNT DEDUCTIONS AND INCOME (a) IN GENERAL.—Section 904(f)(3) (relating to item relating to section 6043 the following new INCLUSIONS IN TRANSACTIONS WITH RELATED FOREIGN PERSONS. dispositions) is amending by adding at the end item: (a) ORIGINAL ISSUE DISCOUNT.—Section the following new subparagraph: ‘‘Sec. 6043A. Returns relating to taxable mergers 163(e)(3) (relating to special rule for original ‘‘(D) APPLICATION TO DISPOSITIONS OF STOCK and acquisitions.’’. issue discount on obligation held by related for- IN CONTROLLED FOREIGN CORPORATIONS.—In the

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case of any disposition by a taxpayer of any (c) EFFECTIVE DATE.—The amendments made the indebtedness with an amount of money share of stock in a controlled foreign corpora- by this section shall apply to amounts paid or equal to the fair market value of the stock or in- tion (as defined in section 957), this paragraph accrued more than 30 days after the date of the terest. In the case of any partnership, any dis- shall apply to such disposition in the same man- enactment of this Act. charge of indebtedness income recognized under ner as if it were a disposition of property de- Subtitle F—Other Revenue Provisions this paragraph shall be included in the distribu- scribed in subparagraph (A), except that the ex- tive shares of taxpayers which were the partners PART I—FINANCIAL INSTRUMENTS ception contained in subparagraph (C)(i) shall in the partnership immediately before such dis- not apply.’’. SEC. 461. TREATMENT OF STRIPPED INTERESTS charge.’’. IN BOND AND PREFERRED STOCK (b) EFFECTIVE DATE.—The amendment made (b) EFFECTIVE DATE.—The amendment made FUNDS, ETC. by this section shall apply to dispositions after by this section shall apply with respect to can- (a) IN GENERAL.—Section 1286 (relating to tax the date of the enactment of this Act. cellations of indebtedness occurring on or after treatment of stripped bonds) is amended by re- SEC. 456. MINIMUM HOLDING PERIOD FOR FOR- the date of the enactment of this Act. EIGN TAX CREDIT ON WITHHOLDING designating subsection (f) as subsection (g) and by inserting after subsection (e) the following SEC. 464. MODIFICATION OF STRADDLE RULES. TAXES ON INCOME OTHER THAN (a) RULES RELATING TO IDENTIFIED STRAD- DIVIDENDS. new subsection: DLES.— N ENERAL ‘‘(f) TREATMENT OF STRIPPED INTERESTS IN (a) I G .—Section 901 is amended by (1) IN GENERAL.—Subparagraph (A) of section BOND AND PREFERRED STOCK FUNDS, ETC.—In redesignating subsection (l) as subsection (m) 1092(a)(2) (relating to special rule for identified the case of an account or entity substantially and by inserting after subsection (k) the fol- straddles) is amended to read as follows: all of the assets of which consist of bonds, pre- lowing new subsection: ‘‘(A) IN GENERAL.—In the case of any straddle ‘‘(l) MINIMUM HOLDING PERIOD FOR WITH- ferred stock, or a combination thereof, the Sec- which is an identified straddle— HOLDING TAXES ON GAIN AND INCOME OTHER retary may by regulations provide that rules ‘‘(i) paragraph (1) shall not apply with re- THAN DIVIDENDS ETC.— similar to the rules of this section and 305(e), as spect to identified positions comprising the iden- ‘‘(1) IN GENERAL.—In no event shall a credit appropriate, shall apply to interests in such ac- tified straddle, be allowed under subsection (a) for any with- count or entity to which (but for this sub- ‘‘(ii) if there is any loss with respect to any holding tax (as defined in subsection (k)) on section) this section or section 305(e), as the case identified position of the identified straddle, the any item of income or gain with respect to any may be, would not apply.’’. basis of each of the identified offsetting posi- property if— (b) CROSS REFERENCE.—Subsection (e) of sections in the identified straddle shall be in- ‘‘(A) such property is held by the recipient of tion 305 is amended by adding at the end the creased by an amount which bears the same the item for 15 days or less during the 30-day pe- following new paragraph: ratio to the loss as the unrecognized gain with riod beginning on the date which is 15 days be- ‘‘(7) CROSS REFERENCE.— respect to such offsetting position bears to the fore the date on which the right to receive pay- ‘‘For treatment of stripped interests in cer- aggregate unrecognized gain with respect to all ment of such item arises, or tain accounts or entities holding preferred such offsetting positions, and ‘‘(B) to the extent that the recipient of the stock, see section 1286(f).’’. ‘‘(iii) any loss described in clause (ii) shall not item is under an obligation (whether pursuant (c) EFFECTIVE DATE.—The amendments made otherwise be taken into account for purposes of to a short sale or otherwise) to make related by this section shall apply to purchases and dis- this title.’’. payments with respect to positions in substan- positions after the date of the enactment of this (2) IDENTIFIED STRADDLE.—Section tially similar or related property. Act. 1092(a)(2)(B) (defining identified straddle) is This paragraph shall not apply to any dividend amended— to which subsection (k) applies. SEC. 462. APPLICATION OF EARNINGS STRIPPING RULES TO PARTNERSHIPS AND S (A) by striking clause (ii) and inserting the ‘‘(2) EXCEPTION FOR TAXES PAID BY DEAL- CORPORATIONS. following: ERS.— (a) IN GENERAL.—Section 168(j) (relating to ‘‘(ii) to the extent provided by regulations, the ‘‘(A) IN GENERAL.—Paragraph (1) shall not limitation on deduction for interest on certain value of each position of which (in the hands of apply to any qualified tax with respect to any indebtedness) is amended by redesignating para- the taxpayer immediately before the creation of property held in the active conduct in a foreign graph (8) as paragraph (9) and by inserting the straddle) is not less than the basis of such country of a business as a dealer in such prop- after paragraph (7) the following new para- position in the hands of the taxpayer at the time erty. graph: the straddle is created, and’’, and ‘‘(B) QUALIFIED TAX.—For purposes of sub- ‘‘(8) APPLICATION TO PARTNERSHIPS AND S (B) by adding at the end the following new paragraph (A), the term ‘qualified tax’ means a CORPORATIONS.— flush sentence: tax paid to a foreign country (other than the ‘‘(A) IN GENERAL.—This subsection shall apply ‘‘The Secretary shall prescribe regulations foreign country referred to in subparagraph (A)) to partnerships and S corporations in the same which specify the proper methods for clearly if— identifying a straddle as an identified straddle ‘‘(i) the item to which such tax is attributable manner as it applies to C corporations. ‘‘(B) ALLOCATIONS TO CERTAIN CORPORATE (and the positions comprising such straddle), is subject to taxation on a net basis by the coun- PARTNERS.—If a C corporation is a partner in a which specify the rules for the application of try referred to in subparagraph (A), and ‘‘(ii) such country allows a credit against its partnership— this section for a taxpayer which fails to prop- net basis tax for the full amount of the tax paid ‘‘(i) the corporation’s allocable share of in- erly identify the positions of an identified strad- to such other foreign country. debtedness and interest income of the partner- dle, and which specify the ordering rules in ‘‘(C) DEALER.—For purposes of subparagraph ship shall be taken into account in applying this cases where a taxpayer disposes of less than an (A), the term ‘dealer’ means— subsection to the corporation, and entire position which is part of an identified ‘‘(i) with respect to a security, any person to ‘‘(ii) if a deduction is not disallowed under straddle.’’. whom paragraphs (1) and (2) of subsection (k) this subsection with respect to any interest ex- (3) UNRECOGNIZED GAIN.—Section 1092(a)(3) would not apply by reason of paragraph (4) pense of the partnership, this subsection shall (defining unrecognized gain) is amended by re- thereof if such security were stock, and be applied separately in determining whether a designating subparagraph (B) as subparagraph ‘‘(ii) with respect to any other property, any deduction is allowable to the corporation with (C) and by inserting after subparagraph (A) the person with respect to whom such property is respect to the corporation’s allocable share of following new subparagraph: described in section 1221(a)(1). such interest expense.’’. ‘‘(B) SPECIAL RULE FOR IDENTIFIED STRAD- ‘‘(D) REGULATIONS.—The Secretary may pre- (b) EFFECTIVE DATE.—The amendments made DLES.—For purposes of paragraph (2)(A)(ii), the scribe such regulations as may be appropriate to by this section shall apply to taxable years be- unrecognized gain with respect to any identified carry out this paragraph, including regulations ginning after the date of the enactment of this offsetting position shall be the excess of the fair to prevent the abuse of the exception provided Act. market value of the position at the time of the by this paragraph and to treat other taxes as SEC. 463. RECOGNITION OF CANCELLATION OF determination over the fair market value of the qualified taxes. INDEBTEDNESS INCOME REALIZED position at the time the taxpayer identified the ‘‘(3) EXCEPTIONS.—The Secretary may by reg- ON SATISFACTION OF DEBT WITH position as a position in an identified straddle.’’ ulation provide that paragraph (1) shall not PARTNERSHIP INTEREST. (4) CONFORMING AMENDMENT.—Section apply to property where the Secretary deter- (a) IN GENERAL.—Paragraph (8) of section 1092(c)(2) is amended by striking subparagraph mines that the application of paragraph (1) to 108(e) (relating to general rules for discharge of (B) and by redesignating subparagraph (C) as such property is not necessary to carry out the indebtedness (including discharges not in title subparagraph (B). purposes of this subsection. 11 cases or insolvency)) is amended to read as (b) PHYSICALLY SETTLED POSITIONS.—Section ‘‘(4) CERTAIN RULES TO APPLY.—Rules similar follows: 1092(d) (relating to definitions and special rules) to the rules of paragraphs (5), (6), and (7) of ‘‘(8) INDEBTEDNESS SATISFIED BY CORPORATE is amended by adding at the end the following subsection (k) shall apply for purposes of this STOCK OR PARTNERSHIP INTEREST.—For purposes new paragraph: subsection. of determining income of a debtor from dis- ‘‘(8) SPECIAL RULES FOR PHYSICALLY SETTLED ‘‘(5) DETERMINATION OF HOLDING PERIOD.— charge of indebtedness, if— POSITIONS.—For purposes of subsection (a), if a Holding periods shall be determined for purposes ‘‘(A) a debtor corporation transfers stock, or taxpayer settles a position which is part of a of this subsection without regard to section 1235 ‘‘(B) a debtor partnership transfers a capital straddle by delivering property to which the po- or any similar rule.’’. or profits interest in such partnership, sition relates (and such position, if terminated, (b) CONFORMING AMENDMENT.—The heading to a creditor in satisfaction of its recourse or would result in a realization of a loss), then of subsection (k) of section 901 is amended by in- nonrecourse indebtedness, such corporation or such taxpayer shall be treated as if such tax- serting ‘‘ON DIVIDENDS’’ after ‘‘TAXES’’. partnership shall be treated as having satisfied payer—

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‘‘(A) terminated the position for its fair mar- ‘‘(A) IN GENERAL.—Except as specifically pro- (4) Section 774(a) is amended by striking ket value immediately before the settlement, and vided in an applicable provision, subsection ‘‘743(b)’’ both places it appears and inserting ‘‘(B) sold the property so delivered by the tax- (a)(2) shall be applied to an applicable provision ‘‘743(a)’’. payer at its fair market value.’’. as if it read as follows: (5) The item relating to section 734 in the table (c) REPEAL OF STOCK EXCEPTION.— ‘(2) BROTHER-SISTER CONTROLLED GROUP.— of sections for subpart B of part II of sub- (1) IN GENERAL.—Section 1092(d)(3) is re- Two or more corporations if 5 or fewer persons chapter K of chapter 1 is amended by striking pealed. who are individuals, estates, or trusts own ‘‘Optional’’. (2) CONFORMING AMENDMENT.—Section (within the meaning of subsection (d)(2) stock (6) The item relating to section 743 in the table 1258(d)(1) is amended by striking ‘‘; except that possessing— of sections for subpart C of part II of subchapter the term ‘personal property’ shall include ‘(A) at least 80 percent of the total combined K of chapter 1 is amended by striking ‘‘Op- stock’’. voting power of all classes of stock entitled to tional’’. (d) REPEAL OF QUALIFIED COVERED CALL EX- vote, or at least 80 percent of the total value of (e) EFFECTIVE DATES.— CEPTION.—Section 1092(c)(4) is amended by add- shares of all classes of stock, of each corpora- (1) IN GENERAL.—Except as provided in para- ing at the end the following new subparagraph: tion, and graph (2), the amendments made by this section ‘‘(I) TERMINATION.—This paragraph shall not ‘(B) more than 50 percent of the total com- shall apply to transfers and distributions made apply to any position established on or after the bined voting power of all classes of stock enti- after the date of the enactment of this Act. date of the enactment of this subparagraph.’’. tled to vote or more than 50 percent of the total (2) REPEAL OF SECTION 732(d).—The amend- (e) EFFECTIVE DATE.—The amendments made value of shares of all classes of stock of each ments made by subsections (b)(2) and (d)(1) by this section shall apply to positions estab- corporation, taking into account the stock own- shall apply to— lished on or after the date of the enactment of ership of each such person only to the extent (A) except as provided in subparagraph (B), this Act. such stock ownership is identical with respect to transfers made after the date of the enactment each such corporation.’ of this Act, and SEC. 465. DENIAL OF INSTALLMENT SALE TREAT- (B) in the case of any transfer made on or be- MENT FOR ALL READILY TRADEABLE ‘‘(B) APPLICABLE PROVISION.—For purposes of DEBT. this paragraph, an applicable provision is any fore such date to which section 732(d) applies, distributions made after the date which is 2 (a) IN GENERAL.—Section 453(f)(4)(B) (relating provision of law (other than this part) which in- years after such date of enactment. to purchaser evidences of indebtedness payable corporates the definition of controlled group of on demand or readily tradeable) is amended by corporations under subsection (a).’’. PART III—DEPRECIATION AND striking ‘‘is issued by a corporation or a govern- (c) EFFECTIVE DATE.—The amendments made AMORTIZATION ment or political subdivision thereof and’’. by this section shall apply to taxable years be- SEC. 471. EXTENSION OF AMORTIZATION OF IN- (b) EFFECTIVE DATE.—The amendment made ginning after the date of the enactment of this TANGIBLES TO SPORTS FRAN- by this section shall apply to sales occurring on Act. CHISES. or after the date of the enactment of this Act. SEC. 469. MANDATORY BASIS ADJUSTMENTS IN (a) IN GENERAL.—Section 197(e) (relating to CONNECTION WITH PARTNERSHIP exceptions to definition of section 197 intan- PART II—CORPORATIONS AND DISTRIBUTIONS AND TRANSFERS OF gible) is amended by striking paragraph (6) and PARTNERSHIPS PARTNERSHIP INTERESTS. by redesignating paragraphs (7) and (8) as para- SEC. 466. MODIFICATION OF TREATMENT OF (a) IN GENERAL.—Section 754 is repealed. graphs (6) and (7), respectively. TRANSFERS TO CREDITORS IN DIVI- (b) ADJUSTMENT TO BASIS OF UNDISTRIBUTED (b) CONFORMING AMENDMENTS.— SIVE REORGANIZATIONS. PARTNERSHIP PROPERTY.—Section 734 is amend- (1)(A) Section 1056 (relating to basis limitation (a) IN GENERAL.—Section 361(b)(3) (relating to ed— for player contracts transferred in connection treatment of transfers to creditors) is amended (1) by striking ‘‘, with respect to which the with the sale of a franchise) is repealed. by adding at the end the following new sen- election provided in section 754 is in effect,’’ in (B) The table of sections for part IV of sub- tence: ‘‘In the case of a reorganization described the matter preceding paragraph (1) of subsection chapter O of chapter 1 is amended by striking in section 368(a)(1)(D) with respect to which (b), the item relating to section 1056. stock or securities of the corporation to which (2) by striking ‘‘(as adjusted by section (2) Section 1245(a) (relating to gain from dis- the assets are transferred are distributed in a 732(d))’’ both places it appears in subsection (b), position of certain depreciable property) is transaction which qualifies under section 355, (3) by striking the last sentence of subsection amended by striking paragraph (4). this paragraph shall apply only to the extent (b), (3) Section 1253 (relating to transfers of fran- that the sum of the money and the fair market (4) by striking subsection (a) and by redesig- chises, trademarks, and trade names) is amend- value of other property transferred to such nating subsections (b) and (c) as subsections (a) ed by striking subsection (e). creditors does not exceed the adjusted bases of and (b), respectively, and (c) EFFECTIVE DATES.— such assets transferred.’’. (5) by striking ‘‘optional’’ in the heading. (1) IN GENERAL.—Except as provided in para- (b) LIABILITIES IN EXCESS OF BASIS.—Section (c) ADJUSTMENT TO BASIS OF PARTNERSHIP graph (2), the amendments made by this section 357(c)(1)(B) is amended by inserting ‘‘with re- PROPERTY.—Section 743 is amended— shall apply to property acquired after the date spect to which stock or securities of the corpora- (1) by striking ‘‘with respect to which the elec- of the enactment of this Act. tion to which the assets are transferred are dis- tion provided in section 754 is in effect’’ in the (2) SECTION 1245.—The amendment made by tributed in a transaction which qualifies under matter preceding paragraph (1) of subsection subsection (b)(2) shall apply to franchises ac- section 355’’ after ‘‘section 368(a)(1)(D)’’. (b), quired after the date of the enactment of this (c) EFFECTIVE DATE.—The amendments made (2) by striking subsection (a) and by redesig- Act. by this section shall apply to transfers of money nating subsections (b) and (c) as subsections (a) SEC. 472. SERVICE CONTRACTS TREATED IN SAME or other property, or liabilities assumed, in con- and (b), respectively, MANNER AS LEASES FOR RULES RE- nection with a reorganization occurring on or (3) by adding at the end the following new LATING TO TAX-EXEMPT USE PROP- after the date of the enactment of this Act. subsection: ERTY. ‘‘(c) ELECTION TO ADJUST BASIS FOR TRANS- (a) IN GENERAL.—Section 168(h)(7) (defining SEC. 467. CLARIFICATION OF DEFINITION OF FERS UPON DEATH OF PARTNER.—Subsection (a) lease) is amended by adding at the end the fol- NONQUALIFIED PREFERRED STOCK. shall not apply and no adjustments shall be lowing: ‘‘Such term shall also include any serv- (a) IN GENERAL.—Section 351(g)(3)(A) is made in the case of any transfer of an interest ice contract or other similar arrangement.’’. amended by adding at the end the following: in a partnership upon the death of a partner (b) LEASE TERM.—Section 168(i)(3) (relating to ‘‘Stock shall not be treated as participating in unless an election to do so is made by the part- lease term) is amended by adding at the end the corporate growth to any significant extent un- nership. Such an election shall apply with re- following new subparagraph: less there is a real and meaningful likelihood of spect to all such transfers of interests in the ‘‘(C) SPECIAL RULE FOR SERVICE CONTRACTS.— the shareholder actually participating in the partnership. Any election under section 754 in In the case of any service contract or other simi- earnings and growth of the corporation.’’. effect on the date of the enactment of this sub- lar arrangement treated as a lease under sub- (b) EFFECTIVE DATE.—The amendment made section shall constitute an election made under section (h)(7), the lease term shall be determined by this section shall apply to transactions after this subsection. Such election may be revoked by in the same manner as a lease.’’. May 14, 2003. the partnership, subject to such limitations as (c) CONFORMING AMENDMENTS.—Section SEC. 468. MODIFICATION OF DEFINITION OF CON- may be provided by regulations prescribed by 168(g)(3)(A) is amended— TROLLED GROUP OF CORPORA- the Secretary.’’, and (1) by inserting ‘‘(as defined in subsection TIONS. (4) by striking ‘‘optional’’ in the heading. (h)(7)’’ after ‘‘lease’’ the first place it appears, (a) IN GENERAL.—Section 1563(a)(2) (relating (d) CONFORMING AMENDMENTS.— and to brother-sister controlled group) is amended by (1) Subsection (d) of section 732 is repealed. (2) by inserting ‘‘(as determined under sub- striking ‘‘possessing—’’ and all that follows (2) Section 755(a) is amended— section (i)(3))’’ after ‘‘term’’. through ‘‘(B)’’ and inserting ‘‘possessing’’. (A) by striking ‘‘section 734(b) (relating to the (d) EFFECTIVE DATE.—The amendments made (b) APPLICATION OF EXISTING RULES TO OTHER optional adjustment’’ and inserting ‘‘section by this section shall apply to leases and service CODE PROVISIONS.—Section 1563(f) (relating to 734(a) (relating to the adjustment’’, and contracts or other similar arrangements entered other definitions and rules) is amended by add- (B) by striking ‘‘section 743(b) (relating to the into after the date of the enactment of this Act. ing at the end the following new paragraph: optional adjustment’’ and inserting ‘‘section SEC. 473. CLASS LIVES FOR UTILITY GRADING ‘‘(5) BROTHER-SISTER CONTROLLED GROUP DEF- 743(a) (relating to the adjustment’’. COSTS. INITION FOR PROVISIONS OTHER THAN THIS (3) Section 761(e)(2) is amended by striking (a) GAS UTILITY PROPERTY.—Section PART.— ‘‘optional’’. 168(e)(3)(E) (defining 15-year property) is

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amended by striking ‘‘and’’ at the end of clause over the 180-month period beginning with the ‘‘(b) DISALLOWED DEDUCTION CARRIED TO (ii), by striking the period at the end of clause month in which the active trade or business be- NEXT YEAR.—Except as otherwise provided in (iii) and inserting ‘‘, and’’, and by adding at the gins.’’. this section, any deduction with respect to any end the following new clause: (2) CONFORMING AMENDMENT.—Subsection (b) tax-exempt use property which is disallowed ‘‘(iv) initial clearing and grading land im- of section 195 is amended by striking ‘‘AMOR- under subsection (a) shall, subject to the limita- provements with respect to gas utility prop- TIZE’’ and inserting ‘‘DEDUCT’’ in the heading. tion under subsection (a), be treated as a deduc- erty.’’. (b) ORGANIZATIONAL EXPENDITURES.—Sub- tion with respect to such property in the next (b) ELECTRIC UTILITY PROPERTY.—Section section (a) of section 248 (relating to organiza- taxable year. 168(e)(3) is amended by adding at the end the tional expenditures) is amended to read as fol- ‘‘(c) TAX-EXEMPT USE PROPERTY.—For pur- following new subparagraph: lows: poses of this section— ‘‘(F) 20-YEAR PROPERTY.—The term ‘20-year ‘‘(a) ELECTION TO DEDUCT.—If a corporation ‘‘(1) IN GENERAL.—The term ‘tax-exempt use property’ means initial clearing and grading elects the application of this subsection (in ac- property’ has the meaning given such term by land improvements with respect to any electric cordance with regulations prescribed by the Sec- section 168(h), except that such section shall be utility transmission and distribution plant.’’. retary) with respect to any organizational ex- applied without regard to paragraphs (2)(C)(ii) (c) CONFORMING AMENDMENTS.—The table penditures— and (3). contained in section 168(g)(3)(B) is amended— ‘‘(1) the corporation shall be allowed a deduc- ‘‘(2) SPECIAL RULES FOR SERVICE CONTRACTS (1) by inserting ‘‘or (E)(iv)’’ after ‘‘(E)(iii)’’, tion for the taxable year in which the corpora- AND SIMILAR ARRANGEMENTS.—If tangible prop- and tion begins business in an amount equal to the erty is subject to a service contract or other simi- (2) by adding at the end the following new lesser of— lar arrangement between a taxpayer (or any re- item: ‘‘(A) the amount of organizational expendi- lated person) and any tax-exempt entity, such ‘‘(F) ...... 25’’. tures with respect to the taxpayer, or contract or arrangement shall be treated in the (d) EFFECTIVE DATE.—The amendments made ‘‘(B) $5,000, reduced (but not below zero) by same manner as if it were a lease for purposes by this section shall apply to property placed in the amount by which such organizational ex- of determining whether such property is tax-ex- service after the date of the enactment of this penditures exceed $50,000, and empt use property under paragraph (1). Act. ‘‘(2) the remainder of such organizational ex- ‘‘(d) SPECIAL RULES.— ‘‘(1) ALLOCABLE DEDUCTIONS.—Subsection (a) SEC. 474. EXPANSION OF LIMITATION ON DEPRE- penditures shall be allowed as a deduction rat- CIATION OF CERTAIN PASSENGER ably over the 180-month period beginning with shall apply to— AUTOMOBILES. the month in which the corporation begins busi- ‘‘(A) any deduction directly allocable to any (a) IN GENERAL.—Section 179(b) (relating to ness.’’. tax-exempt use property, and limitations) is amended by adding at the end the (c) TREATMENT OF ORGANIZATIONAL AND SYN- ‘‘(B) a proper share of other deductions that following new paragraph: DICATION FEES OR PARTNERSHIPS.— are not directly allocable to such property. ‘‘(2) PROPERTY CEASING TO BE TAX-EXEMPT ‘‘(6) LIMITATION ON COST TAKEN INTO ACCOUNT (1) IN GENERAL.—Section 709(b) (relating to USE PROPERTY.—If property of a taxpayer ceases FOR CERTAIN PASSENGER VEHICLES.— amortization of organization fees) is amended by to be tax-exempt use property in the hands of ‘‘(A) IN GENERAL.—The cost of any sport util- redesignating paragraph (2) as paragraph (3) ity vehicle for any taxable year which may be and by amending paragraph (1) to read as fol- the taxpayer— ‘‘(A) any unused deduction allocable to such taken into account under this section shall not lows: property under subsection (b) shall only be al- exceed $25,000. ‘‘(1) ALLOWANCE OF DEDUCTION.—If a tax- lowable as a deduction for any taxable year to ‘‘(B) SPORT UTILITY VEHICLE.—For purposes payer elects the application of this subsection of subparagraph (A)— (in accordance with regulations prescribed by the extent of any net income of the taxpayer allocable to such property, and ‘‘(i) IN GENERAL.—The term ‘sport utility vehi- the Secretary) with respect to any organiza- ‘‘(B) any portion of such unused deduction cle’ means any 4-wheeled vehicle which— tional expenses— ‘‘(I) is manufactured primarily for use on pub- ‘‘(A) the taxpayer shall be allowed a deduc- remaining after application of subparagraph (A) lic streets, roads, and highways, tion for the taxable year in which the partner- shall, subject to the limitation of subparagraph ‘‘(II) is not subject to section 280F, and ship begins business in an amount equal to the (A), be treated as a deduction allocable to such ‘‘(III) is rated at not more than 14,000 pounds lesser of— property in the next taxable year. ISPOSITION OF ENTIRE INTEREST IN PROP- gross vehicle weight. ‘‘(i) the amount of organizational expenses ‘‘(3) D ERTY.—If during the taxable year a taxpayer ‘‘(ii) CERTAIN VEHICLES EXCLUDED.—Such term with respect to the partnership, or does not include any vehicle which— ‘‘(ii) $5,000, reduced (but not below zero) by disposes of the taxpayer’s entire interest in tax- ‘‘(I) does not have the primary load carrying the amount by which such organizational ex- exempt use property, rules similar to the rules of device or container attached, penses exceed $50,000, and section 469(g) shall apply for purposes of this ‘‘(II) has a seating capacity of more than 12 ‘‘(B) the remainder of such organizational ex- section. ‘‘(e) REGULATIONS.—The Secretary shall pre- individuals, penses shall be allowed as a deduction ratably scribe such regulations as may be necessary or ‘‘(III) is designed for more than 9 individuals over the 180-month period beginning with the appropriate to carry out the provisions of this in seating rearward of the driver’s seat, month in which the partnership begins business. section.’’. ‘‘(IV) is equipped with an open cargo area, or ‘‘(2) DISPOSITIONS BEFORE CLOSE OF AMORTI- (b) CONFORMING AMENDMENT.—The table of a covered box not readily accessible from the ZATION PERIOD.—In any case in which a part- sections for subpart C of part II of subchapter E passenger compartment, of at least 72.0 inches nership is liquidated before the end of the period of chapter 1 is amended by adding at the end in interior length, or to which paragraph (1)(B) applies, any deferred ‘‘(V) has an integral enclosure, fully enclosing the following new item: expenses attributable to the partnership which ‘‘Sec. 470. Deductions allocable to property used the driver compartment and load carrying de- were not allowed as a deduction by reason of by governments or other tax-ex- vice, does not have seating rearward of the driv- this section may be deducted to the extent al- empt entities.’’. er’s seat, and has no body section protruding lowable under section 165.’’. FFECTIVE ATE more than 30 inches ahead of the leading edge (2) CONFORMING AMENDMENT.—Subsection (b) (c) E D .—The amendments made of the windshield.’’. of section 709 is amended by striking ‘‘AMORTI- by this section shall apply to leases and service (c) EFFECTIVE DATE.—The amendments made ZATION’’ and inserting ‘‘DEDUCTION’’ in the contracts or similar arrangements entered into by this section shall apply to property placed in heading. after the date of the enactment of this Act. service after the date of the enactment of this (d) EFFECTIVE DATE.—The amendments made PART IV—ADMINISTRATIVE PROVISIONS Act. by this section shall apply to amounts paid or SEC. 481. CLARIFICATION OF RULES FOR PAY- SEC. 475. CONSISTENT AMORTIZATION OF PERI- incurred after the date of the enactment of this MENT OF ESTIMATED TAX FOR CER- ODS FOR INTANGIBLES. Act. TAIN DEEMED ASSET SALES. (a) START-UP EXPENDITURES.— SEC. 476. LIMITATION ON DEDUCTIONS ALLO- (a) IN GENERAL.—Paragraph (13) of section (1) ALLOWANCE OF DEDUCTION.—Paragraph CABLE TO PROPERTY USED BY GOV- 338(h) (relating to tax on deemed sale not taken (1) of section 195(b) (relating to start-up expend- ERNMENTS OR OTHER TAX-EXEMPT into account for estimated tax purposes) is itures) is amended to read as follows: ENTITIES. amended by adding at the end the following: ‘‘(1) ALLOWANCE OF DEDUCTION.—If a tax- (a) IN GENERAL.—Subpart C of part II of sub- ‘‘The preceding sentence shall not apply with payer elects the application of this subsection chapter E of chapter 1 (relating to taxable year respect to a qualified stock purchase for which with respect to any start-up expenditures— for which deductions taken) is amended by add- an election is made under paragraph (10).’’. ‘‘(A) the taxpayer shall be allowed a deduc- ing at the end the following new section: (b) EFFECTIVE DATE.—The amendment made tion for the taxable year in which the active ‘‘SEC. 470. DEDUCTIONS ALLOCABLE TO PROP- by subsection (a) shall apply to transactions oc- trade or business begins in an amount equal to ERTY USED BY GOVERNMENTS OR curring after the date of the enactment of this the lesser of— OTHER TAX-EXEMPT ENTITIES. Act. ‘‘(i) the amount of start-up expenditures with ‘‘(a) GENERAL RULE.—The aggregate amount SEC. 482. EXTENSION OF IRS USER FEES. respect to the active trade or business, or of deductions otherwise allowable to the tax- (a) IN GENERAL.—Section 7528(c) (relating to ‘‘(ii) $5,000, reduced (but not below zero) by payer with respect to tax-exempt use property termination) is amended by striking ‘‘December the amount by which such start-up expenditures for any taxable year shall not exceed the aggre- 31, 2004’’ and inserting ‘‘September 30, 2013’’. exceed $50,000, and gate amount of income includible in gross in- (b) EFFECTIVE DATE.—The amendment made ‘‘(B) the remainder of such start-up expendi- come of the taxpayer for the taxable year with by this section shall apply to requests after the tures shall be allowed as a deduction ratably respect to such property. date of the enactment of this Act.

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SEC. 483. DOUBLING OF CERTAIN PENALTIES, SEC. 485. EXTENSION OF CUSTOMS USER FEES. (c) EFFECTIVE DATE.— FINES, AND INTEREST ON UNDER- Section 13031(j)(3) of the Consolidated Omni- (1) IN GENERAL.—The amendments made by PAYMENTS RELATED TO CERTAIN bus Budget Reconciliation Act of 1985 (19 U.S.C. this section shall apply to deposits made after OFFSHORE FINANCIAL ARRANGE- 58c(j)(3)) is amended by striking ‘‘March 31, the date of the enactment of this Act. MENT. 2004’’ and inserting ‘‘September 30, 2013’’. (2) COORDINATION WITH DEPOSITS MADE UNDER (a) GENERAL RULE.—If— (1) a taxpayer eligible to participate in— SEC. 486. DEPOSITS MADE TO SUSPEND RUNNING REVENUE PROCEDURE 84–58.—In the case of an (A) the Department of the Treasury’s Offshore OF INTEREST ON POTENTIAL UN- amount held by the Secretary of the Treasury or DERPAYMENTS. Voluntary Compliance Initiative, or his delegate on the date of the enactment of this (a) IN GENERAL.—Subchapter A of chapter 67 (B) the Department of the Treasury’s vol- Act as a deposit in the nature of a cash bond (relating to interest on underpayments) is untary disclosure initiative which applies to the deposit pursuant to Revenue Procedure 84–58, amended by adding at the end the following taxpayer by reason of the taxpayer’s under- the date that the taxpayer identifies such new section: reporting of United States income tax liability amount as a deposit made pursuant to section through financial arrangements which rely on ‘‘SEC. 6603. DEPOSITS MADE TO SUSPEND RUN- 6603 of the Internal Revenue Code (as added by NING OF INTEREST ON POTENTIAL this Act) shall be treated as the date such the use of offshore arrangements which were the UNDERPAYMENTS, ETC. subject of the initiative described in subpara- amount is deposited for purposes of such section ‘‘(a) AUTHORITY TO MAKE DEPOSITS OTHER 6603. graph (A), and THAN AS PAYMENT OF TAX.—A taxpayer may (2) any interest or applicable penalty is im- make a cash deposit with the Secretary which SEC. 487. QUALIFIED TAX COLLECTION CON- TRACTS. posed with respect to any arrangement to which may be used by the Secretary to pay any tax im- any initiative described in paragraph (1) applied (a) CONTRACT REQUIREMENTS.— posed under subtitle A or B or chapter 41, 42, 43, or to any underpayment of Federal income tax (1) IN GENERAL.—Subchapter A of chapter 64 or 44 which has not been assessed at the time of attributable to items arising in connection with (relating to collection) is amended by adding at the deposit. Such a deposit shall be made in any arrangement described in paragraph (1), the end the following new section: such manner as the Secretary shall prescribe. then, notwithstanding any other provision of ‘‘(b) NO INTEREST IMPOSED.—To the extent ‘‘SEC. 6306. QUALIFIED TAX COLLECTION CON- law, the amount of such interest or penalty that such deposit is used by the Secretary to pay TRACTS. shall be equal to twice that determined without tax, for purposes of section 6601 (relating to in- ‘‘(a) IN GENERAL.—Nothing in any provision regard to this section. terest on underpayments), the tax shall be treat- of law shall be construed to prevent the Sec- (b) DEFINITIONS AND RULES.—For purposes of ed as paid when the deposit is made. retary from entering into a qualified tax collec- this section— ‘‘(c) RETURN OF DEPOSIT.—Except in a case tion contract. (1) APPLICABLE PENALTY.—The term ‘‘applica- where the Secretary determines that collection ‘‘(b) QUALIFIED TAX COLLECTION CONTRACT.— ble penalty’’ means any penalty, addition to of tax is in jeopardy, the Secretary shall return For purposes of this section, the term ‘qualified tax, or fine imposed under chapter 68 of the In- to the taxpayer any amount of the deposit (to tax collection contract’ means any contract ternal Revenue Code of 1986. the extent not used for a payment of tax) which which— (2) VOLUNTARY OFFSHORE COMPLIANCE INITIA- the taxpayer requests in writing. ‘‘(1) is for the services of any person (other TIVE.—The term ‘‘Voluntary Offshore Compli- ‘‘(d) PAYMENT OF INTEREST.— than an officer or employee of the Treasury De- ance Initiative’’ means the program established ‘‘(1) IN GENERAL.—For purposes of section 6611 partment)— by the Department of the Treasury in January (relating to interest on overpayments), a deposit ‘‘(A) to locate and contact any taxpayer speci- of 2003 under which any taxpayer was eligible which is returned to a taxpayer shall be treated fied by the Secretary, to voluntarily disclose previously undisclosed as a payment of tax for any period to the extent ‘‘(B) to request full payment from such tax- income on assets placed in offshore accounts (and only to the extent) attributable to a disput- payer of an amount of Federal tax specified by and accessed through credit card and other fi- able tax for such period. Under regulations pre- the Secretary and, if such request cannot be met nancial arrangements. scribed by the Secretary, rules similar to the by the taxpayer, to offer the taxpayer an in- (3) PARTICIPATION.—A taxpayer shall be treat- rules of section 6611(b)(2) shall apply. stallment agreement providing for full payment ed as having participated in the Voluntary Off- ‘‘(2) DISPUTABLE TAX.— of such amount during a period not to exceed 3 shore Compliance Initiative if the taxpayer sub- ‘‘(A) IN GENERAL.—For purposes of this sec- years, and mitted the request in a timely manner and all tion, the term ‘disputable tax’ means the ‘‘(C) to obtain financial information specified information requested by the Secretary of the amount of tax specified at the time of the de- by the Secretary with respect to such taxpayer, Treasury or his delegate within a reasonable pe- posit as the taxpayer’s reasonable estimate of ‘‘(2) prohibits each person providing such riod of time following the request. the maximum amount of any tax attributable to services under such contract from committing (c) EFFECTIVE DATE.—The provisions of this disputable items. section shall apply to interest, penalties, addi- any act or omission which employees of the In- ‘‘(B) SAFE HARBOR BASED ON 30-DAY LETTER.— ternal Revenue Service are prohibited from com- tions to tax, and fines with respect to any tax- In the case of a taxpayer who has been issued able year if as of the date of the enactment of mitting in the performance of similar services, a 30-day letter, the maximum amount of tax ‘‘(3) prohibits subcontractors from— this Act, the assessment of any tax, penalty, or under subparagraph (A) shall not be less than interest with respect to such taxable year is not ‘‘(A) having contacts with taxpayers, the amount of the proposed deficiency specified ‘‘(B) providing quality assurance services, and prevented by the operation of any law or rule of in such letter. law. ‘‘(C) composing debt collection notices, and ‘‘(3) OTHER DEFINITIONS.—For purposes of ‘‘(4) permits subcontractors to perform other SEC. 484. PARTIAL PAYMENT OF TAX LIABILITY IN paragraph (2)— services only with the approval of the Secretary. INSTALLMENT AGREEMENTS. ‘‘(A) DISPUTABLE ITEM.—The term ‘disputable ‘‘(c) FEES.—The Secretary may retain and use (a) IN GENERAL.— item’ means any item of income, gain, loss, dean amount not in excess of 25 percent of the (1) Section 6159(a) (relating to authorization duction, or credit if the taxpayer— amount collected under any qualified tax collec- of agreements) is amended— ‘‘(i) has a reasonable basis for its treatment of tion contract for the costs of services performed (A) by striking ‘‘satisfy liability for payment such item, and of’’ and inserting ‘‘make payment on’’, and ‘‘(ii) reasonably believes that the Secretary under such contract. The Secretary shall keep (B) by inserting ‘‘full or partial’’ after ‘‘facili- also has a reasonable basis for disallowing the adequate records regarding amounts so retained tate’’. taxpayer’s treatment of such item. and used. The amount credited as paid by any (2) Section 6159(c) (relating to Secretary re- ‘‘(B) 30-DAY LETTER.—The term ‘30-day letter’ taxpayer shall be determined without regard to quired to enter into installment agreements in means the first letter of proposed deficiency this subsection. certain cases) is amended in the matter pre- which allows the taxpayer an opportunity for ‘‘(d) NO FEDERAL LIABILITY.—The United ceding paragraph (1) by inserting ‘‘full’’ before administrative review in the Internal Revenue States shall not be liable for any act or omission ‘‘payment’’. Service Office of Appeals. of any person performing services under a quali- (b) REQUIREMENT TO REVIEW PARTIAL PAY- ‘‘(4) RATE OF INTEREST.—The rate of interest fied tax collection contract. MENT AGREEMENTS EVERY TWO YEARS.—Section allowable under this subsection shall be the ‘‘(e) APPLICATION OF FAIR DEBT COLLECTION 6159, as amended by this Act, is amended by re- Federal short-term rate determined under sec- PRACTICES ACT.—The provisions of the Fair designating subsections (d), (e), and (f) as sub- tion 6621(b), compounded daily. Debt Collection Practices Act (15 U.S.C. 1692 et sections (e), (f), and (g), respectively, and in- ‘‘(e) USE OF DEPOSITS.— seq.) shall apply to any qualified tax collection serting after subsection (c) the following new ‘‘(1) PAYMENT OF TAX.—Except as otherwise contract, except to the extent superseded by sec- subsection: provided by the taxpayer, deposits shall be tion 6304, section 7602(c), or by any other provi- ‘‘(d) SECRETARY REQUIRED TO REVIEW IN- treated as used for the payment of tax in the sion of this title. STALLMENT AGREEMENTS FOR PARTIAL COLLEC- order deposited. ‘‘(f) CROSS REFERENCES.— TION EVERY TWO YEARS.—In the case of an ‘‘(2) RETURNS OF DEPOSITS.—Deposits shall be ‘‘(1) For damages for certain unauthorized agreement entered into by the Secretary under treated as returned to the taxpayer on a last-in, collection actions by persons performing services subsection (a) for partial collection of a tax li- first-out basis.’’. under a qualified tax collection contract, see ability, the Secretary shall review the agreement (b) CLERICAL AMENDMENT.—The table of sec- section 7433A. at least once every 2 years.’’. tions for subchapter A of chapter 67 is amended ‘‘(2) For application of Taxpayer Assistance (c) EFFECTIVE DATE.—The amendments made by adding at the end the following new item: Orders to persons performing services under a by this section shall apply to agreements entered ‘‘Sec. 6603. Deposits made to suspend running of qualified tax collection contract, see section into on or after the date of the enactment of this interest on potential underpay- 7811(a)(4).’’. Act. ments, etc.’’. (2) CONFORMING AMENDMENTS.—

VerDate jul 14 2003 01:29 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00043 Fmt 4624 Sfmt 6333 E:\CR\FM\A03MR6.041 S03PT1 S2062 CONGRESSIONAL RECORD — SENATE March 3, 2004 (A) Section 7809(a) is amended by inserting PART V—MISCELLANEOUS PROVISIONS ‘‘or’’ at the end of clause (i), by adding ‘‘or’’ at ‘‘6306,’’ before ‘‘7651’’. SEC. 491. ADDITION OF VACCINES AGAINST HEPA- the end of clause (ii), and by inserting after (B) The table of sections for subchapter A of TITIS A TO LIST OF TAXABLE VAC- clause (ii) the following new clause: chapter 64 is amended by adding at the end the CINES. ‘‘(iii) of any patent, copyright, trademark, following new item: (a) IN GENERAL.—Section 4132(a)(1) (defining trade name, trade secret, know-how, software, ‘‘Sec. 6306. Qualified Tax Collection Con- taxable vaccine) is amended by redesignating or similar property, or applications or registra- tracts.’’. subparagraphs (I), (J), (K), and (L) as subpara- tions of such property,’’. (b) TREATMENT OF CONTRIBUTIONS WHERE (b) CIVIL DAMAGES FOR CERTAIN UNAUTHOR- graphs (J), (K), (L), and (M), respectively, and DONOR RECEIVES INTEREST.—Section 170(e) is IZED COLLECTION ACTIONS BY PERSONS PER- by inserting after subparagraph (H) the fol- amended by adding at the end the following FORMING SERVICES UNDER QUALIFIED TAX COL- lowing new subparagraph: new paragraph: LECTION CONTRACTS.— ‘‘(I) Any vaccine against hepatitis A.’’. ‘‘(7) SPECIAL RULES FOR CONTRIBUTIONS OF (1) IN GENERAL.—Subchapter B of chapter 76 (b) CONFORMING AMENDMENT.—Section PATENTS AND SIMILAR PROPERTY WHERE DONOR (relating to proceedings by taxpayers and third 9510(c)(1)(A) is amended by striking ‘‘October RECEIVES INTEREST.— parties) is amended by inserting after section 18, 2000’’ and inserting ‘‘May 8, 2003’’. ‘‘(A) DISALLOWANCE OF DEDUCTION.—No de- 7433 the following new section: (c) EFFECTIVE DATE.— (1) SALES, ETC.—The amendments made by duction shall be allowed under this section with ‘‘SEC. 7433A. CIVIL DAMAGES FOR CERTAIN UNAU- respect to a contribution of property described THORIZED COLLECTION ACTIONS BY this section shall apply to sales and uses on or PERSONS PERFORMING SERVICES after the first day of the first month which be- in paragraph (1)(B)(iii) if the taxpayer after the UNDER QUALIFIED TAX COLLECTION gins more than 4 weeks after the date of the en- contribution has any interest in the property CONTRACTS. actment of this Act. other than a qualified interest. ‘‘(a) IN GENERAL.—Subject to the modifica- (2) DELIVERIES.—For purposes of paragraph ‘‘(B) CONTRIBUTIONS WITH QUALIFIED INTER- tions provided by subsection (b), section 7433 (1) and section 4131 of the Internal Revenue EST.—If a taxpayer after a contribution of prop- shall apply to the acts and omissions of any per- Code of 1986, in the case of sales on or before erty described in paragraph (1)(B)(iii) has a son performing services under a qualified tax the effective date described in such paragraph qualified interest in the property— collection contract (as defined in section 6306(b)) for which delivery is made after such date, the ‘‘(i) any payment pursuant to the qualified to the same extent and in the same manner as delivery date shall be considered the sale date. interest shall be treated as ordinary income and shall be includible in gross income of the tax- if such person were an employee of the Internal SEC. 492. RECOGNITION OF GAIN FROM THE SALE Revenue Service. OF A PRINCIPAL RESIDENCE AC- payer for the taxable year in which the payment ‘‘(b) MODIFICATIONS.—For purposes of sub- QUIRED IN A LIKE-KIND EXCHANGE is received by the taxpayer, and section (a)— WITHIN 5 YEARS OF SALE. ‘‘(ii) subsection (f)(3) and section 1011(b) shall ‘‘(1) Any civil action brought under section (a) IN GENERAL.—Section 121(d) (relating to not apply to the transfer of the property from 7433 by reason of this section shall be brought special rules for exclusion of gain from sale of the taxpayer to the donee. against the person who entered into the quali- principal residence) is amended by adding at the ‘‘(C) QUALIFIED INTEREST.—For purposes of fied tax collection contract with the Secretary end the following new paragraph: this paragraph— ‘‘(i) IN GENERAL.—The term ‘qualified interest’ and shall not be brought against the United ‘‘(10) PROPERTY ACQUIRED IN LIKE-KIND EX- means, with respect to any taxpayer, a right to States. CHANGE.—If a taxpayer acquired property in an ‘‘(2) Such person and not the United States exchange to which section 1031 applied, sub- receive from the donee a percentage (not greater shall be liable for any damages and costs deter- section (a) shall not apply to the sale or ex- than 50 percent) of any royalty payment re- mined in such civil action. change of such property if it occurs during the ceived by the donee with respect to property de- ‘‘(3) Such civil action shall not be an exclusive 5-year period beginning with the date of the ac- scribed in paragraph (1)(B)(iii) (other than remedy with respect to such person. quisition of such property.’’. copyrights which are described in section ‘‘(4) Subsections (c), (d)(1), and (e) of section (b) EFFECTIVE DATE.—The amendment made 1221(a)(3) or 1231(b)(1)(C)) contributed by the 7433 shall not apply.’’. by this section shall apply to sales or exchanges taxpayer to the donee. ‘‘(ii) SECRETARIAL AUTHORITY.— (2) CLERICAL AMENDMENT.—The table of sec- after the date of the enactment of this Act. tions for subchapter B of chapter 76 is amended ‘‘(I) IN GENERAL.—Except as provided in sub- by inserting after the item relating to section SEC. 493. CLARIFICATION OF EXEMPTION FROM clause (II), the Secretary may by regulation or TAX FOR SMALL PROPERTY AND CAS- other administrative guidance treat as a quali- 7433 the following new item: UALTY INSURANCE COMPANIES. fied interest the right to receive other payments ‘‘Sec. 7433A. Civil damages for certain unau- (a) IN GENERAL.—Section 501(c)(15)(A) is from the donee, but only if the donee does not thorized collection actions by per- amended to read as follows: possess a right to receive any payment (whether sons performing services under a ‘‘(A) Insurance companies (as defined in sec- royalties or otherwise) from a third party with qualified tax collection con- tion 816(a)) other than life (including interinsurers and reciprocal underwriters) if— respect to the contributed property. tract.’’. ‘‘(II) EXCEPTIONS.—The Secretary may not ‘‘(i) the gross receipts for the taxable year do (c) APPLICATION OF TAXPAYER ASSISTANCE treat as a qualified interest the right to receive not exceed $600,000, and ORDERS TO PERSONS PERFORMING SERVICES any payment which provides a benefit to the ‘‘(ii) more than 50 percent of such gross re- UNDER A QUALIFIED TAX COLLECTION CON- donor which is greater than the benefit retained ceipts consist of premiums.’’. TRACT.—Section 7811 (relating to taxpayer as- by the donee or the right to receive any portion (b) CONTROLLED GROUP RULE.—Section sistance orders) is amended by adding at the of the proceeds from the sale of the property end the following new subsection: 501(c)(15)(C) is amended by inserting ‘‘, except that in applying section 1563 for purposes of sec- contributed. ‘‘(g) APPLICATION TO PERSONS PERFORMING ‘‘(iii) LIMITATION.—An interest shall be treat- tion 831(b)(2)(B)(ii), subparagraphs (B) and (C) SERVICES UNDER A QUALIFIED TAX COLLECTION ed as a qualified interest under this subpara- of section 1563(b)(2) shall be disregarded’’ before CONTRACT.—Any order issued or action taken graph only if the taxpayer has no right to re- the period at the end. by the National Taxpayer Advocate pursuant to ceive any payment described in clause (i) or (c) CONFORMING AMENDMENT.—Clause (i) of this section shall apply to persons performing (ii)(I) after the earlier of the date on which the section 831(b)(2)(A) is amended by striking ‘‘ex- services under a qualified tax collection contract legal life of the contributed property expires or ceed $350,000 but’’. (as defined in section 6306(b)) to the same extent the date which is 20 years after the date of the and in the same manner as such order or action (d) EFFECTIVE DATE.—The amendments made by this section shall apply to taxable years be- contribution.’’. applies to the Secretary.’’. (c) REPORTING REQUIREMENTS.— ginning after December 31, 2003. (d) INELIGIBILITY OF INDIVIDUALS WHO COM- (1) IN GENERAL.—Section 6050L(a) (relating to MIT MISCONDUCT TO PERFORM UNDER CON- SEC. 494. DEFINITION OF INSURANCE COMPANY returns regarding certain dispositions of do- TRACT.—Section 1203 of the Internal Revenue FOR SECTION 831. nated property) is amended— Service Restructuring Act of 1998 (relating to (a) IN GENERAL.—Section 831 is amended by (A) by striking ‘‘If’’ and inserting: termination of employment for misconduct) is redesignating subsection (c) as subsection (d) ‘‘(1) DISPOSITIONS OF DONATED PROPERTY.— amended by adding at the end the following and by inserting after subsection (b) the fol- If’’, new subsection: lowing new subsection: (B) by redesignating paragraphs (1) through ‘‘(e) INDIVIDUALS PERFORMING SERVICES ‘‘(c) INSURANCE COMPANY DEFINED.—For pur- (5) as subparagraphs (A) through (E), respec- UNDER A QUALIFIED TAX COLLECTION CON- poses of this section, the term ‘insurance com- tively, and TRACT.— An individual shall cease to be per- pany’ has the meaning given to such term by (C) by adding at the end the following new mitted to perform any services under any quali- section 816(a)).’’. paragraph: fied tax collection contract (as defined in section (b) EFFECTIVE DATE.—The amendment made ‘‘(2) PAYMENTS OF QUALIFIED INTERESTS.— 6306(b) of the Internal Revenue Code of 1986) if by this section shall apply to taxable years be- Each donee of property described in section there is a final determination by the Secretary ginning after December 31, 2003. 170(e)(1)(B)(iii) which makes a payment to a of the Treasury under such contract that such SEC. 495. LIMITATIONS ON DEDUCTION FOR donor pursuant to a qualified interest (as de- individual committed any act or omission de- CHARITABLE CONTRIBUTIONS OF fined in section 170(e)(7)) during any calendar scribed under subsection (b) in connection with PATENTS AND SIMILAR PROPERTY. year shall make a return (in accordance with the performance of such services.’’. (a) DEDUCTION ALLOWED ONLY TO THE EX- forms and regulations prescribed by the Sec- (e) EFFECTIVE DATE.—The amendments made TENT OF BASIS.—Section 170(e)(1)(B) (relating to retary) showing— to this section shall take effect on the date of certain contributions of ordinary income and ‘‘(A) the name, address, and TIN of the payor the enactment of this Act. capital gain property) is amended by striking and the payee with respect to such a payment,

VerDate jul 14 2003 01:29 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00044 Fmt 4624 Sfmt 6333 E:\CR\FM\A03MR6.041 S03PT1 March 3, 2004 CONGRESSIONAL RECORD — SENATE S2063 ‘‘(B) a description, and date of contribution, as so many people who watch the Sen- 19 to 2 this bill was voted out of the of the property to which the qualified interest ate regularly know, the Senate, unlike Senate Finance Committee. Our bill is relates, the House of Representatives, can’t a bipartisan balance of domestic tax ‘‘(C) the dates and amounts of any royalty function if it does not function in a bi- relief and international tax reforms, payments received by the donee with respect to such property, partisan way. all meant to strengthen American busi- ‘‘(D) the date and the amount of the payment So we proceed, then, with this bipar- ness. Not as an end in itself, but as pursuant to the qualified interest, and tisan bill: the Jumpstart Our Business business strengthens, jobs are created. ‘‘(E) a description of the terms of the qualified Strength Act. If I refer to the acronym We are talking about jobs for Ameri- interest.’’. JOBS, it is jumpstart our business cans. (2) CONFORMING AMENDMENTS.— strength. Most importantly, this bill is revenue (A) The heading for section 6050L is amended Since March 2000, long before Presi- neutral. That is important, when we by striking ‘‘certain dispositions of’’. dent Bush took office, the manufac- read in the newspapers about facing a (B) The item relating to section 6050L in the turing sector has been under signifi- budget deficit. This bill then will not table of sections for subpart B of part III of sub- cant economic pressure. Obviously, chapter A of chapter 61 is amended by striking add one dime to the Federal deficit. ‘‘certain dispositions of’’. that has affected manufacturing work- The JOBS bill will repeal the current (d) ANTI-ABUSE RULES.—The Secretary of the ers. A recent CBO study estimates that FSC/ETI regime and use all the money Treasury may prescribe such regulations or going way back to March 2000, an esti- from repeal to provide a 3-point tax other administrative guidance as may be nec- mated 3 million workers have lost their rate cut on income from U.S.-based essary or appropriate to prevent the avoidance manufacturing jobs. manufacturing. I emphasize U.S.-based of the purposes of section 170(e)(1)(B)(iii) of the The Congressional Budget Office at- manufacturing. We start those cuts Internal Revenue Code of 1986 (as added by sub- tributes this job decline to the reces- phasing in next year. This 3-point rate section (a)), including preventing— sion that began in November 2000 and (1) the circumvention of the reduction of the cut is only for manufacturing and only the weak economy in demand that fol- for manufacturing in the United charitable deduction by embedding or bundling lowed, part of it a result of September the patent or similar property as part of a chari- States. This bill will not help Amer- 11 and recovery not coming as normal table contribution of property that includes the ican manufacturers that want to man- as recoveries do. patent or similar property, ufacture offshore. But we always tend to look at bad (2) the manipulation of the basis of the prop- I point out how our bill would ap- news. Bad news tends to make the erty to increase the amount of the charitable de- proach this effort to help create jobs in duction through the use of related persons, front pages of the newspaper. Good American manufacturing and do it on pass-thru entities, or other intermediaries, or news tends to make the back pages, if American soil as opposed to the way through the use of any provision of law or regu- there is good news printed at all. lation (including the consolidated return regula- There is good news on the horizon. that the Ways and Means Committee of tions), and That is, that new manufacturing or- the other body, and even other bills (3) a donor from changing the form of the pat- ders, just this past December, surged to that will be offered in the upcoming de- ent or similar property to property of a form for their highest levels in 50 years. They bate, would face these issues. Our bill which different deduction rules would apply. reducing taxes applies to all that man- (e) EFFECTIVE DATE.—The amendments made haven’t been that high since July of 1950. And January was the sixth con- ufacture in America. by this section shall apply to contributions made I wish to make clear to our col- after October 1, 2003. secutive month that manufacturing ac- leagues this is a bill to help manufac- SEC. 496. REPEAL OF 10-PERCENT REHABILITA- tivity expanded. In December, the man- TION TAX CREDIT. ufacturing employment index grew for turing in the United States. American Section 47 is amended by adding at the end the second consecutive month, but the companies that manufacture overseas the following new subsection: overall economy during that month will not get the benefit of the cor- ‘‘(e) TERMINATION.—This section shall not added 1,000 jobs only. That was, of porate rate reduction. Foreign corpora- apply to expenditures described in subsection course, disappointing. But it wasn’t tions that want to come over here to (a)(1) incurred in taxable years beginning after America and build plants and employ December 31, 2003.’’. disappointing from the standpoint of the manufacturing employment index people in this country would get the SEC. 497. INCREASE IN AGE OF MINOR CHILDREN benefit. But this bill is about helping WHOSE UNEARNED INCOME IS growing because it seems that is the TAXED AS IF PARENT’S INCOME. lagging sector of this recovery. American manufacturing that takes (a) IN GENERAL.—Section 1(g)(2)(A) (relating I believe we are on the right path for place in the United States of America. to child to whom subsection applies) is amended a strong recovery. In fact, there has I wish to differentiate the approach by striking ‘‘age 14’’ and inserting ‘‘age 18’’. been a recovery underway since econo- we use from the approach the Ways and (b) EFFECTIVE DATE.—The amendment made mists ruled that the last recession Means Committee uses. by this section shall apply to taxable years be- Unlike the pending Ways and Means ginning after December 31, 2003. ended October 1, 2001. But when a recovery ends, it is not always visible. Of bill, and other bills that will be offered The PRESIDING OFFICER. The Sen- course, it is visible in most segments of during the upcoming debate, these cuts ator from Iowa. the economy by very strong indices apply to all who manufacture in Amer- Mr. GRASSLEY. Mr. President, I that are there to prove that. But one ica, regardless of size. So this is going suggest the absence of a quorum. area that is not is manufacturing em- to include sole proprietors, partner- The PRESIDING OFFICER. The ployment. We do now have those 2 con- ships, farmers, individuals, family clerk will call the roll. secutive months of increased employ- businesses, multinational corporations, The assistant legislative clerk pro- ment. and foreign companies that set up man- ceeded to call the roll. I believe we are on the right path to ufacturing plants in the United States. Mr. GRASSLEY. Mr. President, I ask strong recovery, but we must do more All of these enterprises will benefit as unanimous consent that the order for to ensure manufacturing stays on the long as they manufacture. the quorum call be rescinded. path of recovery. Manufacturing is so So the objectives of this bill are pret- The PRESIDING OFFICER. Without vital to the overall health of our econ- ty simple. Three: Jobs, jobs, jobs, objection, it is so ordered. omy, including follow-on sectors that meaning jobs that pay money because Mr. GRASSLEY. Mr. President, I am benefit: the service and financial sec- of manufacturing in America. happy to be, once again, on the floor tors. Manufacturing is important to all with a very important piece of legisla- As government policymakers, which States, and I want to point out some tion. With the cooperation of the we are, we have to act to revitalize the benefits. For my State of Iowa—the Democratic leadership of the Senate manufacturing sector. Today we have figures I have are for 2001—Iowa’s gross Finance Committee, Senator BAUCUS, some good news on manufacturing, and State product was $91 billion. Of that, we bring to the floor a bill that was that is, the legislation we bring to the $19 billion or 21 percent of the State’s voted out of committee 19 to 2. Senator Senate, because it is going to help en- wealth was created by manufacturing. BAUCUS and I always work together as hance employment in the manufac- From 2001 to 2002, Iowa’s exports grew much as we can—that is, most of the turing sector. by nearly 15 percent. We shipped nearly time—to bring to the Senate a bill that As I have said previously, but I can- $5 billion of goods out of Iowa, and that can get through the Chamber because not emphasize too much, by a vote of was during the year 2002.

VerDate jul 14 2003 01:29 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00045 Fmt 4624 Sfmt 0634 E:\CR\FM\A03MR6.041 S03PT1 S2064 CONGRESSIONAL RECORD — SENATE March 3, 2004 In Iowa, we have 222,000 jobs in manu- Union to impose up to $4 billion a year Domestic law has made that possible facturing. So that shows how impor- of sanctions against U.S. exports. within the United States. We need to tant it is for the United States to be The European Union has already support a regime that does the same competitive in manufacturing both started this because March 1, this year, thing in international trade because we home and abroad because of 222,000 jobs was the date to do it. The sanctions have seen under that regime of rule of just in my State. Those kinds of export start at 5 percent of the $4 billion, and law in international trade for the last numbers translate into very good and they are going to increase 1 percent for 50 or 60 years the expansion of the lasting jobs at home. Many of our each month if we do not repeal the world economic pie. country’s manufacturing jobs are de- FSC/ETI provisions. They are going to We are not talking about something pendent upon the current FSC/ETI cap out at 17 percent. So by November, that is just good for the United States. international taxing regime. these sanctions will be 12 percent. How It is good for the United States. But we I have a map behind me that makes are we going to compete when the tax are talking about something that is this very clear. It shows by State the benefits that were supposed to level the good for the entire world. jobs that are existing today because of playing field are not only used, but the We have a growing world population. the current FSC/ETI provision: South European Union, in a legal way under If you don’t have a growing world eco- Carolina, 47,000 jobs; my State of Iowa, our trade agreements, is levying sanc- nomic pie, there will be less for more 35,000 jobs; California, 429,000 jobs; tions. Just as the United States when people and less for more people means Texas, 262,000; New York, 215,000; Illi- the European Union lost a case on our political, economic, and social insta- nois, 156,000; Washington State, 107,000 beef—they did not take our beef—we bility, and chaos. jobs generated by FSC/ETI. leveled sanctions against European So we have seen under this regime of As my colleagues probably know, products that are coming into this rule of law in international trade that FSC/ETI stands for Foreign Sales Cor- country, all in a legal way but not nec- the world economic pie has grown tre- poration, extraterritorial income. This essarily in the best way to conduct mendously, and to a great extent be- is what was determined to be contrary international trade. cause of international trade. The United States has led the way. to our international trade agreements, So eventually, these sanctions are We need to continue leading the way. and that is why we have this legisla- going to get up to 17 percent, and at There are some lobbyists who are sug- tion before us because if we do not do that point the European Union will re- gesting this is no big deal, this doesn’t something about this issue, these num- view the effectiveness of the sanctions, have to be done now, it can be done to- bers of jobs that are dependent upon and further increases are possible. morrow, it can be done next year, and this legislation are in jeopardy because The European Union has been con- somehow these sanctions don’t mean our manufacturing will not be competi- sistent in its message, that the FSC/ anything. They do mean something be- tive with our foreign competition. ETI must be repealed; the same way cause they are going to make our prod- Of course, what this is all about is that we were insistent upon Europe and ucts uncompetitive and then we can’t passing legislation that will be in we won a case in the World Trade Orga- sell. If these were put on John Deere agreement with our trade agreements nization that they take our beef. tractors in Waterloo, IA, one-fourth of and, consequently, still protect Amer- This is a serious threat against the jobs could go. American manufacturing, and Europe ican manufacturing as the FSC/ETI has One-fourth of the jobs at John Deere knows where to hit us. One of those is done over the last 25 to 30 years. tractor in my home State are related FSC/ETI reduces the income tax on agricultural products, plus paper prod- to trade. But we do have to abide by goods manufactured in the U.S. and ucts, and also a number of important the rule of law in international trade sold overseas. FSC/ETI is critical to manufacturing industries, and they are unless we want chaos, unless we want the manufacturing sector. It can re- hitting us right now in our soft under- the jungle. duce taxes on exports by as much as 3 belly. These lobbyists say sanctions don’t to 8 tax rate percentage points. These sanctions are going to under- matter. They argue: After all, sanc- The nonpartisan Joint Committee on mine the economic recovery that is un- tions only start at 5 percent. They Taxation says that 89 percent of the derway, as I indicated before—under- would say: There has been a decline in Foreign Sales Corporation benefits go way with 2 months in a row of a posi- the dollar. That is going to take care of to manufacturing companies. Many of tive upturn in the manufacturing that problem. With a decline in the dol- those companies are the largest manu- index. So I believe it is important for lar, add on 5 percent, no difference. facturing employers in the Nation. the United States to fulfill its obliga- But I will bet these lobbyists who are This reduced rate of tax on exports of tions under our trading rules. spreading this word that Congress U.S.-manufactured goods keeps our Now, it so happens that we win a lot doesn’t have to act don’t represent companies competitive in the inter- more cases than we lose, and it also is anybody—any workers or any firms— national marketplace. It allows our true that the United States has been a on this retaliation list. But for those companies to compete with the Euro- leader—in fact, the entire world recog- industries that I have already talked pean Union countries, which happen to nizes us as a leader, and they wait for about, and there are a lot more, sanc- have a taxing system where they get a us sometimes—in reducing trade bar- tions do matter because they will not rebate on their value-added tax on ex- riers around the world. We have shown be able to export if they can’t compete. ports. leadership for the last 60 or 70 years in Five percent right now, and for sure 17 If we did not have the Foreign Sales this area going back to the reciprocity percent a year from now, is going to Corporation, we would be exporting agreements of the 1930s of reducing make a big difference. more of our taxes, making us uncom- trade barriers. In regard to the lower value of the petitive with the European Community As we expect Europe to import our dollar against the euro, that somehow that has a different taxing system, beef when we win a case, it seems to merely restores the status quo of the value-added tax, that they do not ex- me that we must show leadership in 1990s for a lot of American companies port. complying with these rules. What the so they can export more. The recent Several years ago, the European World Trade Organization is all about decline in the dollar helped these com- Union filed a claim with the World is to bring the rule of law to what panies regain lost market share in Eu- Trade Organization challenging FSC/ would otherwise be a jungle of inter- rope, and we have lobbyists saying ETI as an illegal export subsidy. Hence, national trade. That is because we get they ought to be back in that position we are here repealing such an impor- more business activity when there is that they were in just a year ago, not tant provision because under trading predictability and understanding of being able to sell because of the high rules, according to the decision, we how we are going to do business. Just cost of the dollar? cannot have a subsidy if it is contin- as that is true in our domestic policy Why would Congress want to deprive gent upon the act of exporting. The for business expansion, it is true in these companies and their employees, World Trade Organization ruled that international trade; if there is predict- where these are good American jobs, of the FSC/ETI is an illegal export sub- ability, we will get more business ex- the opportunity to export? That is be- sidy and has authorized the European pansion around the world. yond me. These are good jobs, because

VerDate jul 14 2003 01:29 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00046 Fmt 4624 Sfmt 0634 E:\CR\FM\G03MR6.019 S03PT1 March 3, 2004 CONGRESSIONAL RECORD — SENATE S2065 statistics show conclusively that jobs Even if it were possible, I am not There would be a benefit to inter- connected with exports pay 15 percent going to suggest on the Senate floor national companies that come here to above the national average. that the United States taxpayers ought create jobs in America in manufac- Besides, there is no guarantee that to be writing a check to the country of turing. Our 3-point rate reduction is the value of the dollar will not go up France. I, for one, don’t think Congress not export contingent under the World tomorrow because our official policy is is going to buy these arguments that Trade Organization rules. Unlike the a strong dollar policy. Our official pol- we don’t have to deal with this now and FSC/ETI regime, this 3-point rate re- icy is also to let the marketplace de- there are other ways around. These duction applies to goods manufactured cide the value of the dollar. But if it proposals are shell games expounded by in the United States and which are sold does go up, it is going to leave Amer- Washington lobbyists trying to confuse domestically in the United States, or if ican exporters in even a worse situa- Congress, confuse the public, and thus they are exported for sale outside the tion than they are today with that 5 avoiding a real permanent solution to a United States. If you make it here, we percent and next month 6 percent. longstanding FSC/ETI dispute with the cut your taxes regardless of whether It is plain wrong for us in Congress, European Union. This is not realistic. you are a U.S. or foreign corporation— when we can do something about it— They will not stop the imposition of bringing those manufacturing jobs, and this bill does something about it— European sanctions. then, to the United States of America. to gamble the future of these American People suggesting these alternatives The JOBS bill starts phasing in the 3- working men and women on the vola- ought to face facts. Gambling Amer- point percentage tax rate reduction im- tile international currency market. ica’s exports on the volatile currency mediately in 2004. There is another fancy suggestion market won’t work. Cutting govern- If you look at this next chart behind from these high-paid lobbyists, that all ment checks to U.S. exporters won’t me, you see on average, European we have to do is cut a Government work. Transferring taxpayers’ money Union manufacturing income is taxed check to these U.S. exporters that are to foreign governments such as France at 21 percent but U.S. manufacturing hurt by the sanctions. won’t work. These are shell games. income is taxed at 24 percent. As you That suggestion is just as stupid as There is only one real solution for can see, the 3-point rate cut on manu- the previous one. First, it is likely that American workers. This is something facturing income in the JOBS bill the World Trade Organization would that has been worked out in a bipar- keeps us even with the European Union find such a scheme to be a prohibited tisan way for the Senate to consider by on manufacturing tax burdens. export subsidy anyway, just as they the Senator from Montana and this We included in the JOBS bill several originally did. That would continue the Senator. This is the JOBS Act that is international tax reforms that are cycle of noncompliance and retalia- before us, and the best solution is to aimed specifically to help manufacturing. The whole JOBS bill is slanted tion. pass the JOBS Act now. I hope my Sen- towards manufacturing. Flaws in our These birds don’t believe in the rule ate colleagues and our counterparts in international tax rules seriously under- of law on international trade. They the House of Representatives will act mine America’s ability to compete in like the jungle of international trade. on the Finance Committee’s FSC/ETI the global marketplace. International In fact, most lobbyists like a jungle be- legislation. It is all of our responsi- tax reform, like doing something with cause they are the ones who think they bility—Democrat and Republican are smart enough to sort it out. We are FSC/ETI, is long overdue. alike—to pass this bipartisan legisla- Our current system is built upon a not going to allow that jungle to grow tion. framework dating back to President just so lobbyists can prosper. If we, as a body, fail to act, American Kennedy in the early 1960s. We clean up But this scheme, as the original sug- workers will suffer with fewer jobs, and problems that cause foreign earnings gestions, is unworkable. It would prob- the United States will lose an oppor- to be double taxed by the United States ably require a new government bu- tunity to rejuvenate and remain glob- and the foreign countries where those reaucracy to administer. You know ally competitive in the mainstay of its profits are earned. We reform subpart what. This JOBS bill is about creating economy—the manufacturing sector of (f) to ensure that active foreign busi- manufacturing jobs, not jobs in a gov- our economy. nesses are taxed when the money is ernment bureaucracy. Our majority leader, Senator FRIST, brought home and not when the United It has also been suggested that the should be commended for bringing this States companies are locked in battle U.S. Government could simply pay bill to the floor so that the Senate can with foreign companies that do not pay compensation to some foreign govern- act now to end sanctions before they taxes. ment rather than comply with our seriously damage the economy and be- You will hear a lot of noise in the up- international trade obligations. I sup- fore they damage our transatlantic re- coming debate about these inter- pose, in the era of foreign aid, you lations. The bill needs to be passed so national provisions. But let me tell you might say that suggestion is theoreti- we can end the sanctions as soon as right now that the international provi- cally possible. But it is not very real- possible. sions in our bipartisan JOBS bill are istic. Repealing FSC/ETI raises around $55 targeted to benefit U.S. manufacturing Under the World Trade Organization billion over 10 years. Eighty-nine per- companies. Members may be surprised dispute settlement system, there is cent of it comes from jobs in the manu- to learn our international provisions only one way, just one way, a nation facturing industry. If that money is can actually harm a company’s expan- can bring itself into compliance with not sent back to help the manufac- sion in the United States of America an adverse ruling, conforming with the turing sector to be competitive with where we want companies to expand so WTO-inconsistent measure, and that is Europe, FSC/ETI repeal will be a $50 that jobs are created here and so that with a report adopted by the dispute billion tax increase on manufacturing. those jobs are not exported. It is a sim- settlement body. That would dictate The old rule of economics is if you tax ple thing to do. Just fix our tax laws so that as long as FSC/ETI is not re- something more, you get less of it. So that jobs are created in America as op- pealed, the United States remains in there is going to be less jobs in manu- posed to overseas. violation of these international trade facturing. We will have plenty of opportunity to commitments. So paying compensation I think we can all agree that a $50 talk about that issue in the upcoming to some government, in my reading of billion tax increase on manufacturing debate. the obligations under the trade com- will not stimulate job growth in that In an era of expanding global mar- mitments, is not going to bring the sector. That is why the JOBS bill kets, in an era of falling trade barriers, United States into compliance. passed by the Finance Committee uses and in an era of technological innova- Furthermore, it has to be remem- every penny from the FSC/ETI bill re- tions that melt away traditional no- bered that compensation in lieu of repeal. To give this 3-percentage tax rate tions of national borders, it is critical taliation is only a viable option if the cut on all income derived from manu- that our international tax laws keep prevailing parties agree. facturing—that is done in the United pace with these new business realities. I think that is something the Euro- States—there is no benefit to American We also include a provision for manu- pean Union is not inclined to do. companies manufacturing overseas. facturing that is not making money

VerDate jul 14 2003 01:29 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00047 Fmt 4624 Sfmt 0634 E:\CR\FM\G03MR6.021 S03PT1 S2066 CONGRESSIONAL RECORD — SENATE March 3, 2004 right now. We allow a 3-year net oper- about is moving things to the center, ufacturing, help us pass a bill to create ating loss carryback. This will allow to get a consensus to get something jobs for American men and women in companies to reclaim prior taxes paid. passed. In the process, there is never manufacturing, which is slow to re- This will give them cash liquidity to complete agreement. cover. They have an opportunity to weather the current storm. For instance, some Members did not help with bipartisanship in the other I understand there may be some ef- favor including this Homeland Rein- body because there are bills in the fort to expand this 3-year carryback to vestment Act which Senators SMITH, other body, but they are short of the a 5-year carryback. ENSIGN, and BOXER have written. We number of votes they need. Part of the The JOBS bill also includes the have included it in this bill. So we may reason is maybe the other body does Homeland Reinvestment Act sponsored have votes on that. not see the need to pass a bipartisan by Senator SMITH of Oregon, Senator Our bill contains a temporary hair- bill as we do in the Senate. There are ENSIGN of Nevada, and Senator BOXER cut on the rate reduction some Mem- Republicans and Democrats in the of California. That is a bipartisan bers would like to remove and others other body who are working on a way group to which anybody ought to be would like to retain. We will probably to do this, a way that is not far re- drawn. have that divisive issue before the Sen- moved from our legislation. This subpart of our JOBS bill, which ate. Some Members prefer a reduction If we have a real strong vote over is sponsored by Senators Smith, En- in the top corporate rate in place of all here and we get this done quickly, we sign, and Boxer, is intended to encour- these international tax reforms and might be able to help the House of Rep- age companies to bring their foreign manufacturing rate cut deductions. resentatives pass some legislation and earnings back to the United States by Now, that is a more simple approach to do it in a bipartisan way. Helping to temporarily providing the reduced rate than we have, but this approach misses pass legislation in a bipartisan way is of tax. This bill will tax foreign earn- a couple of factors. not a bad goal for Senators, since we ings at 51⁄4 percentage points instead of First, the top level rate cut would practice that. the 35 percent that would normally only go to the biggest corporations of Also, those 39 Democrats will have an apply. America. It would not go to the local opportunity to help the Senate Finance Advocates of this Homeland Invest- family-held S corporation or partner- Committee do something we want to do ment Act claim that those moneys will ship as our finance bill does. We think because we can get it done in this bi- be invested overseas instead of the we ought to help small business in the partisan way and it is not exactly the United States, if we don’t tax them at process. way the White House wants us to get it a lower rate than the 35 percent. Second, FSC/ETI repeal will not cre- done. Here again, we share governing These colleagues view this measure ate a large tax increase on the service responsibilities with the President and as I do, very much stimulative to the industry. That repeal will be a $50 bil- with the House of Representatives, and economy and helping with our unem- lion tax increase on manufacturing. If so Democrats working with Senator ployment problem. we redirect the FSC/ETI repeal money BAUCUS and myself, Democrats who are One last point I will make is that our to an across-the-board corporate cut, not on the committee, can help get a bipartisan manufacturing tax bill is as a couple of my colleagues will offer bill to the President, help the Presi- revenue neutral. I don’t think it does an amendment to do, then the manu- dent to see maybe the aspects about harm to emphasize, sometimes we pass facturing sector will be the revenue this bill they do not like, they ought to a tax bill and less money comes into offset for the services sector of tax take a second look at to see the good the Federal Treasury and we might cuts. It is a fact that we have a strug- work, and help get a bipartisan bill have a bigger deficit. This bill does not gling manufacturing sector and I don’t through the House of Representatives. I don’t say that in a defensive way do that. Not one dime is added to the think a sector of our economy that is because I don’t know of any reason the current deficit. slowly recovering ought to be hit with other 39 Democrats do not want to help Thank God, the President has been in this sort of a revenue offset for the us accomplish what we want to accom- the forefront of this, asking for a bill benefit of the service industry. We have plish. What I have just said is not for that would be revenue neutral. We have to face what is the current crisis in that purpose, but only said for the pur- delivered for our colleagues who be- manufacturing. pose of those Democrats who are not lieve in revenue neutrality of tax bills. Working families are living in finan- on this committee, there is a larger as- We have delivered for the President. cial fear. We owe a secure future to pect than just the language of the leg- The JOBS bill provides over $112 bil- these hard-working men and women. islation that is before the Senate. It lion in business tax relief which is paid For them, we have a secure future. benefits them for a lot of goals they for by shutting down tax shelters and Their employers must be able to com- want to accomplish that sometimes by closing abusive loopholes. Let me pete and thrive both at home and cannot be accomplished as a minority emphasize that because people are abroad. Then their future is secure. part of this body. reading about this every day in the Their employers cannot thrive if these The PRESIDING OFFICER. The Sen- newspaper, companies setting up shell companies are burdened with excessive ator from Montana. corporations overseas, with nothing tax rates at home and international Mr. BAUCUS. Mr. President, I would but a cabinet and maybe an address, a tax barriers abroad. like to make a few remarks about the post office box, for the sole purpose of Our bipartisan JOBS bill presents the JOBS bill before the Senate. With this avoiding taxation. They dash and stash best opportunity to end that burden bill, we join in the work of improving the cash, whereas we have all these and to make a downpayment on put- the economic well-being of Americans. other patriotic companies staying in ting Americans back to work. Let’s This bill is about creating good jobs America. hope the Senate gets to work, puts in America. This bill is about improv- There are other schemes I will not go American manufacturing back in the ing the standard of living of all Ameri- into, but we deal with those schemes in game. That is why I am here, urging cans. this legislation, bringing in additional my colleagues to support a bipartisan Let me begin with the economic con- revenue that can be used, then, to JOBS Act and cooperate to get this bill text for this bill. In a series of state- make our international taxing regime on the President’s desk. ments over the coming week, I will ad- more fair and do it in a way that cre- In closing, I have one message for the dress particular aspects of the legisla- ates jobs in the United States of Amer- 39 Democrats who are not on the Fi- tion. We begin with the dignity and im- ica, not overseas. nance Committee and may not see this, portance of work. Our jobs often define It is a fact of life with most bills that other than just a piece of legislation who we are. They are where we spend come to the Senate, there is never voted out of the Senate Finance Com- much of our waking hours. As the complete agreement on an approach. mittee. I say to the 39 Democrats who preacher teaches in the book Eccle- There is always 20 percent on the right are not on the committee, they have an siastes, ‘‘A man can do nothing better and 20 percent on the left that might opportunity to help us very quickly than to . . . find satisfaction in his disagree with something that comes to move a bill to the other body, very work. This . . . I see, is from the hand this Senate. What this Senate is all quickly help us pass a bill to help man- of God. . . .’’

VerDate jul 14 2003 01:29 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00048 Fmt 4624 Sfmt 0634 E:\CR\FM\G03MR6.024 S03PT1 March 3, 2004 CONGRESSIONAL RECORD — SENATE S2067 Job creation is fundamental to our The American economy has, on aver- It is no secret that in the past few ability to live a good life. It is through age, created more than a million net years the engine of American job cre- the creation of good jobs that Ameri- new jobs every year since 1900. Since ation has ground to low gear; manufac- cans have come to enjoy remarkable 1935, we have done better; America has turing has been particularly hard hit. advancements in income and comforts. created 1.5 million jobs every year. This next chart shows the story of The American job creation machine That is a net figure. private sector job creation in the makes our shores the shores to which America’s economic growth springs American economy over the last dec- immigrants swarm. We don’t see people from our people, our freedom, our ade. Beginning in March of 1993, here at heading for the door. Rather, people unity. The American people are smart the lower left, the American economy from around the world want to live in and as hard working as any in the steadily created new jobs throughout America. world. Our free market has given this the rest of the decade. The economy Ours is a dynamic economy. This eco- great people the freedom to achieve grew. People had jobs and families had nomic growth is the key to our Na- their best potential. Our unity has pro- more money in their pockets. In fact, tion’s success. tected its huge internal market from from January of 1993 to January 2001, I point out this chart. I will raise it robbers, foreign and domestic. about 20 million—net jobs—were cre- up so people can see it. This chart We are lucky to be Americans, very ated in America. shows the picture I have just basically lucky. Our Nation is still a magnet for Private sector employment peaked at described. In 1900, in the wake of the immigrants. This country is still a bea- 111.6 million jobs in December of 2000. industrial revolution, America already con to countries around the world. The Bureau of Labor Statistics reports stood at the pinnacle of the world econ- We can pride ourselves in our inde- that since the end of the year 2000, the omy. Already in 1900, believe it or not, pendent judiciary, which helped make private sector of the American econ- we had the highest per capita income this country strong. We can be proud of omy lost 3 million jobs. You can see in the world, slightly more than Brit- our system of government—this long- that on the chart. Our peak was here in ain or Australia, and almost double lived democracy. We have a dynamic, 2000 and we have lost jobs—3 million. that of France or Germany. mobile society. Three million jobs were lost in the But even adjusted for inflation in to- In a number of ways, America has it American economy since that peak in day’s dollars, not 1900 dollars, Amer- right. More times than not, Americans December of 2000. In January of this ica’s per capita GDP—a rough measure have struck about the right balance be- year—the month for which we have the of our average income—was only about tween government protections and pri- latest statistics—the American econ- $5,000 a year in today’s dollars. Meas- vate freedoms, to contribute to eco- omy employed 108 million private sec- nomic growth. ured by today’s standards, we lived in tor workers, which means 1 out of Our society provides an environment poverty: Walking and horseback was every 40 private sector jobs have dis- for success. Bill Gates, for example, how one got around; electricity lit only might be a pauper in Sri Lanka. But appeared since the end of 2000. 3 percent of homes in 1900; only one- The manufacturing sector has dis- America provides the environment and third of Americans had running water; proportionately borne the brunt of infrastructure and, of course, the polit- only 15 percent had flush toilets; life these job losses. ical system and markets where a Bill expectancy was 47 years. This next chart shows the story. This In 1900, America had one of the best Gates can succeed. We should not take is manufacturing jobs from 1993 to 2004. this lesson for granted. This is not true educated populations in the world. But We can see the dramatic decline in in all countries. Our society, economy 1 in 10 were illiterate. The typical roughly 2001, since July of 2000. and, yes, the Government contributed adult had left school after the eighth Since July of 2000, the American to the successes of people such as Bill grade. There were only 382 Ph.Ds economy has lost 3 million manufac- Gates. turing jobs. That is a net loss. The Bu- awarded in the entire country in 1900. Government does have a role to play, Even though in 1900 our economy was reau of Labor Statistics reports that in for good or evil, either to foster or to at the top of the world, Americans had January, America employed 14.3 mil- impede this economic growth. an average income then that the aver- Government can impede growth. By lion workers in manufacturing, and age person in Mexico has today. running large continuing budget defi- that is down from the 42nd straight If our economy had not grown, our cits, the Government can suck vital month from the high of 17.3 million in standard of living would be unaccept- capital out of the economy, robbing in- July of 2000. That is a drop of 17.5 per- able by today’s measures. Economic dividuals and businesses of funds that cent in manufacturing employment. growth made a huge difference. can be used for investment. More than one in every six American Because of economic growth, infla- Thus, the record budget deficits that manufacturing jobs has disappeared tion-adjusted, our per capita income the Government is now running pose a since July of 2000. Again, one in every today is roughly seven times now what threat to our Nation’s economic six manufacturing jobs in America has it was 104 years ago. growth. We have to recognize that. disappeared since July of 2000. With economic growth, electricity These deficits decrease national sav- Manufacturing jobs have disappeared became available across the country, ings, decrease private sector invest- in all 21 industries that constitute the and automobiles made us a mobile na- ment, and raise interest rates. The re- manufacturing sector. It is in all section and made much more of the Na- sulting slower economic growth and in- tors. We lost jobs in computer and election within reach of work. creased cost of borrowing harm busi- tronics products. We lost jobs in trans- It is incredible to see how much we nesses, large and small. portation equipment. We lost jobs in have grown in real per capita GDP Foreign governments can impede our machinery. We lost jobs in fabricated since 1900. You can see a dip on the growth when they deny Americans ac- metals. We lost jobs across the board. chart in 1929. But we have grown at a cess to their markets, when they don’t My home State of Montana has suf- rapid rate. let us sell products in their country, fered more than most. It has had a 19- The next chart is very interesting as when they artificially depress the percent reduction in manufacturing well. This is private sector employ- value of their currency, flooding our jobs since January of 2000. ment. American economic growth cre- lands with their imports and denying This next chart also shows job losses ated 108 million new jobs, net, since our exports a fair opportunity to com- happening all across the country; not 1900. In 1900, the American economy pete. just across all manufacturing sectors employed 27 million people in its civil- Our Government can foster growth but all across America. Every State in ian labor force. By January 2004, 104 by investing in education, by opening the Nation but one has lost manufac- years later, the American economy em- markets at home and abroad, and by turing jobs since July 2000. The darker ployed almost 140 million Americans. removing barriers to our economic the shade, the greater the job loss; the Two-thirds of Americans participate greatness. We can foster growth in lighter the shade—orange and yellow— in the labor force—substantially higher America. there is less job loss. But every State rates than in Europe. That is up from That is what this bill is about—rein the Nation has lost jobs, except one. 55.5 percent in 1900. Americans are moving barriers to economic growth The manufacturing jobs we are losing hard-working people. We work. and creating jobs. are good jobs. This next chart shows

VerDate jul 14 2003 01:29 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00049 Fmt 4624 Sfmt 0634 E:\CR\FM\G03MR6.027 S03PT1 S2068 CONGRESSIONAL RECORD — SENATE March 3, 2004 manufacturing jobs pay more than tax of higher borrowing costs for busi- The PRESIDING OFFICER. Without service jobs on the average. We all ness. objection, it is so ordered. know we are moving from a manufac- This is an important bill. It comes Mr. BAUCUS. Madam President, I turing society to a service job society. none too soon. American manufac- have a few more comments I would like Regrettably, those new jobs, service turing is calling out for help. This bill to make about this bill. I hope, though, jobs, pay quite a bit less than manufac- is part of the answer. we can get an agreement put together, turing jobs, and that has been true To ensure continued prosperity and a list of several amendments that from 1994 all the way up through the well-being, the American economy would then be in order. I know various current date. needs to start growing again, and this Senators and leadership are now dis- This next chart shows manufacturing bill is part of that solution. cussing that. It would be my hope we employment is now at its lowest abso- This bill is an important first step to could reach that agreement fairly soon lute level since July of 1950. Fewer address the economic circumstances in so we can get on with this bill. Americans are employed in manufac- which we find our country. Over the Let me just discuss for a few minutes turing today than at any time in more days to come, I look forward to work- what this JOBS bill is really all about. than half a century. We can see from ing with my colleagues on this bill. I It is a bill which the Finance Com- particularly thank the chairman of the the line from 1950 to today there is es- mittee reported last November. It is committee, Chairman GRASSLEY, who sentially the same number of jobs. something we simply must pass due to has done a terrific job in putting this Clearly, we are not doing very well. the WTO decision. I hope we can get it bill together in a way that focuses di- Why do I mention all this? First, it is enacted into law as soon as possible. rectly on the problem. I think this bill is important for fact. Second, we have to deal with it. We know we are here in large respect three reasons. First of all, it will cut We have to do something about it, and because of the WTO ruling which says that brings us to the bill before us, the we must repeal the so-called FSC/ETI taxes for domestic manufacturers. JOBS bill. We have targeted the provi- regime because it is WTO illegal and That is important. The bill will also sions of this bill directly at manufac- replace it with a system that helps our simplify taxes for American companies turing employment. Why? Because that domestic manufacturers in a way that operating overseas. That, too, is impor- has been the greatest problem. is legal under WTO. There are various tant. And it will bring us into compli- This bill will not be a complete solu- ways to fashion a replacement bill, and ance with an unfavorable ruling of the tion. By no stretch of the imagination the other body has a replacement bill World Trade Organization—no small will this bill be a complete solution to which gives the break to American cor- matter. The JOBS bill, the bill before job loss in America. To help create and porations, C corporations, big corpora- us, reduces the tax rate for domestic keep manufacturing jobs, we also need tions. We have a different bill. Our bill manufacturers by 3 percentage points. to do many other things in addition to says if you are a C corporation, if you So if you are in the top bracket, it is 3 passing this bill. We need to open for- are an S corporation, sole proprietor- percentage points. If you are a com- eign markets to American goods much ship, partnership—whatever—if you pany or corporation in a lower bracket, more aggressively than we have done manufacture products domestically in it is still about the same. Actually, it in the last couple of years. We need to the United States of America, whether is a 9-percent deduction for the cost of improve education, to preserve the you export is irrelevant. You get the producing or manufacturing products comparative advantage of American same reduction in your tax rate. That in the United States, which translates workers. Clearly, we have to be the is to help small business as well as big to about a 3-point reduction. Cutting smartest—hopefully at least try to be business. So business together across taxes for domestic manufacturers will the smartest—in the world. To do that, the board is helped, not just big busi- help prevent layoffs. It will help pre- we have to educate our kids and keep ness. serve jobs. As we all know, this coun- education at all levels, and to retrain We all know that is important be- try has lost 3 million—think of that, 3 workers. cause most new jobs are created by million—manufacturing jobs since July We also need to make health care small businesses. There are many more of 2000. That is net loss. We have lost a more affordable. Health care costs in small business people in this country lot more and gained some, but the net the United States are too high. They than there are big business. Small busi- loss is 3 million manufacturing jobs place a big burden on employment, on ness tends to be more creative in cre- lost since July of 2000. businesses. The cost of health insur- ating new jobs and expanding rather When I talk to manufacturers in my ance and the cost of health care is way than big corporations. home State, as I know the Presiding too high and should be lowered. We I will stop here. There is much more Officer does in her own State, they say also need to provide assistance to dis- to say about this bill. the rising cost of doing business is one placed workers. They need to be re- One final point. I mentioned it is paid of the biggest impediments to business. trained. for. It is paid for by measures which in It is a big problem business has. By This bill will do two things that will themselves should be good public pol- cutting the cost of doing business, this icy and we should pass, anyway. What make an important contribution to bill will help alleviate the job loss. creating and keeping manufacturing are they? They are corporate tax loop- This bill will help companies do their jobs in America. This bill will con- hole closures. They are shelters legisla- job. This bill helps small businesses as tribute to economic growth and in- tion. They are post-Enron provisions well as larger businesses. The Tax Code creased demand. This bill will help re- that have not yet been enacted into treats different kinds of businesses dif- law. There is something else called duce manufacturers’ tax burdens. It ferently, as we all know. C corpora- silos, to shut down another abusive will reduce the tax rate for domestic tions, as you well know, are companies manufacturers by 3 percentage points. international transaction. Not only is this bill paid for, it is that exist as a separate entity from Basically, it is a 9-percent reduction paid for in ways that will help restore their owners, thus limiting the owners’ for domestic manufacturing income, consumer and investment confidence in liability. The corporations can be lia- which translates to about a 3-percent- American business which, in and of ble for various actions, but the stock- age point break for corporations. The itself, will help create and keep jobs in holders themselves, the owners, are JOBS Act will thus help all manufac- America. not. That is the reason why companies turers who produce goods in the United I yield the floor. organize themselves, very often, in States. Mr. GRASSLEY. I suggest the ab- that manner. Cutting taxes for domestic manufac- sence of a quorum. This chart shows about 26 percent of turers will help prevent layoffs. It will The PRESIDING OFFICER. The companies in the United States are or- help. It will not solve the entire prob- clerk will call the roll. ganized as C corporations; that is, they lem, but it is going to certainly help. It The assistant bill clerk proceeded to limit their owners’ liability, the share- will help preserve jobs, and this bill is call the roll. holders themselves. The owners are not paid for. It will not contribute to the Mr. BAUCUS. Madam President, I liable. deficit. It thus will not raise interest ask unanimous consent that the order Sole proprietorships and partnerships rates. It thus will not levy that hidden for the quorum call be rescinded. are businesses where the owners of the

VerDate jul 14 2003 01:29 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00050 Fmt 4624 Sfmt 0634 E:\CR\FM\G03MR6.029 S03PT1 March 3, 2004 CONGRESSIONAL RECORD — SENATE S2069 business are fully liable for its debts. S tax credits. Foreign tax credits prevent budgets of the administration and the corporations are smaller businesses income from being taxed twice. There Budget Committee, which will be com- that are incorporated for liability pur- is a repatriation provision that encour- ing before the floor on Monday, will poses but taxed as a partnership. The S ages companies to bring back overseas not include the cost of the war in Iraq. corporations, partnerships, and sole profits for investments in the United It will not include war costs. In fact, proprietorships are collectively known States. There is also a provision that defense spending is going to be cut a as passthrough entities. These are gen- will ease the tax compliance burden for little bit. One might wonder why, when erally smaller businesses, while C cor- small businesses looking to gain access costs are going up. My guess is the ad- porations are larger concerns. to overseas markets. These are worth- ministration will come back with a Why do I mention all of that? I men- while, and they are measures that will supplemental next year with a big in- tion all that because, as I earlier stat- help restore fairness and integrity to crease in Iraq costs and war costs. This ed, about a quarter of companies are our American tax system. budget does not include that and it organized as C corporations, but about As I mentioned, the bill repeals the should. That would be more honest. three-quarters of American companies current FSC/ETI laws. Why? To bring Second, the budget does not include are organized differently, either as sole us into compliance with WTO obliga- the cost of making expiring tax cuts proprietorships, as partnerships, or as tions. Our bill replaces a tax incentive permanent. That is the view of the ad- S corporations. We want to make sure that was dependent on exports with a ministration, that they should be per- that not just standard, garden-variety tax incentive that is not dependent on manent. The budget does not include C corporations get the benefit of this exports. A company can utilize this tax that. bill but that all companies that manu- benefit in this bill whether the product It doesn’t include providing alter- facture domestically get the benefit of it manufacturers is exported. So long native minimum tax relief. We all this bill, so we have changed the under- as it is manufactured in the United know this Congress is going to have to lying bill. States, that company qualifies. We will enact alternative minimum tax relief Currently, today, under the FSC/ETI partially offset the loss of tax benefits soon, and it is very expensive. That regime, which has been declared illegal to U.S. exporting companies, therefore, also is not included, to say nothing of by the WTO, the C corporations are the by the repeal of the current law, which the cost of paying for the baby boomers ones that get the benefit of the tax I said is inconsistent with WTO, and when they start to retire in the not too break. It helps them export products will also provide benefits to all Amer- distant future. overseas. But in the Finance Com- ican manufacturers, providing a needed Deficits are going to be a lot larger mittee, we felt, not just big companies boost to our economy. than contemplated in either the admin- but all companies should get the ben- Another point: This legislation is istration budget or the budget resolu- efit of reduced taxes. completely paid for. Repealing the old tion that will come to the floor. Nearly three-fourths of the manufac- FSC/ETI regime will cover most of the I say that because it is all the more turers in this country are S corpora- cost for the new tax incentive. By re- reason why this bill must be budget tions, partnerships, and sole propri- pealing the current law, that almost neutral. I say that also because there etorships. About three-quarters of all pays for what we are doing here. are other Members of Congress who new jobs that are created are by these The international provisions are paid have a different view about that. They small businesses. This chart shows for; that is, the additional provisions of would not like this to be budget neu- that. About one-half of all employees the bill are paid for with offsets that tral. They would like there to be fur- in this country are employed not by curb abusive tax shelters. We have off- ther tax cuts but not paid for. I think big C corporations, they are employed sets in this bill. They will not just cre- that is not wise. Frankly, psycho- by the other passthrough entities I ate revenue, but they are also good logically, as well as actually, the mentioned. About three-quarters of all provisions, good tax policy in and of American people will appreciate us the jobs created and held in the United themselves—clamping down on shel- having a budget-neutral bill and trying States are not by the big companies ters, the inversions provisions, post- to work toward a balanced budget. but by all the other smaller companies. Enron reforms, something else called That means people around the country That is why we have extended this SILOs, which is a gimmick, frankly, are saying those guys and gals in bill to include so-called passthrough that international American compa- Washington maybe have their heads entities. Our smaller businesses are the nies are using to shelter their income. screwed on straight. Maybe they are backbone of my State’s economy and All that is shut down, and that pays for doing something right back there. certainly the backbone of the economy the rest of the bill. Again, these shelter Maybe they are not frittering away of the Presiding Officer’s State. I think provisions are absolutely critical to be taxpayer money. they deserve tax relief just as much as enacted. The more we do what is right, by larger businesses do. Let me mention in a little bit more keeping this budget neutral, not suc- In addition, by including partner- detail the three reasons for supporting cumbing to the siren song of lowering ships and sole proprietorships, more of this bill. I mentioned it is fully offset taxes but not paying for them, the bet- our agricultural producers will become and the revenue goes to manufac- ter off we will be in so many respects. eligible for this tax relief. turing. I think that is a principle we Another point: We have a heck of a The JOBS bill that is before us also should maintain. We should not put in- job ahead of us, a huge challenge. What includes long overdue international tax centives in this bill or change this bill is it? It is how to create more jobs in reform. We are not just talking about in a way that deviates from that. We America, how to keep jobs in America, the domestic manufacturing reduction should also not change this bill in any and how to help those who have lost rate; we are also talking about inter- way that reduces or diminishes stop- jobs—no easy task. It is extremely dif- national tax simplification. That is for ping the abuses of tax shelters. That is ficult. We all know the statistics. bigger American companies that do op- a principle we should absolutely main- Three million manufacturing jobs lost erate overseas. We want to make sure tain. in the last several years. We have to do our American companies are com- I might say something about our something about that. The real ques- peting on equal ground with rivals budget deficit. Our current budget def- tion is, what do we do? What is the from other countries. One way to do icit is projected at about $521 billion right thing to do? Some say it is OK. that is to limit double taxation. When this year. We all know that is basically That is the way things are. That is our companies are taxed twice, that an understatement. It is going to be international competition. That is makes them less competitive. We have much worse. Why? Because the admin- globalization. It just happens. In the included international tax simplifica- istration’s budget, as well as the budg- long run we are all better off. Some say tion and reform provisions that will et resolution pending in the Senate that. help American companies compete Budget Committee, does not include Essentially that was a statement of with foreign companies overseas. several factors which more accurately Mr. Mankiw the other day that has A number of provisions will help reflect the true deficit our country is been bandied about so much. He said companies better utilize their foreign facing. What are those? First, both the that is the way it is. There will be new

VerDate jul 14 2003 01:29 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00051 Fmt 4624 Sfmt 0634 E:\CR\FM\G03MR6.031 S03PT1 S2070 CONGRESSIONAL RECORD — SENATE March 3, 2004 technologies. Companies will be able to we can sell products overseas. When we These aren’t abstract numbers. They compete better. They have to lower start selling products overseas, that have real world, dramatic impacts in their costs, and they can lower their means more jobs in America. It is pret- South Dakota and across our country. costs if they can compete any place in ty doggone simple, but it is not being And the millions of affected families the world. If that means jobs overseas, done. are looking to us for answers. They lowering costs, that makes American I might also add that there are other don’t want hand-outs; they want jobs. companies more competitive. things we could be doing that we are Unfortunately, American has lost I have a different view. I think we not doing. I mentioned education. We manufacturing jobs every month since have to face up to the challenge of cre- are cutting education in this country. this administration took office—every ating more jobs and retraining Ameri- We are not fully financing No Child single month. This is unprecedented. cans so they can have jobs, and keeping Left Behind. How are we going to com- It’s also dangerous for our economy. those jobs in America. That is, we can- pete in the world if we don’t give full Manufacturing is more productive, it not be passive. We have two choices: due to education? We have all gone pays higher wages, and provides more try or do nothing. overseas and visited high schools in benefits than other sectors of the econ- I say we try to create more jobs in countries worldwide. I have. The grad- omy. Manufacturing jobs are the kind America; we try to keep more jobs in uates in Pusan, Korea, are bright as of jobs you can raise a family on. America; we try to retrain people and the dickens, and they are hungry. They’re the kind of jobs that make it help people who have lost jobs. We have We have great schools and great possible for middle-class families to to do something about it. teachers. But there is so much more we put their kids through college, and put The administration thus far has been can do. In my State—and this may be something away for retirement. passive. It has gone AWOL. It does not true in other States—teachers are leav- We have clear choices in facing this seem to really care. I do not see any af- ing because their salaries are so low. problem. We can let jobs move over- firmative programs to create jobs in They cannot teach. A lot of schools in seas—or we can fight to keep them America. We need them. It is a hugely the country are cutting back on gifted here. We can try to create jobs here, or complex problem in both the short children programs. They don’t have we can do nothing in the face of term and long term. In the long term, any money. Why are we cutting back globalization. it is education—science, math, engi- on gifted kids? That certainly helps all We can provide help for workers who neering. Did you know we don’t grad- kids, including the underprivileged. are losing their jobs, or we can look uate nearly as many engineers as does Madam President, I will yield the the other way. And we can strengthen Japan, Europe? And China graduates floor because I see our Democratic worker protections, or we can strip about three times the number of engi- leader in the Chamber. He has a lot to away overtime and other benefits that neers we do. Did you know that? How tell us. Certainly, it will add im- have been a hallmark of the American long can we continue that? In the long mensely to this discussion. I urge us to workplace. term, we cannot. It is unsustainable. think critically about the real prob- A couple of weeks ago, President I must also say the amount of finan- lem. We cannot close our borders and Bush and his economic advisors cial aid or the amount of support in put our heads in the sand. We have to weighted in on this issue and told basic research has dropped tremen- meet this challenge head on. This is Americans it was a good idea to ship dously in America. The number of engi- part of that effort. jobs overseas and we ought not worry I yield the floor. neers who graduate in America is now The PRESIDING OFFICER. The about it. I don’t see it that way, and I about 30 percent less than it was not Democratic leader is recognized. know people in South Dakota don’t see too many years ago. The figure is Mr. DASCHLE. Madam President, I it that way. And we need to do some- worse than that. We are not going to be compliment the Senator from Montana thing about it. able to compete in the long run if we for his words. I have not heard all of Today’s legislation is the second step continue that. It can’t be done. There his remarks this morning, but I could in this process. The first step was the are lots of other long-term measures not agree more that this is a problem creation and the passage of a very im- we have to undertake. that has to be addressed head on. As he portant highway bill, which will create There are also in the midterm things noted, this legislation gives us an op- hundreds of thousands, if not millions, we could be doing and we are not. What portunity to do so. It may not be the of new jobs over the course of the next are they? No. 1, we are not opening for- ultimate solution, but it is a critical 6 years. This is the second step. eign markets. Look at India, look at building block in our effort to restore The foreign sales corporation regime other countries in the world that are the economy and create new jobs. was created to counterbalance provi- closed to America, particularly the I hope that very shortly we can get sions in the Tax Code that create in- country of India. We hear about all the on with the debate. We had an agree- centives to move operations overseas. call centers going to India. We don’t ment not to offer amendments, of It provided tax advantages for Amer- hear about goods being exported to course, until people have had a chance ican companies that keep their jobs in India for a very good reason: India is to make opening statements. I intend America and ship their products over- by and large closed. They are closed to to make a short one. I hope in the not seas. intellectual property rights, closed to too distant future we can begin the But the World Trade Organization so many markets, so many products. real debate. We don’t have a lot of has decided that these advantages were India is closed. What are we doing time. We have 3 days. Senator FRIST is an unfair subsidy and needed to be about that? Not much. right that we have a lot to do in a eliminated. And if they weren’t elimi- The same can be said for other coun- short period of time. If we are going to nated, international sanctions would tries—China. Remember the WTO? maximize the use of these 3 days, it is follow. Those sanctions kicked in be- They are a member of the WTO. We time to get on with amendments. I ginning March 1. gave them PNTR. China has a lot more know Senator HATCH is prepared to The question before us is what to re- to do. offer the first one. We hope that cer- place the old export tax regime with? What are we doing in trade? Basi- tainly before the end of this noon hour, The Bush administration is com- cally looking to countries—with no dis- we will have offered the first amend- pletely focused on overseas activities respect—such as Bahrain and Morocco. ment. and has proposed nothing to encourage These smaller countries don’t have Mr. President, these are very dif- manufacturing job creation at home. huge commercial benefit to the United ficult times for millions of American But thanks to Chairman GRASSLEY States. It is easier to reach trade families. and Senator BAUCUS, we have another agreements with those countries. It is Nine million Americans can’t find solution before us. much more difficult to go after where jobs. We have the highest long-term The centerpiece of their legislation is the real problem is. As I mentioned, unemployment rate in 20 years. And in creating tax incentives for manufac- this country is not doing that, and it the last 31⁄2 years, our economy has lost turers that will keep and create good should do that. It should start working 2.9 million jobs; 2.8 million of those jobs in America. Their proposal is one more aggressively to open markets so jobs were manufacturing jobs. of the most important opportunities we

VerDate jul 14 2003 01:41 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00052 Fmt 4624 Sfmt 0634 E:\CR\FM\G03MR6.034 S03PT1 March 3, 2004 CONGRESSIONAL RECORD — SENATE S2071 will have this year to begin addressing In the short term, we have to work member has talked about how impor- America’s manufacturing crisis. together to restore fiscal sanity to the tant it is, and we are doing nothing. We Just as importantly, this bill gives us budget. have a gentleman’s agreement that an overdue opportunity to do more. The Federal deficit this year will be this would be for debate only, but I We need to accelerate and increase half-a-trillion dollars—with no end in think the Democratic leader would domestic manufacturing tax incen- sight to the red ink. This debt could agree with me, and I think everybody tives, and establish a strong job cre- cripple our economy and destroy our should be put on notice that this can- ation tax credit. children’s future. not go on all day long, that this is ri- We need to prohibit tax deductions In the longer term, our Government diculous; would the Senator agree to for outsourcing expenses, and require should assist people with education and that? notice to employees about outsourcing training so they can seize the opportu- Mr. DASCHLE. Madam President, I plans. Every community has a right to nities that rapid change creates. We respond to the Senator from Nevada, know how many employees are losing need to help people who are displaced the distinguished assistant Democratic their jobs, why then are losing their by change, and we need to make sure leader, that the schedule is clear. We jobs, and where those jobs are being America remains on the cutting edge of have this afternoon, we have tomor- sent. innovation. row, and, let’s face it, honestly, we We need to restrict outsourcing of The administration is not facing ei- only have Friday morning, and we will government contracts. ther of these challenges. We have the be under great pressure, I am sure, not We need to help workers who are largest budget deficits in all of Amer- to have any amendments offered be- hurt by outsourcing, and make sure ican history, and the administration is yond midmorning on Friday. they have access to training and health drastically underfunding training and So for all intents and purposes, we care while they get back on their feet. education. have a little bit more than a day to de- And we need to reverse some of the bate this critical legislation prior to Bush administration’s worst policies— The President’s budget recommends $9.3 billion less for the President’s own the time the majority leader has al- like eliminating overtime for 8 million ready indicated we are going to be workers, including veterans who have educational reform plan than the new law calls for. moving to the budget, setting aside been given training in the military and this legislation. are now ineligible for overtime pay as By choosing tax cuts for those at the top over assistance for States, the We are going to be assessed $4 billion a result of this regulation. We need to in tariffs beginning this week if we do do that. American workers have the President has forced drastic increases in tuition at public colleges and uni- not correct the current situation. So same rights they have always had. this legislation is urgent. It needs to be That fact needs to be reemphasized versities. The administration has fought Demo- addressed. with the legislation we will offer on I think we have some very critical cratic efforts to help dislocated work- this bill. amendments that ought to be offered ers upgrade their skills at community We can’t wait until next year to in this very narrow window to accom- colleges. make these improvements. Millions of modate concerns on both sides of the At a time when other countries are American families need them today. aisle. I hope we can do so. Frankly, as feverishly trying to challenge Amer- And I have seen firsthand, in South Da- the Senator suggests with his question, ica’s preeminence in critical tech- kota, why this is so important. we need to do it soon. I recently toured a manufacturing nology, the administration, through The PRESIDING OFFICER. The Sen- plant in Sioux Falls. Graco Incor- neglect and politicization has weak- ator from Nevada. porated is the world’s leading manufac- ened America’s science and technology Mr. REID. Madam President, it is turer of fluid-handling systems and infrastructure and undercut America’s true also, is it not, that we have equipment. They’ve been in business scientific edge. made—and I would like to hear the for 78 years. They employ about 165 The decline in American manufac- Democratic leader respond to this—a people. turing isn’t just happening on Presi- fair response? The majority has an The plant manager showed me two, dent Bush’s watch. It is happening in amendment they want to offer, spon- nearly identical parts. The first was part because of President Bush’s poli- sored by Senator HATCH, dealing with made in Sioux Falls. The other—made cies. extension of some tax credits. We then overseas—wasn’t quite as high-quality, Our choices are clear. We can follow said we would like to offer an amend- but it cost a little less because the peo- the administration’s path and make it ment to stop what—it is not a crime ple who made it were paid less, with no easier and cheaper for companies to but it is close to it in our country benefits. ship American jobs overseas, or we can today with all the outsourcing of all The manager showed me those two fight to keep good jobs in America. We these contracts, and we want to make parts. Then he introduced me to the can turn our back on millions of work- sure the U.S. Government contracts workers who would lose their jobs if ers and families who cannot find jobs, are not outsourced unless there are Graco took the easy, offshoring route. or we can help them get back on their certain limitations placed upon them. He said, ‘‘I don’t want to be the one to feet and get back to work. Then they would come back with an- have to tell them they don’t have jobs It is our hope that, in a bipartisan other amendment sponsored by Sen- anymore.’’ way, we can find ways to ensure that ator BUNNING. Then we would come The people at Graco are resisting the these goals can be achieved, not only back with another amendment spon- temptation to export their workers’ with this legislation but certainly be- sored by Senator HARKIN dealing with jobs. They’re doing everything they ginning with the amendments we will overtime, and this is no secret; this is can think of to be good, responsible offer throughout the debate on this bill an issue about which we have great corporate citizens of my State. The and hopefully with final passage ac- concern as to what the administration last thing the Federal Government corded this legislation someday soon. is doing with American workers with should do is make that job any harder. I yield the floor. overtime. Our responsibility is to make it easi- The PRESIDING OFFICER. The Sen- Is there anything in this agreement er for Graco and thousands of other ator from Nevada. the Democratic leader sees that should companies to keep and create jobs here Mr. REID. Madam President, before prevent us from moving forward on at home. the distinguished Democratic leader this critical legislation? We have even As I said, this bill is one step in a leaves the floor, I would like, through agreed to time limits; is that not true? long process. By itself, it will not com- you, to pose this to him: We have been Mr. DASCHLE. The Senator from Ne- pletely reverse the unpredecented de- here now for approximately 2 hours on vada is correct. We have agreed with cline in American manufacturing that this very important legislation. The our Republican colleagues to limit the has occurred since 2001. That will re- Democratic leader has talked about amount of time devoted to each of quire a comprehensive plan and sus- how important it is, the distinguished these amendments. tained bipartisan cooperation over a chairman of the committee has talked I see the distinguished chair of the period of time. about how important it is, our ranking Finance Committee, and it looks as if

VerDate jul 14 2003 01:41 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00053 Fmt 4624 Sfmt 0634 E:\CR\FM\A03MR6.008 S03PT1 S2072 CONGRESSIONAL RECORD — SENATE March 3, 2004 he may be about to propound a unani- from West Virginia because I already To describe this commission as inde- mous consent request. Perhaps we can made arrangements for him to speak pendent is to turn that word’s defini- yield the floor to accommodate his in- before we completed this agreement. tion on its head. In fact, the deeper one terests in doing so. I think we all hope Mr. REID. Madam President, I pro- delves into the text of the Executive to achieve the same goal. Let’s move pound that in the form of a unanimous order that creates the President’s so- this bill forward. Let’s have a good de- consent request, with the under- called independent commission, the bate about amendments, up or down, standing that the first amendment be more one finds that the commission is and let’s see if we can complete our offered as soon as he finishes. That will ill-equipped to discover just what went work on this legislation in a timely be good. wrong with the prewar intelligence on way. The PRESIDING OFFICER. Without Iraq. I yield the floor. objection, it is so ordered. The Senator At first glance, the charter of the The PRESIDING OFFICER. The Sen- from West Virginia. President’s commission appears very ator from Iowa. Mr. BYRD. Madam President, I broad. It is to assess whether the intel- Mr. GRASSLEY. Madam President, I thank the distinguished Democratic ligence community of the United ask the following unanimous consent whip and I thank the distinguished States is sufficiently authorized, orga- request. We have perfecting amend- chairman of the committee for his nized, equipped, trained, and resourced ments that have been cleared on both courtesy. to tackle the threats of terrorism and sides. Therefore, I ask unanimous con- INDEPENDENT COMMISSIONS ON NATIONAL weapons of mass destruction. As part sent that the first-degree and second- SECURITY ISSUES of that goal, the commission is to com- degree perfecting amendments that are Most of us are familiar with the pare prewar intelligence on Iraq with at the desk be considered and agreed to Aesop’s fables, having read some of what has so far been discovered. en bloc and that the motions to recon- them at one or more times during our That mission sounds like a mouthful, sider be laid upon the table; provided lives. Aesop once told the story of a but it really misses the point of why further that the committee substitute jaybird that ventured into a yard the American people are calling for a be agreed to and considered as original where peacocks used to walk. There commission to investigate in this mat- the jay found a number of feathers fall- text for the purpose of further amend- ter. en from the majestic birds when they ment. I further ask unanimous consent The public has a right to know why had last molted. He tied them all to his that the next first-degree amendments our intelligence on Iraq was so wrong, tail and strutted toward the peacocks. in order be the following: a Senator how the administration may have mis- His cheat was quickly discovered, and Hatch and Senator Murray amendment represented its intelligence, who is the peacocks harassed the imposter on R&D, with a Bingaman second-de- going to be held accountable for mis- until all his borrowed plumes had fall- gree amendment which is relevant to leading our country into war, and what en away. When the jay could do no the first degree; then Senator DODD will be done to fix the problems with more than return to his own kind, hav- dealing with outsourcing; then Senator our intelligence. Those are exactly the ing watched him from afar, they were questions an independent intelligence BUNNING and Senator STABENOW deal- equally affronted by the jay’s actions. panel should be investigating, and yet ing with accelerating manufacturers’ The moral of the story, said Aesop, is tax cut; and then the fourth amend- that it takes more than just fine feath- the President’s commission only skirts ment will be Senator DASCHLE or his ers to make fine birds. those key issues. designee. It is an age-old lesson that the Con- What is more, even though the Presi- The PRESIDING OFFICER. Is there gress should hold in its mind as we con- dent promised that his commission will objection? The Senator from Nevada. sider how best to investigate the dis- investigate current intelligence on Mr. REID. Madam President, reserv- torted and misleading intelligence that North Korea, Iran, and Pakistan, his ing the right object, I wish to express the administration used to build its Executive order, in fact, does not both- my appreciation to the chairman of the case for war in Iraq. er to direct the commission to review committee. He, in the statement he has On February 6, the President an- intelligence on those countries. In- made so far, along with the ranking nounced the creation of his own com- stead, the President’s Executive order member, underscored the importance mission to investigate our intelligence directs the commission to focus its en- of moving this legislation, and this is agencies to find out, in the words of Dr. ergies on Libya and Afghanistan. Libya movement in that direction. David Kay, why we were almost all and Afghanistan are not countries that As we indicated in the dialog between wrong about the administration’s pre- the President has labeled as part of his Senator DASCHLE and this Senator, we war claims of huge Iraqi stockpiles of axis of evil. A real independent intel- will agree on time limits anytime the weapons of mass destruction. If Con- ligence commission would shine new Senator wants to work something out gress is serious about getting to the light on how we assess the threats of in that regard. We will be happy to do bottom of this apparent intelligence North Korea and Iran, not be distracted that. This is a very good first step, and failure and the administration’s rush by sideshows that will keep the com- we do not object. to war, we must realize that once mission busy until March 31, 2005. The PRESIDING OFFICER. Without stripped of its dazzling plumage, the The President has carefully drafted objection, it is so ordered. White House proposal for its own so- this Executive order to allow himself The amendment (No. 2646) was agreed called independent commission is a to serve as the gatekeeper on what in- to. real, honest to goodness turkey. It is formation the so-called independent (The amendment is printed in today’s not only fine feathers that make fine commission might have access to. RECORD under ‘‘Text of Amendments.’’) birds. While the President directs Federal The amendment (No. 2645), as amend- The President has described the agencies to cooperate with this comed, was agreed to. panel that he created as being an inde- mission, he also has created a giant (The amendment is printed in today’s pendent commission. Well, nothing loophole that would prevent the most RECORD under ‘‘Text of Amendments.’’) could be further from the truth. This important intelligence products from The committee amendment in the commission is 100 percent under the being read by his commission. nature of a substitute, as amended, was thumb of the White House. Who cre- The Executive order reads as follows: agreed to. ated the panel’s charter? The Presi- The President may at any time modify Mr. REID. Madam President, we now dent. Who chooses the panel members? the security rules or procedures of the have an amendment that will be of- The President. To whom does the panel commission to provide the necessary fered as soon as Senator HATCH arrives. report? The President. Whom shall the protection to classified information. Senator BYRD saw we were not doing a panel advise and assist? The President. I was born at night but not last lot on the floor, and he asks, through Who is in charge of determining what night. All of America knows that the me, that he be able to speak for up to classified reports the panel may see? White House is in a dispute with the 20 minutes at this time. The President. Who gets to decide September 11 Commission over intel- Mr. GRASSLEY. Madam President, I whether the Congress may see the pan- ligence reports that were read by the feel as if I owe that to the Senator el’s report? The President. President. The commission wants

VerDate jul 14 2003 01:41 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00054 Fmt 4624 Sfmt 0634 E:\CR\FM\G03MR6.039 S03PT1 March 3, 2004 CONGRESSIONAL RECORD — SENATE S2073 them. The White House will not give The revelation by Dr. Kay that he served as Chairman of the Senate Intel- them. The Executive order drafted by does not believe any stockpiles of ligence Committee, could resign be- the President to create an intelligence weapons of mass destruction existed in cause of the administration’s refusal to commission makes sure that his own Iraq has dealt a blow to the President’s let the Commission do its work. What commission will never see documents case for war. It has shaken the Amer- could possibly be the reason for this that the President does not want them ican people’s faith in their Govern- stonewalling by the White House? to see. ment. We owe it to the American peo- It is as if a whole swath of the Wash- At least the 9/11 Commission has the ple to get to the bottom of what went ington establishment has completely power to issue subpoenas for critical wrong with our intelligence agencies forgotten the horror of the terrorist at- information. The President’s intel- and whether the administration mis- tacks that killed 3,000 innocent people. ligence commission does not even have used the intelligence that it was pro- But the American people have not for- that power. The deck is being stacked vided. gotten. The American people have against a full and open inquiry on the The President has simultaneously their priorities straight. They place prewar intelligence on Iraq. Congress is promised a commission to investigate getting at the truth of how that trag- not even assured of having access to these matters and stacked the deck edy was carried out above election year the commission’s report. against the independence of his very politics. The President has required that the own panel. That is not the right way to Enough with the stonewalling. commission send its report to him in gain the confidence of the American Enough with the foot dragging. Enough March 2005 and then within 90 days the people in their Government. It is yet with the election year politics. The President will consult with the Con- another in a string of attempts by this Senate acted correctly a few days ago gress concerning the commission’s re- White House to mislead the American to extend the life of the 9/11 Commis- port and recommendations. people on issues of national security. sion so that it can get its work done, Why can the Congress not simply Congress must step in and correct and the House should promptly follow read the commission’s report? Why the grievous error that the President suit. Now Congress should act quickly should the White House be given the has made in creating a commission to create an independent Iraq intel- opportunity to reword, reshape, redact, that is not equipped properly to do its ligence commission. The confidence of or even flat out censor the so-called job. Congress should use the inde- the American people in their Govern- independent commission’s report be- pendent 9/11 Commission, a commission ment, the people’s government, hangs fore Congress can get their hands on it? that has shown itself to be fair, inde- It is quite possible that if this so- in the balance. pendent, and bipartisan, as a starting Madam President, I yield the floor called independent commission is al- point for how to create an independent lowed to proceed as the President has and I suggest the absence of a quorum. panel to investigate the Iraq intel- The PRESIDING OFFICER (Mr. directed, Congress will never have the ligence failures. If the administration HAGEL). The clerk will call the roll. chance to review the commission’s is serious about getting to the bottom The assistant legislative clerk pro- work. Tucked away in the President’s Exec- of this debacle, this new commission ceeded to call the roll. utive order is a provision that intends might even be created in just a matter Mr. HATCH. Mr. President, I ask to exempt this commission from judi- of days. unanimous consent that the order for cial review. Let us not forget that the The American people deserve answers the quorum call be rescinded. Office of the Vice President fought on why the administration relied on The PRESIDING OFFICER. Without tooth and nail in Federal courts, and is faulty intelligence to take this country objection, it is so ordered. still doing so, to keep the General Ac- to war without presence of an immi- AMENDMENT NO. 2647 counting Office, an arm of the Con- nent threat. A commission that is de- Mr. HATCH. Mr. President, I send an gress, from learning about the meet- signed to keep the inquiry under the amendment to the desk. ings of the Vice President’s energy thumb of the same White House that The PRESIDING OFFICER. The task force. misled Congress and the public about clerk will report. Could this provision be an attempt to the nature of the threat from Saddam The assistant journal clerk read as hide the work of the President’s intel- Hussein will never be able to operate follows: ligence commission from Congress? I independently. So Congress should not The Senator from Utah [Mr. HATCH], for would not put such a scheme beyond allow the President to get away with himself, Mrs. MURRAY, Mr. BAUCUS, Ms. the White House, which has already posting a fox at the door to the hen CANTWELL, Mr. SMITH, Mr. BUNNING, and Mr. demonstrated its zeal for secrecy. house. GRASSLEY, proposes an amendment num- The administration’s case for war in The structure of the 9/11 Commission bered 2647. Iraq appears to have been built upon is a solid foundation upon which to Mr. HATCH. Mr. President, I ask cherry-picked intelligence, produced conduct an inquiry into the adminis- unanimous consent that reading of the and massaged to hype the American tration’s prewar intelligence claims. amendment be dispensed with. people into going along with a war of The 9/11 Commission has been doing The PRESIDING OFFICER. Without choice. The President’s so-called inde- yeoman’s work in digging into all of objection, it is so ordered. pendent commission would allow the the events that led up to those cata- The amendment is as follows: White House to do the exact same num- strophic attacks on New York and (Purpose: To extend and modify the research ber on the commission’s report as it Washington. In fact, the only real prob- credit) did on prewar intelligence and anal- lem that the 9/11 Commission has faced At the end of subtitle A of title III add the ysis; namely, pick out only the parts is the lack of cooperation from the following: that it wants the public to see and bury White House. SEC. ll. EXTENSION AND MODIFICATION OF RE- the rest. After refusing to meet with the full SEARCH CREDIT. It is bitter irony that a report on membership of the 9/11 Commission, (a) EXTENSION.— the President and Vice President have (1) IN GENERAL.—Section 41(h)(1)(B) (relat- whether the administration covered up ing to termination) is amended by striking evidence that contradicted a rush to reluctantly proposed to meet only with ‘‘June 30, 2004’’ and inserting ‘‘December 31, war might itself be covered up under the chairman and vice chairman of the 2005’’. the terms of the President’s Executive panel. And for how long? Just 1 hour. (2) CONFORMING AMENDMENT.—Section order. The National Security Adviser has 45C(b)(1)(D) is amended by striking ‘‘June 30, So what is next? An independent flatly refused to participate in any 2004’’ and inserting ‘‘December 31, 2005’’. commission to investigate the Presi- public discussions with the Commis- (b) INCREASE IN RATES OF ALTERNATIVE IN- dent’s own commission? Is that so? I sion. The White House position on deal- CREMENTAL CREDIT.—Subparagraph (A) of wonder. Let us not make the mistake ing with the 9/11 Commission is so un- section 41(c)(4) (relating to election of alternative incremental credit) is amended— of ignoring the shortcomings of the reasonable that the administration is (1) by striking ‘‘2.65 percent’’ and inserting White House’s version of an intel- drawing criticism from both sides of ‘‘3 percent’’, ligence commission on Iraq, only to be that panel. There is even talk that (2) by striking ‘‘3.2 percent’’ and inserting haunted by those problems later. former Senator Bob Kerrey, who once ‘‘4 percent’’, and

VerDate jul 14 2003 01:41 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00055 Fmt 4624 Sfmt 0634 E:\CR\FM\G03MR6.043 S03PT1 S2074 CONGRESSIONAL RECORD — SENATE March 3, 2004 (3) by striking ‘‘3.75 percent’’ and inserting the current research credit expires in ment has joined in partnership with ‘‘5 percent’’. just a few weeks, on June 30, 2004. businesses, large and small, in those in- (c) ALTERNATIVE SIMPLIFIED CREDIT FOR I believe that if we fail to act to ex- dustries to ensure that the research QUALIFIED RESEARCH EXPENSES.— tend this credit, we surely will see the dollars were expended in the United (1) IN GENERAL.—Subsection (c) of section negative effects manifest in lower eco- States so that the jobs were created 41 (relating to base amount) is amended by redesignating paragraphs (5) and (6) as para- nomic growth, fewer jobs, fewer inno- here. We as a nation have reaped the graphs (6) and (7), respectively, and by in- vative products, and opportunities lost benefits of that research. serting after paragraph (4) the following new as research is taken from this country It seems clear to me that if we want paragraph: to other nations that offer more at- to keep our Nation and our economy ‘‘(5) ELECTION OF ALTERNATIVE SIMPLIFIED tractive incentives. strong and growing, it is vital that we CREDIT.— Our colleagues many times have ex- maintain and even enhance our posi- ‘‘(A) IN GENERAL.—At the election of the pressed their resounding support for tion as the world leader in techno- taxpayer, the credit determined under sub- the research credit and I hope they will logical advances. Our Nation simply section (a)(1) shall be equal to 12 percent of again. This amendment not only would must continue to invest in research so much of the qualified research expenses extend the credit for 18 months, until for the taxable year as exceeds 50 percent of and development, especially in the pri- the average qualified research expenses for December 31, 2005, but also would allow vate sector. And, the Federal Govern- the 3 taxable years preceding the taxable businesses to choose a new way to cal- ment must affirm its role as a partner year for which the credit is being deter- culate the credit so that more rein those private-sector endeavors. mined. search-intensive companies can lower I believe the best way to ensure that ‘‘(B) SPECIAL RULE IN CASE OF NO QUALIFIED their costs of U.S.-based research ac- private-sector investment in R&D con- RESEARCH EXPENSES IN ANY OF 3 PRECEDING tivities. tinues at the health rate needed to fuel TAXABLE YEARS.— The American taxpayer relies on us further productivity gains is to extend ‘‘(i) TAXPAYERS TO WHICH SUBPARAGRAPH to make the right policy choices for the current-law research credit and APPLIES.—The credit under this paragraph the long-term health of our economy. make that credit more widely avail- shall be determined under this subparagraph We have faced and are still facing if the taxpayer has no qualified research ex- able. Ideally, the credit should be made penses in any 1 of the 3 taxable years pre- major challenges both to our national permanent. ceding the taxable year for which the credit security and to our economic security. I have long advocated a permanent is being determined. Time and again we have looked to the credit and this body is overwhelmingly ‘‘(ii) CREDIT RATE.—The credit determined industries on the cutting edge of new on record for a permanent research under this subparagraph shall be equal to 6 and improved technologies to help us credit. During the Senate’s debate on percent of the qualified research expenses for meet those challenges. the 2001 tax cut bill, I offered an the taxable year. My home State of Utah is a good ex- amendment to provide for such a per- ‘‘(C) ELECTION.—An election under this ample of how State economies benefit manent credit that the Senate adopted. paragraph shall apply to the taxable year for from the research tax credit. Utah is Unfortunately, that provision was which made and all succeeding taxable years unless revoked with the consent of the Sec- home to a large number of firms that dropped in conference and we lost a retary. An election under this paragraph invest a high percentage of their rev- great opportunity. may not be made for any taxable year to enue on research and development. Given our budget deficit situation, I which an election under paragraph (4) ap- In Utah, 5 percent of the workers— do not believe it is possible politically plies.’’ 51,000 people—work in the research-in- to make the research credit permanent (2) COORDINATION WITH ELECTION OF ALTER- tensive high technology sector. That on this bill. Ironically, though, a per- NATIVE INCREMENTAL CREDIT.— includes over 10,000 people working just manent credit costs no more than one (A) IN GENERAL.—Section 41(c)(4)(B) (relat- to design computer systems, and over that is regularly extended. Because of ing to election) is amended by adding at the 6,000 producing medical equipment. the urgency and importance of this end the following: ‘‘An election under this And there is a lot of R&D taking place paragraph may not be made for any taxable matter, however, this amendment year to which an election under paragraph outside of Utah’s high-tech sector. seeks only a temporary extension. (5) applies.’’ Just to give one example, more than Let me point out a few key points for (B) TRANSITION RULE.—In the case of an 7,000 people work in Utah’s chemical our colleagues so they can understand election under section 41(c)(4) of the Internal industry, and workers in that industry the importance of the research credit. Revenue Code of 1986 which applies to the benefit from research and development These are according to the staff of the taxable year which includes the date of the taking place in Utah and throughout Joint Committee on Taxation. enactment of this Act, such election shall be the country. Aerospace and the phar- The primary category of expendi- treated as revoked with the consent of the maceutical industries are two more ex- tures that qualify for the research Secretary of the Treasury if the taxpayer amples of big Utah employer groups credit are wages paid to employees per- makes an election under section 41(c)(5) of forming research in the Unites States. such Code (as added by paragraph (1)) for that reap the benefits of R&D. such year. I want Utah companies to be able to In 2001, more than 15,000 taxpayers (f) EFFECTIVE DATES.— buy better manufacturing equipment, claimed the research tax credit—42 per- (1) SUBSECTION (a).—The amendments made more reliable electronics, and have ac- cent of these businesses were engaged by subsection (a) shall apply to amounts paid cess to more efficient quality control in manufacturing. or incurred after the date of the enactment techniques. The workers who use new However, of the total $6.5 billion in of this Act. inventions will get just as many bene- research credits claimed in 2001, 66 per- (2) SUBSECTIONS (b) AND (c).—The amend- fits as workers who create those new cent of those dollars were claimed by ments made by subsections (b) and (c) shall inventions. And the evidence clearly manufacturers. When you look at the apply to taxable years beginning after De- shows, that the research credit will in- size of the companies claiming the cember 31, 2004. crease innovation. credit in 2001, you see that 68 percent of Mr. HATCH. Mr. President, the In short, there are tens of thousands the firms claiming it had assets of $10 amendment I am offering today is an of employees working in Utah’s thou- million or less. important and appropriate one for any sands of technology based companies, The research credit translates into bill that has the word ‘‘jobs’’ in its with tens of thousands more working real jobs in the United States and, as title. It is a bill to extend and expand in other sectors that engage in R&D. the statistics show, it is our small- and a tax provision that is central to cre- Beyond that, practically all of Utah’s medium-size domestic manufacturers ating and retaining U.S. jobs—the re- hundreds of thousands of workers ben- that most benefit from the research search credit. I am joined in this effort efit from higher productivity coming credit. by Senators MURRAY, BAUCUS, CANT- from the innovations that researchers A great deal of the reason our econ- WELL, SMITH, BUNNING, and GRASSLEY. both inside and outside of Utah omy grew so rapidly in the second half This bipartisan amendment will help produce. Research and development is of the last decade was because of a to ensure that businesses continue to clearly the lifeblood of our economy strong surge in our productivity rate. increase research activities—and to throughout the Nation. This surge is continuing into the create new jobs—in the United States. Since 1981, when the research credit present and has been a marvel to most As many of our colleagues are aware, was first enacted, the Federal Govern- economists.

VerDate jul 14 2003 01:41 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00056 Fmt 4624 Sfmt 0634 E:\CR\FM\A03MR6.006 S03PT1 March 3, 2004 CONGRESSIONAL RECORD — SENATE S2075 This increase in productivity has al- now. I wish it were permanent. But starting in January of 2005; and finally, lowed the economy to continue to grow under the circumstances, this is the again starting in January of 2005, it at a rapid pace without the increase in best we can do. I have every confidence provides an alternative simplified cred- inflation that usually accompanies my fellow Members of the Senate will it to encourage even more research-in- such growth. Moreover, increases in vote for this amendment. tensive businesses to spend more on re- productivity growth are the key to fu- I yield the floor. search in the United States. ture economic security, particularly in The PRESIDING OFFICER. The Sen- The R&D tax credit is a great exam- light of the huge entitlement chal- ator from Washington. ple of how we make the Tax Code work lenges we face in the coming years. A Mrs. MURRAY. I rise today to join for American workers and American very large factor in that productivity with Senator HATCH to strengthen and families right here at home. growth is innovation, which of course, extend the research and development I have a letter from the R&D Tax requires R&D. tax credit. We are all concerned about Credit Coalition, and I ask unanimous As I mentioned, this amendment our slow economy. Every day we learn consent to have it printed in the would extend the current credit until of more American jobs that are being RECORD after my remarks. December 31, 2005, giving businesses shipped overseas. We worry about The PRESIDING OFFICER. Without that utilize this important incentive American companies losing out in the objection, it is so ordered. some certainty in the short-term so global marketplace and the impact (See exhibit No. 1) that they can hire the needed per- that has on our workers and on our Mrs. MURRAY. Mr. President, this sonnel to take research activities off economy. letter is actually signed by over 500 the drawing board now. Today, we are offering a way to fight companies and associations and urges Over the years, the research credit back and help our workers and compa- Congress to permanently extend the has proven to be a powerful incentive nies continue to lead the world in inno- R&D tax credit and make the modifica- for companies to increase their re- vation. Today, I am proud to offer an tions contained in S. 664. search and development activities. Un- amendment that will support high- I share with my colleagues a portion fortunately, it does not work perfectly. wage jobs for American workers at of the letter: Part of the reason is that this is an in- home and make our products more The technological innovations made pos- cremental credit, designed to reward competitive around the world. sible by the R&D Credit enable companies to extra research efforts, not just what a Anyone who wants to support good- bring more products and services to market, company might do anyway. From a paying American jobs, and anyone who increase employment, and raise the standard of living for all Americans. good tax policy point of view, I believe wants to help American companies R&D helps manufacturers and services this is the best way to provide an in- compete and win in the global market- companies with U.S. operations maintain a centive tax credit. place should vote for the Hatch-Murray competitive edge over lower-cost foreign However, it is difficult to craft an in- amendment. We all know research and competitors. cremental credit that works as it development is a critical part of any It allows a small, medium or large com- should in every case. While the regular business’s success, but investing in pany to reduce its financial risk in expen- credit works very well for many com- R&D is not cheap. Our foreign trade sive, labor-intensive R&D investments. Since the credit was created in 1981, invest- panies, it does not help some other competitors offer substantial tax and ments in technology and innovation have firms that still incur significant re- financial incentives to encourage spurred economic growth and contributed search expenditures. This is because American companies to make their re- greatly to our country’s high standard of liv- the credit’s base period of 1984 through search investments elsewhere. But we ing. Continued R&D spending is a necessary 1988 is growing more distant and some need those jobs in the United States element in our country’s ability to invest for firms’ business models have changed. and this amendment gives us a chance our future. There is no good policy reason why to support American workers in the This is not some abstract economic research should be more expensive for face of foreign competition. principle. It is a real incentive that some industries than it is for others. That is why the R&D tax credit is so creates jobs and helps workers in To partially solve this problem Con- important. It provides a real incentive America. I have seen it firsthand at gress enacted the alternative incre- for companies to increase their invest- companies throughout Washington mental research credit, AIRC, in 1996, ment in U.S.-based research and devel- State. This year, Microsoft plans to in- and now we propose a way to address opment. The credit helps stimulate invest $6.8 billion on R&D. Because this the rest of that problem. novation, wages, and exports which all tax credit is targeted almost exclu- In addition to increasing the AIRC contribute to a stronger economy and a sively at wages, the credit will trans- rates, this amendment allows tax- higher standard of living for American late into additional jobs in Washington payers to elect, in lieu of the regular workers. State and in the United States. That credit or the AIRC, an alternative sim- This is about investing in America. will mean jobs not just at Microsoft plified credit that is based on a rolling Because this tax credit is only avail- but at many other local companies. average of the prior 3 years’ qualified able for R&D performed in the United In fact, according to a February 25, research expenses. This provides com- States, it provides a discount on quali- 2003, article in the Seattle Times, one panies that are increasing their R&D fying expenditures, and it is a proven study found that every job at Microsoft with another way to take advantage of incentive for U.S. companies to in- supports 3.4 other jobs in the economy. the credit when the 20-year-old base pe- crease their R&D investment in the It also found that from 1990 to 2001 riod proves to be irrelevant. United States. Microsoft was responsible for more This is an important amendment. It Unfortunately, the existing research than a fourth, 28.3 percent, of King is important to our economy, both now and development tax credit will expire County’s growth. That is an example of and in the future. It is important to this June. Unless we take action, in how one company’s investment in R&D good, high paying jobs in the United just a few months we will be throwing is supporting good family wage jobs States. away one of the best incentives for throughout the region. We need to continue to be the world’s spurring investments at home. I have That is just one company. There are leader in innovation. We cannot afford always supported making the R&D tax many other companies engaged in R&D to allow other countries to lure away credit permanent, but because of budg- in Washington State and in the United the research that has always been done et constraints, we are not in a position States. Their investment in R&D will in the United States. We cannot afford to do that today. But we can do the help our workers and help our econ- to have the lapses in the research pipe- next best thing and extend and omy. line that would result if we do not take strengthen this incentive. I want to share some other figures care of extending this credit before it The Hatch-Murray amendment does that show the importance of R&D in- expires on June 30. I urge all of my col- three things: First, it extends the tra- vestment, especially in Washington leagues to support this amendment. It ditional credit for 18 months through State. is the right thing to do. We have done December 31, 2005; second, it increases In the year 2000, companies per- it before. We certainly should do it the alternative incremental credit rate formed almost $200 billion in R&D; $9.8

VerDate jul 14 2003 01:41 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00057 Fmt 4624 Sfmt 0634 E:\CR\FM\A03MR6.012 S03PT1 S2076 CONGRESSIONAL RECORD — SENATE March 3, 2004 billion of that research was performed and provide an alternative simplified credit country, people come up to me to talk in Washington State. calculation. about this overtime issue. They know Let me shed some light on types of Mr. HATCH. Mr. President, I suggest now what the administration is trying employers that are doing that work. the absence of a quorum. to do. They are upset. Working families Thirty-three percent of the research The PRESIDING OFFICER. The are angry and they want action. They done in Washington State was per- clerk will call the roll. want us to take action to stop the im- formed by manufacturers. We have The assistant journal clerk proceeded plementation of these new rules that seen a terrible loss of manufacturing to call the roll. will take away their protection so that jobs over the years, and this credit is Mr. HARKIN. Mr. President, I ask they can get time and a half when they one way to help them stem the tide. unanimous consent that the order for work overtime. Mr. President, 11.4 percent of the re- the quorum call be rescinded. Frankly, at this point the adminis- search done in Washington State was The PRESIDING OFFICER. Without tration has zero credibility on this done in the professional, scientific, and objection, it is so ordered. issue. The Department of Labor claims technical service industries. Mr. HARKIN. Mr. President, just a that it simply wants to give employers This is about moving our economy parliamentary inquiry: I understand we clear guidance as to who is eligible for forward. Technological innovations are on the FSC bill, and we are on an overtime pay. But ordinary Americans have accounted for more than one- amendment that has been laid down; is are not buying this happy talk. They third of our Nation’s economic growth that correct? know that the administration is pro- during the last decade. We know inno- The PRESIDING OFFICER. The Sen- posing a radical rewrite of the Nation’s vation is critical to sustained growth ator is correct. overtime rules. They know these new in the future. Mr. HARKIN. I thank the Chair. rules will strip millions of workers of Extending and improving the R&D America is stuck in a jobless recov- their right to fair compensation. tax credit is one of the most important ery and this jobless recovery is not an The people are right. They are cor- steps we can take right now to foster accident. It is in large measure the re- rect. Plain and simply, the new over- investment at home and job creation sult of failed economic policies, poli- time rules are a frontal attack on the throughout the country. cies that the administration stub- 40-hour workweek, pushed aggressively I urge my colleagues to give Amer- bornly clings to despite the loss of by the administration without a single ican workers a fair shot in the global nearly 3 million private sector jobs public hearing. Yes, that is correct. marketplace by voting for the Hatch- over the last 3 years. Last year these proposed rules came Murray amendment. This administration has embraced out, drastically changing our overtime Mr. President, I yield the floor. outsourcing. It is against extending un- pay protections, the rules that had employment insurance for the long- EXHIBIT 1 been implemented since 1938, without term unemployed. It is adamant one public hearing anywhere in the R&D CREDIT COALITION, Washington, DC, February 9, 2004. against raising the minimum wage. United States. Hon. BILL THOMAS, And it is determined—any day now—to These new proposed rules could effec- Chairman, Committee on Ways and Means, eliminate time-and-a-half overtime pay tively end overtime pay in dozens of House of Representatives, Washington, DC. for millions of American workers. occupations, including nursing, police Hon. CHARLES GRASSLEY, It is time for Congress to step in and officers, firefighters, clerical workers, Chairman, Committee on Finance, U.S. Senate, chart a new course. It is time for Wash- air traffic controllers, social workers, Washington, DC. ington to listen to ordinary working journalists. Indeed, the new criteria for Hon. CHARLES RANGEL, Americans. They are telling us loudly excluding employees from overtime are Ranking Member, Committee on Ways and Means, House of Representatives, Wash- and clearly that their No. 1 issue is deliberately vague and elastic so as to ington, DC. economic security. They are telling us stretch across vast swaths of the work- Hon. MAX BAUCUS, that they fear losing their jobs, health force. Ranking Member, Committee on Finance, U.S. care, and retirement. Listen to Mary Schlichte, a nurse in Senate, Washington, DC. Now they also fear losing their right, Cedar Rapids, IA: DEAR CHAIRMEN THOMAS AND GRASSLEY, which has been their right since 1938, Many nurses just like me work long hours AND RANKING MEMBERS RANGEL AND BAUCUS: to time-and-a-half compensation for in a field with very stressful working condi- We urge you to make the enactment of a per- work over 40 hours a week. They fear, tions and little compensation. . . . Our pa- manent research tax credit (R&D Credit) with good reason, that under the De- tients rely on us. Our families depend on us. with the modifications contained in com- We need overtime pay so we can stay in the panion bills H.R. 463/S. 664 an early legisla- partment of Labor’s new rules, they profession we love and still make our ends tive priority in 2004. will be obligated to work a 50-, 55-, 60- meet. As you know, the technological innova- hour week with zero additional com- Ms. Schlichte told me about her tions made possible by the R&D Credit en- pensation. For millions of working Cedar Rapids nurse colleagues who also able companies to bring more products and Americans and their families, this is rely on overtime pay. One nurse is services to market, increase employment, unacceptable. It is, indeed, the last and raise the standard of living for all Amer- married to a struggling farmer. She re- straw. lies on her overtime pay to cover their icans. R&D helps manufacturers and services Accordingly, at the appropriate time, companies with U.S. operations maintain a insurance premiums. They already fear competitive edge over lower-cost foreign I will offer an amendment to this bill losing their farm, and now they fear competitors. It allows a small, medium or that will stop the administration from losing their health care coverage also. large company to reduce its financial risk in implementing its proposed new rules to Dixie Harms is a longtime trainer of expensive, labor-intensive R&D investments. eliminate overtime pay protection for nurses in Des Moines. Ms. Harms told Since the credit was created in 1981, invest- millions of American workers. me: ments in technology and innovation have This amendment will be very famil- spurred economic growth and contributed If overtime is changed for hospital nurses, iar to my colleagues. Late last year a we will see a mass exodus of registered greatly to our country’s high standard of liv- similar amendment I offered passed the ing. Continued R&D spending is a necessary nurses from the hospital setting because element in our country’s ability to invest for Senate by a vote of 54 to 45. It was en- they will get fed up and refuse to volunteer our future. dorsed in the House by a vote of 226 to so many hours to what they really love The growth of our economy is inextricably 203. It also won the overwhelming sup- doing. tied to the ability to companies to make a port of the American public. Yet de- Two and a half years ago, after the sustained commitment to long-term re- spite this clear expression of the will of terrible September 11 attacks, many in search. Congress has consistently dem- Congress and of the public, my over- this body spoke eloquently about the onstrated support for the R&D credit. This time amendment was stripped from the heroism of our firefighters, police offi- year, in order to provide stability and to en- omnibus appropriations bill in con- cers, public safety workers. Ever since, sure that all companies performing intensive research in the United States are able to ference. America’s first responders have worked benefit from the credit, Congress should Today this overtime amendment is long hours to protect us from terrorists make the credit permanent, increase the Al- back by popular demand. It amazes me threats. But now the administration ternative Incremental Credit (AIRC) rates, that wherever I travel, anywhere in the apparently wants to deny them time-

VerDate jul 14 2003 01:41 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00058 Fmt 4624 Sfmt 0634 E:\CR\FM\G03MR6.048 S03PT1 March 3, 2004 CONGRESSIONAL RECORD — SENATE S2077 and-a-half compensation for those that is all well and good. But, in so However, the word ‘‘customarily’’ means longer hours. Simply put, this is doing, the administration has put out that the exemption is also available to em- wrong. technical advice to employers on how ployees in such professions who have sub- Since passage of the Fair Labor they can get around paying the lowest stantially the same knowledge level as the degreed employees, but who attained such Standards Act in 1938, overtime rights paid workers time and a half. knowledge through a combination of work and the 40-hour workweek have been For example, the department sug- experience, training in the Armed Forces, at- sacrosanct, respected by Presidents of gested in writing that an employer tending a technical school. both parties. But nothing, it seems, is might cut a worker’s hourly wage so Et cetera, et cetera. These words, sacred to this administration when it that any new overtime payments will ‘‘training in the Armed Forces’’ have comes to workers’ rights. not result in a net gain to the em- never been in the rules before. In other For 65 years, the 40-hour workweek ployee. It also recommends if the work- words, since 1938, we have gone through has allowed workers to spend time with er’s salary is close to the threshold, World War II, the Korean war, cold their families instead of toiling past you might want to raise their salary war, Vietnam war, the gulf war, Do- dark and on weekends. At a time when slightly to meet that threshold and minican Republic war, Grenada, and a the family dinner is becoming an then their protection for time and a whole bunch of other things. And our oxymoron, this standard is more im- half would end, and then they could be veterans—people who have served in portant than ever. exempt. the military, who went in there, who This is kind of disgraceful. This These radical revisions are the Army asks to ‘‘be all that you can would be like the IRS putting out ad- antiworker and antifamily. Given the be in the U.S. Army.’’ How many ads vice to would-be scofflaws, or people or fact we are stuck in a jobless recovery, do we see enticing young people to entities that might want to get around the timing of this attack on overtime come into the military because they paying their fair share of taxes, telling could not be worse. It is yet another in- can get training which will increase them how to avoid paying their taxes, stance of this administration’s eco- their ability to earn more money later saying here is how you can effectively nomic malpractice. on in life, after they get out of the cheat. What would we say if the IRS Bear in mind that time-and-a-half military—specialized training that will started putting out advice to employ- pay accounts for some 25 percent of the make them more desirable in the workers, saying here is how to get around total income of Americans who work force? overtime. With average U.S. incomes paying your fair share of taxes? Well, guess what. They are running That is what they are doing on over- declining, the proposed changes would those same ads to be all you can be, time. They are putting out advice to slash the paychecks of millions of learn a specialized training, and be employers, saying here is how you get American workers. more valuable in the workforce, and at around it. It is disgraceful. There is Moreover, the proposed new rules are the same time the administration is one part of this new proposed rule that all but guaranteed to hurt job creation promulgating a rule saying: Wait a I find probably more disgraceful than in the United States. This is basic minute, if you get training in the just about anything. I know that when logic. If employers can more easily Armed Forces, guess what. You are I say this, people are going to say: deny overtime pay, they will push their now covered under this new rule that HARKIN, this cannot be right, this can- current employees to work longer says you can be exempted from the not happen. hours without compensation. The more I dig into the nuts and overtime pay protection because now With 9 million Americans currently bolts and fine print of this proposed you fall into the same kind of category out of work, these proposed regulations rule for changing overtime, the more as lawyers and architects and people will give employers yet another dis- astounded I am at what we are finding, who went to school for a long time to incentive to hire new workers. Why in terms of who is now being exempted, receive specialized training. hire a new worker if you can get your or trying to be exempted from over- Again, don’t take my word for it. present workers to work overtime and time pay. Read it. ‘‘Training in the Armed not have to pay them time and a half? Would you believe it if I told you Forces’’—those five words have never That would be cheaper than hiring a that the administration, for the first been in the rules before, never. We said new worker. time since 1938, is changing the rules to before if you get training in the Armed It is bad enough to deny 8 million make it harder for veterans to get Forces, you can now be exempt from workers their overtime rights, but overtime pay than their counterparts overtime pay. That is what is coming what is really striking about these pro- who did not serve in the military? Let down the pike. That is what is in these posed rules is the mean-spiritedness of me repeat that. Mr. President, gen- rules. That is why so many of us feel so the language included in these pro- erally, people would not believe me if I strongly that this proposed overtime posed rules from the Department of told them this administration, in their rule should not be adopted. Labor. proposed rules, is making it harder for According to the proposed rules, em- For example, the department is offer- a veteran to qualify for overtime than ployers can consider specialized training employers what amounts to kind of someone who didn’t serve in the mili- ing and knowledge gained in the mili- a cheat sheet—helpful hints on how to tary. People say: HARKIN, that cannot tary as equivalent to what is learned in avoid paying overtime to the lowest be right. professional schools. This will allow paid workers, the same workers who Read the proposed regulation. I have employers to reclassify veterans as in- are supposedly helped by the new rules. the old one. Here is the old rule that eligible for overtime. I started looking Let me be clear about this. There is covers overtime pay. There is a section at some of the comments made regard- a part of the proposed changes that we called ‘‘Learned Professions,’’ and it is ing this. I wondered where it is coming all support, and that is raising the talking about who basically would be from. Here are comments on behalf of minimum pay level by which a worker not barred from exemption. It talks the Boeing company: would not be exempt from any over- about members of the professions, such Boeing observes that many of its most time rules. For example, right now, if as graduates of law school and different skilled technical workers received a signifi- you make below about $7,000 a year, no things like that. It says here the word cant portion of their knowledge and training matter what your job is, you cannot be ‘‘customarily’’ implies that in the vast outside the university classroom, typically exempted from overtime, from over- majority of cases a specific academic in a branch of the military service, where time rules—even if you are a profes- through a combination of classroom training training is a prerequisite for entrance and field experience they become ‘‘learned sional or if you fall into one of the ex- into the profession. It makes the ex- experts’’ on very sophisticated aerospace empt categories. If you make below emption available to the lawyer, the products or services. Oftentimes, such ex- about $6,900 or $7,000 a year, you have chemist, and things like that. But it perts are actually more knowledgeable than to be paid time and a half overtime, no does not in any way mention veterans colleagues with advanced degrees— Mas- matter what your job is. The adminis- in the old rule. There is no mention of ter’s degrees and Ph.D.s. tration is proposing to raise that to veterans. and are viewed by the customers as the com- about $21,900, close to $22,000 a year. It Here is the new rule. I have it blown pany’s experts on the product. Boeing thus has not been raised for a long time, so up on the chart. It says: supports the Department’s—

VerDate jul 14 2003 01:41 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00059 Fmt 4624 Sfmt 0634 E:\CR\FM\G03MR6.050 S03PT1 S2078 CONGRESSIONAL RECORD — SENATE March 3, 2004 That is the Department of Labor— come back home from Iraq or wherever port signed by the President explaining focus on the knowledge used by the employee to resume their civilian jobs, they are why we should welcome the in performing her job, rather than the source going to find that if they received spe- ‘‘offshoring’’ of U.S. jobs. The Presi- of the knowledge or skill. cialized training in the military, they dent’s top economic adviser assured us What Boeing is saying is we have a have been stripped of their right to that the outsourcing of high-end, lot of people who work for us who got time-and-a-half overtime pay. white-collar jobs to Asia is ‘‘a plus for their training in the military. They It is punishing veterans precisely be- the economy in the long run.’’ have become skilled in their profes- cause they were dedicated soldiers who The President’s economic report sion. But because they did not go to pursued specialized instruction and praises the virtues of a ‘‘level playing graduate school, because they got their training while in the military. The De- field for goods and services,’’ arguing training in the military, we still have partment of Labor is preparing quite a that when a good or service is produced to pay these people overtime. We have welcome home present for many of the more cheaply abroad, it makes more to pay them time and a half, and we do guardsmen and reservists returning sense to import it than to make or pro- not want to pay them time and a half. from Iraq. It might read this way: vide it domestically. That is from the We want to treat them just like Ph.D.s Dear Returning Veteran: While you were President’s report. and all those other people. So, there- away we reclassified your job so that you no We have a very serious question to fore, they support the proposed rule longer qualify for time-and-a-half overtime ask ourselves: Do we really want Amer- pay. Thank you for serving our country. change that would allow them, Boeing, ican workers competing on a ‘‘level to reclassify these former veterans as There is another group I talked about playing field,’’ head to head with fac- being exempt from overtime pay pro- last year—and it is still true this tory workers in China working for 20 tections. year—who are disproportionately cents an hour, with software engineers This is a letter from Thomas Corey, harmed by the proposed new overtime in India working for $10,000 a year, the national president of the Vietnam rules—women. going head to head with countries that The fact is, women tend to dominate Veterans of America: employ abusive child labor to make in retail services and sales positions products? Therefore, we would like to make you which would be particularly affected by aware that the proposed modification of the In reality, is this not a race to the rules would give employers the ability to the new rules. Married women in Amer- bottom, with nations competing to prohibit veterans from receiving overtime ica increased their working hours by slash salaries and benefits in order to pay based on the training they received in nearly 40 percent from 1979 to 2000. As win more jobs? Outsourcing is not the the military. . . . The proposed rule changes women have increased their time in the only thing hurting job creation and will make these veterans and their families paid labor market, their contribution suppressing wages. These new overtime unfairly economically vulnerable in com- to family income has also risen. These parison with their non-veteran peers. rules will have the same effect. Eight contributions are especially important million workers will be stripped of Let me repeat that: to lower and middle-income families— their right and their protection to The proposed rule changes will make these important for housing, health care, overtime pay. veterans and their families unfairly eco- heating bills and, of course, for sending nomically vulnerable in comparison with Of course, the employers can deny kids to school. overtime pay. As I said, they simply their non-veteran peers. We hope you will Yet now the administration’s new push their current employees to work agree that the men and women who have rules would take away overtime pro- longer hours without compensation. served our Nation so well in military service tections from millions of American should not be penalized for having served. This is a powerful disincentive to hire women. Women in the paid workforce new workers. So as with outsourcing, That is Thomas Corey, national would be forced to work longer hours the idea of sending so many of these president, Vietnam Veterans of Amer- for less pay and, of course, this means jobs overseas, where they are paying 20 ica. I think that is the crux of it. You more time away from families, more could have two people, both skilled in a childcare expenses with no additional cents an hour, no health benefits, no certain area, let’s say aerospace or compensation. Not surprising, promi- retirement benefits, no Social Secu- whatever it might be. One got his nent women’s groups are adamantly rity, no environmental protections, training in the military and one got his opposed to the new overtime rules. killing overtime pay is the same thing. training in some other way outside the The American Association of Univer- Just keep in mind if an employer can military. So the person outside the sity Women, the National Organization work an employee more than 40 hours military would be covered under over- of Women, the National Partnership and not pay time and a half, we can see time. The person who served in the for Women and Families, the YWCA, that an employer would then say, well, military would not be covered by over- and Nine to Five, and the National As- why should I hire new workers? I will time. sociation of Working Women are all just work my present workers longer. I wish someone would make some strongly supporting my amendment to If I can get 4 or 5 more hours a week sense out of that. It is just a slap in the stop the administration from imple- out of each employee and not pay time face to the men and women who served menting these new overtime rules. and a half overtime, that is better than in the military and were told: Be all There is a broader context to this hiring somebody else. you can be, get specialized training in discussion of overtime. There is a big- That is exactly what this proposed the military, but what they are not ger picture. As I said, the No. 1 issue overtime rule is all about. It is terrible telling them is once you do that, they for Americans today is economic secu- for job creation. I do not know why are going to take away your right to rity, and with good reason, because it this administration does not see that. overtime pay once you get out of the is abundantly clear that America is Yet in the face of facts, in the face of military. stuck in a jobless recovery. all of the reports we have gotten, in This is outrageous—outrageous not Since this administration took of- the face of what Americans are saying, just to our veterans but to most Amer- fice, nearly 3 million private sector which is that they want their overtime icans. Veterans organizations are deep- jobs have been lost, including one in protected, the administration is surg- ly disturbed by this, not just the Viet- every seven jobs in manufacturing. ing ahead. They are going to strip peo- nam veterans but all veterans organi- George W. Bush has presided over the ple in this country of their right to zations. largest job loss of any President since overtime pay. Picture this: The Commander in Herbert Hoover. Yet the President re- Since we have had no public hearings Chief has mobilized thousand of reserv- mains wedded to policies that are mak- on it, we are not certain why the ad- ists and National Guard troops from ing the problem worse. He remains ministration is doing this. Why are Iowa and from across America. They wedded to policies that are destroying they moving ahead with the most pro- left their regular jobs as police officers, jobs, driving down wages, and threat- found change in our overtime laws firefighters, nurses, clerical workers, ening the economic security of the since 1938? Now, I use my words care- on and on, and are deployed in Iraq for American people. fully. I said the ‘‘most profound a year or more. But if the administra- A couple of weeks ago, the White change.’’ There have been changes in tion has its way, when these troops House issued its annual economic re- overtime rules and laws since 1938,

VerDate jul 14 2003 01:41 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00060 Fmt 4624 Sfmt 0634 E:\CR\FM\G03MR6.053 S03PT1 March 3, 2004 CONGRESSIONAL RECORD — SENATE S2079 since the Fair Labor Standards Act Moreover, such a recovery, if it even The Senator from New Mexico [Mr. BINGA- was passed, of course. Many occupa- could take place, is not desirable. As MAN] proposes an amendment numbered 2651 tions that existed then no longer exist, one individual said, my time with my to amendment No. 2647. and they were taken off. I understand. family in the evenings and on the Mr. BINGAMAN. I ask unanimous New occupations came in like com- weekends is premium time. Yes, I work consent the reading of the amendment puter software writers, computer engi- during the week to make a living, but be dispensed with. neers, which were not around in the the time with my family is premium The PRESIDING OFFICER. Without late 1930s, 1940s, 1950s, or 1960s. So there time. If I am going to be asked to give objection, it is so ordered. have been changes. up my premium time with my family, The amendment is as follows: Every time we have made a change in do I not deserve to have premium pay, (Purpose: To expand the research credit) the overtime rules, we have done it time and a half, something out of the At the end of the amendment add the fol- through open hearings, through open ordinary? lowing: ll collaboration between the administra- As this person said to me, I get my SEC. . EXPANSION OF RESEARCH CREDIT. wages, which are ordinary, for my ordi- (a) CREDIT FOR EXPENSES ATTRIBUTABLE TO tion and Congress and labor, all work- CERTAIN COLLABORATIVE RESEARCH CON- nary working hours that I have agreed ing together to do what is right for our SORTIA.— people and our country. to work, but I should not get ordinary (1) IN GENERAL.—Section 41(a) (relating to So, yes, we have made a number of pay for my premium time, which is the credit for increasing research activities) is changes since 1938, but as far as my re- time I spend with my family. That is amended by striking ‘‘and’’ at the end of search shows, this is the first time why I say a recovery that means that paragraph (1), by striking the period at the since 1938 that an administration has our American workers are going to end of paragraph (2) and inserting ‘‘, and’’, and by adding at the end the following new made this profound a change, and it is work longer, spend more time away from their families, and not get paid paragraph: the first time since 1938 that the ad- ‘‘(3) 20 percent of the amounts paid or in- ministration has proposed these any more for it is not a desirable recov- curred by the taxpayer in carrying on any changes without having one public ery. trade or business of the taxpayer during the hearing. It is the first time since 1938 A true recovery must include all taxable year (including as contributions) to that any administration, Republican or working Americans. It can only be a research consortium.’’. Democrat, has proposed changes such built on a foundation of good jobs with (2) RESEARCH CONSORTIUM DEFINED.—Sec- good wages in America, not overseas. It tion 41(f) (relating to special rules) is amend- as this in the overtime rules without can only be built on a foundation that ed by adding at the end the following new consultation and working closely with includes a minimum wage that is a liv- paragraph: Congress to develop a consensus as to ing wage, not a poverty wage. It can ‘‘(6) RESEARCH CONSORTIUM.— what has to be done. ‘‘(A) IN GENERAL.—The term ‘research con- I am left with, perhaps, some conclu- only be built on a foundation that pre- sortium’ means any organization— serves American workers’ rights to sions: The administration really does ‘‘(i) which is— time and a half overtime pay. not want to create a lot of new jobs; ‘‘(I) described in section 501(c)(3) and is ex- Shortly, I will be offering this empt from tax under section 501(a) and is or- that by driving down labor costs, per- amendment. Obviously, this FSC bill is ganized and operated primarily to conduct haps we can increase corporate profit- touted as a JOBS bill. That is all well energy research, or ability. It allows corporations to ex- and good. Let us have an open and good ‘‘(II) organized and operated primarily to port cheap labor overseas with discussion about that. We have some conduct research in the public interest (within the meaning of section 501(c)(3)), outsourcing. The administration puts amendments to offer that a number of pressure on U.S. workers to accept ‘‘(ii) which is not a private foundation, us believe will help increase jobs in ‘‘(iii) to which at least 5 unrelated persons lower wages, less generous benefits, this country. The one I will be offering longer working hours. This is true of paid or incurred during the calendar year in will be protecting the overtime rights which the taxable year of the organization outsourcing, and it is true of elimi- of American workers. So I am hopeful begins amounts (including as contributions) nating overtime. we can move on to that. to such organization for research, and Right now, American workers work On this issue, the administration ig- ‘‘(iv) to which no single person paid or in- longer than any workers in any indus- nores the pleas of the public. It has curred (including as contributions) during trialized country in the world. We now brushed aside the clear wishes of both such calendar year an amount equal to more than 50 percent of the total amounts re- work longer than workers in Japan, Houses of Congress. Last year, we Germany, Great Britain, and our ceived by such organization during such cal- passed the amendment in the Senate to endar year for research. neighbor to the north, Canada. Guess disallow the Bush regulations on tak- ‘‘(B) TREATMENT OF PERSONS.—All persons what we are being told. Guess what our ing away overtime pay protections. treated as a single employer under sub- workers are being told by this adminis- The House emphatically approved of section (a) or (b) of section 52 shall be treat- tration. That they are going to work that. Yet it was stripped out in con- ed as related persons for purposes of subpara- even longer, and they will not have any ference. Again, this is not acceptable. I graph (A)(iii) and as a single person for pur- right to overtime pay. hope we can have a strong bipartisan poses of subparagraph (A)(iv).’’. (3) CONFORMING AMENDMENT.—Section There is more. The President refuses vote in support of my amendment that to extend benefits for the long-time un- 41(b)(3)(C) is amended by inserting ‘‘(other would disallow taking away overtime than a research consortium)’’ after ‘‘organi- employed, and opposes any increase in pay protection for American workers. zation’’. the minimum wage. It has been frozen We can save the administration from (b) REPEAL OF LIMITATION ON CONTRACT RE- at $5.15 an hour for years. This is not a making a terrible mistake. We can pro- SEARCH EXPENSES PAID TO SMALL BUSI- living wage; it is a poverty wage. It tect American workers’ time-honored NESSES, UNIVERSITIES, AND FEDERAL LABORA- TORIES.—Section 41(b)(3) (relating to con- keeps downward pressure on wages all right to overtime compensation, and across the spectrum. tract research expenses) is amended by add- we can support an economic recovery ing at the end the following new subpara- All this means, again, is fewer jobs that includes all Americans, a recovery graph: for U.S. citizens. It means downward that respects and preserves the Amer- ‘‘(D) AMOUNTS PAID TO ELIGIBLE SMALL pressure on wages for all of our work- ican way. BUSINESSES, UNIVERSITIES, AND FEDERAL LAB- ers. I yield the floor. ORATORIES.— Something is missing. What is miss- The PRESIDING OFFICER (Mr. ‘‘(i) IN GENERAL.—In the case of amounts ing is ordinary, hard-working Ameri- SUNUNU). The Senator from New Mex- paid by the taxpayer to— cans are not participating in this so- ico. ‘‘(I) an eligible small business, ‘‘(II) an institution of higher education (as called economic recovery. More and AMENDMENT NO. 2651 TO AMENDMENT NO. 2647 more Americans live in fear of losing defined in section 3304(f)), or Mr. BINGAMAN. Mr. President, I ‘‘(III) an organization which is a Federal their jobs, their health benefits, and send an amendment to the desk and laboratory, losing their retirement. The truth is, ask for its immediate consideration. for qualified research which is energy re- we cannot build a sustainable recovery The PRESIDING OFFICER. The search, subparagraph (A) shall be applied by by exporting jobs, by driving down clerk will report. substituting ‘100 percent’ for ‘65 percent’. wages, and by making Americans work The assistant legislative clerk read ‘‘(ii) ELIGIBLE SMALL BUSINESS.—For pur- longer hours without compensation. as follows: poses of this subparagraph, the term ‘eligible

VerDate jul 14 2003 01:41 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00061 Fmt 4624 Sfmt 0634 E:\CR\FM\G03MR6.055 S03PT1 S2080 CONGRESSIONAL RECORD — SENATE March 3, 2004 small business’ means a small business with have sent to the desk which Senator Mr. REID. No objection. respect to which the taxpayer does not own DOMENICI and I have been working on The PRESIDING OFFICER. Without (within the meaning of section 318) 50 per- would correct this and would encour- objection, it is so ordered. cent or more of— age this type of private research Mr. ENSIGN. Mr. President, I under- ‘‘(I) in the case of a corporation, the out- stand the Senator from Tennessee is standing stock of the corporation (either by teaming. vote or value), and The second part of the amendment going to seek recognition. I ask unani- ‘‘(II) in the case of a small business which would be to get rid of a restriction that mous consent that following the Sen- is not a corporation, the capital and profits allows companies to only consider 65 ator from Tennessee, I be recognized to interests of the small business. percent of their research expenses for speak on the R&D amendment. ‘‘(iii) SMALL BUSINESS.—For purposes of purposes of calculating their tax credit Mr. REID. Reserving the right to ob- this subparagraph— when the funds are paid to an outside ject, we have no problem with that ex- ‘‘(I) IN GENERAL.—The term ‘small busi- party such as a Federal laboratory or cept we now have an hour and 10 min- ness’ means, with respect to any calendar university or a small business. utes. We don’t want those two Senators year, any person if the annual average num- to use the entire 70 minutes so we ber of employees employed by such person Again, as with consortiums, this pro- during either of the 2 preceding calendar vision makes no sense as it exists in should have some idea how long they years was 500 or fewer. For purposes of the current law. In many if not most cases are going to speak. preceding sentence, a preceding calendar it is far more efficient and economical Mr. ENSIGN. For myself, I would year may be taken into account only if the for a company to have their research only need 5 minutes. person was in existence throughout the year. done at a facility that is already Senator ALEXANDER? ‘‘(II) STARTUPS, CONTROLLED GROUPS, AND equipped to do this type of experimen- Mr. REID. I think it would be appro- PREDECESSORS.—Rules similar to the rules of tation and development. We ought to priate if my friends agree the time be subparagraphs (B) and (D) of section 220(c)(4) be encouraging businesses to utilize equally divided between now and 3:30 shall apply for purposes of this clause. between the proponents and opponents ‘‘(iv) FEDERAL LABORATORY.—For purposes these resources instead of discouraging that use. For this reason, the amend- of the measure. of this subparagraph, the term ‘Federal lab- The PRESIDING OFFICER. Under oratory’ has the meaning given such term by ment would allow a company to con- section 4(6) of the Stevenson-Wydler Tech- sider 100 percent of all of their expenses the order, the time is equally divided. Mr. ENSIGN. I ask to be recognized nology Innovation Act of 1980 (15 U.S.C. when contracting with a lab or univer- after Senator ALEXANDER. 3703(6)), as in effect on the date of the enact- sity or small business to handle their The PRESIDING OFFICER. Without ment of the Energy Tax Incentives Act of research projects. 2003.’’. The amendment would come into ef- objection, it is so ordered. Who yields (c) EFFECTIVE DATE.—The amendments fect at the end of the year. It would time? made by this section shall apply to amounts Mr. ENSIGN. I yield to Senator AL- continue for as long as the R&D provi- paid or incurred after December 31, 2004. EXANDER. Mr. BINGAMAN. Mr. President, I sions are in effect which, under the Mr. ALEXANDER. Mr. President, my thank my colleagues, Senator HATCH Hatch-Murray amendment which is intention was to ask unanimous con- and Senator MURRAY, for their leader- what this proposal would amend, is the sent to speak as in morning business ship on extending and strengthening end of 2005. for 7 or 8 minutes, which may not be I look forward to working with my the research and development, R&D appropriate at this moment. tax credit. The ability of our Nation to colleagues, Senators HATCH and MUR- The PRESIDING OFFICER. Under remain a world leader in technology RAY, on their R&D amendment. I very controlled time that is the Senator’s and innovation is directly related to much appreciate their support for right. The Senator is recognized. the investment we make in research these small changes Senator DOMENICI Mr. ALEXANDER. I ask unanimous and development. The R&D tax credit and I would like to see made in this consent to speak as in morning busi- is an important component of this bill. ness for up to 7 minutes. strategy as it creates an incentive for I yield the floor. The PRESIDING OFFICER. Without The PRESIDING OFFICER. The Sen- private companies to invest in research objection, it is so ordered. ator from Nevada. they might not otherwise have in- (The remarks of Mr. ALEXANDER are Mr. REID. Mr. President, I suggest vested in but for that tax credit. This printed in today’s RECORD under the absence of a quorum. is an efficient way to accomplish a goal The PRESIDING OFFICER. The ‘‘Morning Business.’’) in our society that is increasing fund- Mr. ALEXANDER. I thank the Chair. clerk will call the roll. ing for research. The assistant legislative clerk pro- I yield the floor. Senator DOMENICI and I have been The PRESIDING OFFICER. The Sen- ceeded to call the roll. working here for the last several years Mr. ALEXANDER. Mr. President, I ator from Nevada is recognized. to make some changes in the R&D tax ask unanimous consent the order for Mr. ENSIGN. Mr. President, I want credit law. The amendment I have sent the quorum call be rescinded. to speak on the R&D tax credit that is to the desk incorporates those changes The PRESIDING OFFICER. Is there in this bill—the proposal to extend we have worked on. The amendment is objection? that tax credit which is scheduled to based on legislation we filed in each of Mr. REID. I object. expire. I want to talk about some of the last several Congresses, most re- The PRESIDING OFFICER. Objec- the benefits. cently S. 515 in the 107th Congress. tion is heard. This is a tax credit that has been This amendment addresses two weak- Mr. ENSIGN. Mr. President, I ask supported by both sides of the aisle and nesses in the current R&D tax credit. unanimous consent the order for the by both bodies. There are many bene- The first part of the amendment pro- quorum call be rescinded. fits to keeping this R&D tax credit as vides participants in a research consor- The PRESIDING OFFICER. Without part of our Tax Code; first of all, the tium with a flat 20-percent research objection, it is so ordered. industries that benefit from this tax credit. A consortium is defined as a Mr. ENSIGN. I ask unanimous con- credit. I am the chairman of the Re- group of five or more unrelated compa- sent the time until 3:30 be equally di- publican High-Tech Task Force in the nies which are working together on a vided in the usual form and that if the Senate, and I hear about this issue all specific type of mutually beneficial re- Bingaman amendment has not been the time from very important parts of search. Under current law, these com- previously disposed of, the Senate our economy and how important it is panies are unable to take advantage of would then vote in relation to the to the creation of jobs. the full R&D tax credit. That does not Bingaman second-degree, to be fol- The industries that benefit from this make good sense. We should be encour- lowed immediately by a vote in rela- include—it is not limited to the aero- aging companies to work together to tion to the Hatch first-degree, as space industry—the agriculture indus- share the costs of research instead of amended if amended, provided further try, biotechnology, chemical industry, requiring that each of them bear the no additional second degrees be in electronic, energy, information tech- full capital expenditure to which they order prior to the vote. nology, manufacturing, medical tech- would be entitled in order to get the re- The PRESIDING OFFICER. Is there nology, pharmaceuticals, software and search tax credit. The amendment I objection? telecommunications, as well as others.

VerDate jul 14 2003 01:41 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00062 Fmt 4624 Sfmt 0634 E:\CR\FM\A03MR6.015 S03PT1 March 3, 2004 CONGRESSIONAL RECORD — SENATE S2081 It is not just big business that bene- ment, Senator HATCH, and I have intro- other sectors. Most of the R&D effect is fits from this R&D tax credit; it is also duced many times over many years. I manufacturing, and manufacturing has many small businesses. The companies have been a cosponsor of this amend- a very high multiplier effect, which is that perform significant amounts of ment for years. Senator HATCH has all the more reason to get this passed. R&D perform that research and devel- been a cosponsor of this amendment for Workers employed in manufacturing opment in the United States. They pay years. It is critically important that plants with more technologies also very good wages to the people who do we finally get a major research and de- earn 63 percent more than workers in the research and development. velopment tax stimulus enacted into plants using lower level technologies. This tax credit should be made per- law. This provision has been in law for It is a question not only of the number manent in the long run. That is my various years, but it has always been of jobs but the wages the jobs pay, the goal—to someday make this tax credit extended—on and off again. It has been amount of income those workers will permanent. We keep extending it. I a yo-yo tax provision—a yo-yo incen- receive. think it has been extended 10 different tive. Sometimes companies get it, I can go on at great length as to why times over the years. It was allowed to sometimes they don’t. Sometimes we this is so important. I am not going to actually lapse once, but it has never enact it—all the way back to the expi- expand anymore on it because I think been made permanent. I believe it ration previous times—sometimes we Senators realize how important it is. I should be made permanent. Unfortu- don’t. It is very irresponsible, in my expect this to pass by a very large mar- nately, we can’t do that in the context judgment, for this Congress not to give gin, and well it should. of what we are doing today. But we permanent research and development Once we pass this amendment, it is should at least make sure that R&D tax credit to American companies. incumbent upon us to start looking for tax credit is extended for the 18 months Other countries do. The Government of other ways we can help give stimulus the bill calls for. Canada, for example, has a R&D tax and help American companies keep Why is it important? New vaccines, credit which is much more generous jobs in America. I am certainly going faster Internet, and other communica- than the one we give to American com- to be a part of this. It is something we tions capabilities, safer transportation, panies. desperately have to do. enhanced energy-efficient appliances, There are other countries that also What is the remaining time? higher quality entertainment, better have stimulus incentives to research The PRESIDING OFFICER. The ma- homes, improved national security. and development—more generous than jority has 27 minutes remaining and The list of societal benefits as a result we have in our country. the minority has 30 minutes remaining. of R&D is endless. I urge adoption of this amendment. Mr. BAUCUS. I yield the floor. R&D is the lifeblood of the U.S. econ- I also agree with my good friend from The PRESIDING OFFICER. The Sen- omy. We really should encourage not Nevada. This provision should be per- ator from Wyoming. only adoption of the extension but also manently extended. It makes no sense Mr. ENZI. I will talk about an eventually making permanent this tax not to be permanently extended. It amendment that has not been laid credit. should be a permanent fixture in the down. There were comments about The revenue analysis, according to law. overtime a while ago, and I want peo- the economic benefit of the R&D tax I say that because the stakes are get- ple to know the rest of the story. credit prepared by Coopers & Lybrand ting so high. We are losing jobs to over- The bill we are on has the catchy in 1998 says: seas companies in lots of ways. name of FSC/ETI. What we are trying In the long run, $1.75 of additional tax rev- One way to create jobs in America is to do is comply with some World Trade enue would be generated for each dollar the to have a very aggressive research and Organization requirements that allow Federal Government spends on the credit, development tax credit for research penalties to be put on our exports over- creating a win-win situation for both the and development in America. It is clear seas and agricultural products are a big taxpayers and the government. that jobs tend to be where the research one. They always get targeted when I will conclude with this: We should is. The more research we have in Amer- this sort of thing happens. We need to do the right thing for the economy and ica, the more likely it is we will have correct our law so we are not being pe- allow companies some level of predict- more jobs in America. It will also help nalized, so we do not eliminate busi- ability. We keep telling them we are to maintain jobs. ness that the United States can have. going to extend it, we are going to ex- We do not want jobs to go overseas. Penalties went into effect on March 1 tend it. But, frankly, it is hard when This will help us maintain jobs in and go up 1 percent per month on U.S. research and development is usually America. We should not erect barriers businesses if we do not change the law. planned long term. It is hard to do that to our companies going overseas. We We are trying to change the law. It when we keep coming up to the dead- should not stick our heads in the sand. needs to be done quickly. It should be line and then finally extending the tax That does not work. We are facing an done pretty cleanly. It obviously is not credit. immense challenge, and one good way going to be. I encourage us to do what we are is to pass this amendment. We keep talking about jobs, but our doing today—extending it for 18 In addition to passing the underlying actions do not match our words. I point months but also be looking for ways to bill, this JOBS bill before the Senate is out one very important jobs program make this R&D tax credit permanent. not going to be the silver bullet many we have that affects Americans who I yield the floor. would like but it will help signifi- want to improve their skills and get a Mr. BAUCUS. Mr. President, I yield cantly. better job. We have the Workforce In- myself about 10 minutes. With respect to the R&D credit, 62 vestment Act, and that has the poten- The PRESIDING OFFICER. The Sen- percent of total industry research and tial each and every year to retrain ator is recognized for 10 minutes. development is performed in manufac- 900,000 people so they have the skills Mr. BAUCUS. Mr. President, I ask turing industries. That includes com- and talents to handle the jobs avail- my friend from Wyoming how much puter and electronic products, trans- able, the well-paying jobs available in time he has. It is my understanding portation, equipment, and chemicals. this country that we are having to fill that there was an agreement before I It is disproportionately helpful to man- from overseas. came to the floor. ufacturing jobs. We clearly want more Do you know what has happened to The PRESIDING OFFICER. Under manufacturing jobs in this country. that bill? Let me give Members a brief the previous order, the time until 3:30 Manufacturing jobs are important to history. We passed it out of the Health, is equally divided between the major- the entire economy. Education, Labor, and Pensions Com- ity and minority leader. The multiplier effect in manufac- mittee unanimously. How often do you Mr. BAUCUS. Mr. President, I will be turing jobs is extremely high. For think that happens in that committee? very brief. every 16 million manufacturing jobs in It can be a very contentious com- I am very happy to be supporting the this country, another 9 million are cre- mittee. It passed out of the committee pending amendment. This is an amend- ated in retail, wholesale, finance, and unanimously. What happened in the ment that the author of the amend- other sectors. That is not as true in Senate? We passed it in the Senate by

VerDate jul 14 2003 01:41 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00063 Fmt 4624 Sfmt 0634 E:\CR\FM\G03MR6.060 S03PT1 S2082 CONGRESSIONAL RECORD — SENATE March 3, 2004 unanimous consent. That means not There is no question that the work- They need to know. They should not one person in the Senate wanted to place has dramatically changed during have a bunch of different criteria that amend the bill; not one person in the the last half century. The regulations they need a special accountant or at- Senate wanted to vote against the bill. governing white-collar exemptions re- torney to interpret for them so they It was unanimous. That is as bipartisan main substantially the same as they can tell whether they are violating the as we can possibly get. were 50 years ago. The existing rules law. Where is that bill now? We cannot take us back to the time when workers This rule, the one proposed—pro- appoint a conference committee. That held titles such as straw boss, key- posed; it is not finalized yet—by the is the committee made up of Repub- punch operator, legman, and other oc- Department of Labor will make it easi- licans and Democrats who would meet cupations that no longer exist today. er for businesses to know when they with Republicans and Democrats from Our economy has evolved. New occu- are complying. the House to work out differences be- pations have emerged that were not By undermining the administration’s tween what they passed and what we even contemplated when the regula- efforts to better protect lower income passed. We cannot have a conference tions were written. A 1999 study by the workers, who will this amendment pro- committee to do that. General Accounting Office rec- tect? The supporters of the amend- That is 900,000 jobs in this country ommended that the Department of ment—the amendment that is going to that are being stalled out; 900,000 op- Labor: Comprehensively review current be laid down, I guess—claim that an es- portunities we are not going to give to regulations and restructure white-col- timated 8 million workers will become Americans. Instead, we are going to lar exemptions to better accommodate ineligible for overtime under the pro- talk about a whole bunch of amend- today’s workplace and to anticipate fu- posed rules. However, this estimate is ments to this bill that are going to ture workplace trends. That is pre- based on a study by the Economic Pol- slow down this bill and increase pen- cisely what the Department of Labor’s icy Institute, and it is riddled with er- alties on American businesses trying to proposal to update and clarify the rors. For example, the study includes ship goods overseas. In fact, all Amer- white-collar regulations will do. in its calculations at least 18 percent of ican businesses. While the Department’s proposal will the workforce who work 35 hours or Keep that in mind. If we want to take update and clarify, this amendment less a week. These part-time workers care of jobs in this country and make will do neither. Instead, it will set the do not work more than 40 hours a week sure jobs stay in this country, we clock back to 1954 and try to force the and, therefore, they do not receive would get a conference committee ap- square peg of the 21st century jobs into overtime in the first place. pointed on the Workforce Investment the round hole of the workplace of 50 The study also claims the proposed Act and get that thing resolved and get years ago. rule will deny overtime pay to white- people trained and to work. I am a former shoe salesman and I collar employees earning more than One of the examples of what will hap- know how to tell when something will $65,000 a year. However, not all the em- pen on this is the overtime amendment not fit. This just will not fit. It is like ployees earning over $65,000 are exempt that we have been promised. I could trying to force a size 10 foot into a size under the proposed rules—only those wait until it actually came up, but 6 shoe. It will not fit no matter how performing office or nonmanual work there were some comments made and hard you try. and one or more exempt duties. This there is a need to respond on the 40 Through the course of the debate on means workers, such as police officers, minutes we have already heard about overtime over the next several days, we firefighters, plumbers, Teamsters, car- the overtime amendment. will hear a lot of numbers. Some of penters, and electricians will not—will It is time to strip the rhetoric from them are statistics and we know how not—lose their overtime pay. The De- the reality and consider who is really statistics work. I am an accountant so partment of Labor acknowledges the helped and hurt by this amendment I will try to give some good numbers possibility that 644,000 highly educated which prohibits the Department of and hope you will put up with me with workers making over $65,000 a year Labor from updating the rules exempt- the numbers, but there are numbers might lose their overtime. Mr. Presi- ing white-collar employees from over- you need to know. dent, 1.3 million get picked up on the time pay. It is not all that simple. Let us be clear about what this bottom end; 644,000 drop out on the top. When I am back in Wyoming, I like amendment will do. The amendment Supporters of this amendment claim to hold town meetings to find out what will undermine the Department of La- that the proposed rules will strip over- is on the minds of my constituents. At bor’s efforts to extend overtime protec- time pay for first responders and each town meeting, there is usually tion to 1.3 million low-wage workers. nurses. If we look behind the rhetoric, someone in attendance who is quite Under the current rules, only those we find there will be virtually no concerned about government regula- rare workers earning less than $8,060 a change in status for first responders tions. I am often told to rein big gov- year are protected for overtime pay. and nurses under the Department of ernment in, keep the rules and regula- That is how old this rule is. You are Labor proposal. Under both the current tions simple, keep them current and re- protected if you are making less than and proposed regulations, only reg- sponsive, and make sure they make $8,060 a year. Now the administration’s istered nurses are exempt from over- sense in today’s ever changing work- proposed rule will raise that threshold time pay. place. to $22,100 a year. Supporters of this amendment claim Most of the people I talk to are small Doesn’t that sound more common that military personnel and veterans businessmen, but that is most of busi- sense in today’s market? Doesn’t that will lose their overtime pay under the ness in this country. They are being sound like a number that covers more proposed rules. However, military per- killed by the rules and regulations, people? If the old rule covered those sonnel and veterans are not affected by and, in some cases, by trial attorneys. making less than $8,060, a new rule, the proposed rules by virtue of their Today we are reviewing an amend- covering those making less than military status or training. Nothing in ment that takes the opposite approach. $22,100, would cover more people. the current or proposed regulation Instead of keeping it simple and cur- As a result, 20 percent of the lowest makes any mention of veteran status. rent, it will prohibit the Secretary of paid workers would be guaranteed Who will this amendment protect, if Labor from updating the rules exempt- overtime pay. The overtime provisions not low-income workers, first responding white-collar employees from the of the Fair Labor Standards Act were ers, nurses, veterans, or millions of Fair Labor Standards Act and overtime originally intended to protect lower in- other working Americans? The anti- requirement in some cases, an attempt come workers. The proposed rules will quated and confusing white-collar ex- to reject the new, turn back the clock, provide lower income workers with the emptions have created a windfall—a and look to yesterday for the answer to protection they deserve. windfall—for trial lawyers. Ambigu- tomorrow’s problems. It is an approach That also makes it easier for busi- ities and outdated terms have gen- that is doomed to failure before it is nesses to know when they are com- erated significant confusion regarding even applied. I am opposed to the plying with the law. And that is impor- which employees are exempt from the amendment. tant, particularly for small businesses. overtime requirements. The confusion

VerDate jul 14 2003 01:41 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00064 Fmt 4624 Sfmt 0634 E:\CR\FM\G03MR6.063 S03PT1 March 3, 2004 CONGRESSIONAL RECORD — SENATE S2083 has generated significant litigation and respond by changing the rule, or re- coalition opposed to any legislative ef- overtime pay awards for highly paid, spond by letting the people know how forts to stop outsourcing is coming up white-collar employees. Wage and hour that will not work or how it is covered with some new language. They don’t cases now exceed discrimination suits a different way. We have to have that like the word, ‘‘outsourcing,’’ so they as the leading type of employment law process work. are calling it worldwide sourcing, to class action. Let me repeat that again. Now, I hope if there are substantial take some of the sting out of the lan- Wage and hour cases now exceed dis- changes it gets put out one more time guage. They may succeed in taking the crimination suits as the leading type of for comments. There is not anything sting out of the language by changing employment law class action. around that says they cannot reissue the vocabulary, but you cannot take This amendment—the amendment them for comment. The public com- the sting out of finding out that your that Senator HARKIN is going to put ments are what help us get it right. We job has been lost and that others off- in—will not preserve overtime for mil- do not do these jobs, so we do not know shore are taking those jobs because it lions of working Americans. The all the right answers. But the people enhances the bottom line in a quar- amendment will not help employers out there working on them do. The an- terly report someplace. We need to ad- and employees clearly and fairly deter- swers can be made right. dress that. mine who is entitled to overtime. The Now, if the final rule has gone I fully understand that outsourcing only clear winners from this amend- astray, after all of this process, we can to some degree is going to go on. I ex- ment will be the trial lawyers who will use the Congressional Review Act to pect that to be the case. But I don’t continue to benefit from the current reverse it. And we have done that be- think the Federal Government ought state of confusion. We are spending fore. That is where we say: You did not to be subsidizing that effort. I am one taxpayers’ dollars sorting through pay attention to the process. You did who has believed in and supported free what could be solved with clarity. not pay attention to the comments. We and fair trade agreements over the I stress that these are proposed are going to jerk you back to reality. years. I take great pride in that. In a rules—proposed rules. The Department But now is not the time or the vehicle global economy, you have to do that. of Labor has received, and is currently for making that determination. But I also understand if we don’t have reviewing, around 80,000 comments to I hope my colleague will not put the services or provide the manufac- their proposed regulations. We should down the amendment, but if he does, I tured goods with which to trade glob- allow the regulatory process to con- hope my other colleagues will support ally because we have given up a signifi- tinue and give the Department a me in allowing the Department to cant part of our manufacturing base or chance to complete its review of the move forward with the review and re- given up a critical area of technology proposed rules. Once the review is com- sponse that they need to be doing. in the service areas, for instance, we pleted, the Department will align the They do need to be paying attention to are necessarily going to be great com- white-collar regulations with the reali- all of this debate. But we do need to petitors in a global marketplace in the ties of the 21st century workplace, the bring that rule into the current cen- 21st century. intent of the Fair Labor Standards tury and make sure people are working Act, and—this is most important— at jobs and the rules are understand- You may say we are nowhere near what they have learned from the com- able, particularly with small busi- that yet. The rest of the world doesn’t ments. nesses that are trying to provide a even come close to producing the qual- They have 80,000 comments. I expect service, not figure out Government reg- ity and high value goods we do in the them to read those. I expect them to ulations. United States. They can’t come close react to those, and make sure that it I yield the floor and reserve the re- to providing the high technology we becomes a part of the rule. mainder of my time. do. Now, supporters of this amendment The PRESIDING OFFICER. The Sen- I think we have all learned over the are, in effect, denying the public a ator from Connecticut. last number of years that technology voice in the regulatory process. This Mr. DODD. Mr. President, I ask unan- and productivity is highly portable, amendment will deny the Department imous consent to yield myself such and it is moving at warp speed. What of Labor an opportunity to respond to time as I may consume from the time was true a year ago, 5 years ago, cer- public comments. I happen to believe under the control of the Democratic tainly 10 years ago, is no longer the that public comments play a critical side. case. I suspect this rate of speed of role in the regulatory process. The PRESIDING OFFICER. Without change is going to continue to grow. I will tell you, I go back to Wyoming objection, it is so ordered. At this particular juncture, I think it most weekends. I go out on Friday, Mr. DODD. Let me say to those who is important that we speak to this travel to a different part of the State, may be listening in the offices of Mem- issue and that we try to find some bal- and come back on Sunday. It is the bers who want to come over and wish ance on how we maintain our global most valuable thing I do around here, to be heard on this matter, I will be leadership role, continue to provide op- and that is because I get to talk to the prepared to yield some time. I am here portunities for American workers, person who has the problem firsthand. to discuss an amendment that will while simultaneously not allowing the Do you know what? They are working come up after 3:30. I thought I would exportation of jobs overseas. on that all day, every day. And the ad- move things along while we have this vantage is they have usually thought dead time, while we are waiting for I was terribly disheartened to read a of some kind of a solution. Now, when this vote to occur, to discuss upcoming report, the Economic Report of the I bring it back, quite often, the com- amendments and encourage those who President, February 2004, just last ment is: It is too simple. It will never may want to participate in some of month, this publication that comes work. Where did you come up with a those debates to come to the floor and out. It is designed to give an overall crazy idea like that? And I have to ex- share some of their thoughts. economic report of the Nation, with plain: From the guy with the problem I will be offering at the appropriate various suggestions and ideas. I am not who works on this every day and knows time, sometime after 3:30, an amend- making up these quotes from some the commonsense approach to solving ment that deals with the outsourcing news article or some demagogue or that problem. of jobs. I note the presence of the Pre- pundit out there when talking about Those are the people writing in with siding Officer who comes from the these issues. These are actual conclu- comments. Those are the people who same region of the country I do. We sions reached by the top economic ad- are saying: This is where it is right. have all been feeling it in our States, visers to the President of the United This is where it is wrong. Fix it where not just in the Northeast, but across States when it comes to the issue of it is wrong. Leave it in the new context the country, the tremendous pinch manufacturing and outsourcing. where it is right. That is how the proc- that is occurring as a result of job loss First on outsourcing, chapter 12, on ess is supposed to work. and the growing number of jobs that page 229 of this economic report of We want the Department of Labor to are being outsourced. I am told by President Bush and his economic team, look at those comments and respond— those who cover these issues that the it says:

VerDate jul 14 2003 01:41 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00065 Fmt 4624 Sfmt 0634 E:\CR\FM\G03MR6.066 S03PT1 S2084 CONGRESSIONAL RECORD — SENATE March 3, 2004 When a good or a service is produced more In F2003, ValiCert agreed to be acquired by home, except for the smaller cubicles and In- cheaply abroad, it makes more sense to im- Tumbleweed Communications Corp., a dian designs on the partitions. There were no port it than to make or provide it domesti- maker of antispam software with its own off- savings on the rent. At $1 a square foot, it cally. shore operation in Bulgaria. Today, the com- matched what ValiCert paid for its Mountain I would suggest that is a conclusion bined Tumbleweed is growing, and again hir- View, Calif., home offices, amid a Silicon ing software architects in Silicon Valley Valley office glut. with which some economists may Misunderstandings started right away. agree. Some have drawn the conclusion with six-figure salaries, as well as engineers overseas. Without India, Mr. Vigouroux says, U.S. executives wanted programmers with that that is inherently a far better ‘‘I don’t know if we’d be around today.’’ eight to 10 years of experience, typical of idea, just thinking in terms of quarters ValiCert’s experience offers important in- ValiCert’s U.S. employees. But such ‘‘career or yearly reports, I suppose, and the sights into the debate over the movement of programmers’’ are rare in India, where the bottom line. That may be OK. But if service jobs to lower-cost countries, such as average age of engineers is 26. Most seek you are worried about generational India. Such shifts can save companies money management jobs after four or five years. and hurt U.S. workers. But the process is dif- Expertise is security technology, key to change, if you are worried about trying ValiCert’s products, was even rarer. to establish a bedrock of job opportuni- ficult, and the savings typically aren’t as great as a simple wage comparison suggests. By contrast, Mr. Vutukuri quickly assembled a group to test ValiCert’s software for ties, stability, and security in the 21st Some jobs cannot easily or profitable be ex- bugs, tapping a large pool of Indian engi- century, then it absolutely makes no ported, and trying to do so can risk a cus- neers that had long performed this mundane sense to export that job rather than to tomer backlash: In recent months, Dell Inc. work. provide it domestically. and Lehman Brothers Holdings Inc., for ex- But the Indian manager heading that I note in this morning’s Wall Street ample, moved several dozen call-center and group ran into resistance. It was ValiCert’s Journal—so you don’t think these help-desk jobs back to the U.S., after em- first use of code-checkers who didn’t report ideas are merely being spouted by a ployee and customer complaints. to the same managers who wrote the pro- Democrat in disagreement with the Founded in 1996, ValiCert specializes in grams. Those U.S. managers fumed when the software to securely exchange information team in India recommended in June 2002 de- President’s economic report—a March over the Internet. Banks use ValiCert’s soft- 3, 2004, article, ‘‘Lesson in India.’’ I ask laying a new product’s release because it had ware to safeguard electronic funds transfers, too many bugs. unanimous consent to print the full ar- health insurers to protect patient medical By midsummer, when Mr. Vutukuri had ticle in the RECORD. records. Although still unprofitable, enough programmers for ValiCert to begin There being no objection, the mate- ValiCert conducted an initial public offering sending bigger assignments to India, U.S. rial was ordered to be printed in the in July 2000, in the dying embers of the dot- managers quickly overwhelmed the India RECORD, as follows: com boom. In two months, the stock doubled team by sending a half-dozen projects at [From the Wall Street Journal, Mar. 3, 2004] to $25.25. once. In 2001, however, sales growth slowed, as Accustomed to working closely with vet- LESSON IN INDIA: NOT EVERY JOB TRANSLATES corporate customers reduced technology pur- eran engineers familiar with ValiCert’s prod- OVERSEAS chases. ValiCert had projected that it would ucts, the U.S. managers offered only vague (By Scott Thurm) break even with quarterly revenue of $18 mil- outlines for each assignment. The less-expe- When sales of their security software lion, according to Srinivasan ‘‘Chini’’ rienced Indian engineers didn’t include ele- slowed in 2001, executives at ValiCert Inc. Krishnan, founder and then-chairman. Quar- ments in the programs that were considered began laying off engineer in Silicon Valley terly expenses had grown to $14 million, but standard among U.S. customers. U.S. pro- to hire replacements in India for $7,000 a revenue was stalled at less than half that fig- grammers rewrote the software, delaying its year. ure. Executives began considering shifting release by months. ValiCert expected to save millions annu- work to India. The ‘‘motivation was pure In India, engineer grew frustrated with ally while cranking out new software for survival,’’ says Mr. Krishnan, who left the long silences, punctuated by rejection. banks, insurers and government agencies. company after the Tumbleweed merger. Suresh Marur, the head of one programming Senior Vice President David Jevans recalls India was a natural choice because of its team, worked on five projects during 2002. optimistic predictions that the company large pool of software engineers. Moreover, All were either cancelled for delayed. Pro- would ‘‘cut the budget by half here and hire both Mr. Krishnan and ValiCert’s then-head grammers who had worked around the clock twice as many people there.’’ Colleagues of engineering grew up in India and were fa- for days on one project quit for new jobs in would swap work across the globe every 12 miliar with large tech-outsourcing firms. Bangalore’s vibrant market. Of nine people hours, helping ValiCert ‘‘put more people on Some, including Mr. Jevans, harbored on Mr. Marur’s team in mid-2002, only three it and get it done sooner,’’ he says. doubts. The Apple Computer Inc. veteran still work for ValiCert. ‘‘The first time peo- The reality was different. The Indian engi- says he preferred ‘‘small teams of awesome ple understand,’’ he says. ‘‘The second time neers, who knew little about ValiCert’s soft- people’’ working closely together. Nonethe- people understand. The third time it gets to ware or how it was used, omitted features less, that summer, ValiCert hired Infosys be more of a problem.’’ Americans considered intuitive. U.S. pro- Technologies Ltd., an Indian specialist in In the U.S., executives lurched from crisis to crisis, as ValiCert’s revenue dipped fur- grammers, accustomed to quick chats over contract software-programming, to supply ther. Each quarter brought more layoffs. By cubicle walls, spent months writing detailed about 15 people in India to review software year end, the California office, which once instructions for overseas assignments, delay- for bugs, and to update two older products. employed 75 engineers, was reduced to 17; the ing new products. Fear and distrust thrived With no manager in India, ValiCert em- India office, meanwhile, swelled to 45. Engi- ployees in the U.S. managed the Infosys as ValiCert’s finances deteriorated, and co- neers ‘‘felt the sword of Damocles was swing- workers directly, often late at night or early workers, 14 time zones apart, traded curt e- ing above their cube,’’ recalls John Thielens, in the morning because of the time dif- mails. In the fall of 2002, executives brought a product manager. back to the U.S. a key project that had been ference. ValiCert also frequently changed Executives knew they could save more assigned to India, irritating some Indian em- the tasks assigned to Infosys, prompting money by exporting more jobs. But they ployees. Infosys to shuffle the employees and frus- were developing a keener sense of how crit- ‘‘At times, we were thinking, ‘What have trating ValiCert’s efforts to build a team ical it was to keep core managers in the U.S. we done here?’’’ recalls John Vigouroux, who there. who knew ValiCert, its products, and how joined ValiCert in July 2002 and became chief Within a few months, ValiCert abandoned they were used by customers. ‘‘Even if you executive three months later. Infosys and created its own Indian sub- could find someone’’ with the right skills in Shifting work to India eventually did help sidiary, with as many as 60 employees. Most India, says Mr. Krishnan, the ValiCert found- cut ValiCert’s engineering costs by two- employees would be paid less than $10,000 a er, ‘‘it wouldn’t make business sense to move thirds, keeping the company and its major year. Even after accounting for benefits, of- the job.’’ products alive—and saving 65 positions fice operating costs and communications Frustrations came to a head in September which remained in the U.S. But not before links back to the U.S., ValiCert estimated 2002, when a prospective customer discovered ValiCert experienced a harrowing period of the annual cost of an Indian worker at problems with the log-on feature of a instability and doubt, and only after its ex- roughly $30,000. That’s about half what ValiCert program. The anticipated purchase ecutives significantly refined the company’s ValiCert was paying Infosys per worker, and was delayed, causing ValiCert to miss third- global division of labor. less than one-sixth of the $200,000 comparable quarter financial targets. The India team The successful formula that emerged was annual cost in Silicon Valley. had recently modified the program, and the to assign the India team bigger projects, To run the new office in India, ValiCert glitch prompted U.S. managers to question rather than tasks requiring continual inter- hired Sridhar Vutukuri, an outspoken 38- ValiCert’s entire offshore strategy. action with U.S. counterparts. The crucial year-old engineer who had headed a similar Relations had long been strained between jobs of crafting new products and features operation for another Silicon Valley start- the U.S. and Indian product teams. John stayed in Silicon Valley. In the end, export- up. He set up shop in January 2002 in a Hines, the Netscape Communications Corp. ing some jobs ultimately led to adding a ground-floor office in bustling Bangalore, veteran who headed the tight-knit U.S. prod- small but important number of new, higher- the tech hub of southern India. The office uct team, thrives on quick responses to cus- level positions in the U.S. looked much like ValiCert’s California tomer requests. As his team shrank to six

VerDate jul 14 2003 02:24 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00066 Fmt 4624 Sfmt 0634 E:\CR\FM\G03MR6.068 S03PT1 March 3, 2004 CONGRESSIONAL RECORD — SENATE S2085 engineers from 20, Mr. Hines was assigned Tumbleweed’s customers. Since July, Mr. to make millions because of laid-off three engineers in India. But he viewed the Lourie’s U.S. team has grown to nine engi- American workers and you hire some- Indians’ inexperience and the communica- neers, from six. one 8 or 10 time zones away, has been, tion delays, as more a hindrance than a help. Tumbleweed’s fourth-quarter revenue grew certainly in the case of this particular ‘‘Things we could do in two days would take 69% from a year earlier, as its net loss a week,’’ he says. shrank to $700,000, and cash increased by $2.4 company, proven to be untrue. Mr. Vigouroux, who became CEO in Octo- million. Shares have risen five-fold in the So to the point that when a good or ber 2002, admits to a touch of ‘‘panic’’ at this past year. service is produced more cheaply point. ValiCert’s cash was running low. ‘‘We Brent Haines, 36, is a new hire. He joined in abroad, it makes more sense to import didn’t have a lot of time,’’ he says. He con- October as a $120,000-a-year software archi- it than to provide it domestically, I ferred with Mr. Hines, who said he wanted to tect, charged largely with coordinating the would suggest that the people who be rid of India, even if it meant a smaller work of the U.S. and India teams. That often wrote the economic report for the team. Mr. Vigouroux agreed to hire one engi- means exchanging e-mail from home with President may want to talk to the peo- neer in California. When he learned of the engineers in India between 11 p.m. and 3 a.m. decision, Mr. Vutukuri says he felt as if he California time, as Mr. Haines reviews pro- ple at ValiCert. I don’t suspect that is had failed. gramming code and suggests changes. Such one company. I suspect that is true of By contrast, Matt Lourie, who heads collaboration requires extensive planning, he many companies. So it is not Biblical. ValiCert’s other big programming group, says, ‘‘something very unnatural to people in I agree that in certain cases you will welcomed additional help in India. He was software.’’ make a lot more money by firing peo- struggling to keep pace with customer de- ‘‘Nine months ago, people would have said ple in the United States and getting rid mands for new features on his product and [moving offshore] was the biggest . . . dis- of them. Why should you worry about new versions for different types of com- aster,’’ says Mr. Thielens, the product man- that? Your job is to provide a bottom puters. ager. ‘‘Now we’re starting to understand how line. That is your job. At the same time, ValiCert executives we can benefit.’’ were streamlining operations and changing My job is a little different than your how they divided work between California Mr. DODD. This is a story written by job. My job, as a Senator, is to not only and India. They gave the India team entire Scott Thurm. It is about a company, watch out for you and your company, projects—such as creating a PC version of a ValiCert, that learned key roles must to make sure you live in an environ- program initially built for bigger remain in the U.S. for outsourcing to ment where you can make a profit, I workstations—rather than small pieces of work. And the thrust of the article is have an obligation to those people who larger projects. U.S. managers began writing this company rushed, like everybody work for you as well. I didn’t get elect- more detailed specifications for each assign- else. Forty percent of the top 1,000 ment to India. ed to the Senate just to guarantee you ValiCert also killed its three smallest-sell- companies in America are now a bottom line. My job is setting public ing products to focus resources on the re- outsourcing their jobs, sort of like policy, not quarter by quarter, not just maining two. To improve morale in the U.S., chasing into Mexico back in the 1980s bottom line and yearly report to yearly Mr. Vigouroux crowded the remaining em- when the financial service sector report, but longer than that. That is ployees into one corner of the half-vacant of- thought that was the place to be, with- what we are supposed to do in a Cham- fice and installed a ship’s bell that he rang out much thought. Once these trends ber such as this, to think a little each time ValiCert recorded $10,000 in rev- begin, they are sort of like sheep fol- longer, to worry about this country, enue. He made sure the India employees re- lowing one after another without much ceived company-wide e-mails, and conducted those who are the children of the 21st multiple sessions of monthly employee meet- thought involved. century and what kind of a Nation are ings so the India group could listen at a con- This company ValiCert went racing they going to inherit after you and I venient hour. Engineering-team leaders off to outsource its jobs, reduced its have left. They are going to ask us began conferring twice a week by telephone, employment, saved a lot of money, ac- about what we did at the beginning of shifting the time of the calls every six cording to the article, expected to save the 21st century when we saw the trend months so that it’s early morning in one of- millions annually while cranking out lines reaching out to cause literally fice and early evening in the other. new software for banks. millions of people to lose their jobs. Toward the end of 2002, Mr. Vigouroux I am quoting from the article now: began to ring the bell daily, as customers One report indicates that in the next such as Washington Mutual Inc. and When sales of their securities software 10 years or so we may lose as many as MasterCard International Inc. purchased slowed in 2001, executives at ValiCert began 4 million jobs, a loss of $140 billion in ValiCert’s software. laying off engineers in Silicon Valley to hire wages, just by outsourcing alone. By early the next year, ValiCert executives replacements in India for $7,000 a year. That number may be low, according believed the company had stabilized. Rev- ValiCert expected to save millions while cranking out new software for banks and in- to those who have done this. I will get enue increased to $3 million in the fourth to the charts in a minute and identify quarter of 2002, up 27% from the previous surers and government agencies. Senior Vice quarter. Expenses declined, and the company President David Jevans recalls optimistic the source of that. I will get to the neared profitability. Investors detected a predictions that the company would ‘‘cut the amendment at an appropriate time and pulse, and the stock rose to 46 cents on the budget by half here and hire twice as many talk about the specifics of it. I know I Nasdaq Stock Market at the end of January, people there [in India].’’ Colleagues would am going to hear that your amendment from a low of 20 cents in August 2002. swap work across the globe every 12 hours, goes too far, it is too heavyhanded, be- But with just $3 million in cash, ValiCert helping ValiCert ‘‘put more people on it and cause I am going to suggest that get it done sooner,’’ he says. remained precarious. Mr. Vigouroux started maybe the use of Federal tax dollars— meeting with potential new investors and The reality was different. The Indian engi- began talks with Tumbleweed CEO Jeffrey C. neers, who knew little about ValiCert’s soft- we ought to have second thoughts Smith. ware or how it was used, omitted features about subsidizing this rushing to go Tumbleweed also had been through signifi- Americans considered intuitive. U.S. pro- overseas to outsource. I cannot stop a cant layoffs and retrenchment, and in Feb- grammers, accustomed to quick chats over private company with its own dollars ruary 2003, the companies agreed to merge. cubicle walls, spent months writing detailed deciding to do that. You can make it The combined Redwood City, Calif., com- instructions for overseas assignments, delay- less of an attractive thing through the pany’s 150 engineers today are almost evenly ing new products. Fear and distrust thrived, Tax Code or more attractive for people and ValiCert’s finances deteriorated and co- divided among California, the Tumbleweed to stay here, but I certainly cannot operation in Bulgaria, and the India office workers, 14 time zones apart, traded curt e- started by ValiCert. In Bulgaria, engineers mails. In the fall of 2002, executives brought stop you from doing it. write and test software, and scan millions of back to the U.S. a key project that had been But I ought to be able to say some- e-mails daily for traces of spam. In India, en- assigned to India, irritating some Indian em- thing about how American taxpayer gineers test software, fix bugs and create ployees. money is being used. If their money is new versions of one product. Last Sep- ‘‘At times we were thinking, what have we being used to cause somebody to lose tember, Tumbleweed released its first prod- done here?’’ ... their job and to hire someone for the uct developed entirely in India, a program The article goes on; I won’t read all attraction of the salary someplace else, that lets two computers communicate auto- of it; the point being sort of buyer be- maybe taxpayers have a right to be matically and securely. Mr. Marur’s team had worked on it for over 18 months. ware. This notion that you might be heard on this issue. This amendment Core development for new products re- hiring people for a fraction of what it says Federal tax, for the purpose of mains in California, where engineers are would cost to hire someone in the Sil- outsourcing—with the exceptions of closer to marketing teams and icon Valley and it is going to allow you national security and other provisional

VerDate jul 14 2003 01:41 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00067 Fmt 4624 Sfmt 0634 E:\CR\FM\A03MR6.019 S03PT1 S2086 CONGRESSIONAL RECORD — SENATE March 3, 2004 waivers, which I will explain—ought istration’s economic policy. In bold ment used in some of our most sophis- not to be something we are supporting. print in this economic report they sug- ticated defense and nondefense prod- If you want to do it as a private com- gest there is a legitimate question over ucts. So when I see these jobs and these pany, that is your business. I don’t whether or not working at McDonald’s businesses going, I have to be reminded think you ought to necessarily have a or Burger King flipping hamburgers that we are not going to create this right to Uncle Sam’s taxpayer money ought to be classified as a manufac- overnight. You don’t reconstitute the to do that at the expense of critical turing job. If you don’t think we are in manufacturing base overnight. Again, I jobs that are important for this Na- trouble on these issues, just read that. accept we have to make changes and tion’s future. That is an example of the kind of ter- you cannot say we are going to stop I will go on in this economic report ribly naive at best, at worst rather cal- this altogether. But I think we have an because I may not have time, when we lous, thinking when it comes to talk- obligation to express our concerns and get to the amendment, to talk about it. ing about the importance of manufac- worries about where we are headed, if I cited chapter 12, page 229, where you turing. I don’t belittle a job somebody we don’t speak up and begin to address have this emphatic statement that it holds down working in a fast food res- what this may mean for our country. automatically, in every case, as I read taurant. For many people out there, I am very worried about where these this, makes more sense to import. that is the only job they can get to trend lines are going and what it may They don’t talk about outsourcing. provide for themselves and their fami- mean. If we end up continuing to lose They act as if it were a good or a serv- lies. They would be the first to tell you jobs and manufacturers, I am con- ice. I know economists like to suggest that they hardly think of themselves cerned about what it may mean for our that is all it is. But I think people in as being in the manufacturing busi- country if we end up having to import Ohio, Connecticut, or Pennsylvania are ness. Yet, in the administration’s offi- not only the jobs but the products more than a good or a service. They cial report, it raises the question of themselves. That is another subject may have a family, a home mortgage whether or not it is a manufacturing matter we can discuss later. We ought they are trying to pay, and they may job. At least this Member gets a sense to worry about it as a country. If we have other obligations; and they worry they are lost on this issue, when they don’t do something soon in this area, about their future retirement and raise questions as foolish as that. that is going to be a continuing prob- health care. So to have the cold eye of Let me go to some of these charts, if lem. an economist saying a person out there I may. Let me just give you a sugges- Let me point out further, to give who has a job in America may find it tion of what is happening on the issue some idea of where this is all hap- gone because the quarterly report of manufacturing. The first chart I pening, because it is not, as I men- would look a lot better if we can hire raise here points to the fact that in the tioned, just my State of Connecticut. I that person for $7,000 a year rather last 36 months, we have now lost in the mentioned my friend and colleague, than paying you $40,000, $50,000, $60,000, United States of America 2.8 million the Presiding Officer, comes from New or $70,000 a year, and you are really manufacturing jobs—since January Hampshire up in our area. Just to high- nothing more than a good or a serv- 2001, up until now, the winter of 2004. light, his small New England State as ice—I think many of us here believe That is 2.8 million manufacturing jobs well had some 22,300 jobs in the manu- otherwise. that have gone in this country. I be- facturing sector lost in New Hamp- These are not just goods or services; lieve that is the single largest loss of shire. In my State of Connecticut, it is these are human beings who help to manufacturing jobs that has occurred about 32,800, about 10,000 more. That is strengthen this country, provide us the since the Great Depression. I under- in the last 36 months. The trend lines are: Pennsylvania, kinds of liberties and opportunities we stand transitions in the economy. 132,000; Ohio, 153,000 jobs have been enjoy as Americans. I think it is about Things happen and move in different lost; California, 272,000 manufacturing time we stood up for them and what directions. But I don’t think you can jobs lost; the State of Washington, their interests may be—not at the ex- wash your hands of this and say I am 59,000; Oregon, 21,000; Texas, 149,000; pense of others, but to merely strike a sorry, but that is the trend line and Florida, 52,000; Georgia, 67,000; 142,000 balance. This is not about being that is the way life is—sort of a laissez- jobs lost in the small State of North against trade, being an isolationist at faire approach. all. It is merely saying strike some bal- We ought to analyze why things are Carolina. This is all in the last 36 months. ance before this sort of giddy trend, happening, where are the jobs going, I won’t go through State after State, where company after company is sort and what are the implications for our but you get some sense of this. It is not of playing follow the leader and runs country. I understand where the CEO of isolated to our corner in Connecticut, amuck as they send these jobs willy- a company is coming from, and the our small State, or the area of New nilly offshore; we ought to say let’s board of directors or the administra- England: New York State, 115,000 jobs; look at what we are doing and at what tion of a company. Their concern is the Michigan, 121,000; Wisconsin, 168,000; Il- ultimate price we may pay. bottom line and whether you have a linois, 115,000 jobs. It is a worrisome The second point I want to make out profit to show the next quarter. I think trend. It is going on all across the of this economic report is a reference Members of Congress ought to have a country. with regard to what is manufacturing. different set of questions from whether Again, we cannot say this is transi- I don’t have the page number, unfortu- the quarterly report is all right— tional, I am sorry, America, you are nately, on this, but I will get it before whether this trend line is going to con- going to have to live with this. We I finish my remarks. It is a highlighted tinue, and what it means to our coun- ought to respond in a way that ac- box, and the title of the box that is try. If this trend line continues and we knowledges this trend and tries to offer framed out here is ‘‘What Is Manufac- end up losing a manufacturing sector, some ideas on how we might turn this turing?’’ This economic report says the we will deeply regret it. trend around. definition of a manufactured product, I come from a State where I have I will be glad to share with my col- however, is not straightforward. When 5,400 small manufacturers—or I did—in leagues, if they are curious about their a fast food restaurant sells a ham- Connecticut. Most of them are small States—I will not go through all 50 burger, for example, is it providing a operators, with 5, 10, 15 people, third States, but there is not a State in the service or manufacturing a product? and fourth generation, producing not country that has not lost manufac- You may say that is only a question. just flowers or some other item but, turing jobs. Some have lost very few. You know, if this is your question and rather, significant products, many of The State of Wyoming lost 700 jobs; the example you would cite in your which are used in the aircraft engine North Dakota, 500. That may be the question, what are you thinking of? Do industry of my State, the manufacture lowest. Arizona, 34,000; New Mexico, you think it is a debatable item as to of the sophisticated submarines we 5,000; Colorado, 37,000; Kansas, 19,000; whether or not producing a hamburger produce in Connecticut, or other high Arkansas, 29,000; Missouri, 38,000. These or a hot dog involves manufacturing? value products. These manufacturers job losses have been very painful. This is not some op-ed piece; this is the employ highly skilled people, pro- We talk about these jobs, and I think official economic report of this admin- ducing very valuable pieces of equip- the tendency is to talk about them in

VerDate jul 14 2003 01:41 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00068 Fmt 4624 Sfmt 0634 E:\CR\FM\G03MR6.070 S03PT1 March 3, 2004 CONGRESSIONAL RECORD — SENATE S2087 and of themselves, the job loss in any anyone from using Federal tax dollars necticut a year ago—people from the manufacturing sector in any given to ship jobs offshore in three different manufacturing sector, from labor State. Each manufacturing job sup- ways. First, the Federal Government unions, and the private sector coming ports three other U.S. jobs. When we may not use Federal taxpayer dollars together. They differ on a lot of issues, end up losing these jobs in the manu- to procure goods or services to fulfill but on this one they are joined in com- facturing sector, there is a ripple ef- contracts that use overseas workers at mon cause. They recognize what we are fect. the expense of American jobs. experiencing is different from what we I won’t dwell on this, but I think Second, we tell State and local gov- experienced before. most of my colleagues are aware of this ernments that any Federal dollars they Today, advances in technology and already. When someone loses their receive in the form of a grant or in the fewer trade restrictions have made it source of income in the area of manu- form of an appropriation by formula or far easier to move goods, information, facturing, the effects are felt in retail in any other way are not to be used to and jobs around the globe. Foreign trade, personal/business services, and promote the loss of American jobs. countries are aggressively enticing other manufacturing sectors with the I point out that today 40 States American businesses with promises of inability of people to purchase goods. outsource jobs. I am told that in the lower wages, lax worker protections, It is not as if these jobs exist or, when State of Minnesota, if you lose your job and weak environmental laws. Coun- they are lost, the only people paying and you call up the unemployment of- tries such as India and China have fig- that price are the people who lost the fice, you are going to talk to someone ured out if you want to compete in the job. In effect, it is being felt across the in India about what your rights and global marketplace in the best jobs, economy as well. benefits are. I do not need to tell you you need to invest in the best edu- Mr. President, 14 million additional the reaction of those people in that cation and training of your workers. jobs are in danger. State who lost their job and they are Rather than trying to find a meaning- Now we get into the question of jobs talking to someone offshore to tell ful way to address these new cir- going offshore. I want to give some in- them what their benefits are. cumstances, this administration would dication of what is happening. Let’s get The third way is, any agency seeking rather pretend the world is still func- back to the outsourcing question. I to privatize a government contract tioning as it always did and actually mentioned manufacturing because a being paid with U.S. taxpayer dollars that our economy is on a path to recov- lot of these jobs are moving in that may not enter that contract if it again ery. As a matter of fact, our country is area. displaces American workers in favor of hemorrhaging jobs at an alarming rate. We are told—and this is from Time offshore workers. As I mentioned already, according to magazine in their February 22 issue— In all these cases, we have exceptions one estimate, by the year 2015, 3.3 mil- that by the year 2015, more than 3 mil- on the grounds of national security and lion, close to 4 million jobs and $136 billion American jobs are projected to be we allow the Governor or a Federal lion in annual wages will have moved shipped overseas. We begin to see these agency head to, in effect, waive these offshore if we do not do something trend lines. In 2005, it moves up to provisions if there is bona fide lack of about it. Four hundred of the largest 588,000 which will be outsourced over- goods and services in the United 1,000 companies are already sending seas. A few years later that number of States. There is an escape clause here. jobs offshore, with more planning to do jobs goes to 1.6 million, and projections The obvious question arises, one, on so every single day. are, with no effort being made to national security, or, two, if no one is In a short time I will get a chance to change this direction, the number gets producing these goods and services go into this in more detail as to why I up to 3 million. We are worried that if here, what are we supposed to do? think this is an important amendment we do not speak up now and do some- Rather than have the President have to and why I hope my colleagues will sup- thing about this trend, we are going to waive the provision, we allow a Gov- port it. find a continued erosion and continued ernor or head of an agency who would I realize it is a loud shout at this mo- loss of these jobs overseas. be in charge of this particular area to ment, and I know others will argue Let me point out where they are do so. that maybe it is louder than it need be, coming from because this may be help- Let me take a few minutes to explain but I do not know any other way to ex- ful as well to those interested in this why this is a timely amendment and press my deep concern about what is subject matter. There are 14 million why it is deserving of our support. A happening in my State and all across additional jobs in danger of being gentleman by the name of John Bow- this country if we do not begin to say shipped overseas, as I mentioned. man dedicated 25 years of his life to be- that at least with taxpayer money you Where are they coming from? Office coming an information technology pro- are going to have to act differently. support areas, some 8 million jobs; fessional, and he was very good at it, I You may decide to do it on your own business and financial support, 2 mil- might add. He, like hundreds of thou- dime, but you are not going to do it on lion; in the area of computer and math sands of Americans, lost his job be- the dimes of my taxpayers, to send jobs professionals, close to 3 million; in the cause of outsourcing. John looked overseas when they are not necessary. area of paralegal, legal assistance, di- around and realized what happened to You do not need to do that in order to agnostic support, medical tran- him was not an isolated incident. It survive. scriptions and the like, the numbers was part of a massive trend, and he de- I see my colleague from Montana in are in the thousands, to give some idea cided to do something about it. the Chamber. I yield the floor and at where we are going with all of this. John will tell you he would be the an appropriate time I will come back It isn’t just these low-wage jobs that last person in the world leading a to this discussion. are going. They are also going in the grassroots organization that has prac- The PRESIDING OFFICER. Under more sophisticated areas as well. I tically become a grassroots movement the previous order, the time for the mi- mentioned earlier the story in the Wall in this country, not just in my State nority has expired. The majority con- Street Journal talking about ValiCert. but all across the Nation. These are trols an additional 9 minutes 20 sec- They were talking about jobs in Silicon white-collar professional people, highly onds. Valley. I guarantee you we are not trained, who are watching their jobs Who yields time? talking about low-wage jobs at all. lost day after day, flying offshore, Mr. GRASSLEY. I suggest the ab- Those are jobs that are fairly well paid, being outsourced. sence of a quorum and that it come off and they are being lost. The trend lines Fortunately, John is now being of our time. are not good in just raw numbers, but joined in this fight from people of all The PRESIDING OFFICER. The also in sectors of the economy where walks of life—labor unions, small busi- clerk will call the roll. these jobs are being lost. ness owners, Republicans and Demo- The assistant journal clerk proceeded At the appropriate time, I will offer a crats alike. I had a meeting in my to call the roll. very specific amendment to address the State a few days ago on this issue. I Mr. HATCH. Mr. President, I ask issue. Very briefly, the amendment had people in the same room that I unanimous consent that the order for would do the following: It will restrict could not put in the same town in Con- the quorum call be rescinded.

VerDate jul 14 2003 01:41 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00069 Fmt 4624 Sfmt 0634 E:\CR\FM\G03MR6.072 S03PT1 S2088 CONGRESSIONAL RECORD — SENATE March 3, 2004 The PRESIDING OFFICER. Without Mr. REID. I announce that the Sen- Mr. DODD. Mr. President, I ask unan- objection, it is so ordered. ator from Louisiana (Mr. BREAUX), the imous consent that the reading of the AMENDMENT NO. 2647 Senator from North Carolina (Mr. ED- amendment be dispensed with. Mr. HATCH. Mr. President, there are WARDS), the Senator from Florida (Mr. The PRESIDING OFFICER. Without several aspects of U.S. job creation and GRAHAM), the Senator from South Da- objection, it is so ordered. retention on which many of us may kota (Mr. JOHNSON), the Senator from The amendment is as follows: Massachusetts (Mr. KERRY), and the (Data not supplied.) disagree. I do not believe, however, Mr. DODD. Mr. President, I offer this Senator from Florida (Mr. NELSON) are that the need for an effective research amendment on behalf of myself, Sen- credit is one of them. It will do more necessarily absent. ator COLEMAN of Minnesota, Senator for workers, more for jobs, more for I further announce that the Senator KENNEDY, Senator CORZINE, Senator from Delaware (Mr. BIDEN) is absent on high technology, more for opportuni- MIKULSKI, and others. ties, and more for the economy than official business. I further announce that, if present Let me say to the floor managers, if most anything else we could pass. In I may, I know they are interested in and voting, the Senator from South this jobs bill it seems very appropriate the time. I am prepared to agree to a 1- Dakota (Mr. JOHNSON) and the Senator for us to add this particular amend- hour time agreement. I do not nec- from Massachusetts (Mr. KERRY) would ment to it. essarily expect to take the hour. I each vote ‘‘yea.’’ This amendment has strong support know there are others who may want The PRESIDING OFFICER (Mr. from both sides of the aisle. It has the to be heard. I know you want to move CORNYN). Are there any other Senators unified support of the whole business things along, so I am prepared to have in the Chamber desiring to vote? community. It is the right thing to do a time agreement and move on my The result was announced—yeas 93, for U.S. workers, for the U.S. economy, amendment, give my remarks, and nays 0, as follows: and for our children and our grand- then others can speak, and then vote children. This amendment will open a [Rollcall Vote No. 31 Leg.] on it, if you would like. door for small businesses, where most YEAS—93 The PRESIDING OFFICER. The Sen- of the jobs are created anyway, to cre- Akaka Dodd Lott ator from Montana. ate more jobs, more opportunities, Alexander Dole Lugar Mr. BAUCUS. Mr. President, with Allard Domenici McCain more good products, more high tech- Allen Dorgan McConnell this amendment, we are moving along nology, more ways of keeping the Baucus Durbin Mikulski on this bill. I very much appreciate the United States at the forefront, eco- Bayh Ensign Miller Senator’s generosity in suggesting a Bennett Enzi Murkowski time agreement. At this point, appar- nomically, in this world than almost Bingaman Feingold Murray anything else we could do. Bond Feinstein Nelson (NE) ently, that is not advisable. But I This jobs bill, which itself is an ex- Boxer Fitzgerald Nickles thank the Senator for making his gen- cellent bill that will do a lot for jobs, Brownback Frist Pryor erous offer and for proceeding never- Bunning Graham (SC) Reed will be much better for having this Burns Grassley Reid theless. amendment added to it. I hope my col- Byrd Gregg Roberts The PRESIDING OFFICER. The Sen- leagues will all vote for it. It is a Campbell Hagel Rockefeller ator from Connecticut. worthwhile thing to do. It is something Cantwell Harkin Santorum Mr. DODD. Mr. President, I will move Carper Hatch Sarbanes that every one of us ought to vote for. Chafee Hollings Schumer forward. If, at any moment you would I thank those who have cosponsored Chambliss Hutchison Sessions like to have a time agreement, let me this with me, those who have amended Clinton Inhofe Shelby know and I will try to accommodate Cochran Inouye Smith you so you can move on to other mat- it with their excellent suggestions and Coleman Jeffords Snowe the members of the Senate Finance Collins Kennedy Specter ters. Committee who have been champions Conrad Kohl Stabenow I have already spoken about the of this for many years. I believe over Cornyn Kyl Stevens amendment during the time between Corzine Landrieu Sununu 2:30 and around 3:30, describing, in a the long run this type of amendment is Craig Lautenberg Talent going to pay off in great dividends. Crapo Leahy Thomas sense, what the amendment would do I yield the floor, and I suggest the ab- Daschle Levin Voinovich and the rationale for the amendment. I Dayton Lieberman Warner will be glad to go back over this sence of a quorum. DeWine Lincoln Wyden The PRESIDING OFFICER. The amendment again for my colleagues clerk will call the roll. NOT VOTING—7 and then engage in any debate or dis- The assistant journal clerk proceeded Biden Graham (FL) Nelson (FL) cussion about it. Breaux Johnson In a sense, I am preaching to the to call the roll. Edwards Kerry Mr. REID. Mr. President, I ask unan- choir when I talk about this issue to imous consent that the order for the The amendment (No. 2647) was agreed my colleagues on both sides of the aisle quorum call be rescinded. to. because we all painfully know what has Mr. GRASSLEY. I move to recon- The PRESIDING OFFICER. Without happened in the last 36 months in our sider the vote. objection, it is so ordered. country. We have lost around 2.8 mil- Mr. BAUCUS. I move to lay that mo- lion manufacturing jobs in the United VOTE ON AMENDMENT NO. 2651 tion on the table. States. I have laid out on this chart I The PRESIDING OFFICER. Under The motion to lay on the table was have in the Chamber how that breaks the previous order, the hour of 3:30 hav- agreed to. down State by State across the coun- ing arrived, the question is on agreeing The PRESIDING OFFICER. The Sen- try. to amendment No. 2651. ator from Connecticut. In my home State of Connecticut, we The amendment (No. 2651) was agreed Mr. DODD. Mr. President, may I in- have lost some 32,000 jobs in the manu- to. quire what is the business before the facturing sector; California, 272,000; VOTE ON AMENDMENT NO. 2647 Senate? Ohio has lost around 153,000 jobs; in Il- The PRESIDING OFFICER. The The PRESIDING OFFICER. The bill, linois, 115,000; Texas—the Presiding Of- question is on agreeing to amendment as amended, is currently pending. ficer’s State—150,000 jobs. No. 2647, as amended. AMENDMENT NO. 2660 So certainly we all appreciate the Mr. BAUCUS. I ask for the yeas and Mr. DODD. I send an amendment to fact there has been a tremendous ero- nays. the desk and ask for its immediate con- sion in a very critical area in our econ- The PRESIDING OFFICER. Is there a sideration. omy. sufficient second? The PRESIDING OFFICER. The We also know there is another phe- There appears to be a sufficient sec- clerk will report. nomena occurring, and at an acceler- ond. The assistant legislative clerk read ated pace; that is, the outsourcing of The clerk will call the roll. as follows: many jobs, including some manufac- The assistant journal clerk called the The Senator from Connecticut [Mr. DODD] turing jobs, around the globe, and it is roll. proposes an amendment numbered 2660. accelerating at warp speed.

VerDate jul 14 2003 04:01 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00070 Fmt 4624 Sfmt 0634 E:\CR\FM\G03MR6.075 S03PT1 March 3, 2004 CONGRESSIONAL RECORD — SENATE S2089 We now know there are literally 400 ago on this issue. I am talking about So I am deeply concerned that if we of the top 1,000 companies in the my chambers of commerce, my manu- do not say something, particularly United States outsourcing their jobs to facturing associations, and my labor with U.S. taxpayer money that is being India or China or other nations around unions—all coming together saying: used to subsidize this outsourcing of the globe. Mr. President, 40 of the 50 When is Washington going to say some- jobs, then we are failing to understand States now outsource jobs. thing about this outsourcing that is what is going on across this country. In My amendment simply says—and going on? State after State after State, the trend there are waivers in here and the like. If we continue to allow these jobs to lines are there in manufacturing. It is I understand, although I do not like it, flow out of our country, then I think also occurring in other sectors in the if a company decides on its own dime it we run the risk, at critical junctures, economy. is going to outsource a job. I disagree of having the human talent necessary Let me share with my colleagues, as with that. I think they are wrong to do for us to provide those services and to shown on this chart, indication of it, but it certainly is their right to do produce those goods which will allow where the outsourcing of these jobs is it. We can offer tax incentives to en- us to compete effectively in the 21st occurring. Presently, it is occurring in courage people to stay here, tax dis- century. Once you lose jobs, particu- areas such as office support. The esti- incentives so they do not go offshore, larly in the manufacturing sector, or mate is 14 million additional jobs, by but ultimately a company can decide some of the high-skilled areas, it is the way, will be lost and shipped over- for itself. very difficult to go back and re-create seas over the next several years. The It is another matter with taxpayer those jobs, to re-create those manufac- estimates are about 8 million will money, with the money that American turing centers. occur in office support areas; in com- taxpayers send to Washington. The Let me point out an article that ap- puter and math professionals, close to 3 idea that we would use their dollars to peared in the Wall Street Journal this million jobs lost in that area; business outsource an American job is some- morning. In fact, I have already in- and financial services, over 2 million thing on which I think we ought to cluded it in the RECORD. But the jobs; paralegals, diagnostic support speak loudly and clearly. We ought to ValiCert company—and I think this is services, medical transcriptions, over say: Look, we disagree with that. We a front-page story or nearly a front- 94,000. don’t think you ought to be able to do page story in the Wall Street Journal— So it is not just low-wage, low-salary that. discovered that outsourcing was no jobs that are going but very sophisti- So this amendment, in three dif- great success for them. They did it and cated, high-technology jobs that could ferent areas, very simply says: First, discovered that the value they were be leaving our country as well. That the Federal Government may not use getting for the jobs and products being makes us weaker. It is not in the na- Federal taxpayer money to procure produced did not equal that produced tional security interests of the United goods and services to fulfill contracts here in the United States. They have States to be losing these critical jobs that use overseas workers at the ex- reversed that decision. at a time when we need them most in pense of American jobs. Second, we tell So when you read in this economic order to provide for the economic State and local governments that any report, prepared for the President of growth of our own Nation. So while I understand, from a busi- Federal dollars they receive in the the United States, last month, in Feb- ness perspective, your job is to look at form of a grant, in the form of an ap- ruary— and I will quote the report for quarterly reports, to try to improve propriation, or any other way, that my colleagues where they state, in ab- the bottom line, our job in the Senate they are not to use those Federal dol- solute terms, on page 229 of this report: and the Congress of the United States lars to promote the loss of American When a good or service is produced more goes beyond looking at quarterly re- jobs for the creation of offshore jobs. cheaply abroad, it makes more sense to imports. And, third, we say any agency seeking port it than to make or provide it domestically. We should look generationally. I to privatize a Government contract don’t want my generation to be the Well, tell that to the ValiCert com- being paid with U.S. taxpayer dollars first generation of Americans which pany. They did not discover that. Cer- may not enter into that contract if it, leaves the coming generation less well tainly, while that may be true of a bot- again, displaces American workers in off than every other succeeding genera- tom line of a company, if you are try- favor of offshore workers. tion has left their children and their ing to preserve jobs in this country, Now, very quickly, in anticipation of grandchildren. We are at risk of doing which is a responsibility we bear in some of the arguments we may hear, that if we don’t step up at this juncture this body, and not just to those compa- we provide waivers and exceptions on and say we need to stop or at least dis- nies but to the people who work for grounds of national security, and we courage this outsourcing of jobs that is also allow Governors or Federal agency them—an American job is not just a occurring at a rapid pace every single heads to waive these provisions if there good or a service. An American job has day. is a bona fide lack of comparable goods implications that go beyond just the It is hard not to pick up a U.S. news- or services in the United States. dollar amount lost of income in wages paper in any city and read where one In this legislation, we also, of course, or salaries. It means also that a family corporation, one business after an- make it clear that the Government may not pay their home mortgage and other, is making the decision to procurement agreements between the may not be able to provide the goods outsource more jobs. I think we ought United States and some 27 other na- and services that allow our economy to to say, let’s slow down. Let’s have tions, that are predominantly Western grow and expand. It means families are some balance. Let’s not use taxpayer Europe countries, are not affected by under more strain and stress because money to allow these jobs to be lost. the prohibitions contained in this bill. they have lost the source of income to That is the thrust of the amendment. Those 27 nations do not include, I provide for themselves. I hope we will have overwhelming would point out, India or the People’s So this ought not be a partisan issue. support for this idea. This bill is an ap- Republic of China. This ought to be something on which propriate place to be debating it. It is So the major sources of outsourcing we stand united. This is not being an something that could make a huge dif- are not affected by those provisions. isolationist. I am a free trader. I have ference for those who are worrying Thus, we are in complete compliance been so in the years I have been here. whether we are paying attention at all. with the WTO and every other formal I have supported many, many free We have just debated over the last 5 agreement we have. We are not in vio- trade agreements, and I opposed some weeks medical malpractice, providing lation of any of those agreements as a as well, but I honestly believe if you immunization for gun manufacturers. result of this amendment. are going to be an effective trader, a We have had a bill on pensions. But we Now, I had a meeting in my State— free and fair trader in the 21st century, have not spent 5 minutes debating the and I assume my colleagues may have then you ought not squander and give issue of what is happening to America’s had similar kinds of gatherings—where up the very jobs that make it possible jobs. That is the big issue. people came together who you could for you to compete in this global econ- Look at any survey right now. Ask not have put in the same county a year omy. the American people what they worry

VerDate jul 14 2003 01:41 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00071 Fmt 4624 Sfmt 0634 E:\CR\FM\G03MR6.077 S03PT1 S2090 CONGRESSIONAL RECORD — SENATE March 3, 2004 about the most. It is the loss of jobs. ports three other U.S. jobs. So when we I am one who has supported and sup- They are outraged we have nothing to lose these jobs, we also feel it in the reports expanding markets. I understand say when it comes to outsourcing of tail trade, in the professional services, the importance of trade in terms of jobs to other nations, and we are not and in manufacturing as well. growing jobs. This initiative is not de- standing up and defending our own I apologize if I get heated about this signed to step in the way of our efforts workforce. subject, but it is painful to read some to expand and broaden our capacity to In this same economic report I cited of this cold-eyed analysis that suggests find new markets for our products. On earlier, to give you some idea of why somehow you just have to stomach this the contrary, what it does is ensures people get discouraged, I mentioned or weather this, that this is just one of those firms which have exemplary earlier the quote suggesting it was an these cyclical or structural occur- goods and services to sell have a fair automatic thing that outsourcing of rences in the national economy, and shake at contracts involving Federal jobs was good or, as they call it, im- these statistics, as troublesome as they dollars. porting of jobs. That is the way they are, are nothing more than that, statis- This issue has come up in Minnesota. describe it. I mentioned already a com- tics. From conversations with my Governor, pany identified in a Wall Street Jour- Behind every one of those statistics, it is clear—and I understood this when nal article this morning, ‘‘Lesson in behind every one of those numbers I I was a former mayor—we have an obli- India, Not Every Job Translates Over- cite, is usually a head of household or gation to get the best possible value for seas.’’ I encourage my colleagues to people trying to keep their families to- taxpayers. We have to look at the bot- look at that article as one example of gether. They are not just statistics. tom line. But at the same time we have a company that discovered outsourcing These are American citizens. These are to be concerned about the impact on was bad for business, not good. human beings who are doing every- our State and national economy of for- In this same economic report pre- thing they can to live by the rules and eign offshoring when other options are pared by the President’s top economic provide for their families. They want available, when the work can be done advisors, they raised the following to know whether their Congress—they here. question: don’t identify themselves when they I call this commonsense legislation. The definition of a manufactured product, get up in the morning as a Democrat or Again, I support trade as a way to cre- however, is not straightforward. When a fast Republican; they get up in the morning ate wealth and jobs. But for a govern- food restaurant sells a hamburger, for exam- and worry about their families and ment at any level to contract out with ple, is it providing a service or inputs for their future—gets it, if we understand foreign entities for delivery of feder- manufacturing a product? it, and whether we are willing to do ally funded U.S. programs is tanta- If this was some sort of cartoon in anything about it. mount to Detroit, MI buying a fleet of This is an attempt by myself and my the paper, I might have laughed at it, foreign-made squad cars. It doesn’t colleague from Minnesota and others but it is part of an official document, make any sense. It flies in the face of to say at least when it comes to your an economic report prepared by the common sense. tax dollar, we are going to say to the President’s top economic advisers Recent news reports noted that under States, localities, and other businesses which suggests through the question a $16.8 million contract with an Ari- with waiver provisions here, you are that flipping a hamburger or cooking a zona firm, calls to a Minnesota toll- not going to use those dollars to hot dog is a manufacturing job. You free number for help with lost and sto- outsource an American job, not on our get some idea and sense of where the len food stamp cards are being routed watch. You may decide to do it with outrage of the American public is com- to Bombay, India. Under a $13.3 million your own money, but you will not do it ing on why we are unable to speak to contract, software programs in India with American taxpayer money. That this issue. are helping build a Web-based system is why we offer this amendment. Again, I don’t care if you are a Demo- to automate eligibility for Medicaid crat or Republican, what your politics I yield the floor to my colleague from Minnesota for any comments he would and other health care benefits to low- or ideology is. We have to stand up and like to make. income Minnesotans. defend our country in a moment like The PRESIDING OFFICER. The Sen- The administration of U.S. Govern- this. I worry about losing these jobs. ator from Minnesota. ment programs ought to be done here I mentioned earlier I had some 5,400 Mr. COLEMAN. Mr. President, I rise at home in the U.S. Even if some of the manufacturers in my State employing in support of the amendment offered by work is outsourced to private vendors, well over 240,000 people. We have lost my colleague from Connecticut. I am the thought of our Medicaid or food about 35,000 jobs in the last 36 months. proud of working with the President to stamp programs being run out of some- My manufacturers produce critical grow jobs. I firmly believe, from my place in India would offend most Min- components for some of the most so- days as a mayor, when you cut taxes, nesotans’ sensibilities, and it offends phisticated defense technologies in the you shape an environment in which mine. Nation. If you lose that manufacturing folks invest. And when they invest, We have an opportunity to talk base, it is not just the loss of a manu- mom and dad have a job. The best wel- about what we do with taxpayer dol- facturing job or the loss of a good little fare program is a job. The best housing lars. Would you use those taxpayer dol- company, it is also a critical issue program is a job. Access to health care lars in a way that fosters the growth when it comes to national security comes with a job, most often. So we and development of American jobs or needs. Many of these small manufac- have to do what is necessary to grow do we send them overseas? I think com- turers produce critical components and jobs. We are moving in that direction. mon sense says we use them here. parts for some of the most sophisti- Clearly, more needs to be done. My colleague and I may disagree at cated defense technologies in our Na- Changing the economy at times re- times on tax policy or on a range of tion. minds me of turning around one of issues. But this is an issue that should I mentioned earlier my friend and those oar boats in Lake Superior: You cut across partisan lines. We have an colleague from Texas. The number of have to get it moving in the right di- interest in growing jobs in this country jobs there, 150,000. I know this Senator rection. I believe we are moving in the and this is a way to make common- has many of these small companies right direction, but more has to be sense use of taxpayer dollars. I am that are producing those parts for de- done. proud to stand in support of my col- fense companies, defense technologies. We have an opportunity with the league’s amendment to this bill. There is a ripple effect. We know as Dodd amendment to do more, to make I yield the floor. well, beyond the implications for our sure we use taxpayer dollars wisely, in The PRESIDING OFFICER. The Sen- national security, for every one of a way that prevents the outsourcing of ator from New Jersey is recognized. these jobs that are lost in the manufac- American jobs and grows jobs here. Mr. CORZINE. Mr. President, I also turing sector, there are jobs lost in The underlying bill we are dealing rise to support the amendment of the other sectors. It is not just that job with, the Jumpstart JOBS Act, is mov- Senator from Connecticut. It is very that is lost or that family that is af- ing us in that direction. We have to do hard for people in my State and across fected. Each manufacturing job sup- more. We are doing it right here. this country to read the President’s

VerDate jul 14 2003 01:41 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00072 Fmt 4624 Sfmt 0634 E:\CR\FM\G03MR6.080 S03PT1 March 3, 2004 CONGRESSIONAL RECORD — SENATE S2091 economic report and hear economic is absolutely essential the American bottom line. Here is an example of a theory that is pronounced in economics people know we are fighting for their company which had a very different ex- 101, that somehow or another 19th cen- best interests at home on the floor of ample. Aside from the obvious reduc- tury comparative advantage is the the Senate. This is the most direct, tion in payroll by hiring people in an- basis on which we ought to be working clear method of pushing back against other country to do the job, and firing jobs in this country. what is a very wrongheaded approach Americans, are there also examples Folks are very concerned when they to creating jobs in America. where this kind of activity has actu- don’t have work. That is a very simple Again, I am pleased to be a cospon- ally been bad for business and not nec- principle of economics. We are seeing sor. essarily automatically good for busi- so many of our manufacturing jobs go, Mr. DODD. If my colleague will yield, ness, as suggested by this report? and now 40 out of 50 of our States are I thank my colleague from New Jersey Mr. CORZINE. Well, the Senator taking jobs that are government jobs for his support, and my colleague from from Connecticut raises a good point and shipping them overseas and under- Minnesota as well. because I think when business decides mining our economy here. That is not My colleague from New Jersey is no it wants to outsource 14 time zones highfalutin economics. That is taking stranger to these issues. I made note away or 12 time zones away, there are money out of the pockets of people who before of what is happening in Min- enormous synergies in business that drive our economy and make a dif- nesota and other States. In Con- are lost—the ability for people to work ference in our communities. It has all necticut, we have lost 32,000 manufac- in similar space, to get the economies those multiplier effects other econo- turing jobs. New Jersey has lost over of the consolidation of ideas, working mists might talk about. Then you 55,000 manufacturing jobs. with people. It doesn’t work nearly as don’t collect tax revenues, you don’t Mr. CORZINE. If the Senator will well. As a matter of fact, a lot of busi- have people spending money back into yield for a quick statement, on Friday, nesses are consolidating so they can the economy and driving it. A Senator we closed the last Ford production fa- make a lot of their operations much talked about manufacturing jobs, but cility in New Jersey, and we are on more sympathetic with each other. there is a leverage or multiplier effect track to have complete closure of the These are business principles a lot of on government jobs as well. auto industry in New Jersey, which folks follow. This is really out of touch with the used to be one of the heartlands of auto I don’t think it is as obvious as is American people, when we believe our production, outside of Michigan. It is commented in the economic report of policy ought to be to encourage very much reflected in the kinds of the President, but I guarantee some- outsourcing. Here, with taxpayer dol- numbers the Senator is talking about. times the short-term benefits that lars, in the Federal Government, we We were supposed to be replacing somebody might see on a quarterly re- have an opportunity to say, no, this is those jobs with technology, informa- port, because they have lowered their not the direction we ought to take. We tion systems and telecommunications loss, are grossly offset by long-term should not be moving jobs overseas equipment, and now we see those jobs costs because they lose the techno- that would be very properly done here moving offshore just as much, and logical innovation of having people at home. We see it in the manufac- some are reflected in those numbers. work together. They lose the econo- turing sector. I am not sure I totally That is why it is so important to mies of scale, and the potential long- agree we ought to let everybody look stanch some of that movement by the term costs, aside from the social costs at their quarterly bottom line and kind of action that would be taken in the Senators from Connecticut, Min- nesota, and New Jersey have been talk- move. I think we need to understand reflection of the amendment of the ing about, are huge. there are national security interests at Senator. Mr. DODD. I thank my colleague for stake on jobs we have right here at Mr. DODD. I mentioned earlier there was an article in this morning’s Wall those comments. They are very en- home. We need to make sure we have a lightening. It is further indication that manufacturing sector that can actually Street Journal entitled ‘‘Lesson in India: Not Every Job Translates Over- these trend lines are moving forward. produce steel, manufacture the weap- There has been a report in Time mag- ons that protect our men and women seas.’’ I want to ask my colleague a question. Because of his background in azine that indicates we are looking at, when they go to war. We need to have some indicate over the coming years as that strength and it needs to be sub- business, he understands those issues better than most of us. This reads: many as 14 million, 15 million jobs to stantial. be outsourced if we do not begin to do When sales of their security software We need to work to make sure our something about it. In the near term, I technology is under our control, the slowed in 2001, executives at ValiCert Inc. began laying off engineers in Silicon Valley think the number is between 3 and 4 privacy of the information that flows million with a loss, by the way, just in. I think we ought to push back to hire replacements in India for $7,000 a year. looking at revenue loss, of wages lost— against all this outsourcing for a lot of It says: forget everything else, forget what reasons that don’t just deal with eco- happens when a person loses their job nomics. But it is absolutely The reality was different. The Indian engineers, who knew little about ValiCert’s soft- and the ripple effects that occur—just unfathomable that we would take ware or how it was used, omitted features in lost wages it is about $140 billion. State and local folks, Federal Govern- Americans considered intuitive. U.S. pro- We know what kind of budget deficit ment people, and ship their jobs over- grammers, accustomed to quick chats over we are in already. I don’t think this seas at the cost of not being able to cubicle walls, spent months writing detailed figure has been projected onto those have the overall economic impact of instructions for overseas assignments, delay- numbers at all. We look at revenues this. I think, particularly with the ing new products. Fear and distrust thrived coming in, and we look at what expend- waivers the Senator from Connecticut as ValiCert’s finances deteriorated, and co- itures for which we have to account, has built into these programs, we have workers, 14 time zones apart, traded curt e- mails. In the fall 2002, executives brought and a loss of $136 billion to $140 billion a program that will make a difference. back to the U.S. a key project that had been in wages, lost because of outsourcing It is not enough to talk about trans- assigned to India, irritating many Indian over the next decade or less, ought to lating hamburger-flipping jobs into re- employees. be a matter of deep concern, even if classifying manufacturing as a means ‘‘At times, we are thinking, ‘What have we you are not affected or moved by what to solve an outsourcing problem. It is done here?’’’ recalls John Vigouroux, who happens to families or heads of house- incredible, absolutely incredible, the il- joined ValiCert in July 2002 and became chief holds who are trying to provide for the logic we see running through this eco- executive three months later. needs of their families. nomic report. Tell me a bit about this. I think the The fact that we lose that much sal- I think the Senator from Connecticut assumption is made automatically, and ary and wages going out ought to be of has put together a response that makes certainly in this economic report pre- great concern. I mention that as an ad- sense. We are going to use U.S. tax- pared for the President by his adminis- ditional implication of what is caused payer dollars to make sure when we tration, it makes a categorical state- by outsourcing. have Government jobs, they stay here. ment that outsourcing of jobs is always Again, I said earlier, we can offer in- I am proud to be a cosponsor. I think it a good thing because it improves the centives for people to stay, we can offer

VerDate jul 14 2003 01:41 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00073 Fmt 4624 Sfmt 0634 E:\CR\FM\G03MR6.083 S03PT1 S2092 CONGRESSIONAL RECORD — SENATE March 3, 2004 disincentives in the Tax Code for them These happen from a structural agreements, particularly with large not to go, but I don’t know, for the life standpoint. But when you allow it to economies—we are not going to see of me, why we ought to be taking go on with Federal money being used— even the theoretical benefits coming American taxpayers’ money—we insult again, as I say, I would not be party, as back of open trade markets. The situa- the taxpayer to say, I am going to use much as I may object, to companies tion is very true in the old industry your money to fire someone in this that want to do this. I think they are that I worked in, financial services. It company and hire someone someplace wrong to do it. They are making a mis- is very hard to penetrate these large else to do the job at a fraction of the take. It is harmful to our country. On economies about which the Senator has cost because it is going to improve their dime, I guess they have a right to talked. your bottom line. do it. But on our dime, they ought not So we give up the jobs in I don’t know how the Senator feels, have the right to do it, and this is the outsourcing, but we are not getting the but the societal implications are pro- American taxpayers’ dime. ability to actually provide the services found. Our job is not only to make sure I don’t think we ought to be saying that would make up for some of those there is wealth creation in the country, to them, You can take your Federal jobs back here at home. but also we bear a responsibility be- taxpayer money and pay somebody off- It goes back to a miscast presen- yond quarterly reports to see to it, shore to do it, losing an American job tation of a concept that is fine in Eco- from a generational standpoint, that that could be done here. I don’t think nomics 101 books on comparative ad- we are going to leave this country at that is right, and that is the purpose of vantage but makes no sense in the ev- least as in good a shape as we inherited this amendment. I thank my colleague. eryday lives of working men and from our parents. Mr. BAUCUS. My good friend from women in America. Mr. CORZINE. Will the Senator New Jersey has to leave the floor. I Mr. BAUCUS. The point I am trying yield? compliment the Senator for what he is to make is, we Americans pride our- Mr. DODD. I will be happy to yield. trying to do. This clearly is the issue, selves on being fair and open, but I Mr. CORZINE. The $140 billion the the problem that faces our country as don’t know that other countries are as Senator from Connecticut spoke about it will certainly for the rest of the year fair and open when it comes to trade. We are not pure. We do not wear a with regard to salaries on the chart the and probably for the indefinite future. Senator previously showed, there is a I am wondering, in addition to the white hat. Other countries are not necessarily Darth Vaders and wear black multiplier effect. It is almost three approach suggested today—and there hats. But I think it is also true the times that value to the economy. The probably are additional proposals, too. shade of gray of our hat is a lot lighter Senator had the chart which showed This is a complex problem and requires shade of gray than the shade of gray of the full implications. It is remarkable a complex solution. It reminds me of a their hats. They do not agree to fair what is given up when our Nation loses quote I am fond of making. H.L. Menc- trade in the main. I am talking about these jobs overseas. It is not just those ken once said: For every complicated the bigger countries. India is the best salaries. When you take the full impli- problem there is a simple solution, and example, the most blatant example. cation, because you also have to look it is usually wrong. Mr. DODD. I thank my colleague at the tax revenues that come back In my judgment, this administration from Montana, as well, for his com- into the coffers of State, local, and not only is sort of laissez-faire but kind ments. I think they are poignant. Federal governments, these numbers of going AWOL on this issue. I don’t While we do not specifically address could be even larger. This is just show- see a plan. I don’t see a way to deal those issues, he is absolutely correct. ing the impact of what the multiplier with job loss that passes the smell test. It is another piece of this puzzle on effect is for the economy. In addition, wouldn’t it help to be which we need to do a far better job. I These numbers are huge. So the un- much more aggressive in enforcing our have had some recent discussions with dermining of the well-being of our trade laws? ambassadors from some of the Latin economy by this outsourcing element One thing that bothers me, frankly, American countries and have suggested is just way more profound than I think is that we are going about getting to them they ought to start talking to is being discussed and is an extraor- trade agreements with minuscule us about having labor standards and dinary misrepresentation and a mis- economies. The big bang for the buck is environmental standards from their take for the administration to believe enforcing our trade laws, say, with re- perspective. that this is something we ought to be spect to India or China or maybe the Mr. BAUCUS. Absolutely. embracing and encouraging. European Union. There are lots of ex- Mr. DODD. If free and fair trade is to There is another element that needs amples. work well, it ought to be raising the to be thought about. Every time those We hear about all the call centers in quality of life and the level of wealth outsourcing jobs cost an American job, India. We don’t hear much about many accumulation by people in these coun- then that individual has to compete for products by American companies being tries with whom we are about to enter another job. Right now, for all but the sold in India, and the Indians are very into trading agreements. That is good top 20 percent of our economy, we are much violating the intellectual prop- for us, and it is good for them. Instead seeing declining real wages. erty agreements. Billions of dollars are of us having to fight for it here, they The fact is, people are competing for being lost to American companies that ought to be fighting for it and insisting lesser quality jobs that pay less than could be spent in America because upon it on behalf of their own constitu- the jobs that are leaving. I think we other countries are not living up to ents. have seen estimates that it is about 20 their international obligations. Mr. BAUCUS. Let me ask the Sen- percent less that an individual makes I was wondering if the Senators agree ator a question on that same point. in the next job they take after they that is one of the additional ways we Would the Senator agree that in the have been laid off. It is profoundly can take to keep more jobs in America? main, most of the countries we are wrong for the administration to em- Let’s open up markets in other coun- talking about—we are talking about brace such a dangerous idea both for tries so we can export more. environmental standards and labor the economic power and also the real Mr. CORZINE. The Senator from standards in these countries—generally hurt that I think it brings to the indi- Montana is exactly right, some of the do not most of those countries want to vidual loss. regulatory restrictions or ability to ac- sign free trade agreements with the Mr. DODD. I thank my colleague. It tually penetrate some of these mar- United States because it adds to their is worthwhile to make the point that kets, while they may meet the letter of prestige; it helps them market their actually watching the buying power, the law with regard to trade agree- products and helps them gain standing the wealth of individuals being re- ments, are virtually impossible, par- in the world? Would the Senator agree duced, overall our country suffers from ticularly in the services where we sup- with that? that—obviously the families do—but posedly have the comparative advan- Mr. DODD. I say to my friend from when you reduce that buying power, tage. Montana, it is as obvious as anything. that wealth, implications are being felt I think unless we are prepared to deal These are the shelves—this is the mar- throughout our economy. on all fronts—enforcing our trade ketplace you want to be. If you are any

VerDate jul 14 2003 01:41 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00074 Fmt 4624 Sfmt 0634 E:\CR\FM\G03MR6.086 S03PT1 March 3, 2004 CONGRESSIONAL RECORD — SENATE S2093 other country in the world, you want people in this Chamber calling for well. So the implications, in addition to be able to access the greatest con- these kinds of things, but, in fact, peo- to laying someone off—as we see now sumer market in the history of man- ple in these other countries are going the thousands of jobs that have gone— kind, which is the United States of to be insisting upon it as well. the Senator from Montana is very ac- America. This is the most inviolable Mr. BAUCUS. I do not know how curate in pointing this out when look- place to which you can sale your serv- much time the Senator has, but I ing at this issue. ices and your goods. might ask, if the Senator does not Here we are taking Federal taxpayer Mr. BAUCUS. Would the Senator also mind, to address another subject with money. That is what my amendment agree that it is the case that most of respect to jobs. Would the Senator addresses. It says: With Federal tax- these countries probably want to enjoy agree, as we try to find a solution to payer money you can lay someone off the status or the prestige of having a this problem, that one of the issues we and hire someone else and pay them free trade agreement with the United have to face and have to focus on is basically with Federal dollars. So we States? Certainly we are not going to high health care costs that American are, in a sense, not only causing that negotiate an agreement that gives companies pay and face? It is a very person to lose their job in this country away the store. This is a bargain for an complex problem, clearly, but a lot of but also their health care benefits and exchange. Is it not also true that it companies unfortunately are lowering other benefits they may have, not to therefore is a mistake for the United their employee health benefits or their mention what it does to a family. States to in effect be negotiating retiree health benefits because they Talk about keeping families to- against itself; that is, for some in the say it is necessary in order to do busi- gether, the single largest reason why administration to say, no, we do not ness; the world is just so competitive. families break up is economics. Every want those labor standards, we do not The first casualty is those who lose study in the world that has been done want those environmental standards, their health benefits. They are scared on that institution says it is econom- whereas in truth those countries, to death, frankly, about lowered health ics. frankly, are the ones we should be benefits or no health benefits. On top As a matter of Federal policy, in ef- talking with because they themselves of that, it is partly, it seems to me, be- fect we are saying we are going to want these agreements and would be cause we do have high health care costs outsource these jobs, causing a great much more willing to agree to them? in America. disruption in America and families’ Mr. DODD. Absolutely. The whole In fact, the last study I saw is that lives. The Senator from Montana is so point of these trading agreements, be- we pay twice as much per capita on right to point out that the health care cause we are a high value country, ob- health than does the next highest implications, because we have not yet viously, and we do not want to dumb country. I do not know if we are twice sorted this out, are huge. down our system, we want to see im- as healthy as people in other countries, Again, I come back to the point, I do proving quality products, you need to but we pay a lot, and that has to be the not accept it, I do not like it, but if sell them to somebody. If the countries cost of doing business. someone on their dime wants to lay What I am getting at, is part of the with whom you are entering trading someone off and hire someone else, I do solution of this some way to address ef- agreements do not have a population not like it and I wish I could do some- ficiencies in health care and quality of that can afford to buy your higher thing about it and I certainly want to health care, recognizing that employ- value goods and services, then the trad- support measures that I know of the ing arrangement is going to be all one ees of companies in other countries have their health covered by the gov- Senator from Montana and the Senator way and not the other. So it is very from California, such as giving tax in- much in our own interest, from a larg- ernment, where that is not true in our country; that that, too, is a part of the centives to encourage people to stay er perspective, to be able to have it. here, but when someone does it with Too often it is U.S. interests that are problem here? If we are honest with Uncle Sam’s nickel, with the tax- insisting that labor and environmental ourselves, we are going to have to fig- payers’ money, then I say, no. I have agreements not be included because ure out some way to get our hand on they want to be able to enter those that one, too. some control over that. I am offering an amendment today markets and hire people at those de- Mr. DODD. I appreciate the com- that says when it comes to U.S. tax- pressed wages and be able to operate ments of my colleague from Montana. payer money, you are not going to lay plants that do not face environmental He is absolutely correct. I did not even regulations. So they see it as advan- get into the issue of what happens somebody off and hire somebody else 12 tageous for them. They then turn here. Obviously, when you fire sometime zones away to do the job. You around and sell those goods back here. one, lay someone off, you hire someone may do it on your dime but not on They are not thinking about an offshore to do the job, there is abso- their dime. American corporation that wants to lutely no requirement that the fired or I will mention one other subject mat- sell its quality product there. It is very laid-off worker is necessarily going to ter that I know my colleague from shortsighted and, of course, it only be able to get any kind of health care Montana and my colleague from Cali- leads to further encourage the coverage from the former employer. fornia care about, and that is privacy. outsourcing of jobs, which is exactly Even when you have retired with full That is one of the things we have not what is going on. benefits there is no guarantee, as we talked about at all on this issue. Mr. BAUCUS. The point being that learned through the discussion of the I pointed out earlier—I apologize to the other countries themselves are Medicare bill that was before us only a my colleague from California because much less concerned about this. few months ago. she cannot see this chart, but I was Mr. DODD. And they should be more So in addition to the lost jobs and talking earlier about where these jobs concerned about it. wages—that is all I have been talking are going, from what sectors of our Mr. BAUCUS. Exactly. about today—there are benefits that economy they are coming from, the 14 Mr. DODD. My colleague would be in- are incredible, and when people lose million additional jobs in danger of terested to know, in my conversations, those benefits it adds to the roles of being shipped overseas. One of the very informally at this point, but I am the 44 million people in this country areas we are talking about is in the finding a great deal of receptivity to who have no health insurance. area of medical, diagnostic and medical the point the Senator from Montana is They get health care. It might be services. This covers a little more than making; that, in fact, they should be showing up in an emergency room, almost 300,000 jobs in that area. insisting upon these points. The poli- which increases the costs of everyone We all know what is happening. tics of their own countries are chang- else who has health care, as we all Today, with information technology, x- ing and they are insisting if you are know. Fortunately, in this country if rays can be transmitted at the speed of going to enter these agreements, that people get sick they can show up some- light or faster. this be a part of it as well. place and get some kind of coverage. Mr. BAUCUS. We are going to give Mr. BAUCUS. Absolutely. Mr. BAUCUS. Usually that is true. you a Nobel Prize for that. Mr. DODD. We may be looking at a Mr. DODD. It is not free, and it adds Mr. DODD. All sorts of medical infor- new era where it is not going to be just tremendously to the cost of others as mation.

VerDate jul 14 2003 01:41 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00075 Fmt 4624 Sfmt 0634 E:\CR\FM\G03MR6.089 S03PT1 S2094 CONGRESSIONAL RECORD — SENATE March 3, 2004 We have provisions of law in this As we work to alleviate food shortages ex- I thank you again for your leader- country that say you cannot share cer- perienced by the Iraqi people, we have a ship. tain private medical information with unique opportunity to assist our own farm- Mr. DODD. My staff gave me some insurance companies or employers ers. I request USDA reconsider this decision other information. I have mentioned and instead purchase the needed quantity of without consent. Medical information rice from U.S. farmers. In the future, USDA others. Tax experts now say Indian- is now being processed by someone who should use taxpayer dollars to purchase U.S. chartered accountants, the subconti- has been hired 12 time zones away—all rice before it spends taxpayer dollars on for- nent version of certified professional of a sudden that information is no eign commodities. accountants, will prepare somewhere longer well-protected. So as we see the I wrote this letter on February 24. I between 150,000 and 200,000 tax returns increase in these diagnostic support am so pleased. I discussed this with this year. That is up from 20,000 last services and medical transcriptions your staff. Your amendment would year. going offshore, then the very protec- cover this. I am not making up these numbers. tions we ought to have as Americans Here we have the sons and daughters The trend lines are moving at a very are also being lost. I don’t cover that of America’s working people, including rapid pace. In this case here I am not in my amendment here, but we may people on the farms for sure, going off suggesting these are necessarily being offer some language on this bill at to Iraq and putting their lives on the paid for with Federal tax dollars. I some point that would say you have to line. Now their families either see their don’t know that. If it is not, obviously give people at least the opportunity to jobs going abroad or in this case they we are not covering the situation and say I don’t want my medical records are ready and willing to feed the Iraqi these firms that want to continue being processed or handled by someone people. They are excited about it, they doing it unfortunately will be able to offshore. I want it kept in the United have great products, they have sur- continue. But if they were doing it States because I don’t want someone to pluses, and our administration, the with Federal tax money, I say no, just be able to go in and find out highly Bush administration, goes outside. as my colleague from California says sensitive information about me and my I wanted to first of all ask if you no. family that could be used against me. were aware of this issue, and, second, If someone with their own dime Today the laws of the United States say to you whether you were or you wants to decide they are going to ship do not adequately protect you when were not, I thank you on behalf of the rice or whatever products and use this information is being processed and people who make a living from agri- someone else offshore, that is one handled offshore. That is one of the culture, because we have our serious thing. But when they are using tax- major areas we are seeing these jobs problems. We have the best products in payer money to do that, that is when moving. the world and we have farmers who are we have an obligation to stand up and Mrs. BOXER. Will my colleague yield ready to feed the hungry. say no. for a question? Mr. DODD. Let me say to my col- Mrs. BOXER. Thank you. Mr. DODD. I am happy to yield. league I was not aware of it. I apologize Mr. DODD. I appreciate her very Mrs. BOXER. First let me say how for not being aware of it. much for raising that issue. happy I am to hear you and our rank- I know agriculture is a huge industry Let me say I see my colleague from ing member have this conversation. in the State of California, particularly Iowa on the floor, and others. This Sen- This is so important. In a way it is in the area of rice. It is significant. So ator is prepared to vote. I talked about kind of a problem that snuck up on us. I am pleased to know we are covering this. I have had colleagues come over I took a look at the loss of manufac- this kind of activity as well. and share some thoughts on it. I know turing jobs in California and my heart Again, this is not being isolationist. there are other matters. I know Sen- sank. Mrs. BOXER. No. ators want to move on. I am certainly Mr. DODD. There were 272,000 jobs Mr. DODD. Every time you try to not engaged in any filibuster. I am pre- lost. stand up for an American job you are pared to ask for the yeas and nays and Mrs. BOXER. Think about it, 272,000 called an isolationist. There is a new vote on this amendment and move on jobs. coalition. They want to change the lan- to other questions. Is there some op- There is one area covered in your guage, by the way. There was an arti- portunity? I don’t want to go into a amendment. Since no one has men- cle this morning that says, ‘‘Business quorum call if other Members want to tioned it, I want to read into the record coalition rewrites lexicon for jobs come over and discuss other matters, a letter and then answer the comment, outsourcing.’’ They point out, they say but if we want to vote on it, I would and then I am done with my role here the coalition is now rallying around like to do it. What chance do we have, today other than to say thank you ‘‘worldwide sourcing’’ as a less provoc- I ask my friend from Iowa? again for your leadership. ative term. Mr. GRASSLEY. I will be glad to re- This is an interesting issue. It is cov- I apologize for sounding provocative, spond to that. Some Members on our ered. Your amendment is not reflected but we didn’t make this up. What side have not studied the amendment on the charts because it deals with ag- ought to be provocative is the fact that as much as they felt they should and riculture, something in your State you people like my colleague from Cali- have some questions about it. I would don’t have as much of as I have. fornia have constituents who are losing say there are two things. One is under- I want to read a letter I just wrote to their jobs because we are not doing standing completely the impact of your Ann Veneman. I believe this will get enough to protect these jobs—not from amendment, which obviously is a le- you a lot of votes from agriculture a protectionist standpoint, but protect gitimate concern. The other is that country. them when in fact there is no loss to be kind of makes a determination whether DEAR MADAM SECRETARY: I was shocked to learn that the U.S. Department of Agri- incurred as a result of standing up and some Members on our side would want culture purchased 70,000 metric tons of rice saying we ought to be doing what we to take some action, maybe with an for the Iraqi people from abroad rather than can to protect these positions in our amendment to the amendment. That purchasing this product from U.S. sources. country. I commend her for it. decision has not been made. My guess At a time when U.S. farmers are facing in- I thank you for raising it. It is an im- is that decision is not going to be made creased economic pressures and food sur- portant point and I am glad our amend- today. That decision will be made to- pluses, our taxpayer money should be spent ment covers it. morrow. on U.S. commodities, not the commodities of Mrs. BOXER. I will talk to those Mr. DODD. I appreciate that. other nations. from agriculture states because they California, like many other States across Mr. GRASSLEY. Maybe I am being our nation, is experiencing a surplus of com- may not be aware this administration more candid than a Republican ought modities such as rice that could provide val- is taking the dollars this body voted to be, but that is the way it looks to uable nutrition to the Iraqi people while al- on—I had problems with voting on it, me. You have always been transparent leviating potential crop losses for our na- but most people voted for it—they are with me. I think I ought to be trans- tion’s farmers. taking that taxpayer money and tak- parent with you. Then I talk about California’s high ing it right out of this country. It is Mr. DODD. I thank my colleague and quality of rice. outrageous. the manager of this bill for his candor

VerDate jul 14 2003 01:41 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00076 Fmt 4624 Sfmt 0634 E:\CR\FM\G03MR6.092 S03PT1 March 3, 2004 CONGRESSIONAL RECORD — SENATE S2095 on the subject matter. He will cer- them out with somebody because you If you are unemployed in a State and tainly understand if I share with him— have been here a long time. There is no you call up your unemployment office I know these were not his views, he is one who is more patient and more will- to find out about your rights, and you expressing the views of others who ing to sit down and figure things out. are talking to someone 14 time zones didn’t understand the impact of this But I have a feeling it is deeper than away to find out your rights, that is of- amendment. Let me say to him, my that. I have a feeling you have touched fensive to people in this country. They good friend—and he is a good friend. a nerve today which is a very impor- want to know what we are going to do We have been in Congress together for tant nerve to be touched. I think it is about it. Do we understand what they many years—the impact of not doing being touched in the Presidential cam- are going through? something here is huge, on workers los- paign. I think it is being touched in the This is the first opportunity we have ing their jobs. I know my colleague campaigns across our country, and it is had since we have been back over the knows that and shares my concern being touched here today. last 5 or 6 weeks to raise the one issue about it as well. If we don’t stand up and do some- here. Night after night, Lou Dobbs on It is not terribly complicated what I thing about this, as my friend pointed CNN, to his great credit, is talking am suggesting here. It is straight- out in his very chilling chart—and say about this issue. He is not talking forward. It says when it comes to tax- there is some complication, there is a about it and speaking to an audience payer money, it can’t be used to sub- message being sent, it may be too late. that is not interested. The audience sidize someone offshore at the cost of I say to my friend, if he is willing and across this country is deeply interested an American job. if there is some concerns around the in this subject matter. They want to I know the coalition of the Chamber edges which can be worked out, I just know whether or not anybody is doing of Commerce and the National Associa- hope he won’t back off this amendment anything about it. I can’t stop a pri- tion of Manufacturers and some other in a substantial way. If there is a dif- vate company from outsourcing with groups out there don’t particularly like ference between the parties, bring it their own money. But I can stop you this amendment because 400 of the top on, I say. This is what people care from using Federal taxpayer money to 1,000 corporations are now outsourcing about in my State, and I know also in fire somebody here and hire somebody jobs, and I am sorry if they are dis- my friend’s State. Can he give me a 14 time zones away. That I can try. I appointed by this amendment, but sense of the thinking on how he is may not win, but I can try to do it. there are an awful lot of people losing going to proceed since the majority And that is what we are trying to do. their jobs. will not allow a vote today? Mrs. BOXER. I am really relieved to That is the only reason I raise it. I Mr. DODD. I will make two points. hear my friend’s response to the Sen- I appreciate my friend from Iowa have to wait until tomorrow. We will ator from Iowa. As I understand his telling me what the substantive con- have to wait, obviously. I am dis- amendment, he has already gone a very cerns are about the amendment, one appointed because I thought it was long way in answering the concerns which I think we have addressed. pretty straight forward. Nonetheless, I On the second question he raised, we that were raised. I hope we will stick appreciate my friend’s candor. included language which very specifi- with it. I think the people in this coun- I see my colleague from California. cally makes clear that the government try are watching. They are not only Mrs. BOXER. Mr. President, I wanted procurement agreements between the watching CNN, but they want to know to ask a question of my friend. I would United States and 27 other predomi- what we are doing. It is an amendment be happy to defer. nantly western European countries that I have been looking forward to for Mr. GRASSLEY. Mr. President, I would not be affected by this legisla- a long time. We have to make a stand, think maybe I answered too casually tion. India and China are not part of and I think what my friend is doing is when I answered the Senator’s ques- that problem. The major culprit in all not overreaching. tion—that maybe I have a feeling there of this is outsourcing of jobs. But my I rise to say thank you to the Sen- were not legitimate concerns by people colleague from Montana raised the ator for sticking with it, and I will do on my side. There are a couple legiti- question that we could be found in vio- all I can to help him get it passed. mate concerns. No. 1, the Senator’s lation of World Trade Organization The PRESIDING OFFICER (Ms. COL- amendment does have some mandate policies, if we didn’t include this lan- LINS). The Senator from Iowa. Mr. GRASSLEY. Madam President, on States. That creates a lot of con- guage. So I think we addressed the con- first of all, the Senator from Con- cern—I will bet not only on my side cerns about whether or not we are necticut has been right in the sense but on his side as well. That is a very going to run afoul of some inter- that we have raised some concerns, and philosophical point of view of the im- national agreements to which we are a we are working with him. He has made pact which we make in the Senate on signatory. 50 States, and how many subdivisions I The second part about mandating some modifications. We are still hear- don’t know. The other one is the extent States, if you are going to use Federal ing about some more concerns. I have to which this might lead to legitimate money to lay off workers in your State expressed two of those already. I would legal retaliation as a result of the Sen- and hire someone 12 time zones away like to express another concern that I ator’s amendment. That seems to me to do the job, I don’t consider that a have heard. to be a reasonable, free, and fair trade mandate. That is Federal money. If Yes, it preserves jobs in America if consideration in any action this body you want to do it with State money, I there is not outsourcing of service jobs takes. can’t keep you from doing that. That is that are involved. But this is a legiti- I want to make clear that it is not your choice. If you are going to do it mate concern on our side: The extent strictly political. There are some con- with Federal money that comes from to which there might be retaliation by cerns about his amendment. I enun- grants and so forth, I think the Amer- countries that outsource some things ciated at least two. ican taxpayer would like to know that to the United States. That goes on as Mr. DODD. Mr. President, I yield to Federal dollars are being used to lay well. We want to make sure if we are my colleague from California. off one person in your State and hire losing jobs, we don’t have a greater Mrs. BOXER. I have a question of my someone 12 time zones away. You can loss of jobs in retaliation for Ameri- friend, Senator GRASSLEY. call that a mandate, but I call it com- cans who are already employed by a While the Senator was out, I was tell- mon sense at this particular juncture. company outside the United States ing the Senate that I had written to I think we have gone as far as we can which is using the services of American Ann Veneman because with taxpayer go on this issue. We have covered the people in America. dollars the USDA went out and bought ground. These are concerns that need to be rice from a foreign country instead of I thank my colleague from Wis- addressed. These are things that will be from my rice farmers. I think that is consin, Senator KOHL, for joining me in brought out in debate, and it may be wrong. a bipartisan fashion on this amend- possible to work on continuing modi- I ask this question of my friend: If ment. fications of the Dodd amendment so there are legitimate concerns, I am Today, 40 States outsource jobs. That that hopefully we can get it passed sure my friend will sit down and work is pretty alarming. without a great deal of opposition.

VerDate jul 14 2003 01:41 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00077 Fmt 4624 Sfmt 0634 E:\CR\FM\G03MR6.094 S03PT1 S2096 CONGRESSIONAL RECORD — SENATE March 3, 2004 At this point, we are not prepared to disagreement on this point that necticut has spoken passionately and vote. outsourcing is a good thing. eloquently about our concern about job Mr. DODD. Madam President, I don’t These are not just goods and services loss in this country and certainly it is believe I yielded the floor. to be tradable in the open marketplace. something we are all concerned and The PRESIDING OFFICER. The Sen- These are critical jobs which mean a want to do something about. But I am ator from Connecticut has the floor. huge difference to the families af- sure none of us would want to endorse Mr. DODD. My colleague from Ne- fected. We bear no greater responsi- a cure which is worse than the disease vada is in the Chamber. I didn’t know bility in this Chamber than to do what or cause other problems that perhaps if he wanted to speak. we can to protect American families. we have not thought through or that Mr. REID. If I could make a brief When they are being threatened by un- are not intended. statement without the Senator losing necessarily shipping their job overseas, I do detect a whiff of politics. I notice the floor—— it is our obligation to speak out and the chart says manufacturing jobs lost The PRESIDING OFFICER. Is there try to do something about it that is re- under President Bush. Perhaps since objection? Without objection, it is so sponsible. the time when we had primarily an ordered. I made the point over and over again, agrarian economy, we have seen tre- Mr. REID. For the minority, the ma- and I will make it again, I have sup- mendous shifts in our economy because jority leader has indicated there will ported far more free trade agreements of the efficiency of a flow market sys- over my course of service here than not be no votes tonight. Everyone should tem that is far more efficient than the because I believe that is where you know that. command-and-control economy that is have to be in the 21st century. But they Mr. GRASSLEY. That is what my used in other parts of the world that is have to be fair agreements. We have to Blackberry said 5 minutes ago. inefficient and stifles competition and Mr. DODD. For the purposes of those negotiate them far better. The Senator from Montana and I innovation and the productivity that who don’t know what a Blackberry is, we have in this country. we will explain that. have talked about how we might achieve those desired results. I don’t I certainly would not want to see us I do not know whether my colleague do anything that would harm the good from Texas has a question of me or not. subscribe to the notion that it is isolationist or protectionist to stand in the things we had going on in the economy I know he would like to speak on the in the effort to address a real problem issue. Does he have a question for this Senate and say I think it is wrong to use Federal taxpayer money to cause but perhaps with the wrong solution. Senator on the subject matter? someone in this country to lose their I appreciate the Senator from Wyo- Mr. CORNYN. If the Senator will job and hire someone 14 time zones ming mentioning this is something I yield, I will have a brief response but away. I don’t think that is a good idea. and no doubt other Members would like not so much a question at this time. Others may say that is their right, but to study a little further to see exactly Mr. DODD. I will wrap up myself. I we will have a vote on whether you what the details may be before we were would like to come back, if I could. think it is right. asked to vote on it. Again, maybe I am wrong. But every Examine it until you are blue in the I am not an economist. I do under- survey I have seen over the last num- face and try every cockamamie idea to stand why companies outsource, to find ber of weeks has indicated that peo- undermine what we are doing, but it is a cheaper way of producing their prod- ple—even people who have jobs—are a bad idea to federally subsidize the ex- uct. Even though the distinguished worried about this issue. portation of jobs that ought to be kept Senator from Connecticut says it is a To give you some indication of the here, not for protectionist reasons but bad idea, I am not sure what you can disconnect that occurs when it comes if we provide services and jobs in the do or what we could do, short of erect- to this issue, I quote from the Los An- global marketplace in the 21st century, ing a wall around this country and say- geles Times story, which appeared else- you better have the people here who ing we are no longer interested in where, but talking about this question, can do it. international trade. I don’t know what it says: If we give up that kind of human cap- we can do to avoid companies who are ‘‘The movement of American factory jobs ital that is so critical to our long-term seeking to produce a cheaper product and other white collar work to other coun- success of people, we are putting our tries is part of a positive transformation in a more competitive environment Nation in jeopardy. It is not a great from outsourcing some of those jobs. I that will enrich the United States economy quarterly answer. For that company over time even if it causes short term pain do think there is an answer, but I am and dislocation,’’ the Bush administration which wants to make more money next not sure the answer is what the distin- said the other day. quarter, this is a dreadful idea. But if guished Senator from Connecticut is you are thinking more than quarters, if It goes down and says from the eco- proposing. you are thinking down the road about nomic report: In fact, by prohibiting the what kind of a Nation we will be leav- outsourcing of jobs we are basically ‘‘Outsourcing is just a new way of doing ing the next generation who will in- international trade,’’ said Gregory Mankiw, saying the American taxpayer has to habit these seats we hold today as Chairman of the President’s Council of Eco- pay a higher price than they would Members—we have an obligation to nomic Advisers. otherwise have to pay. Certainly, that them, as well. We owe an obligation, They prepared the report. is something we need to explore, just as others who sat in these seats whether the higher price is worth the More things are tradable than were bore an obligation to us and left us a tradable in the past, and that is a good proposed cure. pretty decent country—not a perfect thing. one, but a good one. We should see to it Also, the Senator from Iowa men- The article goes on. that coming generations have the tioned we are a country that has a pol- I remember the statement being equal opportunity to bear the fruits we icy of free and fair trade. Of course, made; Mr. Mankiw apologizing. He said have provided for two centuries. there is a question of retaliation. But it was a bad choice of words, and we We do not do it by remaining silent the truth is, we have seen a loss of certainly accept his apology. The prob- or giving phony reasons about why jobs manufacturing jobs in this country for lem is, it was not the words. It is not are being outsourced unnecessarily a lot of reasons other than outsourcing a bad choice of words; it is a bad idea. around the globe. That is why I bring it or competition with China, India—now The idea of saying I am sorry I said up and that is why I hope we can have with the movement of white-collar jobs only indicated to me they were sorry a vote and move on it. It is not that particularly in the service sector to they said it out loud. They did not difficult to understand. that country—and that is simply be- change their mind about the subject I yield the floor, as I know my friend cause we have increased productivity. matter but merely said we got caught from Texas wants to be heard. Technology has made it possible to do at something we should not have said The PRESIDING OFFICER. The Sen- the same or, indeed, more work using because it was bad politics to say it. I ator from Texas. less people. That is just a fact of life. I misspoke politically but not sub- Mr. CORNYN. Madam President, the don’t think anyone would want to go stantively, and there is a fundamental distinguished Senator from Con- back to the last century and say we are

VerDate jul 14 2003 01:41 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00078 Fmt 4624 Sfmt 0634 E:\CR\FM\G03MR6.097 S03PT1 March 3, 2004 CONGRESSIONAL RECORD — SENATE S2097 not going to seek further improve- tion issues in this country. I will note what has transpired in recent weeks ments in technology or innovation be- that there are not people trying to get with this administration. Senator cause we do not want to put people out out of the United States of America be- DODD has brought to the Senate’s at- of work. cause things are so bad. To the con- tention one issue; that is, a high-rank- The truth is, the solution is, we need trary, people are risking life itself to ing member of this administration has to make sure we continue to educate come here because we are still a beacon said that outsourcing jobs—what does our workforce and not for minimum- in terms of the opportunities provided, it mean? Shipping jobs overseas—is wage jobs but for good high-paying in terms of the freedom, in terms of the good for our economy. That is what he jobs. Members may recall the Presi- ability of people, working hard in this said. Well, if that were the end of it, dent addressed this issue in his State of country, to have a good standard of liv- you could well say, maybe that was the Union speech and talked about the ing and a better quality of life. just somebody who made a mistake. importance of Americans competing in I hope the election year does not con- Then we have today Tommy Thomp- a global economy by educating and per- sume us so much that we look at the son who says: We should not have haps retraining our workforce for new glass always as half empty rather than Americans be concerned about all the and better-paying jobs. half full, or look at something as a money we are giving to Iraq to estab- He mentioned his initiative, working lemon rather than an opportunity to lish a health care system because we with community colleges. I took the make lemonade. really have, in the United States, a President’s words to heart because I I think the President is exactly on universal health care system because am concerned—as no doubt all 100 the right track. I think if we commit those people who have no insurance get Members of this body are—about job resources to train the American work- taken care of. That is what a Cabinet loss in this country. I went to the com- er to be part of the innovation that has officer of this President said. munity colleges in my State. I said, always characterized and been the hall- Now, should we stop there? Let’s go Tell me what you are doing to train mark of the American economy and on and talk about what another Cabi- the American worker or perhaps to re- the business providers in this country, net officer said 2 weeks ago, the Sec- train the American worker for good, to make sure those workers are trained retary of Education. The Secretary of high-paying jobs. I went to Amarillo in in this constantly evolving economy, Education said, to a group of assembled the Panhandle where I found that Bell which is very efficient, and sometimes Governors, that the National Edu- Helicopter and the Amarillo College brutal, but to make sure we are there cation Association were terrorists. He helped create a curriculum to train and are working with local and State did not say it once to the Governors people to work on the V–22 Osprey and Federal governments to do every- but twice. I have talked to Governors which is produced in that plant. thing we can to assist business part- who were there: The National Edu- I remember a young woman, a single ners and the education community to cation Association are terrorists; the mom, Hispanic woman, with two chil- train the American worker for good, largest teacher organization in the dren, formerly working as a prison high-paying jobs, I think we have noth- world, based in the United States, are guard making about $9 an hour. As a ing to fear. terrorists. result of this program with Amarillo Finally, where I was raised we were I think that is something I cannot College and Bell Helicopter—this is taught that we would get our formal comprehend: How the Secretary of just one example—she is now working education and then we would go to Education can say this about teachers. on a production line, contributing to work and maybe even stay in the same Someone I went to high school with— the transformation of our military and job for the rest of our adult life. But we played baseball together; we were also improving her standard of living, the truth is, today that is just not pos- on the first State championship base- making about $16 an hour in a good job. sible. We need to change our frame of ball team in the history of the State of I have done the same thing in Austin mind so that we teach our younger peo- Nevada; He was a pitcher; I was a where I went to the Austin Community ple, look, learning is a lifetime endeav- catcher—Reynaldo Martinez and I have College and learned about partnerships or, and it may be that you will change been friends for these many years. He they had entered into to train nurses, jobs at different times during your was my chief of staff in the Senate. He surgical techs, dental hygienists. At adult life because you want to improve retired a few years ago. He was a long- the San Jacinto Community College your circumstances, you want to get a time organizer for the National Edu- near Houston they have partnerships better paying job to better provide for cation Association. To call Rey Mar- with Boeing and NASA and others to your family, and you can do it in a free tinez a terrorist because he was a mem- train people for good, high-paying jobs. country where there is an opportunity Now, I realize we are in the political ber of that organization is difficult for to retrain, to get an education me to comprehend. season, and I understand that perhaps throughout the course of your life. nothing said in this body or anywhere For me personally, what is tran- I firmly believe now is not the time spiring in Congress, because of the po- else in Washington is perhaps totally for the American people to lose faith in devoid of politics, but the truth is, sition the administration has taken re- the good thing we have going in this garding highway transportation—the Americans can and will always be will- country, and that, as I said a moment ing to compete and win in the global former chairman of the Environment ago, is the envy of the entire world. I and Public Works Committee, the competition in this new economy. believe our focus ought to be on that Now is not the time for us to wring former chairman of the Finance Com- education, lifetime job training, and mittee, now the ranking member of the our hands and say: Oh, woe is us. We not on erecting barriers around this just can’t quite do it. We have to erect Finance Committee, has worked, as I country or perhaps other solutions, al- have worked, on a number of highway protectionist walls. We have to come though well intended, which will have up with solutions which, perhaps bills. There is no bill we do in the Sen- a detrimental impact. ate, in the Congress, that is more im- maybe actually increase prices to the With that, Madam President, I yield portant than a highway bill. It creates American consumer while not actually the floor. solving the problem that we are all Mr. DODD. I suggest the absence of a millions of jobs over a 6-year bill. We concerned about; that is, job loss. quorum. produced a bill based on the budget we So I say as part of this debate—and, The PRESIDING OFFICER. The passed a year ago. We have there, in again, I know the Senator from Con- clerk will call the roll. the bill that we were able to report out necticut has the best of intentions, and The assistant journal clerk proceeded of committee, in keeping with the we share the same concern—now is not to call the roll. budget, and as passed the Senate of the the time for the American worker or Mr. REID. Madam President, I ask United States, a bill that is a very good for the Members of the Congress to lose unanimous consent that the order for bill, that does not raise one penny of faith in free markets and the capitalist the quorum call be rescinded. taxes, that takes care of transit and economy which has made this Nation The PRESIDING OFFICER. Without highways. The President says he is the envy of the world. objection, it is so ordered. going to veto the bill. We are talking now again, thank- Mr. REID. Madam President, I think Outsourcing is good; 44 million Amer- fully, about addressing our immigra- the American people need to look at icans, don’t worry, you have universal

VerDate jul 14 2003 01:41 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00079 Fmt 4624 Sfmt 0634 E:\CR\FM\G03MR6.099 S03PT1 S2098 CONGRESSIONAL RECORD — SENATE March 3, 2004 coverage because if you get sick, you burger might actually be a manufac- Mr. REID. As I was saying, Senator can go to an emergency room, if you turing job. My colleague from Nevada DODD and I were looking at this earlier are lucky, if there is one there; the Na- is absolutely right to raise this point. today. We don’t need to go through all tional Education Association personnel Mr. REID. Mr. President, I have only of this, about the 14 million jobs, some are terrorists; and he is going to veto talked about what has happened in the of which have already been shipped the transportation bill. Is there some- last few weeks: Outsourcing is good, overseas and some going overseas. Di- body in the bowels of the White House teachers are terrorists, veto the trans- agnostic support services, we already trying to destroy the President? I can- portation bill. We have universal cov- know what these are. They are actu- not imagine the President would come erage in America because if you are ally shipping medical records to other up with these ideas himself. I certainly one of the 44 million, you get taken countries and having them catalogued. hope not. care of some day somewhere. That is But they are also having some of these I commend and applaud my friend universal coverage. That was the Sec- medical records reviewed. Take, for ex- from Connecticut, the senior Senator retary of Health and Human Services ample, a CAT scan. Ship it overseas. from Connecticut. He has brought to who said that. And now they are trying They can have somebody there review the attention of the Senate the impor- to develop a new category of manufac- it very quickly. Take, for example, an tance of focusing on the disastrous loss turing. X-ray, a simple X-ray, ship it overseas. This reminds me of my friend Greg of manufacturing jobs. Since this They can do it quickly. You will get Maddux. In Las Vegas we are so proud President has been in office, our Nation the results back soon. I don’t feel very of him. He has won the Cy Young has lost a total of 2.8 million jobs. good about that. I go to my doctor in Award 4 years. He is slightly built and Every single month, with no exception, Las Vegas or Reno, Boulder City, Elko my size. He is one of the greatest pitch- manufacturing jobs are lost. in Nevada. They are shipping the X- ers of all size. His hands are smaller I guess I should be leading the cheers rays they take of my body to India or here because out of the 50 States, the than mine. He is now going to Chicago. He needs to win 11 more games to be- some foreign country to have some- great State of Nevada is the only one body over there call my doctor or the in white on this chart. We hold the come a 300-game winner, which is a big deal in baseball. Just a handful of peo- hospital staff and tell them what is record. We created 200 new jobs in the ple have done that. So he needs 11 more wrong with me? I don’t think so. last 31⁄2 years. That is certainly better The additional problem with that, games. Based on the President’s as- than losing 200, and it is certainly bet- just from a basic fairness standpoint, I sumption of how we can create manu- ter than the State of Texas, which has facturing jobs, maybe we can get him won’t disclose the Senator’s name, but lost 150,000 jobs, or the State of New to 11 more quickly. What I suggest is a Senator told me she had two com- York, 115,000 jobs. Even a small State having four strikes instead of three. plaints from constituents in that State such as Wyoming lost 700 jobs. Cali- With four strikes—he has great con- that privacy was being violated, people fornia has lost 273,000 jobs. So 200 may trol—I guarantee you, even though he had information that came from over- not look like much, but for us in Ne- will be 37 years old next month, I think seas about her health condition. I hope vada, we will take it. the people making these decisions for Two hundred manufacturing jobs in he could win his 11 games much more quickly. our President were not trained during 31⁄2 years were created in the State of That is what is going on with this ad- the Reagan years. Nevada—not much, until you compare ministration. If you don’t like what Reagan, for whom I have the highest it to the rest of the country. Then we goes on, change the rules. respect, didn’t continue this. He are doing pretty well. We are the only I have said before, I have two broth- learned early on it was not a good idea State in the Union that had a net gain ers older than I. One of them was work- when someone in his administration of manufacturing jobs during this Pres- ing in a Standard station in a place said, let’s have ketchup considered a idency. called Ashfork, AZ. He wanted to take vegetable for the school lunch pro- Where have these jobs gone? Some his little brother away from Search- grams. Maybe that person is still are gone forever, but lots of them have light. So we went to what I thought around here someplace and giving gone overseas. Our country cannot re- was the big town of Ashfork, AZ. these great recommendations to this main strong if we can’t manufacture Frankly, it was not a lot of fun for me administration. I hope not. Or if it is steel, automobiles, airplanes, and ap- because my brother had a girlfriend, true that that person is around, maybe pliances. I am very happy that we do and he didn’t spend a lot of time with they should put a stop to it. We do not wonderfully well with our service in- me. So I was pushed off on his want people who are being X-rayed, dustry. No place represents that better girlfriend’s brother. I could not beat medical records, lawyers who research than the State of Nevada, especially him at anything. It didn’t matter what cases and write briefs, technological Las Vegas. But we cannot remain the it was. I never beat him at anything specialists to keep virtually every superpower of the world by flipping because he always changed the rules in company running—all these jobs are hamburgers, which is something I for- the middle of the game. That is what is fleeing America in a mad global case got to mention. going on here with the administration. for cheap labor. Somebody in the administration sug- We are going to change the definition Every time a job goes overseas, it gested 2 weeks ago that we should cre- of manufacturing. hurts an American family. ate a new manufacturing category; The loss of jobs in our country is It used to be that if you lost a job, that is, people who work in fast food very bad. If it were only manufacturing you would find one pretty quickly. Now restaurants. I am not making that up. jobs that were going overseas, I would the average time for getting a new job They want to turn people who work in not like it, I would complain about it. after losing a job in America is almost McDonald’s preparing meat patties, But this has been compounded because 1 year. Losing the job is bad enough be- putting the sandwiches together, into the loss of manufacturing jobs is not cause you lose self-esteem, you lose a manufacturers. the only problem. The Senator from sense of pride, you believe you have not Mr. DODD. If my colleague will yield, Connecticut and I were looking earlier been appreciated, even though you in chapter 2, page 73 of the Economic today at a chart. I am sure he has were doing the best job you could, but Report of the President—this was pre- shown it. This chart talked about some also that family probably loses their pared by the President’s economic ad- of the diagnostic procedures that were health insurance because they cannot visors—they raise the issue here as if it going overseas. Look at some of these pay for the COBRA; they don’t have were a legitimate question. They say: things: 14 million jobs in danger of money to do so. The definition of a manufactured prod- being shipped overseas. My son left to go to Vegas, and he uct, however, is not straightforward. Mr. DODD. These charts belong to needed coverage of insurance for 2 When a fast food restaurant sells a Senator KENNEDY. He feels very strong- weeks. It cost him $2,200. He is mar- hamburger, for example, is it providing ly about these charts. I wanted to ried, has two little girls, his wife was a service or is it manufacturing a prod- make sure the record reflects we are pregnant. He had no choice. He had the uct? They think that is a legitimate borrowing Senator KENNEDY’s charts. money to pay for it. If he had not had question, that manufacturing a ham- They are very good charts. it, I would have helped him. That is not

VerDate jul 14 2003 01:41 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00080 Fmt 4624 Sfmt 0634 E:\CR\FM\G03MR6.101 S03PT1 March 3, 2004 CONGRESSIONAL RECORD — SENATE S2099 the way it is with everybody. Many by the skyrocketing cost of health about changing the rules. I have wor- people are not able to buy insurance care. Their deductibles and copayments ried about that, when all of a sudden— for periods of time when they don’t keep going up, and they wonder wheth- and I have seen it happen in the past— have it. Maybe they are buying a home er they are going to lose coverage en- you don’t like the numbers you have, or were going to buy one and they lose tirely. so you come up with a whole new defi- the sense of a dream of owning a home. There are 77,000 people on strike in nition and expand the numbers. That is What about college? College is so ex- California who work in grocery stores. what it looks like when you start talk- pensive. It used to be that when I was They are not on strike because of ing about what clearly are fast food growing up, I could work in the sum- working conditions, not because of service jobs, manufacturing jobs, and mers and during the school year to pay wages or hours; they are striking for we have seen those efforts being made. for my education. My parents were not one simple reason, health benefits. This wasn’t the first administration in a position to help me, and I basically They could not make ends meet by trying games like that. We have had educated myself with a few little schol- having to pay what they were going to others in the past doing that. I appre- arships I had. You cannot do that any- be told by their employer they had to ciate his comments, and I thank him more. You cannot work during the off- pay for health costs, so they went on for his support as well. season—unless you rob banks—to pay strike—one of the longest strikes in I have just a couple of other points. for a college education. It is too expen- modern history. My friend and colleague from Texas sive. So that is another thing a family All these problems are deeper than cited earlier some of the efforts in the would lose—the ability to prepare for the business cycle. They all demand a area of job training, vocational edu- their children to attend college. That real economic plan, and part of that cation. I wanted to respond by saying I is why the loss of American jobs is a plan is the amendment offered by the don’t disagree. I think that is an im- crisis in our country. We need a real Senator from Connecticut. It is not ev- portant element. But the problem is plan to address that issue. We cannot erything. If we had the opportunity, we that one of the frustrations is the afford to wait until the next business could come up with a better plan. This outsourcing of jobs that is occurring at cycle because the flight of jobs over- is a step in the right direction. What a rather remarkable rate now, and it seas is a result of powerful economic we have to do in Congress today is un- seems to be accelerating and very little forces. derstand that we are not going to com- is being offered to try to do something American workers are not afraid of pletely rewrite Superfund, endangered about this. fair competition. I am not against species, clean air and clean water, or In fact, even in the area of protecting that, but I am against the mentality of the economic situation this country manufacturing jobs and doing some- chasing cheap labor around the globe faces. But we have the ability to do thing about retraining, let me share with no regard to long-term implica- things to improve Superfund and en- with my colleagues what is going on. tions. When American companies dangered species. We can do a little In the manufacturing extension part- choose cheap labor, they are saying our here and a little there to help the eco- nership, which is a very important environment doesn’t matter. They are nomic situation in this country. issue for the manufacturing firms of saying conditions for their own work- The amendment by the Senator from this country, this is going to mean less ers do not matter, and they are forget- Connecticut is a good amendment. It is help to an estimated 11,000 small busi- ting the great lesson learned from a step in the right direction. That is nesses; 28,000 workers will either lose Henry Ford. Henry Ford was not a per- why we chose this as our first amend- their jobs or not be hired as a result of son I liked everything he did or said, ment. It sends a message to the Amer- these cuts. but he was a good businessman. He re- ican people that we want to do some- So there is cutting back in this area. alized in order for his company to sell thing to stop the outflow of these jobs. Outsourcing is going to have a huge cars, the people who build them should Focusing on Federal Government impact on the manufacturing sector. be able to also buy those cars. In other outsourcing is one of the things at The Small Business Administration words, workers are also customers. A which we need to take a closer look. is being cut by $79 million, hurting worker who earns a decent living can We can start trying to improve our hundreds of thousands of small busi- afford to buy the products and services economy now, today, by cutting off nesses struggling to create jobs for American companies are selling. So Government contracts to companies Americans. There is a cut of $316 mil- every time a so-called American com- that plan to outsource their work. Two lion for vocational education. This is in pany chases cheap labor by moving years ago, the State of Florida ordered addition to the more than $1.5 million jobs overseas, we are all diminished. a $280 million contract to a company in proposed cuts to job training and vo- The market for goods and services in that outsources its work to India. If cational education made over the last 3 our country is damaged. Florida wants to do that, it is their years. We are also cutting $448 million As I have said, the President’s top business. But when the American tax- for the Workforce Investment Act pro- economic advisers said the outsourcing payers hire somebody to do a job, it grams. of jobs is a good thing. Every day should be done by an American worker My point is, as we watch these someone in the administration says the who is also a taxpayer. outsourcing of jobs and the loss of 2.8 economy is getting better. It might be For the fourth time in the last few million manufacturing jobs, I would be looking up to those who have the Wall minutes, I commend Senator DODD for heartened if I thought we were making Street Journal and the Financial this amendment and urge all of my col- an effort at least to commit additional Times delivered to their homes but not leagues to support it. I also say this to resources to help provide training for to middle class Americans. They feel the majority: If tomorrow, when we people who find themselves under nor- that inside something is happening come back in session, there is an effort mal cyclical circumstances losing a that goes beyond the normal business made to prevent the Senator from Con- job, but here we are in an abnormal sit- cycle. necticut from having a vote on this, we uation where there is an extraordinary Middle class Americans are deeper in are going to keep offering it and offer- loss of manufacturing jobs occurring debt than ever. Consumer debt is at an ing it until we get a vote on it. If we across the country in the last 36 all-time high. Middle class Americans don’t get it done on this bill, we will months and we have an extraordinary are afraid the Social Security benefits get it done on the next bill. If we don’t acceleration of outsourcing of jobs oc- will be swallowed in the sink hole of a get it done on the next bill, it will be curring over the same period of time— half-trillion-dollar deficit. And they offered on the next bill. This is our No. I pointed out that now 400 of the top are right. The debt would be much big- 1 amendment, and we are going to con- 1,000 businesses in America are ger for the 3 years that this President tinue pushing it. outsourcing, 40 of the 50 States, all for has been in office but for the fact that The PRESIDING OFFICER. The Sen- a very obvious reason. You can save a the debt is being disguised by the So- ator from Connecticut is recognized. lot of money right off the top by doing cial Security surplus. Middle class Mr. DODD. Madam President, I it. When you can hire somebody in Americans are worried their jobs might thank my colleague from Nevada for India at $7 a day as opposed to paying be outsourced. They are being hit hard his comments. He is absolutely right someone a salary in Silicon Valley, you

VerDate jul 14 2003 01:41 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00081 Fmt 4624 Sfmt 0634 E:\CR\FM\G03MR6.104 S03PT1 S2100 CONGRESSIONAL RECORD — SENATE March 3, 2004 do not have to have a Ph.D. in mathe- Democrats who want Bush’s job were quick computer programming and medical matics to know the outcome. to challenge his claims. diagnostics. I understand the motivation behind Sen. John F. Kerry of Massachusetts, the ‘‘Maybe we will outsource a few radiolo- it. The question I have is, are we going front-runner for the Democratic presidential gists,’’ Mankiw told reporters. ‘‘What does to sit back and allow this to continue nomination, supports a rollback of Bush’s that mean? Well, maybe the next generation tax cuts for the wealthiest Americans and of doctors will train fewer radiologists and at the expense of losing the kind of backs the creation of tax incentives for com- will train more general practitioners or sur- human investments that we ought to panies that keep jobs in the United States— geons.... Maybe we’ve learned that we be making to guarantee that we have a although he supported the North American don’t have a comparative advantage in radi- workforce capable of doing jobs and Free Trade Agreement, which many union ologists.’’ providing the services that America members say is responsible for the migration Government should try to salve the short- ought to be providing in the coming of U.S. jobs, particularly in the auto indus- term disruption by helping displaced workers years? try, to Mexico. obtain the training they need to enter new In addition to that, even if we were Campaigning Monday in Roanoke, Va., fields, such as health-care, Mankiw said, not not doing an amendment or were not Kerry questioned the credibility of the ad- by erecting protectionist barriers on behalf ministration’s job-creation forecast. going to support language that would of vulnerable industries or professions. ‘‘The ‘‘I’ve got a feeling this report was prepared market is the best determination of where say that Federal taxpayer money by the same people who brought us the intel- the jobs should be,’’ he said. ought not be used for this purpose, I ligence on Iraq,’’ Kerry said. ‘‘I don’t think Bush’s quick visit to Missouri—his 15th to would like to think that in the area of we need a new report about jobs in America. a state considered a critical election battle- vocational education, small business I think we need a new president who’s going ground—was the first of several events this assistance, manufacture extension to create jobs in America and put Americans week intended to underscore recent eco- partnerships, and certainly Workforce back to work.’’ nomic gains. Although U.S. job creation re- Investment Act—all of these areas— In an evening appearance at George Mason mains relatively sluggish, the nation’s un- University in Fairfax, Va., Sen. John Ed- employment rate fell from 6.4% in June to that the administration would say: wards of North Carolina mocked the Bush Look, this is our answer to this. We 5.6% in January, and the economy grew at administration’s economic report. the fastest pace in 20 years during the last don’t agree with you, Senator, about Edwards, who also supports repealing tax half of 2003. not using Federal funds. cuts for the richest Americans and offering The format of his visit to SRC Auto- Madam President, I ask unanimous incentives to corporations that create new motive—one that he particularly likes—in- consent that an article from the Los jobs in the United States, said it would come volved several employees and local business Angeles Times be printed in the as a ‘‘news bulletin’’ to the American people owners sharing the stage with the president RECORD. that the economy was improving and that to discuss their perspectives on the economy, There being no objection, the mate- the outsourcing of jobs was good for Amer- with Bush elaborating on their stories to em- ica. phasize particular aspects of his economic rial was ordered to be printed in the ‘‘These people,’’ he said of the Bush admin- RECORD, as follows: program. istration, ‘‘what planet do they live on? Today, Bush is scheduled to meet with eco- [From the Nation; Feb. 10, 2004] They are so out of touch.’’ nomic leaders at the White House. On Thurs- BUSH SUPPORTS SHIFT OF JOBS OVERSEAS The president’s 411-page report contains a day, he goes to Pennsylvania’s capital, Har- (By Warren Vieth and Edwin Chen) detailed diagnosis of the forces the White risburg—in another swing state that he has WASHINGTON.—The movement of American House says are contributing to America’s already visited more than two dozen times factory jobs and white-collar work to other economic slowdown and a wide-ranging de- since becoming president. fense of the policies Bush has pursued to countries is part of a positive transformation Mr. DODD. The headline in the Los that will enrich the U.S. economy over time, combat it. even if it causes short-term pain and disloca- It asserts that the last recession actually Angeles Times—it is a viewpoint—says: tion, the Bush administration said Monday. began in late 2000, before the president took ‘‘Bush Supports Shift of Jobs Over- The embrace of foreign outsourcing, an ac- office, instead of March 2001, as certified by seas.’’ It goes on to talk about the re- celerating trend that has contributed to U.S. the official recession-dating panel of the Na- port that I talked about all afternoon, job losses in recent years and has become an tional Bureau of Economic Research. this economic report prepared by the issue in the 2004 elections, is contained in Much of the report repeats the administration’s previous economic prescriptions. Council of Economic Advisers, where the president’s annual report to Congress on they conclude that the outsourcing of the health of the economy. For instance, it says the Bush tax cuts ‘‘Outsourcing is just a new way of doing must be made permanent to have their full jobs is a good thing. The author of that international trade,’’ said N. Gregory effect on the economy. language apologized for his use of those Mankiw, chairman of Bush’s Council of Eco- Social Security also must be restructured words, but he has not apologized, and I nomic Advisers, which prepared the report. to let workers put part of their retirement understand why, because he believes it ‘‘More things are tradable than were funds in private accounts, the report argues. is good economic policy to be Doing so could add nearly $5 trillion to the tradable in the past. An that’s a good thing.’’ outsourcing. The report, which predicts that the nation national debt by 2036, the president’s advi- will reverse a three-year employment slide sors note, but the additional borrowing There are some of us—I do not know by creating 2.6 million jobs in 2004, is part of would be repaid 20 years later and the pro- if it is a majority—who disagree with a weeklong effort by the administration to gram’s long-term health would be more se- that conclusion, that outsourcing is highlight signs that the recovery is picking cure. necessarily good. up speed. Bush’s economic stewardship has The report devotes an entire chapter to an I cited already from the Wall Street become a central issue in the presidential issue that has become increasingly trouble- Journal companies that painfully dis- campaign, and the White House is eager to some for the administration: the loss of 2.8 covered when they outsourced, while million manufacturing jobs since Bush took demonstrate that his policies are producing they thought they were going to save results. office, and critics’ claims that his trade poli- In his message to Congress on Monday, cies are partly to blame. money, it actually cost them dearly. It Bush said the economy ‘‘is strong and get- His advisors acknowledge that inter- is not only not good, but it fails to ting stronger,’’ thanks in part to his tax cuts national trade and foreign outsourcing have take into account—watching some- and other economic programs. He said the contributed to the job slump. But the report body’s job be lost because there is a nation had survived a stock market melt- argues that technological progress and rising cheaper labor pool that you don’t have down, recession, terrorist attacks, corporate productivity—the ability to produce more to pay health care benefits to, despite scandals and war in Afghanistan and Iraq, goods with fewer workers—have played a big- the fact the person here is going to lose and was finally beginning to enjoy ‘‘a ger role than the flight of production to mounting prosperity that will reach every China and other low-wage countries. them—if it is really good for America. corner of America.’’ Although trade expansion inevitably hurts I am suggesting while this rush is oc- The president repeated that message dur- some domestic workers, the benefits eventu- curring that we ought to put on the ing an afternoon discussion about the econ- ally will outweigh the costs as Americans brakes and stop, look, and listen so we omy at SRC Automotive, an engine-rebuild- are able to buy cheaper goods and services will not necessarily be caught up in a ing plant in Springfield, Mo., where he and as new jobs are created in growing sec- situation where a year or two or five lashed out at lawmakers who oppose making tors of the economy, the report said. from now we will look back and say: his tax cuts permanent. The president’s report endorses the rel- ‘‘When they say, ‘We’re going to repeal atively new phenomenon of outsourcing Why didn’t somebody say something or Bush’s tax cuts,’ that means they’re going to high-end, white-collar work to India and do something when we knew this was raise your taxes, and that’s wrong. And other countries, a trend that has stirred con- happening, when we could sit, watch, that’s bad economics,’’ he said. cern within such affected occupations as and read on a daily basis the pouring of

VerDate jul 14 2003 02:50 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00082 Fmt 4624 Sfmt 0634 E:\CR\FM\G03MR6.107 S03PT1 March 3, 2004 CONGRESSIONAL RECORD — SENATE S2101 jobs out of this country to 14 time created by certain domestic manufac- The new jobs pay on average $8,000 less zones away, depriving people of bene- turers. than jobs lost in the Bush economy. In fits and income they needed for their Mr. KENNEDY. Madam President, we 48 of the 50 States, jobs being created families; what did you do on your call this bill the ‘‘Jumpstart Our Busi- pay 21 percent less than had been paid watch? What did you do? ness Strength Act’’—the JOBS Act, be- by industries losing jobs. If the answer is we thought it was a cause that is exactly what we are de- Employees have smaller paychecks, good thing for the American economy, bating this week—the critical issue and are even less able to keep up with then I think we will be suffering an in- facing so many millions of Americans, the rising costs of education, let alone dictment historically. the lack of jobs. pay the bill for food, rent and health I see my colleague from Kentucky To hear President Bush, you would care. who wants to move on to matters of never know there was a problem with A big part of the job problem is the the day. I yield the floor, with the jobs. According to the Bush adminis- worsening crisis in manufacturing. We right to be recognized at the conclu- tration, everything is sunshine and have lost nearly 3 million manufac- sion of his remarks. roses. turing jobs since the Bush administra- Mr. MCCONNELL. I say to my friend Over and over again, the President tion took office. It is a nationwide from Connecticut, he will hardly have says things that show he is out of problem, affecting almost every State to hold his breath and he will be back touch with the lives of ordinary Ameri- in the Union. Forty-nine of the 50 up waxing eloquent to all of our col- cans and can’t understand the eco- States have lost manufacturing jobs leagues who I am sure, back in their of- nomic hardships they are facing. Happy under this President. fices, are watching his speech and lis- talk about economic recovery doesn’t That is only part of the story. Four- tening carefully to every word. jibe with the daily lives of the people teen million other jobs are newly at risk of being sent overseas as well. ELIMINATING THE ‘‘HAIRCUT’’ PROVISION on Main Street. Mr. SMITH. Madam President, I rise In his State of the Union Address in Every day, we hear more stories about today in support of S. 1637, the JOBS January, the President said ‘‘. . . this how white collar jobs and service sec- Act, which will halt European Union economy is strong, and growing strong- tor jobs in health care, financial serv- trade sanctions against American in- er . . . Productivity is high, and jobs ices, and information technology are dustries and provide immediate tax re- are on the rise.’’ going to other countries. What is the President’s response? lief for domestic manufacturers. A week later he said: ‘‘The economy More empty rhetoric and broken prom- U.S. manufacturing has experienced is growing, people are finding work. ises. Last year on Labor Day, the a crisis over the last three years due to There’s an excitement in our economy President met with workers and prom- the global economic downturn, sharply . . . You can tell I’m upbeat, and I’ve ised to appoint a manufacturing czar to diminished capital spending, global got reason to be. Not only the numbers deal with the loss of manufacturing overcapacity, and steady price declines say things are looking pretty good, the jobs. How typical of the President to for manufactured goods. S. 1637 pro- American people are telling me they make a promise like that on Labor Day vides a strong incentive for companies feel pretty good.’’ and then forget all about it. to keep and create jobs in the U.S. Then came his annual economic re- Six months later, there is still no However, I believe we can improve S. port and its ringing endorsement of manufacturing czar. Administration of- 1637 by eliminating the ‘‘haircut’’ pro- sending jobs overseas. ficials say they’re working on it, but vision that increases the taxes on U.S. At the National Governors Associa- the economy is still hemorrhaging manufacturers for their U.S. companies tion meeting last Monday, he said he manufacturing jobs. merely because these companies also thinks the 5.6 percent unemployment American workers deserve better manufacture products abroad. This rate is ‘‘a good national number.’’ than this. They deserve better than to concept is totally at odds with the pur- Yesterday, Vice President CHENEY have their jobs exported with the pose of this legislation—to cut taxes on said, ‘‘The economy’s in very good President, as cheerleader in chief, wav- manufacturers that employ American shape, and going forward there’s every ing good bye. workers. U.S. companies with global reason to be optimistic that we will We need to do more, to encourage operations employ more than 23 mil- have the kind of growth that we need good-paying manufacturing jobs to lion Americans—9 million of which are to create jobs out there.’’ stay here, and discourage corporations manufacturing jobs. Foreign-owned In fact, he went on to say that if from sending jobs and new investment companies with U.S. operations employ ‘‘Democratic policies had been pursued overseas. more than 2 million manufacturing over the last two or three years. . . . This bill contains provisions to en- workers in the U.S. we would not have had the kind of job courage manufacturing in the United The haircut is structured so that the growth that we’ve had.’’ States, and I commend Senator GRASS- more a company manufacturers Job growth? Someone should tell the LEY and Senator BAUCUS for their bi- abroad, the less of a manufacturing Vice President that we have lost over partisan work on this bill. But we can rate cut it gets. The ‘‘haircut’’ makes two million jobs in the Bush economy. do more and we must do more. the U.S. a less competitive location for The reality of the Bush economic We need to provide incentives now current and future investment. Thus, it record is very different from the rhet- for companies to keep and create man- is less likely that multinational manu- oric. ufacturing jobs in the United States. A facturing companies will site new Just a few weeks ago, the President key weakness in this bill is that the plants and new high-paying jobs in the said in his economic report that the tax benefits for domestic manufac- U.S. economy will create 2.6 million new turing are phased in too slowly. These Furthermore, I am concerned that jobs this year. The reality is that no companies and their workers need help the ‘‘haircut’’ invites mirror legisla- one in the White House or the Cabinet now. tion in other countries. In this time of will endorse the 2.6 million number. We need to stop rewarding multi- crisis for the U.S. manufacturing in- President Bush said his first tax cuts national corporations that send jobs to dustry, we cannot afford to let any in 2001 would create 800,000 additional other countries. more manufacturing jobs slip away, jobs by the end of 2002. The reality is, This bill not only fails to do that, it particularly due to bad tax policy. we lost 1.9 million jobs instead. creates $35 billion in new or larger tax With my colleague, Senator BREAUX, His 2002 economic report predicted 3 breaks for companies doing business I am offering an amendment to the million jobs would be created in 2003. abroad. Why on earth do we want to JOBS Act which will eliminate the Instead, more than 300,000 were lost. make exporting of American jobs more ‘‘haircut’’ and provide an equal tax He said the tax breaks enacted last attractive to corporations? These benefit for all manufacturers that em- year would create 510,000 additional international provisions should be re- ploy American workers. Congress jobs by the end of the year, but we lost moved from the bill, and the tax dol- should be in the business of rewarding 53,000 jobs last year. lars should be used to make the tax all well-paid manufacturing jobs that Even the few jobs being created are benefits for domestic manufacturing are created in the U.S.—not just those not as good as the jobs we have lost. more robust.

VerDate jul 14 2003 02:50 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00083 Fmt 4624 Sfmt 0634 E:\CR\FM\G03MR6.108 S03PT1 S2102 CONGRESSIONAL RECORD — SENATE March 3, 2004 In many respects, the tax code al- My amendment would resolve some more aware of our Americanness, that ready gives a greater subsidy to profits of this inequality by extending to com- our appetite for the new has been whet- from foreign operations over domestic mercial fishermen the same income ted, and that we have leaned on one an- plants. We ought to change that too, averaging benefit given to farmers. It other for support, often organizing new instead of kowtowing to the clout of would also fix a technical error in the forms of communities to deal with new multinational corporations. Our cor- original provision that has led to some circumstances. Boorstin believed porate tax laws should be rewritten to farmers being caught under alternative America works community by commu- increase the cost of exporting jobs and minimum tax. nity. He argued that the prototype decrease the cost of maintaining jobs I thank the chairman for his leader- early American was not the solitary in America. ship on this issue in the past and in- trailblazer but a wagon train commu- And what about the urgent needs of cluding this important provision in his nity. Americans who have already lost their bill, the Tax Empowerment and Relief Despite his erudition and his Pul- jobs and their long-term unemploy- for Farmers and Fishermen, TERFF, itzer, Dr. Boorstin was not especially ment benefits too? Act. I am pleased to see that portions popular with professional historians. Solid majorities in the Senate and of the TERFF Act were incorporated Perhaps it was because he was such a the House have already sent a message into the bill now before us, and I am booster, as have been most Americans. loud and clear to the White House and hopeful that we will be able to address Perhaps it was because he contented the Republican leadership in Congress the issue of income averaging for fish- himself with being an ‘‘amateur’’ histo- that we want to reinstate those bene- ermen also at this time. rian, not shackled by the ruts along fits, which expired on December 31st. Our farmers and fishermen represent which professionals often trudge. Or, Ninety thousand workers a week have an important sector of our economy. perhaps it was because he was a mem- lost their benefits and still can’t get a Unfortunately, they and their families ber of a diminishing band of public fig- job. They’re moving in with friends or often have to deal with more than their ures—the late Senator Pat Moynihan family, giving up health care, and fair share of challenges. Making the and American Federation of Teachers struggling to pay every bill. Yet our Tax Code more consistent and more re- President Albert Shanker were two Republican colleagues say, in their flective of the variable nature of re- others—who believed passionately in best imitation of Marie Antoinette, source industries will also make it American exceptionalism. A growing ‘‘let them eat cake.’’ more fair and provide some measure of number of history professionals today They tell the unemployed to look stability for these hard working indi- reject this idea of exceptionalism. To harder for work. They treat them as viduals. them, our country is fortunate, rich I encourage the Senate to consider slackers, and say they won’t subsidize and large, but not more exceptional and pass this important amendment. their idleness any longer. That atti- than many other countries. These pro- The PRESIDING OFFICER (Mr. AL- tude is wrong. The unemployment in- fessionals prefer social studies to U.S. EXANDER). The Senator from Kentucky. surance extension we enacted when the history. They take snapshots of our na- economy began to decline has expired, f tional experience instead of teaching and I urge my colleagues to fix it, be- MORNING BUSINESS the steady drumbeat of a work in fore these hard-working employees who Mr. MCCONNELL. Mr. President, I progress toward grand goals. In their have lost their jobs through no fault of ask unanimous consent that the Sen- enthusiasm for overlooked victims, their own suffer any longer. ate now proceed to a period for the they themselves overlook heroes. I also urge my colleagues to join me transaction of morning business, with Because of their growing influence in strengthening this legislation. We Senators permitted to speak for up to we now find American history courses must improve incentives in the manu- 10 minutes each. watered down, the great controversies facturing industries and give working The PRESIDING OFFICER. Without of race and religion ‘‘sensitized’’ from Americans a chance for the jobs and objection, it is so ordered. textbooks. Civics is often dropped en- the better future they deserve. f tirely from the curriculum. As one re- Mr. SMITH. Madam President, I will sult, our high school seniors score offer an amendment which would allow COMMEMORATING DANIEL worse on U.S. history tests than on any commercial fishermen to use income BOORSTIN other subject. tax averaging to help mitigate the neg- Mr. ALEXANDER. Over the weekend, Daniel Boorstin’s writings have re- ative effects of their fluctuating in- the United States of America lost one minded us of what is truly exceptional comes. of its great teachers of what it means about America, warts and all. He em- Progressive tax systems, like the to be an American. Daniel Boorstin phasized that our greatest accomplish- Federal income tax, often penalize died at the age of 89. He served as Li- ment is that, more than any other farmers and others whose incomes vary brarian of Congress and director of the country, we have united people from greatly from year to year. Recognizing Smithsonian Institution’s National everywhere into a single nation, united this fact, Congress, in 1997, gave farm- Museum of Science and Technology. by beliefs in a few principles rather ers the option to calculate their taxes Daniel Boorstin’s books about the than by race, creed, and color. He by averaging their income over a 3- American experience earned a Pulitzer taught that we may be proud of where year period. This was an important Prize in 1974. He believed America’s we came from, but should be prouder to change in the Tax Code and has helped success came largely because we have be Americans. many in our agriculture communities been free from the ‘‘virus of ideology,’’ He left us one other very special in- weather the up-and-downs of a some- free to be flexible and responsive, ‘‘free sight. In an essay written in 1962, Dr. times erratic farm economy. to take clues from the delightful, unex- Boorstin foresaw that television would Like farmers, our fishermen are often plored and uncongested world around create a world in which we would have subject to dramatic swings in income. us.’’ Free from ideology, being an a hard time telling the difference be- Whether it’s changing ocean condi- American became its own ideology. tween heroes—those worth paying at- tions, harvest restrictions, or bad Daniel Boorstin celebrated Ameri- tention to because we might learn from weather that keeps them in port, the cans for always trying the new. He be- their nobility—and celebrities who are change in income can be severe and believed we have been at our best when ‘‘famous primarily for being famous.’’ yond their control. For example, fish- we have been ‘‘on the verge,’’ encoun- He invented the term pseudo event, ermen in Coos Bay, OR have struggled tering new territory—whether it was which most of us will recognize as to- with regulatory restrictions and re- creating new schools, new crops, new day’s photo opportunity. duced stocks over the last several planting techniques, new towns, a new My favorite of Daniel’s Boorstin’s years. Unfortunately, our Tax Code form of the English language, new books was not his Pulitzer winner. It doesn’t allow for flexibility, and fisher- technologies, new cars and trains, or was The Discoverers, a stream of sto- men, who experience both good and bad John Winthrop’s new City on the Hill. ries about men and women in history years, are forced to pay more taxes He observed during these encounters who challenged dogma and created a than if they had steady income levels. with new circumstances, we have been better life for mankind.

VerDate jul 14 2003 01:41 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00084 Fmt 4624 Sfmt 0634 E:\CR\FM\A03MR6.028 S03PT1 March 3, 2004 CONGRESSIONAL RECORD — SENATE S2103 As we are poised on yet another and I introduced the Local Law En- Mr. McNeil immediately established verge in our national experience, we forcement Enhancement Act, a bill himself as an extremely capable ama- would do well to remember Dr. that would add new categories to cur- teur astronomer. The discovery was Boorstin’s advice about what has rent hate crimes law, sending a signal made with a relatively small telescope. served us well before: be more aware of that violence of any kind is unaccept- His discovery was a very rare occur- our Americanness, whet our appetites able in our society. rence. According to experts in the field, for the new, and form new communities In February, 2003, in Antioch, CA, a such a discovery by an amateur of this so that we might rely better on one an- 15-year-old teen was charged with as- magnitude has not occurred since 1939. other as we deal with changing cir- sault and battery and for committing a The discovery, later named McNeil’s cumstances. hate crime. He viciously assaulted and Nebula, was verified by the Inter- national Astronomical Union in Feb- f taunted another teenager because he believed he was gay. ruary of 2004. The nebula is believed to REPORT PURSUANT TO WAR I believe that Government’s first contain a newborn star and is about POWERS RESOLUTION duty is to defend its citizens, to defend 1,500 light years from earth. This Mr. STEVENS. Mr. President, I ask them against the harms that come out means that what Mr. McNeil saw actu- unanimous consent that the attached of hate. The Local Law Enforcement ally occurred a millennium and a half statement from the President of the Enhancement Act is a symbol that can ago, and is just now being seen on United States be printed in the become substance. By passing this leg- earth. I salute Mr. McNeil for his discovery. RECORD, consistent with the War Pow- islation and changing current law, we ers Resolution. can change hearts and minds as well. The thirst for knowledge and appreciation for science that he has shown There being no objection, the mate- f serves as an example for all Kentuck- rial was ordered to be printed in the CHANGES TO DISCRETIONARY ians.∑ RECORD, as follows: CAPS f THE WHITE HOUSE, Washington, March 2, 2004. Mr. NICKLES. Mr. President, section LEWISTON ELKS LODGE NO. 896 Hon. TED STEVENS, 421 of H. Con. Res. 95, the 2004 Budget CELEBRATES 100-YEAR ANNIVER- President pro tempore of the Senate, Resolution, requires the chairman of SARY Washington, DC. the Senate Budget Committee to make ∑ DEAR MR. PRESIDENT: In my report to the appropriate adjustments in the appro- Mr. CRAIG. Mr. President, it is with Congress of February 25, 2004, I provided in- priate allocations and aggregates to re- great honor that I congratulate the formation on the deployment of combat- flect the difference between Public Law Lewiston Elks Club, Lodge No. 896, on equipped U.S. Armed Forces to Haiti. I am 108–11, the Emergency Wartime Supple- its 100-year anniversary. The organiza- providing this additional report, consistent mental Appropriations Act of 2003—and tion has overcome multiple obstacles with the War Powers Resolution, to help en- in its efforts to continue the fellowship the corresponding levels assumed in sure that the Congress is kept fully informed among its members, and more impor- the resolution. on U.S. military activities in Haiti. tant, its consistent and significant con- On February 29, 2004, approximately 200 ad- As enacted, the Emergency Wartime ditional U.S. combat-equipped, military per- Supplemental Appropriations Act of tributions to the local community. Lodge No. 896 was first chartered on sonnel from the U.S. Joint Forces Command 2003 contains budgetary authority, out- March 8, 1904 by just eight members. deployed to Port-au-Prince, Haiti, to secure lays and revenues that differ from The organization envisioned by the key facilities, to facilitate the continued re- those assumed in the budget resolu- patriation of Haitian migrants, to help cre- original eight founders has grown to ate conditions in the capital for the antici- tion. On May 5, 2003, the allocations include more than 13,000 members over pated arrival of the Multinational Interim and aggregates were revised, but the the past century. Today it is the larg- Force, to protect American citizens as may discretionary caps were not appro- est Elks Club in Idaho. Successful re- be required, and for other purposes con- priately adjusted to reflect the cruitment efforts bring in 15 to 18 new sistent with United Nations Security Council changes. members each month, making the Resolution 1529 (2004). I anticipate additional I ask unanimous consent to have combat-equipped military personnel will be Lewiston lodge one of the Nation’s printed in the RECORD a table which re- best. Together, the Elks have made deployed to Haiti until the situation in Haiti flects the revised discretionary caps for stabilizes. The forces that the United States countless positive impacts on the deployed and continues to deploy will be part 2005. These revised caps are the appro- Lewiston area, and have been stellar of the Multinational Interim Force. priate levels to be used for enforcement ambassadors of our great State. The United Nations Security Council of the 2004 Budget Resolution. The Lewiston Elks Lodge has en- unanimously adopted Resolution 1529 on There being no objection, the mate- dured two devastating fires, the first of February 29, 2004. It authorized the deploy- rial was ordered to be printed in the which occurred in 1904 after the club’s ment of a Multinational Interim Force to RECORD, as follows: second meeting. The second fire hap- contribute to a more secure and more stable pened in 1969, and spurred the group to environment in the Haitian capital and else- Category 2005 cap Adjustment New 2005 where, to facilitate the provision of humani- cap move the lodge to a new location over- looking the beautiful Snake River, tarian assistance and the access of humani- Discretionary: tarian aid workers to the Haitian people, and BA ...... 812.598 0.175 812.773 which passes through Lewiston. It was for other purposes. OT ...... 817.883 0.402 818.285 at its present location that disaster Highway: It is anticipated U.S. forces will redeploy BA ...... 0.000 0.000 0.000 made a third attempt. In 1998, the when the Multinational Interim Force has OT ...... 33.393 0.000 33.393 lodge was closed for more than 18 transitioned to a follow-on United Nations Mass Transit: BA ...... 1.488 0.000 1.488 months after a landslide on the hillside stabilization force. OT ...... 6.726 0.000 6.726 below threatened the structure. De- I have taken this action pursuant to my Total: constitutional authority to conduct U.S. for- BA ...... 814.086 0.175 814.261 spite these obstacles, the Lewiston OT ...... 858.002 0.402 858.404 eign relations and as Commander in Chief Elks have continued their community service. and Chief Executive. I am providing this re- f port as part of my efforts to keep the Con- The service projects carried out by gress informed, consistent with the War ADDITIONAL STATEMENTS the Lewiston Elks are significant. Powers Resolution. They serve people of all ages, and from Sincerely, every walk of life. Some projects in- GEORGE W. BUSH DISCOVERY BY JULIAN ‘‘JAY’’ W. clude making Christmas baskets, sup- MCNEIL II f porting a drug awareness program, ∑ Mr. BUNNING. Mr. President, today I poster contests, and an annual food LOCAL LAW ENFORCEMENT ACT would like to take the opportunity to caravan for needy families. The Elks OF 2003 honor Mr. Jay McNeil of Paducah, KY. also express their support for individ- Mr. SMITH. Mr. President, I speak On January 23, 2004, Mr. McNeil discov- uals and groups in the community by about the need for hate crimes legisla- ered a new nebula while examining the sponsoring a number of awards recog- tion. On May 1, 2003, Senator KENNEDY night sky over Western Kentucky. nizing Boy Scouts, Cub Scouts, Special

VerDate jul 14 2003 02:50 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00085 Fmt 4624 Sfmt 0634 E:\CR\FM\A03MR6.025 S03PT1 S2104 CONGRESSIONAL RECORD — SENATE March 3, 2004 Olympics, and Teenager of the Month to the Federal Register for publication. egon, to the county to improve management and Year. Education is another area It states that the national emergency of and recreational access to the Oregon that the Elks are firm in their support. blocking the property of persons under- Dunes National Recreation Area, and for The Lewiston club offers yearly schol- mining the democratic processes or in- other purposes. arships to local youth ranging from stitutions in Zimbabwe is to continue f $100 to $1,000. in effect beyond March 6, 2004. EXECUTIVE AND OTHER Perhaps one of the greatest contribu- The crisis caused by the actions and COMMUNICATIONS tions from this organization is the sup- policies of certain members of the Gov- The following communications were port it offers to the Idaho State Elks ernment of Zimbabwe and other per- laid before the Senate, together with Rehabilitation Hospital. The modern sons to undermine Zimbabwe’s demo- accompanying papers, reports, and doc- hospital, located in Boise, serves near- cratic processes or institutions has not uments, and were referred as indicated: ly 12,000 patients a year and is working been resolved. These actions and poli- EC–6569. A communication from the Presi- on a proposal to provide rehabilitation cies pose a continuing, unusual, and ex- dent and Chairman, Export-Import Bank of services to military veterans returning traordinary threat to the foreign pol- the United States, transmitting, pursuant to from war zones. With the support of icy of the United States. For these rea- law, the report of a transaction involving the Lewiston Elks and other organiza- sons, I have determined that it is nec- U.S. exports to the Grand Duchy of Luxem- tions, the hospital plans to open a new essary to continue the national emer- bourg; to the Committee on Banking, Hous- ing, and Urban Affairs. Hearing and Balance Center in the next gency declared on March 6, 2003, block- EC–6570. A communication from the Dep- few months. ing the property of persons under- uty Secretary, Securities and Exchange On behalf of the citizens of the mining democratic processes or insti- Commission, transmitting, pursuant to law, Lewiston area, and the entire State of tutions in Zimbabwe and to maintain the report of a rule entitled ‘‘Shareholder Idaho, I thank Lodge No. 896 for their in force the sanctions to respond to Reports and Quarterly Portfolio Disclosure commitment to their community. It is this threat. of Registered Management Investment Com- panies’’ (RIN3235–AG64) received on March 2, the standard set by the Lewiston Elks GEORGE W. BUSH. 2004; to the Committee on Banking, Housing, THE WHITE HOUSE, March 2, 2004. that encourages local youth to strive and Urban Affairs. to improve themselves, and for neigh- f EC–6571. A communication from the Attor- bors to help one another. Their selfless- ney Advisor, Maritime Administration, De- ness has allowed everyone in the com- MESSAGE FROM THE HOUSE partment of Transportation, transmitting, munity to benefit. Congratulations to At 10:30 a.m., a message from the pursuant to law, the report of a rule entitled the Lewiston Elks for their endurance House of Representatives, delivered by ‘‘Amended Service Obligation Reporting Re- and dedication for the past 100 years.∑ quirements for U.S. Merchant Marine Acad- Ms. Niland, one of its reading clerks, emy and State Maritime Academy Grad- f announced that the House has passed uates’’ (RIN2133–AB57) received on March 2, the following bill, in which it requests 2004; to the Committee on Commerce, MESSAGE FROM THE PRESIDENT the concurrence of the Senate. Science, and Transportation. A message from the President of the H.R. 3769. An act to designate the facility EC–6572. A communication from the Attor- United States was communicated to of the United States Postal Service located ney, National Highway Traffic Safety Ad- at 137 East Young High Pike in Knoxville, ministration, Department of Transportation, the Senate by Ms. Evans, one of his transmitting, pursuant to law, the report of secretaries. Tennessee, as the ‘‘Ben Atchley Post Office Building’’. a rule entitled ‘‘Upper Interior Impact’’ f (RIN21270–AH61) received on March 2, 2004; to f the Committee on Commerce, Science, and EXECUTIVE MESSAGE REFERRED Transportation. ENROLLED BILL SIGNED As in executive session the Presiding EC–6573. A communication from the Assist- ant General Counsel for Regulatory Law, Of- Officer laid before the Senate a mes- The message also announced that the Speaker has signed the following en- fice of Energy Efficiency and Renewable En- sage from the President of the United ergy, Department of Energy, transmitting, States submitting a nomination which rolled bill: pursuant to law, the report of a rule entitled was referred to the Committee on Envi- S. 714. An act to provide for the convey- ‘‘Alternative Fuel Transportation Program; ronment and Public Works. ance of a small parcel of Bureau of Land Private and Local Government Fleet Deter- (The nomination received today is Management land in Douglas County, Or- mination’’ (RIN1904–AA98) received on March printed at the end of the Senate pro- egon, to the county to improve management 2, 2004; to the Committee on Energy and Nat- of and recreational access to the Oregon ural Resources. ceedings.) Dunes National Recreation Area, and for EC–6574. A communication from the Assist- f other purposes. ant General Counsel for Regulatory Law, Of- The enrolled bill was signed subse- fice of Energy Efficiency and Renewable En- NOTIFICATION OF THE CONTINU- ergy, Department of Energy, transmitting, ATION OF THE NATIONAL EMER- quently by the President pro tempore pursuant to law, the report of a rule entitled GENCY BLOCKING PROPERTY OF (Mr. STEVENS). ‘‘Human Reliability Program’’ (RIN1992– PERSONS UNDERMINING DEMO- f AA29) received on March 2, 2004; to the Com- CRATIC PROCESSES OR INSTITU- mittee on Energy and Natural Resources. MEASURES REFERRED EC–6575. A communication from the Sec- TIONS IN ZIMBABWE—PM 69 retary of Energy, transmitting, a draft of The PRESIDING OFFICER laid be- The following bill was read the first proposed legislation to authorize the reclas- fore the Senate the following message and the second times by unanimous sification of fees paid into the Nuclear Waste from the President of the United consent, and referred as indicated: Fund as offsetting collections, in an amount H.R. 3769. An act to designate the facility equal to appropriations for nuclear waste States, together with an accompanying disposal; to the Committee on Energy and report; which was referred to the Com- of the United States Postal Service located at 137 East Young High Pike in Knoxville, Natural Resources. mittee on Banking, Housing, and Tennessee, as the ‘‘Ben Atchley Post Office EC–6576. A communication from the Attor- Urban Affairs: Building’’; to the Committee on Govern- ney Advisor, Federal Highway Administra- To the Congress of the United States: mental Affairs. tion, Department of Transportation, transmitting, pursuant to law, the report of a rule Section 202(d) of the National Emer- f entitled ‘‘Federal Lands Highway Program; gencies Act (50 U.S.C. 1622(d)) provides Transportation Planning Procedures and for the automatic termination of a na- ENROLLED BILL PRESENTED Management Systems Pertaining to the For- tional emergency unless, prior to the The Secretary of the Senate reported est Service, Including the Forest Highways anniversary date of its declaration, the that on today, March 3, 2004, she had Programs’’ (RIN2125–AE55) received on President publishes in the Federal Reg- presented to the President of the March 2, 2004; to the Committee on Environ- ister and transmits to the Congress a ment and Public Works. United States the following enrolled EC–6577. A communication from the Attor- notice stating that the emergency is to bill: ney Advisor, Federal Highway Administra- continue in effect beyond the anniver- S. 714. An act to provide for the convey- tion, Department of Transportation, trans- sary date. In accordance with this pro- ance of a small parcel of Bureau of Land mitting, pursuant to law, the report of a rule vision, I have sent the enclosed notice Management land in Douglas County, Or- entitled ‘‘Federal Lands Highway Program;

VerDate jul 14 2003 02:50 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00086 Fmt 4624 Sfmt 0634 E:\CR\FM\A03MR6.034 S03PT1 March 3, 2004 CONGRESSIONAL RECORD — SENATE S2105 Transportation Planning Procedures and EC–6590. A communication from the Ad- transmitting, pursuant to law, the report of Management Systems Pertaining to the For- ministrator, General Services Administra- a rule entitled ‘‘Governmentwide Debarment est Service, Including the Park Roads and tion, transmitting, pursuant to law, a report and Suspension (Nonprocurement) and Re- Parkways Program’’ (RIN2125–AE52) received relative to the transfer of the Nebraska Ave- quirements for Drug-Free Workplace on March 2, 2004; to the Committee on Envi- nue Complex from the U.S. Navy to the Gen- (Grants)’’ (RIN3145–AA41) received on Feb- ronment and Public Works. eral Services Administration; to the Com- ruary 24, 2004; to the Committee on Health, EC–6578. A communication from the Attor- mittee on Governmental Affairs. Education, Labor, and Pensions. ney Advisor, Federal Highway Administra- EC–6591. A communication from the Chair- EC–6603. A communication from the Acting tion, Department of Transportation, trans- man, Merit Systems Protection Board, Clerk of Court, United States Court of Fed- mitting, pursuant to law, the report of a rule transmitting, pursuant to law, the Board’s eral Claims, transmitting, pursuant to law, entitled ‘‘Federal Lands Highway Program; Fiscal Year 2002 Performance Report; to the two copies of the report of the Court; to the Transportation Planning Procedures and Committee on Governmental Affairs. Committee on the Judiciary. Management Systems Pertaining to the For- EC–6592. A communication from the Comp- EC–6604. A communication from the Ad- est Service, Including the Refuge Roads Pro- troller General of the United States, trans- ministrator, Federal Aviation Adminis- gram’’ (RIN2125–AE54) received on March 2, mitting, pursuant to law, the GAO’s Per- trator, transmitting, pursuant to law, the 2004; to the Committee on Environment and formance and Accountability Highlights Fis- Federal Aviation Administration and Na- Public Works. cal 2003; to the Committee on Governmental tional Air Traffic Controllers Association EC–6579. A communication from the Attor- Affairs. Collective Bargaining Impasse Submission to ney Advisor, Federal Highway Administra- EC–6593. A communication from the Direc- Congress; to the Committee on Commerce, tion, Department of Transportation, trans- tor of the Peace Corps, transmitting, pursu- Science, and Transportation. mitting, pursuant to law, the report of a rule ant to law, the report of the Office of Inspec- f entitled ‘‘Federal Lands Highway Program; tor General for the period from April 1, 2003 Transportation Planning Procedures and through September 30, 2003; to the Com- INTRODUCTION OF BILLS AND Management Systems Pertaining to the For- mittee on Governmental Affairs. JOINT RESOLUTIONS est Service, Including the Indian Reserva- EC–6594. A communication from the Acting The following bills and joint resolutions Road Program’’ (RIN2125–AE53) re- Chief Executive Officer, Corporation for Na- tions were introduced, read the first tional and Community Service, transmit- ceived on March 2, 2004; to the Committee on and second times by unanimous con- Environment and Public Works. ting, pursuant to law, the report of a nomi- EC–6580. A communication from the Sec- nation confirmed for the position of Chief sent, and referred as indicated: retary of the Treasury, transmitting, pursu- Executive Officer, Corporation for National By Mr. SESSIONS (for himself, Mr. ant to law, the Financial Report of the and Community Service, received on Feb- KYL, Mr. ENZI, Mr. MCCONNELL, and United States Government for Fiscal Year ruary 24, 2004; to the Committee on Govern- Mr. NICKLES): 2003; to the Committee on Finance. mental Affairs. S. 2159. A bill to amend section 1951 of title EC–6581. A communication from the United EC–6595. A communication from the Dep- 18, United States Code (commonly known as States Trade Representative, Executive Of- uty Associate Administrator, Office of Ac- the Hobbs Act), and for other purposes; to fice of the President, transmitting, pursuant quisition Policy, National Aeronautics and the Committee on the Judiciary. to law, the 2004 Trade Policy Agenda and 2003 Space Administration, transmitting, pursu- By Mr. WYDEN (for himself, Mr. STE- Annual Report on the Trade Agreements ant to law, the report of a rule entitled VENS, and Ms. MURKOWSKI): Program as prepared by the Administration; ‘‘Federal Acquisition Regulation; Federal S. 2160. A bill to regulate interstate com- to the Committee on Finance. Acquisition Circular 2001–18’’ (FAC2001–18) merce by prohibiting the sale of children’s EC–6582. A communication from the Chief received on February 24, 2004; to the Com- personally identifiable information for com- Executive Officer, Corporation for National mittee on Governmental Affairs. mercial marketing purposes; to the Com- and Community Service, transmitting, the EC–6596. A communication from the Dep- mittee on Commerce, Science, and Transpor- Corporation’s Performance and Account- uty Executive Director, Neighborhood Rein- tation. ability Report for Fiscal Year 2003; to the vestment Corporation, transmitting, pursu- By Mrs. BOXER: Committee on Governmental Affairs. ant to law, the Corporation’s Fiscal Year S. 2161. A bill to amend title 5, United EC–6583. A communication from the Chair- 2002 Annual Program Performance Report; to States Code, to establish a national health man, International Trade Commission, the Committee on Governmental Affairs. program administered by the Office of Per- transmitting, pursuant to law, the Commis- EC–6597. A communication from the Regu- sonnel Management to offer Federal em- sion’s Program Performance Report for Fis- lations Coordinator, Food and Drug Adminis- ployee health benefits plans to individuals cal Year 2003; to the Committee on Govern- tration, transmitting, pursuant to law, the who are not Federal employees, and for other mental Affairs. report of a rule entitled ‘‘Bar Code Label Re- purposes; to the Committee on Finance. EC–6584. A communication from the Chair- quirements for Human Drug Products and By Mr. CRAPO: man, Federal Energy Regulatory Commis- Biological Treatments’’ (Doc. No. 2002N–0204) S. 2162. A bill to implement the Inland sion, transmitting, pursuant to law, the received on February 24, 2004; to the Com- Northwest Economic Adjustment Strategy, Commission’s Fiscal Year 2003 Performance mittee on Health, Education, Labor, and and for other purposes; to the Committee on Report; to the Committee on Governmental Pensions. Environment and Public Works. Affairs. EC–6598. A communication from the Regu- f EC–6585. A communication from the Sec- lations Coordinator, Food and Drug Adminis- retary of Education, transmitting, pursuant tration, transmitting, pursuant to law, the SUBMISSION OF CONCURRENT AND to law, a report relative to surplus Federal report of a rule entitled ‘‘Final Rule Declar- SENATE RESOLUTIONS real property disposed of to educational in- ing Dietary Supplements Containing Ephed- The following concurrent resolutions stitutions; to the Committee on Govern- rine Alkaloids Adulterated Because They and Senate resolutions were read, and mental Affairs. Present an Unreasonable Risk’’ (RIN0910– referred (or acted upon), as indicated: EC–6586. A communication from the Chair- AA59) received on February 24, 2004; to the man, Federal Election Commission, trans- Committee on Health, Education, Labor, and By Mr. SPECTER (for himself, Mr. mitting, a report relative to the Commis- Pensions. ALLEN, Mr. BENNETT, Mr. BIDEN, Mr. sion’s internal management control and fi- EC–6599. A communication from the Direc- BINGAMAN, Mrs. BOXER, Mr. BREAUX, nancial management control systems; to the tor, Occupational Safety and Health Admin- Mr. CARPER, Mr. CHAFEE, Mrs. CLIN- Committee on Governmental Affairs. istration, Department of Labor, transmit- TON, Mr. COCHRAN, Mr. CORZINE, Mr. EC–6587. A communication from the Chair- ting, pursuant to law, the report of a rule en- DASCHLE, Mr. DAYTON, Mr. DEWINE, man, National Transportation Safety Board, titled ‘‘Commercial Diving Operations’’ Mr. DODD, Mr. DOMENICI, Mr. DORGAN, transmitting, pursuant to law, a report rel- (RIN1218–AB97) received on February 24, 2004; Mr. DURBIN, Mr. EDWARDS, Mrs. FEIN- ative to the Board’s compliance with the to the Committee on Health, Education, STEIN, Mr. FITZGERALD, Mr. GRAHAM Federal Manager’s Integrity Act or the year Labor, and Pensions. of South Carolina, Mr. GRASSLEY, Mr. 2003; to the Committee on Governmental Af- EC–6600. A communication from the Chair- GREGG, Mr. HAGEL, Mr. HARKIN, Mr. fairs. man, Railroad Retirement Board, transmit- HOLLINGS, Mr. INHOFE, Mr. JOHNSON, EC–6588. A communication from the Chair- ting, pursuant to law, the Board’s Annual Mr. KENNEDY, Mr. KOHL, Ms. man, Board of Governors, United States Report for Calendar Year 2003; to the Com- LANDRIEU, Mr. LAUTENBERG, Mr. Postal Service, transmitting, pursuant to mittee on Health, Education, Labor, and LEVIN, Mr. LIEBERMAN, Mr. LOTT, Mr. law, the Board’s report under the Govern- Pensions. LUGAR, Ms. MIKULSKI, Mr. MILLER, ment in Sunshine Act for calendar year 2003; EC–6601. A communication from the Sec- Ms. MURKOWSKI, Mrs. MURRAY, Mr. to the Committee on Governmental Affairs. retary of Labor, transmitting, a draft of pro- NELSON of Florida, Mr. NICKLES, Mr. EC–6589. A communication from the Direc- posed legislation entitled the ‘‘Black Lung REED, Mr. REID, Mr. ROCKEFELLER, tor, Office of Personnel Management, trans- Disability Trust Fund Debt Restructuring Mr. SANTORUM, Mr. SARBANES, Mr. mitting, pursuant to law, the Office’s Fed- Act’’; to the Committee on Health, Edu- SCHUMER, Mr. SESSIONS, Mr. SMITH, eral Activities Inventory Reform Act Inven- cation, Labor, and Pensions. Ms. SNOWE, Ms. STABENOW, Mr. STE- tory as of June 30, 2003; to the Committee on EC–6602. A communication from the Gen- VENS, Mr. VOINOVICH, Mr. WARNER, Governmental Affairs. eral Counsel, National Science Foundation, Mr. WYDEN, and Mr. FEINGOLD):

VerDate jul 14 2003 01:46 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00087 Fmt 4624 Sfmt 0634 E:\CR\FM\A03MR6.043 S03PT1 S2106 CONGRESSIONAL RECORD — SENATE March 3, 2004 S. Res. 308. A resolution designating March S. 983 (Mr. LEAHY) was added as a cosponsor 25, 2004, as ‘‘Greek Independence Day: A Na- At the request of Mr. CHAFEE, the of S. 2065, supra. tional Day of Celebration of Greek and name of the Senator from Arizona (Mr. S. 2158 American Democracy’’; to the Committee on MCCAIN) was added as a cosponsor of S. the Judiciary. At the request of Ms. COLLINS, the 983, a bill to amend the Public Health By Mr. CRAIG (for himself, Mrs. FEIN- names of the Senator from Arizona STEIN, Mr. CAMPBELL, Mrs. BOXER, Service Act to authorize the Director (Mr. MCCAIN), the Senator from Illinois Mr. FITZGERALD, Ms. LANDRIEU, Mr. of the National Institute of Environ- (Mr. FITZGERALD), and the Senator INHOFE, Mr. FEINGOLD, Mr. COCHRAN, mental Health Sciences to make grants from Maryland (Ms. MIKULSKI) were Mr. JOHNSON, Mr. LIEBERMAN, Ms. MI- for the development and operation of added as cosponsors of S. 2158, a bill to KULSKI, Mr. DURBIN, and Mr. KOHL): research centers regarding environ- amend the Public Health Service Act S. Res. 309. A resolution designating the mental factors that may be related to to increase the supply of pancreatic week beginning March 14, 2004 as ‘‘National the etiology of breast cancer. Safe Place Week’’; to the Committee on the islet cells for research, and to provide Judiciary. S. 1420 for better coordination of Federal ef- f At the request of Mr. CRAIG, the forts and information on islet cell name of the Senator from Wyoming transplantation. ADDITIONAL COSPONSORS (Mr. THOMAS) was added as a cosponsor S.J. RES. 26 S. 68 of S. 1420, a bill to establish terms and At the request of Mr. ALLARD, the At the request of Mr. LAUTENBERG, conditions for use of certain Federal name of the Senator from Wyoming his name was added as a cosponsor of land by outfitters and to facilitate pub- (Mr. ENZI) was added as a cosponsor of S. 68, a bill to amend title 38, United lic opportunities for the recreational S.J. Res. 26, a joint resolution pro- States Code, to improve benefits for use and enjoyment of such land. posing an amendment to the Constitu- Filipino veterans of World War II, and S. 1888 tion of the United States relating to for other purposes. At the request of Mr. SPECTER, the marriage. S. 596 name of the Senator from Wisconsin S.J. RES. 28 At the request of Mr. ENSIGN, the (Mr. FEINGOLD) was added as a cospon- At the request of Mr. CAMPBELL, the name of the Senator from Tennessee sor of S. 1888, a bill to halt Saudi sup- names of the Senator from New Hamp- (Mr. ALEXANDER) was added as a co- port for institutions that fund, train, shire (Mr. SUNUNU) and the Senator sponsor of S. 596, a bill to amend the incite, encourage, or in any other way from Wyoming (Mr. THOMAS) were Internal Revenue Code of 1986 to en- aid and abet terrorism, and to secure added as cosponsors of S.J. Res. 28, a courage the investment of foreign earn- full Saudi cooperation in the investiga- joint resolution recognizing the 60th ings within the United States for pro- tion of terrorist incidents. anniversary of the Allied landing at ductive business investments and job S. 2035 Normandy during World War II. creation. At the request of Mr. GRAHAM of S. CON. RES. 88 S. 623 South Carolina, the name of the Sen- At the request of Mr. SARBANES, the At the request of Mr. WARNER, the ator from Maryland (Mr. SARBANES) name of the Senator from Washington name of the Senator from Arizona (Mr. was added as a cosponsor of S. 2035, a (Ms. CANTWELL) was added as a cospon- KYL) was added as a cosponsor of S. 623, bill to amend title 10, United States sor of S . Con. Res. 88, a concurrent res- a bill to amend the Internal Revenue Code, to revise the age and service re- olution expressing the sense of Con- Code of 1986 to allow Federal civilian quirements for eligibility to receive re- gress that there should continue to be and military retirees to pay health in- tired pay for non-regular service; to ex- parity between the adjustments in the surance premiums on a pretax basis pand certain authorities to provide pay of members of the uniformed serv- and to allow a deduction for TRICARE health care benefits for Reserves and ices and the adjustments in the pay of supplemental premiums. their families, and for other purposes. civilian employees of the United S. 738 S. 2056 States. OXER At the request of Mrs. B , the At the request of Mr. BROWNBACK, the S. CON. RES. 91 name of the Senator from California name of the Senator from Georgia (Mr. At the request of Mr. BROWNBACK, the (Mrs. FEINSTEIN) was added as a co- CHAMBLISS) was added as a cosponsor of name of the Senator from Georgia (Mr. sponsor of S. 738, a bill to designate S. 2056, a bill to increase the penalties MILLER) was added as a cosponsor of S. certain public lands in Humboldt, Del for violations by television and radio Con. Res. 91, a concurrent resolution Norte, Mendocino, Lake, Napa, and broadcasters of the prohibitions designating the month of April 2005 as Yolo Counties in the State of Cali- against transmission of obscene, inde- ‘‘American Religious History Month.’’ fornia as wilderness, to designate cer- cent, and profane language. f tain segments of the Black Butte River S. 2057 in Mendocino County, California as a At the request of Ms. CANTWELL, her STATEMENTS ON INTRODUCED wild or scenic river, and for other pur- name was added as a cosponsor of S. BILLS AND JOINT RESOLUTIONS poses. 2057, a bill to require the Secretary of By Mr. WYDEN (for himself, Mr. S. 846 Defense to reimburse members of the STEVENS, and Ms. MURKOWSKI): At the request of Mr. SMITH, the United States Armed Forces for certain S. 2160. A bill to regulate interstate name of the Senator from Kentucky transportation expenses incurred by commerce by prohibiting the sale of (Mr. BUNNING) was added as a cosponsor the members in connection with leave children’s personally identifiable infor- of S. 846, a bill to amend the Internal under the Central Command Rest and mation for commercial marketing pur- Revenue Code of 1986 to allow a deduc- Recuperation Leave Program before poses; to the Committee on Commerce, tion for premiums on mortgage insur- the program was expanded to include Science, and Transportation. ance, and for other purposes. domestic travel. Mr. WYDEN. Mr. President and col- S. 874 At the request of Mr. COLEMAN, the leagues, there is now clear evidence At the request of Mr. TALENT, the name of the Senator from Wyoming that it is open season for large-scale names of the Senator from South Caro- (Mr. ENZI) was added as a cosponsor of commercial marketing to the Nation’s lina (Mr. HOLLINGS) and the Senator S. 2057, supra. smallest children. As a result, today I from Connecticut (Mr. DODD) were S. 2065 am introducing with the distinguished added as cosponsors of S. 874, a bill to At the request of Mrs. MURRAY, her chairman of the Senate Appropriations amend title XIX of the Social Security name was added as a cosponsor of S. Committee, Senator STEVENS, legisla- Act to include primary and secondary 2065, a bill to restore health care cov- tion to protect the privacy of Amer- preventative medical strategies for erage to retired members of the uni- ica’s children. children and adults with Sickle Cell formed services, and for other pur- I suspect parents of very young chil- Disease as medical assistance under poses. dren would not want their children’s the medicaid program, and for other At the request of Mr. DASCHLE, the names and addresses, their e-mail ad- purposes. name of the Senator from Vermont dresses, their ages and other data

VerDate jul 14 2003 01:46 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00088 Fmt 4624 Sfmt 0634 E:\CR\FM\A03MR6.046 S03PT1 March 3, 2004 CONGRESSIONAL RECORD — SENATE S2107 treated as a simple marketplace com- league, the distinguished chairman of SEC. 2. FINDINGS. modity to be freely bought and sold for the Senate Appropriations Committee, The Congress finds the following: a profit with no questions asked. Yet Senator STEVENS, a privacy act to pro- (1) Commercial list brokers routinely ad- that is exactly what happens every tect our youngsters. vertise and sell detailed information on chil- day. dren, including names, addresses, ages, and The bill’s premise is simple: Traf- other data, for use in marketing. This data is Parents may not be aware of it, but ficking in data on very young children commonly available on children as young as large list brokers routinely advertise for the purpose of commercial mar- two years old, enabling marketers to target and sell information on very young keting should not be permitted in our specific demographics such as junior high children for marketing purposes. Their country. Specifically, the bill bans the school, elementary school, or even preschool. lists cover millions of children and selling or purchasing of personal infor- (2) Commercially available marketing often include such data as ethnicity, mation about people that the seller and databases can be very large, covering mil- family income, and hobbies or inter- purchaser know to be very young. lions of children. (3) Commercially available marketing ests. In short, commercial trafficking There would be an exception for cases in personal information about very databases can include a variety of informa- where the parent is given express con- tion on the children they cover, from eth- young children is surprisingly com- sent, provided that the parent had no- nicity to family income to hobbies and inter- monplace. tice of what he or she was consenting ests. How extreme has it gotten? Take a to and was not required to grant con- (4) Money spent on marketing to children look at this example. The broker of sent as a condition of obtaining a de- has been estimated at $12 billion per year. this list says on their Web site that sired product or service. (5) Several Federal statutes, including sec- they have more than 15 million names There would also be an exception for tion 1061 of the No Child Left Behind Act, the Children’s Online Privacy Protection of children from the ages of 2 to 13. the sale of information for nonmar- They said they update it monthly. Act, and the Family and Educational Rights keting purposes as long as the pur- and Privacy Act, restrict the collection and That is why it is clear it is open season chaser certifies it will neither use the for large-scale marketing to the coun- disclosure of information about children or information for marketing nor allow students under specified circumstances. try’s smallest children, which has con- others to do so. This exception would When data on children is collected in a man- cerned Senator STEVENS and I. The list allow, for example, health care officials ner that is outside the scope of those stat- brokers break it down for the market- to still use available data to track the utes, however, Federal law does not signifi- ers, as well, to help them target the spread of a disease or for students, of cantly restrict the commercial sale or resale of such data. very young. course, to get information about var- On this next graphic, a list broker of- (6) The ability to sell information about ious academic activities. The list buy- fers marketing lists that only contain children to marketers for a profit creates an ers would have to certify that lists are the names of preschool children ages 2 economic incentive to find new and creative to 5. If that is too young for a par- not being purchased or resold for mar- ways to collect and compile such informa- ticular marketer’s needs, the marketer keting; otherwise they will be in violation, and possibly to circumvent or subvert the intent of those Federal statutes that do could pursue lists of elementary school tion of the law. The bill’s enforcement provisions govern the collection of information about children ages 5 through 11 or junior children or students. There are a variety of high school kids age 11 to 13. These track those of the Children’s Online Privacy Protection Act. Primary en- means and sources that marketers and list lists of young children are advertised brokers can and do use to compile names, ad- openly on the Internet for anyone who forcement authority would rest with dresses, and other data about children. the Federal Trade Commission, and is interested. SEC. 3. RESTRICTION ON SALE OR PURCHASE OF We can see the details promised: Full State attorneys general would be au- CHILDREN’S PERSONAL INFORMA- name, address, and age. My view is thorized to bring enforcement actions TION. that is not information about young- as well. (a) IN GENERAL.—It is unlawful— I think we all understand marketers (1) to sell personal information about an sters that parents want available for individual the seller knows to be a child; sale without the consent of the par- have products they want to get out, and lists are a big part of their trade. (2) to purchase personal information about ents. But it is happening now all the an individual identified by the seller as a time because there is big money in But it is one proposition when the per- child, for the purpose of marketing to that marketing to the very young. Children, son on the list is an adult; it is quite child; or of course, influence the purchases of another to be buying and selling and (3) for a person who has provided a certifi- their parents. Sometimes they have trafficking in all of this data and all of cation pursuant to subsection (b)(2), in con- money to spend of their own. As a re- these lists on the very young. nection with the purchase of personal infor- sult, an estimated $12 billion per year I say to the Senate, if you just spend mation about an individual identified by the seller as a child, to engage in any practice is spent on marketing to these very a little time on the Internet, you will see what I have concluded; that it is that violates the terms of the certification. young children. (b) EXCEPTIONS.— open season for the large-scale mar- Unfortunately, with all the money (1) PARENTAL CONSENT.—Subsection (a) involved, the ethics of direct marketing that is targeted at very small does not apply to any sale, purchase, or use keting to children and appropriate lim- children, and we ought to make an ef- of personal information about a child if the its get short shrift. The very young are fort to draw some lines. parent of the child has granted express con- not likely to understand the intent and Yes, marketing is accepted and im- sent to that sale, purchase, or use of the in- tactics of marketing pitches the way portant with respect to adults. But I formation. adults do and may be more vulnerable hope my colleagues will join me and (2) CERTIFICATION.—Subsection (a)(1) shall not apply to the sale of personal information to influence, manipulation, and ques- Senator STEVENS today in supporting a commonsense effort to limit the way in about a child if the purchaser certifies to the tionable and deceptive tactics. The seller, electronically or in writing, before wholesale trafficking of specific infor- which data is used and commercialized the sale is completed— mation about individual youngsters about America’s smallest children. (A) the purpose for which the information and the use of that information to tar- Mr. President, I ask unanimous con- will be used by the purchaser; and get and contact those children for mar- sent that the text of the legislation I (B) that the purchaser will neither— keting purposes is something that am introducing today with Senator (i) use the information for marketing that most parents find very troubling. STEVENS be printed in the RECORD. child; nor The suggested use for these lists runs There being no objection, the bill was (ii) permit the information to be used by others for the purpose of marketing to that the gamut. Here is another list broker ordered to be printed in the RECORD, as child. that has 20 million names of children follows: SEC. 4. ADMINISTRATION AND ENFORCEMENT. in preschool through eighth grade. S. 2160 They have all kinds of suggestions. We (a) IN GENERAL.—Except as provided in Be it enacted by the Senate and House of Rep- subsection (b), this Act shall be enforced by can see a few of the examples on the resentatives of the United States of America in the Commission as if the violation of section chart that make it clear exactly how Congress assembled, 3 of this Act were an unfair or deceptive act great this potential market is. SECTION 1. SHORT TITLE. or practice proscribed under section That is why I am introducing today, This Act may be cited as the ‘‘Children’s 18(a)(1)(B) of the Federal Trade Commission with the bipartisan support of our col- Listbroker Privacy Act’’. Act (15 U.S.C. 57a(a)(1)(B)).

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(b) ENFORCEMENT BY CERTAIN OTHER AGEN- (1) CIVIL ACTIONS.—In any case in which permission in writing or electronic form. The CIES.—Compliance with this Act shall be en- the attorney general of a State has reason to term ‘‘express consent’’ does not include con- forced under— believe that an interest of the residents of sent inferred from a failure to indicate af- (1) section 8 of the Federal Deposit Insur- that State has been or is threatened or ad- firmatively that consent is denied or with- ance Act (12 U.S.C. 1818), in the case of— versely affected by the engagement of any held. (A) national banks, and Federal branches person in a practice that section 3 of this (B) PREREQUISITES.—Express consent is not and Federal agencies of foreign banks, by the Act, the State, as parens patriae, may bring valid unless— Office of the Comptroller of the Currency; a civil action on behalf of the residents of (i) before granting the consent the indi- (B) member banks of the Federal Reserve the State in a district court of the United vidual granting the consent was informed of System (other than national banks), States of appropriate jurisdiction— the purpose for which the information would branches and agencies of foreign banks (A) to enjoin that practice; be sold, purchased, or used; and (other than Federal branches, Federal agen- (B) to enforce compliance with the rule; (ii) consent was not granted as a condition cies, and insured State branches of foreign (C) to obtain damage, restitution, or other for making a product, service, or warranty banks), commercial lending companies compensation on behalf of residents of the available to the individual or the child to owned or controlled by foreign banks, and State; or which the information pertains. organizations operating under section 25 or (D) to obtain such other relief as the court (4) MARKETING.—The term ‘‘marketing’’ 25A of the Federal Reserve Act (12 U.S.C. 601 may consider to be appropriate. means making a communication to encour- and 611), by the Board; and (2) NOTICE.— age the purchase or use of a commercial (C) banks insured by the Federal Deposit (A) IN GENERAL.—Before filing an action product or service. For purposes of this para- Insurance Corporation (other than members under paragraph (1), the attorney general of graph, a product or service shall be consid- of the Federal Reserve System) and insured the State involved shall provide to the Com- ered to be commercial if some or all of the State branches of foreign banks, by the mission— proceeds from the sale inure to the benefit of Board of Directors of the Federal Deposit In- (i) written notice of that action; and an enterprise conducted for profit. surance Corporation; (ii) a copy of the complaint for that action. (5) PARENT.—The term ‘‘parent’’ includes a (2) section 8 of the Federal Deposit Insur- (B) EXCEPTION.— legal guardian. ance Act (12 U.S.C. 1818), by the Director of (i) IN GENERAL.—Subparagraph (A) shall (6) PERSONAL INFORMATION.—The term the Office of Thrift Supervision, in the case not apply with respect to the filing of an ac- ‘‘personal information’’ means identifiable of a savings association the deposits of which tion by an attorney general of a State under information about an individual, including— are insured by the Federal Deposit Insurance this subsection, if the attorney general de- (A) a name; Corporation; termines that it is not feasible to provide the (B) a home or other physical address in- (3) the Federal Credit Union Act (12 U.S.C. notice described in that subparagraph before cluding street name and name of a city or 1751 et seq.) by the National Credit Union the filing of the action. town; Administration Board with respect to any (ii) NOTIFICATION.—In an action described (C) an e-mail address or online username; Federal credit union; in clause (i), the attorney general of a State (D) a telephone number; (4) part A of subtitle VII of title 49, United shall provide notice and a copy of the com- (E) a Social Security number; or States Code, by the Secretary of Transpor- plaint to the Commission at the same time (F) any other information that permits a tation with respect to any air carrier or for- as the attorney general files the action. specific individual to be identified. eign air carrier subject to that part; (b) INTERVENTION.— (7) PURCHASE; SELL; SALE.—In section 3, the (5) the Packers and Stockyards Act, 1921 (7 (1) IN GENERAL.—On receiving notice under terms ‘‘purchase’’, ‘‘sell’’, and ‘‘sale’’ include U.S.C. 181 et seq.) (except as provided in sec- subsection (a)(2), the Commission shall have the purchase and sale of the right to use per- tion 406 of that Act (7 U.S.C. 226, 227)), by the the right to intervene in the action that is sonal information, without regard to wheth- Secretary of Agriculture with respect to any the subject of the notice. er— activities subject to that Act; and (2) EFFECT OF INTERVENTION.—If the Com- (A) the right is limited or unlimited; (6) the Farm Credit Act of 1971 (12 U.S.C. mission intervenes in an action under sub- (B) the transaction is characterized as a 2001 et seq.) by the Farm Credit Administra- section (a), it shall have the right— purchase, sale, lease, or otherwise; and tion with respect to any Federal land bank, (A) to be heard with respect to any matter (C) the consideration for the transaction is Federal land bank association, Federal inter- that arises in that action; and monetary, goods, or services. mediate credit bank, or production credit as- (B) to file a petition for appeal. SEC. 7. EFFECTIVE DATE. sociation. (c) CONSTRUCTION.—For purposes of bring- (c) EXERCISE OF CERTAIN POWERS.—For the ing any civil action under subsection (a), This Act takes effect 6 months after the purpose of the exercise by any agency re- nothing in this subtitle shall be construed to date of enactment. ferred to in subsection (b) of its powers under prevent an attorney general of a State from Mr. STEVENS. Mr. President, I am any Act referred to in that subsection, a vio- exercising the powers conferred on the attor- proud to introduce, with my colleague lation of section 3 of this Act I is deemed to ney general by the laws of that State to— from Oregon, a bill which protects chil- be a violation of a requirement imposed (1) conduct investigations; dren from being strategically targeted under that Act. In addition to its powers (2) administer oaths or affirmations; or by commercial advertising. under any provision of law specifically re- (3) compel the attendance of witnesses or ferred to in subsection (b), each of the agen- the production of documentary and other I was shocked to learn that presently cies referred to in that subsection may exer- evidence. there is no law that restricts compa- cise, for the purpose of enforcing compliance (d) ACTIONS BY THE COMMISSION.—In any nies from purchasing databases which with any requirement imposed under section case in which an action is instituted by or on contain information about children. 3 of this Act, any other authority conferred behalf of the Commission for violation of In fact, websites have been brought on it by law. section 2 of this Act, no State may, during to my attention that actually sell lists (d) ACTIONS BY THE COMMISSION.—The Com- the pendency of that action, institute an ac- of children as young as pre-school. mission shall prevent any person from vio- tion under subsection (a) against any defend- The thought of companies acquiring lating section 3 of this Act in the same man- ant named in the complaint in that action ner, by the same means, and with the same for violation of that section. lists of information about kids that are jurisdiction, powers, and duties as though all (e) VENUE; SERVICE OF PROCESS.— barely past the toddler stage is appall- applicable terms and provisions of the Fed- (1) VENUE.—Any action brought under sub- ing. eral Trade Commission Act (15 U.S.C. 41 et section (a) may be brought in the district These companies actually market seq.) were incorporated into and made a part court of the United States that meets appli- that the lists can be selected and pur- of this Act. Any entity that violates any pro- cable requirements relating to venue under chased by sorting according to dif- vision of that section is subject to the pen- section 1391 of title 28, United States Code. ferent age groups. They suggest pos- alties and entitled to the privileges and im- (2) SERVICE OF PROCESS.—In an action munities provided in the Federal Trade Com- brought under subsection (a), process may be sible commercial uses for the lists such mission Act in the same manner, by the served in any district in which the defend- as for magazines, amusement parks, same means, and with the same jurisdiction, ant— child care services, etc. power, and duties as though all applicable (A) is an inhabitant; or One of the websites even points out terms and provisions of the Federal Trade (B) may be found. that many high school students have Commission Act were incorporated into and SEC. 6. DEFINITIONS. their own credit cards or have use of made a part of that section. In this Act: their parents’ credit cards. The website (f) PRESERVATION OF COMMISSION AUTHOR- (1) CHILD.—The term ‘‘child’’ means an in- then suggests that companies could ITY.—Nothing contained in this section shall dividual under the age of 16. buy these lists so they could market to be construed to limit the authority of the (2) COMMISSION.—The term ‘‘Commission’’ Commission under any other provision of means the Federal Trade Commission. children various products such as law. (3) EXPRESS CONSENT.— clothing, computers, etc. SEC. 5. ACTIONS BY STATES. (A) IN GENERAL.—The term ‘‘express con- The bill that we are introducing (a) IN GENERAL.— sent’’ means an affirmative indication of today will deter entities from selling

VerDate jul 14 2003 01:46 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00090 Fmt 4624 Sfmt 0634 E:\CR\FM\A03MR6.083 S03PT1 March 3, 2004 CONGRESSIONAL RECORD — SENATE S2109 these lists of personal information ance for All Americans Act of 2004,’’ is Whereas Greek Commander in Chief Petros about children to be used for commer- a partial solution that will give Ameri- Mavromichalis, a founder of the modern cial purposes. cans access to the same health insur- Greek state, said to the citizens of the The bill will prohibit anyone from ance program as Members of Congress. United States in 1821, ‘‘it is in your land that selling or buying personal information liberty has fixed her abode and... in imi- It establishes a separate risk pool tating you, we shall imitate our ancestors about a person who is known to be within the Federal Employee Health and be thought worthy of them if we succeed under 16 years of age unless: 1. The par- Benefit Program for individuals who in resembling you’’; ent has given express consent; or 2. The wish to purchase individual or family Whereas Greece is one of only three na- buyer certifies that the information is coverage. The Office of Personnel Man- tions in the world, beyond the former British being obtained for strictly non-mar- agement would make at least one pri- Empire, that has been allied with the United keting purposes. If that is the case, vate health insurance plan available States in every major international conflict they can’t subsequently sell the infor- through the FEHBP to non-Federal for more than 100 years; mation to a commercial marketing employees. While individuals will have Whereas Greece played a major role in the group. World War II struggle to protect freedom and access to the same program as Federal democracy through such bravery as was The enforcement will be by the Fed- employees, the entry of others into shown in the historic Battle of Crete that eral Trade Commission and the 50 at- FEHBP will not affect Federal employ- presented the Axis land war with its first torney generals. ees at all. major setback, setting off a chain of events I look forward to working with my My bill also makes this insurance af- that significantly affected the outcome of colleague from Oregon and others on fordable by establishing advanceable, World War II; this bill. refundable tax credits for certain low Whereas the price for Greece in holding our and middle-income participants. For common values in their region was high, as By Mrs. BOXER: those below poverty, the credit is 100 hundreds of thousands of civilians were S. 2161. A bill to amend title 5, killed in Greece during the World War II pe- percent. The credit is gradually de- riod; United States Code, to establish a na- creased up to 400 percent of poverty. So tional health program administered by Whereas President George W. Bush, in rec- a family of 4 making $18,850 or less ognizing Greek Independence Day, said, the Office of Personnel Management to would receive a 100 percent credit. A ‘‘Greece and America have been firm allies offer Federal employee health benefits family of 4 making $75,000 would rein the great struggles for liberty. Americans plans to individuals who are not Fed- ceive a 30 percent credit. will always remember Greek heroism and eral employees, and for other purposes; We need to begin implementing Greek sacrifice for the sake of freedom... to the Committee on Finance. measures to provide all Americans [and] as the 21st Century dawns, Greece and Mrs. BOXER. Mr. President, over 43 America once again stand united; this time with access to affordable health cov- in the fight against terrorism. The United million Americans are uninsured, erage. My bill is a step toward this which means that one in every 7 Amer- States deeply appreciates the role Greece is goal. playing in the war against terror.... Amer- icans has no health insurance. It is not f ica and Greece are strong allies, and we’re surprising that two-thirds of the unin- strategic partners.’’; sured are low-income. What may be SUBMITTED RESOLUTIONS Whereas Greece is a stabilizing force by surprising to some is that most of the virtue of its political and economic power in uninsured—8 in 10—come from working the volatile Balkan region and is one of the families. Most of these uninsured are SENATE RESOLUTION 308—DESIG- fastest growing economies in Europe; not eligible for public health insurance NATING MARCH 25, 2004, AS Whereas Greece, through excellent work programs, such as Medicaid or SCHIP. ‘‘GREEK INDEPENDENCE DAY: A and cooperation with United States and international law enforcement agencies, ar- Lack of health insurance too often NATIONAL DAY OF CELEBRA- rested and convicted key members of the No- means poorer health care. The unin- TION OF GREEK AND AMERICAN vember 17 terrorist organization; sured receive less preventive care, are DEMOCRACY’’ Whereas President Bush stated that diagnosed at more advanced disease Mr. SPECTER (for himself, Mr. Greece’s successful ‘‘law enforcement operations against a terrorist organization [No- stages, and once diagnosed, tend to re- ALLEN, Mr. BENNETT, Mr. BIDEN, Mr. ceive less therapeutic care. The Insti- vember 17] responsible for three decades of BINGAMAN, Mrs. BOXER, Mr. BREAUX, terrorist attacks underscore the important tute of Medicine estimates that 18,000 Mr. CARPER, Mr. CHAFEE, Mrs. CLINTON, Americans die prematurely each year contributions Greece is making to the global Mr. COCHRAN, Mr. CORZINE, Mr. war on terrorism’’; due to the effects of a lack of health in- DASCHLE, Mr. DAYTON, Mr. DEWINE, Mr. Whereas the Olympic Games will be com- surance. DODD, Mr. DOMENICI, Mr. DORGAN, Mr. ing home in August 2004 to Athens, Greece, The plight of the uninsured has con- DURBIN, Mr. EDWARDS, Mrs. FEINSTEIN, the land of their ancient birthplace 2,500 sequences that reach beyond the unin- Mr. FITZGERALD, Mr. GRAHAM of South years ago and the city of their modern re- sured. In 2001, the uninsured amounted vival in 1896; Carolina, Mr. GRASSLEY, Mr. GREGG, to about $35 billion in uncompensated Whereas the unprecedented Olympic secu- Mr. HAGEL, Mr. HARKIN, Mr. HOLLINGS, care. Those costs are borne by all of us rity effort in Greece, including a record-set- Mr. INHOFE, Mr. JOHNSON, Mr. KEN- through higher health care costs and ting expenditure of over $850,000,000 and as- NEDY, Mr. KOHL, Ms. LANDRIEU, Mr. signment of over 50,000 security personnel, as government-funded reimbursements. LAUTENBERG, Mr. LEVIN, Mr. well as the utilization of a 7-country Olym- Furthermore, the Institute of Medi- LIEBERMAN, Mr. LOTT, Mr. LUGAR, Ms. pic Security Advisory Group which includes cine suggests that the reduced health MIKULSKI, Mr. MILLER, Ms. MURKOWSKI, the United States, will contribute to a safe and higher mortality of the uninsured Mrs. MURRAY, Mr. NELSON of Florida, and secure environment for staging the 2004 costs society between $65 billion and Olympic Games in Athens, Greece; Mr. NICKLES, Mr. REED, Mr. REID, Mr. $130 billion a year, and concludes that Whereas Greece, geographically located in ROCKEFELLER, Mr. SANTORUM, Mr. SAR- public programs are likely to have a region where Christianity meets Islam and BANES, Mr. SCHUMER, Mr. SESSIONS, Mr. higher budgetary costs than they Judaism, maintains excellent relations with SMITH, Ms. SNOWE, Ms. STABENOW, Mr. Muslim nations and Israel; would if everyone under 65 had health STEVENS, Mr. VOINOVICH, Mr. WARNER, Whereas Greece has had extraordinary suc- insurance. In addition, the Urban Insti- Mr. WYDEN, and Mr. FEINGOLD) sub- cess in recent years in furthering cross-cul- tute recently found that if people were mitted the following resolution; which tural understanding and reducing tensions covered by insurance, there could be was referred to the Committee on the between Greece and Turkey; savings to Medicare and Medicaid of Judiciary: Whereas Greece and the United States are $10 billion a year. at the forefront of the effort for freedom, de- Even those who have health insur- S. RES. 308 mocracy, peace, stability, and human rights; ance find it extremely expensive and of Whereas the ancient Greeks developed the Whereas those and other ideals have forged poor quality. It is time to expand ac- concept of democracy, in which the supreme a close bond between our two nations and power to govern was vested in the people; their peoples; cess to affordable, quality health insur- Whereas the Founding Fathers of the Whereas March 25, 2004, marks the 183d an- ance for all Americans. United States drew heavily on the political niversary of the beginning of the revolution The bill I am introducing today, the experience and philosophy of ancient Greece that freed the Greek people from the Otto- ‘‘Universal Access to Affordable Insur- in forming our representative democracy; man Empire; and

VerDate jul 14 2003 01:46 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00091 Fmt 4624 Sfmt 0634 E:\CR\FM\A03MR6.051 S03PT1 S2110 CONGRESSIONAL RECORD — SENATE March 3, 2004 Whereas it is proper and desirable to cele- United States and interested groups to pro- SA 2655. Mr. BUNNING submitted an brate with the Greek people and to reaffirm mote awareness of and volunteer involve- amendment intended to be proposed by him the democratic principles from which our ment in the Safe Place programs, and to ob- to the bill S. 1637, supra; which was ordered two great nations were born: Now, therefore, serve the week with appropriate ceremonies to lie on the table. be it and activities. SA 2656. Mr. BUNNING (for himself and Mr. Resolved, That the Senate— f BOND) submitted an amendment intended to (1) designates March 25, 2004, as ‘‘Greek be proposed by him to the bill S. 1637, supra; Independence Day: A National Day of Cele- AMENDMENTS SUBMITTED AND which was ordered to lie on the table. bration of Greek and American Democracy’’; PROPOSED SA 2657. Mr. BUNNING (for himself, Mr. GRAHAM, of Florida, and Mr. NELSON, of Flor- and SA 2638. Mr. SANTORUM (for himself, Mr. (2) requests that the President issue a ida) submitted an amendment intended to be BAYH, and Mr. BINGAMAN) submitted an proposed by him to the bill S. 1637, supra; proclamation calling on the people of the amendment intended to be proposed by him which was ordered to lie on the table. United States to observe the day with appro- to the bill S. 1637, to amend the Internal SA 2658. Mr. BUNNING submitted an priate ceremonies and activities. Revenue Code of 1986 to comply with the amendment intended to be proposed by him World Trade Organization rulings on the to the bill S. 1637, supra; which was ordered SENATE RESOLUTION 309—DESIG- FSC/ETI benefit in a manner that preserves to lie on the table. jobs and production activities in the United NATING THE WEEK BEGINNING SA 2659. Mr. BUNNING (for himself and Mr. States, to reform and simplify the inter- MARCH 14, 2004 AS ‘‘NATIONAL SCHUMER) submitted an amendment intended national taxation rules of the United States, SAFE PLACE WEEK’’ to be proposed by him to the bill S. 1637, and for other purposes; which was ordered to supra; which was ordered to lie on the table. Mr. CRAIG (for himself, Mrs. FEIN- lie on the table. SA 2660. Mr. DODD (for himself, Mr. COLE- STEIN, Mr. CAMPBELL, Mrs. BOXER, Mr. SA 2639. Mr. ALLEN submitted an amend- MAN, Mr. KENNEDY, Mr. CORZINE, Ms. MIKUL- FITZGERALD, Ms. LANDRIEU, Mr. ment intended to be proposed by him to the SKI, and Mr. FEINGOLD) proposed an amend- bill S. 1637, supra; which was ordered to lie INHOFE, Mr. FEINGOLD, Mr. COCHRAN, ment to the bill S. 1637, supra. on the table. Mr. JOHNSON, Mr. LIEBERMAN, Ms. MI- SA 2661. Mr. BAYH submitted an amend- SA 2640. Mr. INOUYE submitted an amend- KULSKI, Mr. DURBIN, and Mr. KOHL) sub- ment intended to be proposed by him to the ment intended to be proposed by him to the bill S. 1637, supra; which was ordered to lie mitted the following resolution; which bill S. 1637, supra; which was ordered to lie on the table. was referred to the Committee on the on the table. SA 2662. Mr. AKAKA submitted an amend- Judiciary: SA 2641. Mrs. LINCOLN submitted an ment intended to be proposed by him to the amendment intended to be proposed by her S. RES. 309 bill S. 1637, supra; which was ordered to lie to the bill S. 1637, supra; which was ordered Whereas today’s youth are vital to the on the table. preservation of our country and will be the to lie on the table. SA 2642. Mrs. LINCOLN submitted an SA 2663. Ms. CANTWELL (for herself, Mr. future bearers of the bright torch of democ- amendment intended to be proposed by her THOMAS, Mr. DURBIN, and Mr. LEAHY) sub- racy; to the bill S. 1637, supra; which was ordered mitted an amendment intended to be pro- Whereas youth need a safe haven from var- to lie on the table. posed by her to the bill S. 1637, supra; which ious negative influences such as child abuse, SA 2643. Mrs. LINCOLN (for herself and Mr. was ordered to lie on the table. substance abuse and crime, and they need to COLEMAN) submitted an amendment intended SA 2664. Ms. LANDRIEU (for herself and have resources readily available to assist to be proposed by her to the bill S. 1637, Ms. CANTWELL) submitted an amendment in- them when faced with circumstances that supra; which was ordered to lie on the table. tended to be proposed by her to the bill S. compromise their safety; SA 2644. Mrs. LINCOLN submitted an 1637, supra; which was ordered to lie on the Whereas the United States needs increased amendment intended to be proposed by her table. numbers of community volunteers acting as to the bill S. 1637, supra; which was ordered SA 2665. Mr. LAUTENBERG submitted an positive influences on the Nation’s youth; to lie on the table. amendment intended to be proposed by him Whereas the Safe Place program is com- SA 2645. Mr. GRASSLEY (for himself and to the bill S. 1637, supra; which was ordered mitted to protecting our Nation’s most valu- Mr. BAUCUS) proposed an amendment to the to lie on the table. able assert, our youth, by offering short bill S. 1637, supra. SA 2666. Mr. VOINOVICH submitted an term ‘‘safe places’’ at neighborhood locations SA 2646. Mr. GRASSLEY (for himself and amendment intended to be proposed by him where trained volunteers are available to Mr. BAUCUS) proposed an amendment to to the bill S. 1637, supra; which was ordered counsel and advise youth seeking assistance amendment SA 2645 proposed by Mr. GRASS- to lie on the table. and guidance; LEY (for himself and Mr. BAUCUS) to the bill SA 2667. Mr. SMITH (for himself, Mr. LAU- Whereas the Safe Place program combines S. 1637, supra. TENBERG, and Ms. MURKOWSKI) submitted an the efforts of the private sector and non- SA 2647. Mr. HATCH (for himself, Mrs. amendment intended to be proposed by him profit organizations uniting to reach youth MURRAY, Mr. BAUCUS, Ms. CANTWELL, Mr. to the bill S. 1637, supra; which was ordered in the early stages of crisis; SMITH, Mr. BUNNING, and Mr. GRASSLEY) pro- to lie on the table. Whereas the Safe Place program provides a posed an amendment to the bill S. 1637, SA 2668. Mr. SANTORUM submitted an direct way to assist programs in meeting supra. amendment intended to be proposed by him performance standards relative to outreach SA 2648. Ms. CANTWELL submitted an to the bill S. 1637, supra; which was ordered and community relations, as set forth in the amendment intended to be proposed by her to lie on the table. Federal Runaway and Homeless Youth Act to the bill S. 1637, supra; which was ordered SA 2669. Mr. HOLLINGS submitted an guidelines; to lie on the table. amendment intended to be proposed by him Whereas the Safe Place placard displayed SA 2649. Mr. BAYH submitted an amend- to the bill S. 1637, supra; which was ordered at businesses within communities stands as ment intended to be proposed by him to the to lie on the table. a beacon of safety and refuge to at-risk bill S. 1637, supra; which was ordered to lie SA 2670. Mr. SANTORUM (for himself and youth; on the table. Mr. LIEBERMAN) submitted an amendment Whereas more than 700 communities in 42 SA 2650. Mr. BAYH submitted an amend- intended to be proposed by him to the bill S. states and more than 14,000 locations have ment intended to be proposed by him to the 1637, supra; which was ordered to lie on the established Safe Place programs; bill S. 1637, supra; which was ordered to lie table. Whereas more than 68,000 young people on the table. SA 2671. Mr. SMITH (for himself and Mr. have gone to Safe Place locations to get help SA 2651. Mr. BINGAMAN (for himself and BREAUX) submitted an amendment intended when faced with crisis situations; Mr. DOMENICI) proposed an amendment to to be proposed by him to the bill S. 1637, Whereas through the efforts of Safe Place amendment SA 2647 proposed by Mr. HATCH supra; which was ordered to lie on the table. coordinators across the country each year (for himself, Mrs. MURRAY, Mr. BAUCUS, Ms. SA 2672. Mr. SANTORUM submitted an more than one-half million students learn CANTWELL, Mr. SMITH, Mr. BUNNING, and Mr. amendment intended to be proposed by him that Safe Place is a resource if abusive or ne- GRASSLEY) to the bill S. 1637, supra. to the bill S. 1637, supra; which was ordered glectful situations exist; SA 2652. Mrs. LINCOLN submitted an to lie on the table. Whereas increased awareness of the pro- amendment intended to be proposed by her SA 2673. Mr. BINGAMAN submitted an gram’s existence will encourage commu- to the bill S. 1637, supra; which was ordered amendment intended to be proposed by him nities to establish Safe Places for the Na- to lie on the table. to the bill S. 1637, supra; which was ordered tion’s youth throughout the country: Now, SA 2653. Mr. REID submitted an amend- to lie on the table. therefore, be it ment intended to be proposed by him to the SA 2674. Mr. BINGAMAN (for himself and Resolved, That the Senate— bill S. 1637, supra; which was ordered to lie Mr. ALLEN) submitted an amendment in- (1) proclaims the week of March 14 through on the table. tended to be proposed by him to the bill S. March 20, 2004 as ‘‘National Safe Place SA 2654. Mr. WARNER submitted an 1637, supra; which was ordered to lie on the Week’’ and amendment intended to be proposed by him table. (2) requests that the President issue a to the bill S. 1637, supra; which was ordered SA 2675. Mr. DURBIN (for himself, Mr. proclamation calling upon the people of the to lie on the table. GRAHAM, of South Carolina, Mr. REID, and

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Mrs. MURRAY) submitted an amendment in- (1) EXTENSION OF CREDITS.—The amend- ‘‘(A) such subparagraph (A) shall be applied tended to be proposed by him to the bill S. ments made by subsection (a) shall apply to by substituting ‘$10,000’ for ‘$6,000’, and 1637, supra; which was ordered to lie on the individuals who begin work for the employer ‘‘(B) such subparagraph (B) shall be applied table. after December 31, 2003. by substituting ‘$833.33’ for ‘$500’.’’ (d) REPEAL OF SEPARATE WELFARE-TO- f (2) MODIFICATIONS.—The amendments made by subsections (b), (c), (d), and (e) shall apply WORK CREDIT.— TEXT OF AMENDMENTS to individuals who begin work for the em- (1) IN GENERAL.—Section 51A is hereby repealed. SA 2638. Mr. SANTORUM (for him- ployer after December 31, 2004. SEC. 503. CONSOLIDATION OF WORK OPPOR- (2) CLERICAL AMENDMENT.—The table of self, Mr. BAYH, and Mr. BINGAMAN) sub- TUNITY CREDIT WITH WELFARE-TO- sections for subpart F of part IV of submitted an amendment intended to be WORK CREDIT. chapter A of chapter 1 is amended by strik- proposed by him to the bill S. 1637, to (a) IN GENERAL.—Paragraph (1) of section ing the item relating to section 51A. amend the Internal Revenue Code of 51(d) is amended by striking ‘‘or’’ at the end (e) EFFECTIVE DATE.—The amendments 1986 to comply with the World Trade of subparagraph (G), by striking the period made by this section shall apply to individ- Organization rulings on the FSC/ETI at the end of subparagraph (H) and inserting uals who begin work for the employer after ‘‘, or’’, and by adding at the end the fol- December 31, 2004. benefit in a manner that preserves jobs lowing new subparagraph: and production activities in the United ‘‘(I) a long-term family assistance recipi- 2639. Mr. ALLEN submitted an States, to reform and simplify the ent.’’ amendment intended to be proposed by international taxation rules of the (b) LONG-TERM FAMILY ASSISTANCE RECIPI- him to the bill S. 1637, to amend the In- United States, and for other purposes; ENT.—Subsection (d) of section 51 is amended ternal Revenue Code of 1986 to comply which was ordered to lie on the table; by redesignating paragraphs (10) through (12) with the World Trade Organization rul- as follows: as paragraphs (11) through (13), respectively, ings on the FSC/ETI benefit in a man- and by inserting after paragraph (9) the fol- ner that preserves jobs and production On page 179, after line 25, insert the following new paragraph: activities in the United States, to re- lowing: ‘‘(10) LONG-TERM FAMILY ASSISTANCE RECIPI- SEC. ll. MODIFICATIONS TO WORK OPPOR- ENT.—The term ‘long-term family assistance form and simplify the international TUNITY CREDIT AND WELFARE-TO- recipient’ means any individual who is cer- taxation rules of the United States, WORK CREDIT. tified by the designated local agency— and for other purposes; which was or- (a) EXTENSION OF CREDIT.— ‘‘(A) as being a member of a family receiv- dered to lie on the table; as follows: (1) Subparagraph (B) of section 51(c)(4) is ing assistance under a IV–A program (as de- At the end add the following: amended by striking ‘‘December 31, 2003’’ and fined in paragraph (2)(B)) for at least the 18- inserting ‘‘December 31, 2005’’. TITLE III—HOMESTEAD PRESERVATION month period ending on the hiring date, ACT (2) Subsection (f) of section 51A is amended ‘‘(B)(i) as being a member of a family re- SEC. 301. SHORT TITLE. by striking by striking ‘‘December 31, 2003’’ ceiving such assistance for 18 months begin- and inserting ‘‘December 31, 2005’’. This title may be cited as the ‘‘Homestead ning after August 5, 1997, and Preservation Act’’. (b) ELIGIBILITY OF EX-FELONS DETERMINED ‘‘(ii) as having a hiring date which is not SEC. 302. MORTGAGE PAYMENT ASSISTANCE. WITHOUT REGARD TO FAMILY INCOME.—Para- more than 2 years after the end of the ear- (a) ESTABLISHMENT OF PROGRAM.—The Sec- graph (4) of section 51(d) is amended by add- liest such 18-month period, or ing ‘‘and’’ at the end of subparagraph (A), by retary of Labor (referred to in this section as ‘‘(C)(i) as being a member of a family the ‘‘Secretary’’) shall establish a program striking ‘‘, and’’ at the end of subparagraph which ceased to be eligible for such assist- (B) and inserting a period, and by striking under which the Secretary shall award lowance by reason of any limitation imposed by interest loans to eligible individuals to en- all that follows subparagraph (B). Federal or State law on the maximum period (c) INCREASE IN MAXIMUM AGE FOR ELIGI- able such individuals to continue to make such assistance is payable to a family, and mortgage payments with respect to the pri- BILITY OF FOOD STAMP RECIPIENTS.—Clause ‘‘(ii) as having a hiring date which is not (i) of section 51(d)(8)(A) is amended by strik- mary residences of such individuals. more than 2 years after the date of such ces- (b) ELIGIBILITY.—To be eligible to receive a ing ‘‘25’’ and inserting ‘‘40’’. sation.’’ loan under the program established under (d) INCREASE IN MAXIMUM AGE FOR DES- (c) INCREASED CREDIT FOR EMPLOYMENT OF subsection (a), an individual shall— IGNATED COMMUNITY RESIDENTS.— LONG-TERM FAMILY ASSISTANCE RECIPIENTS (1) be— (1) IN GENERAL.—Paragraph (5) of section AND QUALIFIED EX-FELONS.—Section 51 is (A) an adversely affected worker with re- 51(d) is amended to read as follows: amended by inserting after subsection (d) the spect to whom a certification of eligibility ‘‘(5) DESIGNATED COMMUNITY RESIDENTS.— following new subsection: has been issued by the Secretary of Labor ‘‘(A) IN GENERAL.—The term ‘designated ‘‘(e) CREDIT FOR SECOND-YEAR WAGES FOR under chapter 2 of title II of the Trade Act of community resident’ means any individual EMPLOYMENT OF LONG-TERM FAMILY ASSIST- 1974 (19 U.S.C. 2271 et seq.); or who is certified by the designated local agen- ANCE RECIPIENTS AND QUALIFIED EX-FEL- (B) an individual who would be an indi- cy— ONS.— vidual described in subparagraph (A) but who ‘‘(i) as having attained age 18 but not age ‘‘(1) IN GENERAL.—With respect to the em- resides in a State that has not entered into 40 on the hiring date, and ployment of a long-term family assistance an agreement under section 239 of such Act ‘‘(ii) as having his principal place of abode recipient or a qualified ex-felon— (19 U.S.C. 2311); within an empowerment zone, enterprise ‘‘(A) the amount of the work opportunity (2) be a borrower under a loan which re- community, or renewal community. credit determined under this section for the quires the individual to make monthly mort- ‘‘(B) INDIVIDUAL MUST CONTINUE TO RESIDE taxable year shall include 50 percent of the gage payments with respect to the primary IN ZONE OR COMMUNITY.—In the case of a des- qualified second-year wages for such year, place of residence of the individual; and ignated community resident, the term and (3) be enrolled in a job training or job as- ‘qualified wages’ shall not include wages ‘‘(B) in lieu of applying subsection (b)(3), sistance program. paid or incurred for services performed while the amount of the qualified first-year wages, (c) LOAN REQUIREMENTS.— the individual’s principal place of abode is and the amount of qualified second-year (1) IN GENERAL.—A loan provided to an eli- outside an empowerment zone, enterprise wages, which may be taken into account gible individual under this section shall— community, or renewal community.’’ with respect to such a recipient shall not ex- (A) be for a period of not to exceed 12 (2) CONFORMING AMENDMENT.—Subpara- ceed $10,000 per year. months; graph (D) of section 51(d)(1) is amended to ‘‘(2) QUALIFIED SECOND-YEAR WAGES.—For (B) be for an amount that does not exceed read as follows: purposes of this subsection, the term ‘quali- the sum of— ‘‘(D) a designated community resident,’’. fied second-year wages’ means qualified (i) the amount of the monthly mortgage (e) CLARIFICATION OF TREATMENT OF INDI- wages— payment owed by the individual; and VIDUALS UNDER INDIVIDUAL WORK PLANS.— ‘‘(A) which are paid to a long-term family (ii) the number of months for which the Subparagraph (B) of section 51(d)(6) (relating assistance recipient or a qualified ex-felon, loan is provided; to vocational rehabilitation referral) is and (C) have an applicable rate of interest that amended by striking ‘‘or’’ at the end of ‘‘(B) which are attributable to service ren- equals 4 percent; clause (i), by striking the period at the end dered during the 1-year period beginning on (D) require repayment as provided for in of clause (ii) and inserting ‘‘, or’’, and by the day after the last day of the 1-year pe- subsection (d); and adding at the end the following new clause: riod with respect to such recipient deter- (E) be subject to such other terms and con- ‘‘(iii) an individual work plan developed mined under subsection (b)(2). ditions as the Secretary determines appro- and implemented by an employment net- ‘‘(3) SPECIAL RULES FOR AGRICULTURAL AND priate. work pursuant to subsection (g) of section RAILWAY LABOR.—If such recipient is an em- (2) ACCOUNT.—A loan awarded to an indi- 1148 of the Social Security Act with respect ployee to whom subparagraph (A) or (B) of vidual under this section shall be deposited to which the requirements of such subsection subsection (h)(1) applies, rules similar to the into an account from which a monthly mort- are met.’’ rules of such subparagraphs shall apply ex- gage payment will be made in accordance (f) EFFECTIVE DATES.— cept that— with the terms and conditions of such loan.

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(d) REPAYMENT.— of chapter 11 (relating to taxable estate) is ‘‘(2) ADJUSTMENT FOR PREVIOUS TRANS- (1) IN GENERAL.—An individual to which a amended by striking section 2057. FERS.—The Secretary may increase the value loan has been awarded under this section (b) CARRYOVER BUSINESS INTEREST EXCLU- of any carryover business interest by that shall be required to begin making repay- SION.—Part IV of subchapter A of chapter 11 portion of those assets transferred from such ments on the loan on the earlier of— (relating to taxable estate) is amended by in- carryover business interest to the decedent’s (A) the date on which the individual has serting after section 2058 the following new taxable estate within 3 years before the date been employed on a full-time basis for 6 con- section: of the decedent’s death. secutive months; or ‘‘SEC. 2059. CARRYOVER BUSINESS INTERESTS. ‘‘(d) CARRYOVER BUSINESS INTEREST.— (B) the date that is 1 year after the date on ‘‘(a) GENERAL RULES.— ‘‘(1) IN GENERAL.—For purposes of this sec- which the loan has been approved under this ‘‘(1) ALLOWANCE OF DEDUCTION.—For pur- tion, the term ‘carryover business interest’ section. poses of the tax imposed by section 2001, in means— (2) REPAYMENT PERIOD AND AMOUNT.— the case of an estate of a decedent to which ‘‘(A) an interest as a proprietor in a trade (A) REPAYMENT PERIOD.—A loan awarded this section applies, the value of the taxable or business carried on as a proprietorship, or under this section shall be repaid on a estate shall be determined by deducting from ‘‘(B) an interest in an entity carrying on a monthly basis over the 5-year period begin- the value of the gross estate the adjusted trade or business, if— ning on the date determined under paragraph value of the carryover business interests of ‘‘(i) at least— (1). the decedent which are described in sub- ‘‘(I) 50 percent of such entity is owned (di- (B) AMOUNT.—The amount of the monthly section (b)(2). rectly or indirectly) by the decedent and payment described in subparagraph (A) shall ‘‘(2) APPLICATION OF CARRYOVER BASIS members of the decedent’s family, be determined by dividing the total amount RULES.—With respect to the adjusted value ‘‘(II) 70 percent of such entity is so owned provided under the loan (plus interest) by 60. of the carryover business interests of the de- by members of 2 families, or (C) RULE OF CONSTRUCTION.—Nothing in cedent which are described in subsection ‘‘(III) 90 percent of such entity is so owned this paragraph shall be construed to prohibit (b)(2), the rules of section 1023 shall apply. by members of 3 families, and ‘‘(b) ESTATES TO WHICH SECTION APPLIES.— an individual from— ‘‘(ii) for purposes of subclause (II) or (III) of ‘‘(1) IN GENERAL.—This section shall apply (i) paying off a loan awarded under this clause (i), at least 30 percent of such entity to an estate if— section in less than 5 years; or is so owned by the decedent and members of ‘‘(A) the decedent was (at the date of the (ii) from paying a monthly amount under the decedent’s family. decedent’s death) a citizen or resident of the such loan in excess of the monthly amount For purposes of the preceding sentence, a de- United States, determined under subparagraph (B) with re- cedent shall be treated as engaged in a trade ‘‘(B) the executor elects the application of spect to the loan. or business if any member of the decedent’s this section under rules similar to the rules (e) REGULATIONS.—Not later than 6 weeks family is engaged in such trade or business. of paragraphs (1) and (3) of section 2032A(d) after the date of enactment of this section, ENDING AND FINANCE BUSINESS.—For and files the agreement referred to in sub- ‘‘(2) L the Secretary shall promulgate regulations section (e), and purposes of this section, any asset used in a necessary to carry out this section, includ- ‘‘(C) during the 8-year period ending on the lending and finance business (as defined in ing regulations that permit an individual to date of the decedent’s death there have been section 6166(b)(10)(B)(ii)) shall be treated as certify that the individual is an eligible indi- periods aggregating 5 years or more during an asset which is used in carrying on a trade vidual under subsection (b). which— or business. (f) AUTHORIZATION OF APPROPRIATIONS.— ‘‘(i) the carryover business interests de- ‘‘(3) LIMITATION.—Such term shall not in- There is authorized to be appropriated to scribed in paragraph (2) were owned by the clude— carry out this section, $10,000,000 for each of decedent or a member of the decedent’s fam- ‘‘(A) any interest in a trade or business the fiscal years 2004 through 2008. ily, and principal place of business of which is not lo- ‘‘(ii) there was material participation cated in the United States, SA 2640. Mr. INOUYE submitted an (within the meaning of section 2032A(e)(6)) ‘‘(B) any interest in an entity, if the stock amendment intended to be proposed by by the decedent, a member of the decedent’s or debt of such entity or a controlled group him to the bill S. 1637, to amend the In- family, or a qualified heir in the operation of (as defined in section 267(f)(1)) of which such ternal Revenue Code of 1986 to comply the business to which such interests relate. entity was a member was readily tradable on an established securities market or sec- with the World Trade Organization rul- ‘‘(2) INCLUDIBLE CARRYOVER BUSINESS IN- ondary market (as defined by the Secretary) ings on the FSC/ETI benefit in a man- TERESTS.—The carryover business interests described in this paragraph are the interests at any time, ner that preserves jobs and production ‘‘(C) that portion of an interest in an enti- activities in the United States, to re- which— ‘‘(A) are included in determining the value ty transferred by gift to such interest within form and simplify the international of the gross estate (other than qualified 3 years before the date of the decedent’s taxation rules of the United States, spousal property with respect to which an death, and and for other purposes; which was or- aggregate spousal property basis increase is ‘‘(D) that portion of an interest in an enti- dered to lie on the table; as follows: allocated under section 1023(c)), ty which is attributable to cash or marketable securities, or both, in any amount in ex- On page 179, after line 25, insert the fol- ‘‘(B) are acquired by any qualified heir cess of the reasonably anticipated business lowing: from, or passed to any qualified heir from, needs of such entity. SEC. 312. EXTENSION OF POSSESSION TAX CRED- the decedent (within the meaning of section IT WITH RESPECT TO AMERICAN 2032A(e)(9)), and In any proceeding before the United States SAMOA. ‘‘(C) are subject to the election under para- Tax Court involving a notice of deficiency Subparagraph (A) of section 936(j)(8) of the graph (1)(B). based in whole or in part on the allegation Internal Revenue Code of 1986 (relating to ‘‘(3) RULES REGARDING MATERIAL PARTICIPA- that cash or marketable securities, or both, special rules for certain possessions) is TION.—For purposes of paragraph (1)(C)(ii)— are accumulated in an amount in excess of amended by inserting before the period at ‘‘(A) in the case a surviving spouse, mate- the reasonably anticipated business needs of the end the following: ‘‘(January 1, 2016, in rial participation by such spouse may be sat- such entity, the burden of proof with respect the case of American Samoa)’’. isfied under rules similar to the rules under to such allegation shall be on the Secretary section 2032A(b)(5), to the extent such cash or marketable secu- SA 2641. Mrs. LINCOLN submitted an ‘‘(B) in the case of a carryover business in- rities are less than 35 percent of the value of amendment intended to be proposed by terest in an entity carrying on multiple the interest in such entity. her to the bill S. 1637, to amend the In- trades or businesses, material participation ‘‘(4) RULES REGARDING OWNERSHIP.— ‘‘(A) OWNERSHIP OF ENTITIES.—For purposes ternal Revenue Code of 1986 to comply in each trade or business is satisfied by material participation in the entity or in 1 or of paragraph (1)(B)— with the World Trade Organization rul- more of the multiple trades or businesses, ‘‘(i) CORPORATIONS.—Ownership of a cor- ings on the FSC/ETI benefit in a man- and poration shall be determined by the holding ner that preserves jobs and production ‘‘(C) in the case of a lending and finance of stock possessing the appropriate percent- activities in the United States, to re- business (as defined in section age of the total combined voting power of all form and simplify the international 6166(b)(10)(B)(ii)), material participation is classes of stock entitled to vote and the ap- taxation rules of the United States, satisfied under the rules under subclause (I) propriate percentage of the total value of and for other purposes; which was or- or (II) of section 6166(b)(10)(B)(i). shares of all classes of stock. ‘‘(c) ADJUSTED VALUE OF THE CARRYOVER ‘‘(ii) PARTNERSHIPS.—Ownership of a part- dered to lie on the table; as follows: BUSINESS INTERESTS.—For purposes of this nership shall be determined by the owning of On page 179, after line 25, add the fol- section— the appropriate percentage of the capital in- lowing: ‘‘(1) IN GENERAL.—The adjusted value of terest in such partnership. SEC. ll. REPEAL OF ESTATE TAX ON FAMILY- any carryover business interest is the value ‘‘(B) OWNERSHIP OF TIERED ENTITIES.—For OWNED BUSINESSES AND FARMS. of such interest for purposes of this chapter purposes of this section, if by reason of hold- (a) REPEAL OF QUALIFIED FAMILY-OWNED (determined without regard to this section), ing an interest in a trade or business, a dece- BUSINESS INTEREST.—Part IV of subchapter A as adjusted under paragraph (2). dent, any member of the decedent’s family,

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any qualified heir, or any member of any ‘‘SEC. 1023. TREATMENT OF CARRYOVER BUSI- ‘‘(iii) POWERS OF APPOINTMENT.—The dece- qualified heir’s family is treated as holding NESS INTERESTS AND SPOUSAL dent shall not be treated as owning any prop- an interest in any other trade or business— PROPERTY. erty by reason of holding a power of appoint- ‘‘(i) such ownership interest in the other ‘‘(a) IN GENERAL.—Except as otherwise pro- ment with respect to such property. vided in this section— trade or business shall be disregarded in de- ‘‘(iv) COMMUNITY PROPERTY.—Property termining if the ownership interest in the ‘‘(1) qualified property acquired from a de- which represents the surviving spouse’s one- first trade or business is a carryover business cedent shall be treated for purposes of this half share of community property held by subtitle as transferred by gift, and interest, and the decedent and the surviving spouse under ‘‘(2) the basis of the person acquiring quali- ‘‘(ii) this section shall be applied sepa- the community property laws of any State fied property from such a decedent shall be rately in determining if such interest in any or possession of the United States or any for- the lesser of— other trade or business is a carryover busi- eign country shall be treated for purposes of ‘‘(A) the adjusted basis of the decedent, or ness interest. this section as owned by, and acquired from, ‘‘(B) the fair market value of the property ‘‘(C) INDIVIDUAL OWNERSHIP RULES.—For the decedent if at least one-half of the whole at the date of the decedent’s death. purposes of this section, an interest owned, of the community interest in such property ‘‘(b) QUALIFIED PROPERTY.—For purposes of directly or indirectly, by or for an entity de- this section, the term ‘qualified property’ is treated as owned by, and acquired from, scribed in paragraph (1)(B) shall be consid- means— the decedent without regard to this clause. ered as being owned proportionately by or ‘‘(1) the carryover business interests of the ‘‘(C) PROPERTY ACQUIRED BY DECEDENT BY for the entity’s shareholders, partners, or decedent with respect to which an election is GIFT WITHIN 3 YEARS OF DEATH.— beneficiaries. A person shall be treated as a made under section 2059(b)(1)(B), and ‘‘(i) IN GENERAL.—This subsection shall not beneficiary of any trust only if such person ‘‘(2) the qualified spousal property. apply to property acquired by the decedent has a present interest in such trust. ‘‘(c) ADDITIONAL BASIS INCREASE FOR PROP- by gift or by inter vivos transfer for less than adequate and full consideration in ‘‘(e) AGREEMENT.—The agreement referred ERTY ACQUIRED BY SURVIVING SPOUSE.— money or money’s worth during the 3-year to in this subsection is a written agreement ‘‘(1) IN GENERAL.—In the case of property period ending on the date of the decedent’s signed by each person in being who has an to which this subsection applies and which is death. interest (whether or not in possession) in qualified spousal property, the basis of such ‘‘(ii) EXCEPTION FOR CERTAIN GIFTS FROM any property designated in such agreement property under subsection (a) shall be in- SPOUSE.—Clause (i) shall not apply to prop- consenting to the application of this section creased by its spousal property basis increase. erty acquired by the decedent from the dece- with respect to such property. ‘‘(2) SPOUSAL PROPERTY BASIS INCREASE.— dent’s spouse unless, during such 3-year pe- ‘‘(f) OTHER DEFINITIONS AND APPLICABLE For purposes of this subsection— riod, such spouse acquired the property in RULES.—For purposes of this section— ‘‘(A) IN GENERAL.—The spousal property whole or in part by gift or by inter vivos ‘‘(1) QUALIFIED HEIR.—The term ‘qualified basis increase for property referred to in transfer for less than adequate and full con- heir’ means a United States citizen who is— paragraph (1) is the portion of the aggregate sideration in money or money’s worth. ‘‘(A) described in section 2032A(e)(1), or spousal property basis increase which is allo- ‘‘(D) STOCK OF CERTAIN ENTITIES.—This sub- ‘‘(B) an active employee of the trade or cated to the property pursuant to this sec- section shall not apply to— business to which the carryover business in- tion. ‘‘(i) stock or securities of a foreign per- terest relates if such employee has been em- ‘‘(B) AGGREGATE SPOUSAL PROPERTY BASIS sonal holding company, ployed by such trade or business for a period INCREASE.—In the case of any estate, the ag- ‘‘(ii) stock of a DISC or former DISC, of at least 10 years before the date of the de- gregate spousal property basis increase is ‘‘(iii) stock of a foreign investment com- cedent’s death. $3,000,000. pany, or ‘‘(2) MEMBER OF THE FAMILY.—The term ‘‘(3) QUALIFIED SPOUSAL PROPERTY.—For ‘‘(iv) stock of a passive foreign investment ‘member of the family’ has the meaning purposes of this section, the term ‘qualified company unless such company is a qualified given to such term by section 2032A(e)(2). spousal property’ means any interest in electing fund (as defined in section 1295) with ‘‘(3) APPLICABLE RULES.—Rules similar to property which passes or has passed from the respect to the decedent. the following rules shall apply: decedent to the decedent’s surviving spouse ‘‘(E) FAIR MARKET VALUE LIMITATION.—The ‘‘(A) Section 2032A(b)(4) (relating to dece- with respect to which a deduction is allowed adjustments under this subsection shall not dents who are retired or disabled). under section 2056. increase the basis of any interest in property ‘‘(B) Section 2032A(e)(10) (relating to com- ‘‘(4) DEFINITIONS AND SPECIAL RULES.— acquired from the decedent above its fair munity property). ‘‘(A) PROPERTY TO WHICH SUBSECTION AP- market value in the hands of the decedent as ‘‘(C) Section 2032A(e)(14) (relating to treat- PLIES.—The basis of property acquired from of the date of the decedent’s death. ment of replacement property acquired in a decedent may be increased under this sub- ‘‘(d) PROPERTY ACQUIRED FROM THE DECE- section 1031 or 1033 transactions). section only if the property was owned by DENT.—For purposes of this section, the fol- ‘‘(D) Section 2032A(g) (relating to applica- the decedent at the time of death. lowing property shall be considered to have tion to interests in partnerships, corpora- ‘‘(B) RULES RELATING TO OWNERSHIP.— been acquired from the decedent: tions, and trusts). ‘‘(i) JOINTLY HELD PROPERTY.—In the case ‘‘(1) Property acquired by bequest, devise, ‘‘(4) SAFE HARBOR FOR ACTIVE ENTITIES HELD of property which was owned by the decedent or inheritance, or by the decedent’s estate BY ENTITY CARRYING ON A TRADE OR BUSI- and another person as joint tenants with from the decedent. NESS.—For purposes of this section, if— right of survivorship or tenants by the en- ‘‘(2) Property transferred by the decedent ‘‘(A) an entity carrying on a trade or busi- tirety— during his lifetime— ness owns 20 percent or more in value of the ‘‘(I) if the only such other person is the ‘‘(A) to a qualified revocable trust (as de- voting interests of another entity, or such surviving spouse, the decedent shall be treat- fined in section 645(b)(1)), or other entity has 15 or fewer owners, and ed as the owner of only 50 percent of the ‘‘(B) to any other trust with respect to ‘‘(B) 80 percent or more of the value of the property, which the decedent reserved the right to assets of each such entity is attributable to ‘‘(II) in any case (to which subclause (I) make any change in the enjoyment thereof assets used in an active business operation, does not apply) in which the decedent fur- through the exercise of a power to alter, then the requirements under subsections nished consideration for the acquisition of amend, or terminate the trust. (b)(1)(C)(ii) and (d)(3)(D) shall be met with re- the property, the decedent shall be treated ‘‘(3) Any other property passing from the spect to an interest in such an entity.’’. as the owner to the extent of the portion of decedent by reason of death to the extent the property which is proportionate to such that such property passed without consider- (c) MODIFICATION OF TREATMENT OF MAR- consideration, and ation. ITAL DEDUCTION; LIMITATION ON STEP-UPIN ‘‘(III) in any case (to which subclause (I) ‘‘(e) COORDINATION WITH SECTION 691.—This BASIS.—Section 2056 (relating to bequests, does not apply) in which the property has section shall not apply to property which etc., to surviving spouses) is amended by been acquired by gift, bequest, devise, or in- constitutes a right to receive an item of in- adding at the end the following new sub- heritance by the decedent and any other per- come in respect of a decedent under section section: son as joint tenants with right of survivor- 691. ‘‘(f) CERTAIN LIABILITIES DISREGARDED.— ‘‘(e) APPLICATION OF CARRYOVER BASIS ship and their interests are not otherwise ‘‘(1) IN GENERAL.—In determining whether RULES.—With respect to the value of the in- specified or fixed by law, the decedent shall gain is recognized on the acquisition of prop- terests of the decedent which are described be treated as the owner to the extent of the value of a fractional part to be determined erty— in subsection (a), the rules of section 1023 ‘‘(A) from a decedent by a decedent’s estate shall apply.’’. by dividing the value of the property by the number of joint tenants with right of survi- or any beneficiary other than a tax-exempt (d) CARRYOVER BASIS RULES FOR CARRY- vorship. beneficiary, and OVER BUSINESS INTERESTS AND SPOUSAL ‘‘(ii) REVOCABLE TRUSTS.—The decedent ‘‘(B) from the decedent’s estate by any ben- PROPERTY.—Part II of subchapter O of chap- shall be treated as owning property trans- eficiary other than a tax-exempt beneficiary, ter 1 (relating to basis rules of general appli- ferred by the decedent during life to a quali- and in determining the adjusted basis of such cation) is amended by inserting after section fied revocable trust (as defined in section property, liabilities in excess of basis shall 1022 the following new section: 645(b)(1)). be disregarded.

VerDate jul 14 2003 01:46 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00095 Fmt 4624 Sfmt 0634 E:\CR\FM\A03MR6.057 S03PT1 S2114 CONGRESSIONAL RECORD — SENATE March 3, 2004 ‘‘(2) TAX-EXEMPT BENEFICIARY.—For pur- form and simplify the international (o) and by inserting after subsection (m) the poses of paragraph (1), the term ‘tax-exempt taxation rules of the United States, following new subsection: beneficiary’ means— and for other purposes; which was or- ‘‘(n) CLARIFICATION OF ECONOMIC SUB- STANCE DOCTRINE; ETC.— ‘‘(A) the United States, any State or polit- dered to lie on the table; as follows: ical subdivision thereof, any possession of ‘‘(1) GENERAL RULES.— the United States, any Indian tribal govern- On page 179, after line 25, insert the fol- ‘‘(A) IN GENERAL.—In any case in which a ment (within the meaning of section 7871), or lowing: court determines that the economic sub- any agency or instrumentality of any of the SEC. ll. PAYMENT OF DIVIDENDS ON STOCK OF stance doctrine is relevant for purposes of foregoing, COOPERATIVES WITHOUT REDUC- this title to a transaction (or series of trans- ‘‘(B) an organization (other than a coopera- ING PATRONAGE DIVIDENDS. actions), such transaction (or series of trans- tive described in section 521) which is exempt (a) IN GENERAL.—Subsection (a) of section actions) shall have economic substance only from tax imposed by chapter 1, 1388 (relating to patronage dividend defined) if the requirements of this paragraph are ‘‘(C) any foreign person or entity (within is amended by adding at the end the fol- met. the meaning of section 168(h)(2)), and lowing new sentence: ‘‘For purposes of para- ‘‘(B) DEFINITION OF ECONOMIC SUBSTANCE.— ‘‘(D) to the extent provided in regulations, graph (3), net earnings shall not be reduced For purposes of subparagraph (A)— any person to whom property is transferred by amounts paid during the year as divi- ‘‘(i) IN GENERAL.—A transaction has eco- for the principal purpose of tax avoidance. dends on capital stock or other proprietary nomic substance only if— ‘‘(g) REGULATIONS.—The Secretary shall capital interests of the organization to the ‘‘(I) the transaction changes in a meaning- prescribe such regulations as may be nec- extent that the articles of incorporation or ful way (apart from Federal tax effects) the essary to carry out the purposes of this sec- bylaws of such organization or other con- taxpayer’s economic position, and tion.’’. tract with patrons provide that such divi- ‘‘(II) the taxpayer has a substantial nontax (e) CLERICAL AMENDMENTS.— dends are in addition to amounts otherwise purpose for entering into such transaction (1) The table of sections for part IV of sub- payable to patrons which are derived from and the transaction is a reasonable means of chapter A of chapter 11 is amended by strik- business done with or for patrons during the accomplishing such purpose. ing the item relating to section 2057 and by taxable year.’’. In applying subclause (II), a purpose of inserting after the item relating to section (b) EFFECTIVE DATE.—The amendment achieving a financial accounting benefit 2058 the following new item: made by this section shall apply to distribu- shall not be taken into account in deter- tions in taxable years beginning after the mining whether a transaction has a substan- ‘‘Sec. 2059. Carryover business exclusion.’’. date of the enactment of this Act. tial nontax purpose if the origin of such fi- (2) The table of sections for part II of sub- nancial accounting benefit is a reduction of chapter O of chapter 1 of such Code is amend- SA 2644. Mrs. LINCOLN submitted an income tax. ed by inserting after the item relating to amendment intended to be proposed by ‘‘(ii) SPECIAL RULE WHERE TAXPAYER RELIES section 1022 the following new item: her to the bill S. 1637, to amend the In- ON PROFIT POTENTIAL.—A transaction shall ternal Revenue Code of 1986 to comply not be treated as having economic substance ‘‘Sec. 1023. Treatment of carryover business by reason of having a potential for profit un- interests and spousal prop- with the World Trade Organization rulings on the FSC/ETI benefit in a man- less— erty.’’. ‘‘(I) the present value of the reasonably ex- (f) EFFECTIVE DATES.—The amendments ner that preserves jobs and production pected pre-tax profit from the transaction is made by this section shall apply to estates of activities in the United States, to re- substantial in relation to the present value decedents dying, and gifts made— form and simplify the international of the expected net tax benefits that would (1) after December 31, 2003, and before Jan- taxation rules of the United States, be allowed if the transaction were respected, uary 1, 2010, and and for other purposes; which was or- and (2) after December 31, 2011. dered to lie on the table; as follows: ‘‘(II) the reasonably expected pre-tax profit On page 177, strike lines 13 through 16, and from the transaction exceeds a risk-free rate SA 2642. Mrs. LINCOLN submitted an insert the following: of return. amendment intended to be proposed by ‘‘(I) SPECIAL RULE.—In the case of a net op- ‘‘(C) TREATMENT OF FEES AND FOREIGN her to the bill S. 1637, to amend the In- erating loss for any taxable year ending after TAXES.—Fees and other transaction expenses ternal Revenue Code of 1986 to comply December 31, 2002, and before February 1, and foreign taxes shall be taken into account 2004, subparagraph (A)(i) shall be applied by as expenses in determining pre-tax profit with the World Trade Organization rul- under subparagraph (B)(ii). ings on the FSC/ETI benefit in a man- substituting ‘3’ for ‘2’.’’. On page 178, strike lines 9 through 15, and ‘‘(2) SPECIAL RULES FOR TRANSACTIONS WITH ner that preserves jobs and production insert the following: TAX-INDIFFERENT PARTIES.— ‘‘(A) SPECIAL RULES FOR FINANCING TRANS- activities in the United States, to re- (1) IN GENERAL.—Section 56(d)(1)(A)(ii)(I) form and simplify the international (relating to general rule defining alternative ACTIONS.—The form of a transaction which is in substance the borrowing of money or the taxation rules of the United States, tax net operating loss deduction) is amend- acquisition of financial capital directly or and for other purposes; which was or- ed— indirectly from a tax-indifferent party shall (A) by striking ‘‘or 2002’’ and inserting ‘‘, dered to lie on the table; as follows: not be respected if the present value of the 2002, or after December 31, 2002, and before On page 179, after line 25, add the fol- deductions to be claimed with respect to the February 1, 2004,’’, and lowing: transaction is substantially in excess of the (B) by striking ‘‘and 2002’’ and inserting ‘‘, present value of the anticipated economic re- SEC. ll. RESTORATION OF EXCLUSION FOR 2002, and after December 31, 2002, and before AMOUNTS RECEIVED UNDER QUALI- turns of the person lending the money or February 1, 2004’’. FIED GROUP LEGAL SERVICES providing the financial capital. A public of- PLANS. On page 179, line 17, strike ‘‘during 2003’’ fering shall be treated as a borrowing, or an (a) INCREASE OF EXCLUSION.—Subsection (a) and inserting ‘‘after December 31, 2002, and acquisition of financial capital, from a tax- of section 120 (relating to exclusion by em- before February 1, 2004’’. indifferent party if it is reasonably expected ployee for contributions and legal services) that at least 50 percent of the offering will be is amended by striking the last sentence SA 2645. Mr. GRASSLEY (for himself placed with tax-indifferent parties. thereof. and Mr. BAUCUS) proposed an amend- ‘‘(B) ARTIFICIAL INCOME SHIFTING AND BASIS (b) RESTORATION OF EXCLUSION.—Section ment to the bill S. 1637, to amend the ADJUSTMENTS.—The form of a transaction 120 is amended by striking subsection (e) and Internal Revenue Code of 1986 to com- with a tax-indifferent party shall not be re- by redesignating subsection (f) as subsection ply with the World Trade Organization spected if— (e). rulings on the FSC/ETI benefit in a ‘‘(i) it results in an allocation of income or (c) EFFECTIVE DATE.—The amendments gain to the tax-indifferent party in excess of made by this section shall apply to taxable manner that preserves jobs and produc- such party’s economic income or gain, or years beginning after December 31, 2004, and tion activities in the United States, to ‘‘(ii) it results in a basis adjustment or before December 31, 2009. reform and simplify the international shifting of basis on account of overstating taxation rules of the United States, the income or gain of the tax-indifferent SA 2643. Mrs. LINCOLN (for herself and for other purposes; as follows: party. and Mr. COLEMAN) submitted an Strike title IV and insert the following: ‘‘(3) DEFINITIONS AND SPECIAL RULES.—For purposes of this subsection— amendment intended to be proposed by TITLE IV—ADDITIONAL PROVISIONS her to the bill S. 1637, to amend the In- ‘‘(A) ECONOMIC SUBSTANCE DOCTRINE.—The Subtitle A—Provisions Designed To Curtail ternal Revenue Code of 1986 to comply term ‘economic substance doctrine’ means Tax Shelters the common law doctrine under which tax with the World Trade Organization rul- SEC. 401. CLARIFICATION OF ECONOMIC SUB- benefits under subtitle A with respect to a ings on the FSC/ETI benefit in a man- STANCE DOCTRINE. transaction are not allowable if the trans- ner that preserves jobs and production (a) IN GENERAL.—Section 7701 is amended action does not have economic substance or activities in the United States, to re- by redesignating subsection (n) as subsection lacks a business purpose.

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‘‘(B) TAX-INDIFFERENT PARTY.—The term of section 448(c) shall apply for purposes of ‘‘(A) is required to pay a penalty under this ‘tax-indifferent party’ means any person or this subparagraph. section with respect to a listed transaction, entity not subject to tax imposed by subtitle ‘‘(C) HIGH NET WORTH INDIVIDUAL.—For pur- ‘‘(B) is required to pay a penalty under sec- A. A person shall be treated as a tax-indif- poses of subparagraph (A), the term ‘high net tion 6662A with respect to any reportable ferent party with respect to a transaction if worth individual’ means, with respect to a transaction at a rate prescribed under sec- the items taken into account with respect to reportable transaction, a natural person tion 6662A(c), or the transaction have no substantial impact whose net worth exceeds $2,000,000 imme- ‘‘(C) is required to pay a penalty under sec- on such person’s liability under subtitle A. diately before the transaction. tion 6662B with respect to any noneconomic ‘‘(C) EXCEPTION FOR PERSONAL TRANS- ‘‘(c) DEFINITIONS.—For purposes of this sec- substance transaction, ACTIONS OF INDIVIDUALS.—In the case of an tion— the requirement to pay such penalty shall be individual, this subsection shall apply only ‘‘(1) REPORTABLE TRANSACTION.—The term disclosed in such reports filed by such person to transactions entered into in connection ‘reportable transaction’ means any trans- for such periods as the Secretary shall speci- with a trade or business or an activity en- action with respect to which information is fy. Failure to make a disclosure in accord- required to be included with a return or gaged in for the production of income. ance with the preceding sentence shall be statement because, as determined under reg- ‘‘(D) TREATMENT OF LESSORS.—In applying treated as a failure to which the penalty ulations prescribed under section 6011, such paragraph (1)(B)(ii) to the lessor of tangible under subsection (b)(2) applies. transaction is of a type which the Secretary property subject to a lease— ‘‘(f) COORDINATION WITH OTHER PEN- determines as having a potential for tax ‘‘(i) the expected net tax benefits with re- ALTIES.—The penalty imposed by this section spect to the leased property shall not include avoidance or evasion. is in addition to any penalty imposed under ISTED TRANSACTION.—Except as pro- the benefits of— ‘‘(2) L this title.’’. vided in regulations, the term ‘listed trans- ‘‘(I) depreciation, (b) CONFORMING AMENDMENT.—The table of ‘‘(II) any tax credit, or action’ means a reportable transaction sections for part I of subchapter B of chapter ‘‘(III) any other deduction as provided in which is the same as, or substantially simi- 68 is amended by inserting after the item re- guidance by the Secretary, and lar to, a transaction specifically identified lating to section 6707 the following: ‘‘(ii) subclause (II) of paragraph (1)(B)(ii) by the Secretary as a tax avoidance trans- ‘‘Sec. 6707A. Penalty for failure to include re- shall be disregarded in determining whether action for purposes of section 6011. ‘‘(d) AUTHORITY TO RESCIND PENALTY.— portable transaction informa- any of such benefits are allowable. ‘‘(1) IN GENERAL.—The Commissioner of In- tion with return or state- ‘‘(4) OTHER COMMON LAW DOCTRINES NOT AF- ternal Revenue may rescind all or any por- ment.’’. FECTED.—Except as specifically provided in tion of any penalty imposed by this section this subsection, the provisions of this sub- (c) EFFECTIVE DATE.—The amendments with respect to any violation if— made by this section shall apply to returns section shall not be construed as altering or ‘‘(A) the violation is with respect to a re- supplanting any other rule of law, and the and statements the due date for which is portable transaction other than a listed after the date of the enactment of this Act. requirements of this subsection shall be con- transaction, SEC. 403. ACCURACY-RELATED PENALTY FOR strued as being in addition to any such other ‘‘(B) the person on whom the penalty is im- rule of law. LISTED TRANSACTIONS AND OTHER posed has a history of complying with the re- REPORTABLE TRANSACTIONS HAV- ‘‘(5) REGULATIONS.—The Secretary shall quirements of this title, ING A SIGNIFICANT TAX AVOIDANCE prescribe such regulations as may be nec- ‘‘(C) it is shown that the violation is due to PURPOSE. essary or appropriate to carry out the pur- an unintentional mistake of fact; (a) IN GENERAL.—Subchapter A of chapter poses of this subsection. Such regulations ‘‘(D) imposing the penalty would be 68 is amended by inserting after section 6662 may include exemptions from the applica- against equity and good conscience, and the following new section: tion of this subsection.’’. ‘‘(E) rescinding the penalty would promote ‘‘SEC. 6662A. IMPOSITION OF ACCURACY-RE- (b) EFFECTIVE DATE.—The amendments compliance with the requirements of this LATED PENALTY ON UNDERSTATE- made by this section shall apply to trans- title and effective tax administration. MENTS WITH RESPECT TO REPORT- actions entered into after the date of the en- ‘‘(2) DISCRETION.—The exercise of authority ABLE TRANSACTIONS. actment of this Act. under paragraph (1) shall be at the sole dis- ‘‘(a) IMPOSITION OF PENALTY.—If a taxpayer SEC. 402. PENALTY FOR FAILING TO DISCLOSE cretion of the Commissioner and may be del- has a reportable transaction understatement REPORTABLE TRANSACTION. egated only to the head of the Office of Tax for any taxable year, there shall be added to (a) IN GENERAL.—Part I of subchapter B of Shelter Analysis. The Commissioner, in the the tax an amount equal to 20 percent of the chapter 68 (relating to assessable penalties) Commissioner’s sole discretion, may estab- amount of such understatement. is amended by inserting after section 6707 lish a procedure to determine if a penalty ‘‘(b) REPORTABLE TRANSACTION UNDER- the following new section: should be referred to the Commissioner or STATEMENT.—For purposes of this section— ‘‘SEC. 6707A. PENALTY FOR FAILURE TO INCLUDE the head of such Office for a determination ‘‘(1) IN GENERAL.—The term ‘reportable REPORTABLE TRANSACTION INFOR- under paragraph (1). transaction understatement’ means the sum of— MATION WITH RETURN OR STATE- ‘‘(3) NO APPEAL.—Notwithstanding any MENT. other provision of law, any determination ‘‘(A) the product of— ‘‘(a) IMPOSITION OF PENALTY.—Any person under this subsection may not be reviewed in ‘‘(i) the amount of the increase (if any) in who fails to include on any return or state- any administrative or judicial proceeding. taxable income which results from a dif- ment any information with respect to a reference between the proper tax treatment of ‘‘(4) RECORDS.—If a penalty is rescinded portable transaction which is required under under paragraph (1), the Commissioner shall an item to which this section applies and the section 6011 to be included with such return place in the file in the Office of the Commis- taxpayer’s treatment of such item (as shown or statement shall pay a penalty in the sioner the opinion of the Commissioner or on the taxpayer’s return of tax), and amount determined under subsection (b). the head of the Office of Tax Shelter Anal- ‘‘(ii) the highest rate of tax imposed by ‘‘(b) AMOUNT OF PENALTY.— ysis with respect to the determination, in- section 1 (section 11 in the case of a taxpayer ‘‘(1) IN GENERAL.—Except as provided in cluding— which is a corporation), and paragraphs (2) and (3), the amount of the ‘‘(A) the facts and circumstances of the ‘‘(B) the amount of the decrease (if any) in penalty under subsection (a) shall be $50,000. transaction, the aggregate amount of credits determined ‘‘(2) LISTED TRANSACTION.—The amount of ‘‘(B) the reasons for the rescission, and under subtitle A which results from a dif- the penalty under subsection (a) with respect ‘‘(C) the amount of the penalty rescinded. ference between the taxpayer’s treatment of to a listed transaction shall be $100,000. an item to which this section applies (as ‘‘(5) REPORT.—The Commissioner shall ‘‘(3) INCREASE IN PENALTY FOR LARGE ENTI- each year report to the Committee on Ways shown on the taxpayer’s return of tax) and TIES AND HIGH NET WORTH INDIVIDUALS.— and Means of the House of Representatives the proper tax treatment of such item. ‘‘(A) IN GENERAL.—In the case of a failure and the Committee on Finance of the Sen- For purposes of subparagraph (A), any reduc- under subsection (a) by— ate— tion of the excess of deductions allowed for ‘‘(i) a large entity, or ‘‘(A) a summary of the total number and the taxable year over gross income for such ‘‘(ii) a high net worth individual, aggregate amount of penalties imposed, and year, and any reduction in the amount of the penalty under paragraph (1) or (2) shall rescinded, under this section, and capital losses which would (without regard be twice the amount determined without re- ‘‘(B) a description of each penalty re- to section 1211) be allowed for such year, gard to this paragraph. scinded under this subsection and the rea- shall be treated as an increase in taxable in- ‘‘(B) LARGE ENTITY.—For purposes of sub- sons therefor. come. paragraph (A), the term ‘large entity’ means, ‘‘(e) PENALTY REPORTED TO SEC.—In the ‘‘(2) ITEMS TO WHICH SECTION APPLIES.—This with respect to any taxable year, a person case of a person— section shall apply to any item which is at- (other than a natural person) with gross re- ‘‘(1) which is required to file periodic re- tributable to— ceipts in excess of $10,000,000 for the taxable ports under section 13 or 15(d) of the Securi- ‘‘(A) any listed transaction, and year in which the reportable transaction oc- ties Exchange Act of 1934 or is required to be ‘‘(B) any reportable transaction (other curs or the preceding taxable year. Rules consolidated with another person for pur- than a listed transaction) if a significant similar to the rules of paragraph (2) and sub- poses of such reports, and purpose of such transaction is the avoidance paragraphs (B), (C), and (D) of paragraph (3) ‘‘(2) which— or evasion of Federal income tax.

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‘‘(c) HIGHER PENALTY FOR NONDISCLOSED (b) DETERMINATION OF OTHER UNDERSTATE- ‘‘(I) is based on unreasonable factual or LISTED AND OTHER AVOIDANCE TRANS- MENTS.—Subparagraph (A) of section legal assumptions (including assumptions as ACTIONS.— 6662(d)(2) is amended by adding at the end to future events), ‘‘(1) IN GENERAL.—Subsection (a) shall be the following flush sentence: ‘‘(II) unreasonably relies on representa- applied by substituting ‘30 percent’ for ‘20 ‘‘The excess under the preceding sentence tions, statements, findings, or agreements of percent’ with respect to the portion of any shall be determined without regard to items the taxpayer or any other person, reportable transaction understatement with to which section 6662A applies and without ‘‘(III) does not identify and consider all rel- respect to which the requirement of section regard to items with respect to which a pen- evant facts, or 6664(d)(2)(A) is not met. alty is imposed by section 6662B.’’. ‘‘(IV) fails to meet any other requirement ‘‘(2) RULES APPLICABLE TO ASSERTION AND as the Secretary may prescribe.’’. (c) REASONABLE CAUSE EXCEPTION.— COMPROMISE OF PENALTY.— (2) CONFORMING AMENDMENT.—The heading ‘‘(A) IN GENERAL.—Only upon the approval (1) IN GENERAL.—Section 6664 is amended for subsection (c) of section 6664 is amended by adding at the end the following new sub- by the Chief Counsel for the Internal Rev- by inserting ‘‘FOR UNDERPAYMENTS’’ after section: enue Service or the Chief Counsel’s delegate ‘‘EXCEPTION’’. at the national office of the Internal Rev- ‘‘(d) REASONABLE CAUSE EXCEPTION FOR RE- (d) CONFORMING AMENDMENTS.— enue Service may a penalty to which para- PORTABLE TRANSACTION UNDERSTATEMENTS.— (1) Subparagraph (C) of section 461(i)(3) is graph (1) applies be included in a 1st letter of ‘‘(1) IN GENERAL.—No penalty shall be im- amended by striking ‘‘section proposed deficiency which allows the tax- posed under section 6662A with respect to 6662(d)(2)(C)(iii)’’ and inserting ‘‘section payer an opportunity for administrative re- any portion of a reportable transaction un- 1274(b)(3)(C)’’. view in the Internal Revenue Service Office derstatement if it is shown that there was a (2) Paragraph (3) of section 1274(b) is of Appeals. If such a letter is provided to the reasonable cause for such portion and that amended— taxpayer, only the Commissioner of Internal the taxpayer acted in good faith with respect (A) by striking ‘‘(as defined in section Revenue may compromise all or any portion to such portion. 6662(d)(2)(C)(iii))’’ in subparagraph (B)(i), and of such penalty. ‘‘(2) SPECIAL RULES.—Paragraph (1) shall (B) by adding at the end the following new ‘‘(B) APPLICABLE RULES.—The rules of para- not apply to any reportable transaction un- subparagraph: graphs (2), (3), (4), and (5) of section 6707A(d) derstatement unless— ‘‘(C) TAX SHELTER.—For purposes of sub- shall apply for purposes of subparagraph (A). ‘‘(A) the relevant facts affecting the tax paragraph (B), the term ‘tax shelter’ means— ‘‘(d) DEFINITIONS OF REPORTABLE AND LIST- treatment of the item are adequately dis- ‘‘(i) a partnership or other entity, ED TRANSACTIONS.—For purposes of this sec- closed in accordance with the regulations ‘‘(ii) any investment plan or arrangement, tion, the terms ‘reportable transaction’ and prescribed under section 6011, or ‘listed transaction’ have the respective ‘‘(B) there is or was substantial authority meanings given to such terms by section ‘‘(iii) any other plan or arrangement, 6707A(c). for such treatment, and if a significant purpose of such partnership, ‘‘(e) SPECIAL RULES.— ‘‘(C) the taxpayer reasonably believed that entity, plan, or arrangement is the avoid- ‘‘(1) COORDINATION WITH PENALTIES, ETC., ON such treatment was more likely than not the ance or evasion of Federal income tax.’’. OTHER UNDERSTATEMENTS.—In the case of an proper treatment. (3) Section 6662(d)(2) is amended by strik- understatement (as defined in section A taxpayer failing to adequately disclose in ing subparagraphs (C) and (D). 6662(d)(2))— accordance with section 6011 shall be treated (4) Section 6664(c)(1) is amended by strik- ‘‘(A) the amount of such understatement as meeting the requirements of subparagraph ing ‘‘this part’’ and inserting ‘‘section 6662 or (determined without regard to this para- (A) if the penalty for such failure was re- 6663’’. graph) shall be increased by the aggregate scinded under section 6707A(d). (5) Subsection (b) of section 7525 is amend- amount of reportable transaction under- ‘‘(3) RULES RELATING TO REASONABLE BE- ed by striking ‘‘section 6662(d)(2)(C)(iii)’’ and statements and noneconomic substance LIEF.—For purposes of paragraph (2)(C)— inserting ‘‘section 1274(b)(3)(C)’’. transaction understatements for purposes of ‘‘(A) IN GENERAL.—A taxpayer shall be (6)(A) The heading for section 6662 is determining whether such understatement is treated as having a reasonable belief with re- amended to read as follows: a substantial understatement under section spect to the tax treatment of an item only if ‘‘SEC. 6662. IMPOSITION OF ACCURACY-RELATED 6662(d)(1), and such belief— PENALTY ON UNDERPAYMENTS.’’. ‘‘(B) the addition to tax under section ‘‘(i) is based on the facts and law that exist (B) The table of sections for part II of sub- 6662(a) shall apply only to the excess of the at the time the return of tax which includes chapter A of chapter 68 is amended by strik- amount of the substantial understatement such tax treatment is filed, and ing the item relating to section 6662 and in- (if any) after the application of subparagraph ‘‘(ii) relates solely to the taxpayer’s serting the following new items: (A) over the aggregate amount of reportable chances of success on the merits of such ‘‘Sec. 6662. Imposition of accuracy-related transaction understatements and non- treatment and does not take into account penalty on underpayments. economic substance transaction understate- the possibility that a return will not be au- ments. dited, such treatment will not be raised on ‘‘Sec. 6662A. Imposition of accuracy-related ‘‘(2) COORDINATION WITH OTHER PENALTIES.— audit, or such treatment will be resolved penalty on understatements ‘‘(A) APPLICATION OF FRAUD PENALTY.—Ref- through settlement if it is raised. with respect to reportable erences to an underpayment in section 6663 ‘‘(B) CERTAIN OPINIONS MAY NOT BE RELIED transactions.’’. shall be treated as including references to a UPON.— (e) EFFECTIVE DATE.—The amendments reportable transaction understatement and a ‘‘(i) IN GENERAL.—An opinion of a tax advi- made by this section shall apply to taxable noneconomic substance transaction under- sor may not be relied upon to establish the years ending after the date of the enactment statement. reasonable belief of a taxpayer if— of this Act. ‘‘(B) NO DOUBLE PENALTY.—This section ‘‘(I) the tax advisor is described in clause SEC. 404. PENALTY FOR UNDERSTATEMENTS AT- shall not apply to any portion of an under- (ii), or TRIBUTABLE TO TRANSACTIONS statement on which a penalty is imposed ‘‘(II) the opinion is described in clause (iii). LACKING ECONOMIC SUBSTANCE, under section 6662B or 6663. ‘‘(ii) DISQUALIFIED TAX ADVISORS.—A tax ETC. ‘‘(3) SPECIAL RULE FOR AMENDED RETURNS.— advisor is described in this clause if the tax (a) IN GENERAL.—Subchapter A of chapter Except as provided in regulations, in no advisor— 68 is amended by inserting after section event shall any tax treatment included with ‘‘(I) is a material advisor (within the mean- 6662A the following new section: an amendment or supplement to a return of ing of section 6111(b)(1)) who participates in ‘‘SEC. 6662B. PENALTY FOR UNDERSTATEMENTS tax be taken into account in determining the the organization, management, promotion, ATTRIBUTABLE TO TRANSACTIONS amount of any reportable transaction under- or sale of the transaction or who is related LACKING ECONOMIC SUBSTANCE, statement or noneconomic substance trans- (within the meaning of section 267(b) or ETC. action understatement if the amendment or 707(b)(1)) to any person who so participates, ‘‘(a) IMPOSITION OF PENALTY.—If a taxpayer supplement is filed after the earlier of the ‘‘(II) is compensated directly or indirectly has an noneconomic substance transaction date the taxpayer is first contacted by the by a material advisor with respect to the understatement for any taxable year, there Secretary regarding the examination of the transaction, shall be added to the tax an amount equal to return or such other date as is specified by ‘‘(III) has a fee arrangement with respect 40 percent of the amount of such understate- the Secretary. to the transaction which is contingent on all ment. ‘‘(4) NONECONOMIC SUBSTANCE TRANSACTION or part of the intended tax benefits from the ‘‘(b) REDUCTION OF PENALTY FOR DISCLOSED UNDERSTATEMENT.—For purposes of this sub- transaction being sustained, or TRANSACTIONS.—Subsection (a) shall be ap- section, the term ‘noneconomic substance ‘‘(IV) as determined under regulations pre- plied by substituting ‘20 percent’ for ‘40 per- transaction understatement’ has the mean- scribed by the Secretary, has a disqualifying cent’ with respect to the portion of any non- ing given such term by section 6662B(c). financial interest with respect to the trans- economic substance transaction understate- ‘‘(5) CROSS REFERENCE.— action. ment with respect to which the relevant ‘‘For reporting of section 6662A(c) penalty ‘‘(iii) DISQUALIFIED OPINIONS.—For purposes facts affecting the tax treatment of the item to the Securities and Exchange Commission, of clause (i), an opinion is disqualified if the are adequately disclosed in the return or a see section 6707A(e).’’. opinion— statement attached to the return.

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‘‘(c) NONECONOMIC SUBSTANCE TRANSACTION lief that the tax treatment was more likely ‘‘(c) REGULATIONS.—The Secretary may UNDERSTATEMENT.—For purposes of this sec- than not the proper treatment, or’’. prescribe regulations which provide— tion— (2) CONFORMING AMENDMENT.—Section ‘‘(1) that only 1 person shall be required to ‘‘(1) IN GENERAL.—The term ‘noneconomic 6662(d) is amended by adding at the end the meet the requirements of subsection (a) in substance transaction understatement’ following new paragraph: cases in which 2 or more persons would oth- means any amount which would be an under- ‘‘(3) SECRETARIAL LIST.—For purposes of erwise be required to meet such require- statement under section 6662A(b)(1) if section this subsection, section 6664(d)(2), and sec- ments, 6662A were applied by taking into account tion 6694(a)(1), the Secretary may prescribe a ‘‘(2) exemptions from the requirements of items attributable to noneconomic sub- list of positions for which the Secretary be- this section, and stance transactions rather than items to lieves there is not substantial authority or ‘‘(3) such rules as may be necessary or ap- which section 6662A would apply without re- there is no reasonable belief that the tax propriate to carry out the purposes of this gard to this paragraph. treatment is more likely than not the proper section.’’. ‘‘(2) NONECONOMIC SUBSTANCE TRANS- tax treatment. Such list (and any revisions (b) CONFORMING AMENDMENTS.— ACTION.—The term ‘noneconomic substance thereof) shall be published in the Federal (1) The item relating to section 6111 in the transaction’ means any transaction if— Register or the Internal Revenue Bulletin.’’. table of sections for subchapter B of chapter ‘‘(A) there is a lack of economic substance (c) EFFECTIVE DATE.—The amendments 61 is amended to read as follows: (within the meaning of section 7701(n)(1)) for made by this section shall apply to taxable ‘‘Sec. 6111. Disclosure of reportable trans- years beginning after the date of the enact- the transaction giving rise to the claimed actions.’’. benefit or the transaction was not respected ment of this Act. (2)(A) So much of section 6112 as precedes under section 7701(n)(2), or SEC. 406. TAX SHELTER EXCEPTION TO CON- subsection (c) thereof is amended to read as ‘‘(B) the transaction fails to meet the re- FIDENTIALITY PRIVILEGES RELAT- ING TO TAXPAYER COMMUNICA- follows: quirements of any similar rule of law. TIONS. ‘‘SEC. 6112. MATERIAL ADVISORS OF REPORT- ULES PPLICABLE O OMPROMISE OF ‘‘(d) R A T C (a) IN GENERAL.—Section 7525(b) (relating ABLE TRANSACTIONS MUST KEEP PENALTY.— to section not to apply to communications LISTS OF ADVISEES. ‘‘(1) IN GENERAL.—If the 1st letter of pro- regarding corporate tax shelters) is amended ‘‘(a) IN GENERAL.—Each material advisor posed deficiency which allows the taxpayer to read as follows: (as defined in section 6111) with respect to an opportunity for administrative review in ‘‘(b) SECTION NOT TO APPLY TO COMMUNICA- any reportable transaction (as defined in sec- the Internal Revenue Service Office of Ap- TIONS REGARDING TAX SHELTERS.—The privi- tion 6707A(c)) shall maintain, in such manner peals has been sent with respect to a penalty lege under subsection (a) shall not apply to as the Secretary may by regulations pre- to which this section applies, only the Com- any written communication which is— scribe, a list— missioner of Internal Revenue may com- ‘‘(1) between a federally authorized tax ‘‘(1) identifying each person with respect to promise all or any portion of such penalty. practitioner and— whom such advisor acted as such a material ‘‘(2) APPLICABLE RULES.—The rules of para- ‘‘(A) any person, advisor with respect to such transaction, and graphs (2), (3), (4), and (5) of section 6707A(d) ‘‘(B) any director, officer, employee, agent, ‘‘(2) containing such other information as shall apply for purposes of paragraph (1). or representative of the person, or the Secretary may by regulations require. ‘‘(e) COORDINATION WITH OTHER PEN- ‘‘(C) any other person holding a capital or This section shall apply without regard to ALTIES.—Except as otherwise provided in this profits interest in the person, and whether a material advisor is required to file part, the penalty imposed by this section ‘‘(2) in connection with the promotion of a return under section 6111 with respect to shall be in addition to any other penalty im- the direct or indirect participation of the such transaction.’’. posed by this title. person in any tax shelter (as defined in sec- (B) Section 6112 is amended by redesig- ‘‘(f) CROSS REFERENCES.— tion 1274(b)(3)(C)).’’. nating subsection (c) as subsection (b). (b) EFFECTIVE DATE.—The amendment ‘‘(1) For coordination of penalty with un- (C) Section 6112(b), as redesignated by sub- made by this section shall apply to commu- derstatements under section 6662 and other paragraph (B), is amended— nications made on or after the date of the special rules, see section 6662A(e). (i) by inserting ‘‘written’’ before ‘‘request’’ enactment of this Act. ‘‘(2) For reporting of penalty imposed in paragraph (1)(A), and under this section to the Securities and Ex- SEC. 407. DISCLOSURE OF REPORTABLE TRANS- (ii) by striking ‘‘shall prescribe’’ in para- ACTIONS. change Commission, see section 6707A(e).’’. graph (2) and inserting ‘‘may prescribe’’. (a) IN GENERAL.—Section 6111 (relating to (D) The item relating to section 6112 in the (b) CLERICAL AMENDMENT.—The table of registration of tax shelters) is amended to sections for part II of subchapter A of chap- table of sections for subchapter B of chapter read as follows: 61 is amended to read as follows: ter 68 is amended by inserting after the item ‘‘SEC. 6111. DISCLOSURE OF REPORTABLE TRANS- relating to section 6662A the following new ACTIONS. ‘‘Sec. 6112. Material advisors of reportable item: ‘‘(a) IN GENERAL.—Each material advisor transactions must keep lists of with respect to any reportable transaction advisees.’’. ‘‘Sec. 6662B. Penalty for understatements at- shall make a return (in such form as the Sec- tributable to transactions lack- (3)(A) The heading for section 6708 is retary may prescribe) setting forth— ing economic substance, etc.’’. amended to read as follows: ‘‘(1) information identifying and describing ‘‘SEC. 6708. FAILURE TO MAINTAIN LISTS OF (c) EFFECTIVE DATE.—The amendments the transaction, ADVISEES WITH RESPECT TO RE- made by this section shall apply to trans- ‘‘(2) information describing any potential PORTABLE TRANSACTIONS.’’. actions entered into after the date of the en- tax benefits expected to result from the (B) The item relating to section 6708 in the actment of this Act. transaction, and table of sections for part I of subchapter B of SEC. 405. MODIFICATIONS OF SUBSTANTIAL UN- ‘‘(3) such other information as the Sec- chapter 68 is amended to read as follows: DERSTATEMENT PENALTY FOR NON- retary may prescribe. ‘‘Sec. 6708. Failure to maintain lists of REPORTABLE TRANSACTIONS. Such return shall be filed not later than the advisees with respect to report- (a) SUBSTANTIAL UNDERSTATEMENT OF COR- date specified by the Secretary. able transactions.’’. PORATIONS.—Section 6662(d)(1)(B) (relating to ‘‘(b) DEFINITIONS.—For purposes of this sec- special rule for corporations) is amended to tion— (c) REQUIRED DISCLOSURE NOT SUBJECT TO read as follows: ‘‘(1) MATERIAL ADVISOR.— CLAIM OF CONFIDENTIALITY.—Subparagraph ‘‘(B) SPECIAL RULE FOR CORPORATIONS.—In ‘‘(A) IN GENERAL.—The term ‘material ad- (A) of section 6112(b)(1), as redesignated by the case of a corporation other than an S visor’ means any person— subsection (b)(2)(B), is amended by adding at corporation or a personal holding company ‘‘(i) who provides any material aid, assist- the end the following new flush sentence: (as defined in section 542), there is a substan- ance, or advice with respect to organizing, ‘‘For purposes of this section, the identity of tial understatement of income tax for any managing, promoting, selling, implementing, any person on such list shall not be privi- taxable year if the amount of the understate- or carrying out any reportable transaction, leged.’’. ment for the taxable year exceeds the lesser and (d) EFFECTIVE DATE.— of— ‘‘(ii) who directly or indirectly derives (1) IN GENERAL.—Except as provided in ‘‘(i) 10 percent of the tax required to be gross income in excess of the threshold paragraph (2), the amendments made by this shown on the return for the taxable year (or, amount for such aid, assistance, or advice. section shall apply to transactions with re- if greater, $10,000), or ‘‘(B) THRESHOLD AMOUNT.—For purposes of spect to which material aid, assistance, or ‘‘(ii) $10,000,000.’’. subparagraph (A), the threshold amount is— advice referred to in section 6111(b)(1)(A)(i) (b) REDUCTION FOR UNDERSTATEMENT OF ‘‘(i) $50,000 in the case of a reportable of the Internal Revenue Code of 1986 (as TAXPAYER DUE TO POSITION OF TAXPAYER OR transaction substantially all of the tax bene- added by this section) is provided after the DISCLOSED ITEM.— fits from which are provided to natural per- date of the enactment of this Act. (1) IN GENERAL.—Section 6662(d)(2)(B)(i) (re- sons, and (2) NO CLAIM OF CONFIDENTIALITY AGAINST lating to substantial authority) is amended ‘‘(ii) $250,000 in any other case. DISCLOSURE.—The amendment made by sub- to read as follows: ‘‘(2) REPORTABLE TRANSACTION.—The term section (c) shall take effect as if included in ‘‘(i) the tax treatment of any item by the ‘reportable transaction’ has the meaning the amendments made by section 142 of the taxpayer if the taxpayer had reasonable be- given to such term by section 6707A(c). Deficit Reduction Act of 1984.

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SEC. 408. MODIFICATIONS TO PENALTY FOR FAIL- ing subsections (a) and (b) and inserting the ‘‘(B) AMOUNT OF PENALTY.— URE TO REGISTER TAX SHELTERS. following new subsections: ‘‘(i) IN GENERAL.—Except as provided in (a) IN GENERAL.—Section 6707 (relating to ‘‘(a) AUTHORITY TO SEEK INJUNCTION.—A subparagraph (C), the amount of any civil failure to furnish information regarding tax civil action in the name of the United States penalty imposed under subparagraph (A) shelters) is amended to read as follows: to enjoin any person from further engaging shall not exceed $5,000. ‘‘SEC. 6707. FAILURE TO FURNISH INFORMATION in specified conduct may be commenced at ‘‘(ii) REASONABLE CAUSE EXCEPTION.—No REGARDING REPORTABLE TRANS- the request of the Secretary. Any action penalty shall be imposed under subparagraph ACTIONS. under this section shall be brought in the (A) with respect to any violation if— ‘‘(a) IN GENERAL.—If a person who is re- district court of the United States for the ‘‘(I) such violation was due to reasonable quired to file a return under section 6111(a) district in which such person resides, has his cause, and with respect to any reportable transaction— principal place of business, or has engaged in ‘‘(II) the amount of the transaction or the ‘‘(1) fails to file such return on or before specified conduct. The court may exercise its balance in the account at the time of the the date prescribed therefor, or jurisdiction over such action (as provided in transaction was properly reported. ‘‘(2) files false or incomplete information section 7402(a)) separate and apart from any ‘‘(C) WILLFUL VIOLATIONS.—In the case of with the Secretary with respect to such other action brought by the United States any person willfully violating, or willfully transaction, against such person. causing any violation of, any provision of such person shall pay a penalty with respect ‘‘(b) ADJUDICATION AND DECREE.—In any ac- section 5314— to such return in the amount determined tion under subsection (a), if the court finds— ‘‘(i) the maximum penalty under subpara- under subsection (b). ‘‘(1) that the person has engaged in any graph (B)(i) shall be increased to the greater specified conduct, and ‘‘(b) AMOUNT OF PENALTY.— of— ‘‘(2) that injunctive relief is appropriate to ‘‘(1) IN GENERAL.—Except as provided in ‘‘(I) $25,000, or paragraph (2), the penalty imposed under prevent recurrence of such conduct, ‘‘(II) the amount (not exceeding $100,000) subsection (a) with respect to any failure the court may enjoin such person from en- determined under subparagraph (D), and shall be $50,000. gaging in such conduct or in any other activ- ‘‘(ii) subparagraph (B)(ii) shall not apply. ‘‘(2) LISTED TRANSACTIONS.—The penalty ity subject to penalty under this title. ‘‘(D) AMOUNT.—The amount determined imposed under subsection (a) with respect to ‘‘(c) SPECIFIED CONDUCT.—For purposes of under this subparagraph is— any listed transaction shall be an amount this section, the term ‘specified conduct’ ‘‘(i) in the case of a violation involving a equal to the greater of— means any action, or failure to take action, transaction, the amount of the transaction, ‘‘(A) $200,000, or subject to penalty under section 6700, 6701, or ‘‘(B) 50 percent of the gross income derived 6707, or 6708.’’. ‘‘(ii) in the case of a violation involving a (b) CONFORMING AMENDMENTS.— by such person with respect to aid, assist- failure to report the existence of an account (1) The heading for section 7408 is amended ance, or advice which is provided with re- or any identifying information required to be to read as follows: spect to the listed transaction before the provided with respect to an account, the bal- date the return including the transaction is ‘‘SEC. 7408. ACTIONS TO ENJOIN SPECIFIED CON- ance in the account at the time of the viola- DUCT RELATED TO TAX SHELTERS tion.’’. filed under section 6111. AND REPORTABLE TRANSACTIONS.’’. Subparagraph (B) shall be applied by sub- (b) EFFECTIVE DATE.—The amendment (2) The table of sections for subchapter A made by this section shall apply to viola- stituting ‘75 percent’ for ‘50 percent’ in the of chapter 67 is amended by striking the item case of an intentional failure or act de- tions occurring after the date of the enact- relating to section 7408 and inserting the fol- ment of this Act. scribed in subsection (a). lowing new item: SEC. 413. FRIVOLOUS TAX SUBMISSIONS. ‘‘(c) CERTAIN RULES TO APPLY.—The provi- ‘‘Sec. 7408. Actions to enjoin specified sions of section 6707A(d) shall apply to any (a) CIVIL PENALTIES.—Section 6702 is conduct related to tax shelters amended to read as follows: penalty imposed under this section. and reportable transactions.’’. ‘‘(d) REPORTABLE AND LISTED TRANS- ‘‘SEC. 6702. FRIVOLOUS TAX SUBMISSIONS. (c) EFFECTIVE DATE.—The amendment ACTIONS.—The terms ‘reportable transaction’ ‘‘(a) CIVIL PENALTY FOR FRIVOLOUS TAX RE- made by this section shall take effect on the and ‘listed transaction’ have the respective TURNS.—A person shall pay a penalty of day after the date of the enactment of this meanings given to such terms by section $5,000 if— Act. 6707A(c).’’. ‘‘(1) such person files what purports to be a SEC. 411. UNDERSTATEMENT OF TAXPAYER’S LI- (b) CLERICAL AMENDMENT.—The item relat- return of a tax imposed by this title but ABILITY BY INCOME TAX RETURN ing to section 6707 in the table of sections for PREPARER. which— part I of subchapter B of chapter 68 is (a) STANDARDS CONFORMED TO TAXPAYER ‘‘(A) does not contain information on amended by striking ‘‘tax shelters’’ and in- STANDARDS.—Section 6694(a) (relating to un- which the substantial correctness of the self- serting ‘‘reportable transactions’’. derstatements due to unrealistic positions) assessment may be judged, or (c) EFFECTIVE DATE.—The amendments is amended— ‘‘(B) contains information that on its face made by this section shall apply to returns (1) by striking ‘‘realistic possibility of indicates that the self-assessment is substan- the due date for which is after the date of being sustained on its merits’’ in paragraph tially incorrect; and the enactment of this Act. (1) and inserting ‘‘reasonable belief that the ‘‘(2) the conduct referred to in paragraph SEC. 409. MODIFICATION OF PENALTY FOR FAIL- tax treatment in such position was more (1)— URE TO MAINTAIN LISTS OF INVES- likely than not the proper treatment’’, ‘‘(A) is based on a position which the Sec- TORS. (2) by striking ‘‘or was frivolous’’ in para- retary has identified as frivolous under sub- (a) IN GENERAL.—Subsection (a) of section graph (3) and inserting ‘‘or there was no rea- section (c), or 6708 is amended to read as follows: sonable basis for the tax treatment of such ‘‘(B) reflects a desire to delay or impede ‘‘(a) IMPOSITION OF PENALTY.— position’’, and the administration of Federal tax laws. ‘‘(b) CIVIL PENALTY FOR SPECIFIED FRIVO- ‘‘(1) IN GENERAL.—If any person who is re- (3) by striking ‘‘UNREALISTIC’’ in the head- LOUS SUBMISSIONS.— quired to maintain a list under section ing and inserting ‘‘IMPROPER’’. 6112(a) fails to make such list available upon (b) AMOUNT OF PENALTY.—Section 6694 is ‘‘(1) IMPOSITION OF PENALTY.—Except as written request to the Secretary in accord- amended— provided in paragraph (3), any person who ance with section 6112(b)(1)(A) within 20 busi- (1) by striking ‘‘$250’’ in subsection (a) and submits a specified frivolous submission ness days after the date of the Secretary’s inserting ‘‘$1,000’’, and shall pay a penalty of $5,000. request, such person shall pay a penalty of (2) by striking ‘‘$1,000’’ in subsection (b) ‘‘(2) SPECIFIED FRIVOLOUS SUBMISSION.—For $10,000 for each day of such failure after such and inserting ‘‘$5,000’’. purposes of this section— 20th day. (c) EFFECTIVE DATE.—The amendments ‘‘(A) SPECIFIED FRIVOLOUS SUBMISSION.— ‘‘(2) REASONABLE CAUSE EXCEPTION.—No made by this section shall apply to docu- The term ‘specified frivolous submission’ penalty shall be imposed by paragraph (1) ments prepared after the date of the enact- means a specified submission if any portion with respect to the failure on any day if such ment of this Act. of such submission— failure is due to reasonable cause.’’. SEC. 412. PENALTY ON FAILURE TO REPORT IN- ‘‘(i) is based on a position which the Sec- (b) EFFECTIVE DATE.—The amendment TERESTS IN FOREIGN FINANCIAL retary has identified as frivolous under sub- made by this section shall apply to requests ACCOUNTS. section (c), or made after the date of the enactment of this (a) IN GENERAL.—Section 5321(a)(5) of title ‘‘(ii) reflects a desire to delay or impede Act. 31, United States Code, is amended to read as the administration of Federal tax laws. SEC. 410. MODIFICATION OF ACTIONS TO ENJOIN follows: ‘‘(B) SPECIFIED SUBMISSION.—The term CERTAIN CONDUCT RELATED TO ‘‘(5) FOREIGN FINANCIAL AGENCY TRANS- ‘specified submission’ means— TAX SHELTERS AND REPORTABLE ACTION VIOLATION.— ‘‘(i) a request for a hearing under— TRANSACTIONS. ‘‘(A) PENALTY AUTHORIZED.—The Secretary ‘‘(I) section 6320 (relating to notice and op- (a) IN GENERAL.—Section 7408 (relating to of the Treasury may impose a civil money portunity for hearing upon filing of notice of action to enjoin promoters of abusive tax penalty on any person who violates, or lien), or shelters, etc.) is amended by redesignating causes any violation of, any provision of sec- ‘‘(II) section 6330 (relating to notice and subsection (c) as subsection (d) and by strik- tion 5314. opportunity for hearing before levy), and

VerDate jul 14 2003 01:46 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00100 Fmt 4624 Sfmt 0634 E:\CR\FM\A03MR6.061 S03PT1 March 3, 2004 CONGRESSIONAL RECORD — SENATE S2119 ‘‘(ii) an application under— 6702(b)(2)(A), then the Secretary may treat or statement, the time for assessment of any ‘‘(I) section 6159 (relating to agreements such portion as if it were never submitted tax imposed by this title with respect to for payment of tax liability in installments), and such portion shall not be subject to any such transaction shall not expire before the ‘‘(II) section 7122 (relating to com- further administrative or judicial review.’’. date which is 1 year after the earlier of— promises), or (e) CLERICAL AMENDMENT.—The table of ‘‘(A) the date on which the Secretary is ‘‘(III) section 7811 (relating to taxpayer as- sections for part I of subchapter B of chapter furnished the information so required; or sistance orders). 68 is amended by striking the item relating ‘‘(B) the date that a material advisor (as ‘‘(3) OPPORTUNITY TO WITHDRAW SUBMIS- to section 6702 and inserting the following defined in section 6111) meets the require- SION.—If the Secretary provides a person new item: ments of section 6112 with respect to a re- with notice that a submission is a specified ‘‘Sec. 6702. Frivolous tax submissions.’’. quest by the Secretary under section 6112(b) frivolous submission and such person with- relating to such transaction with respect to draws such submission within 30 days after (f) EFFECTIVE DATE.—The amendments such taxpayer.’’. such notice, the penalty imposed under para- made by this section shall apply to submis- (b) EFFECTIVE DATE.—The amendment graph (1) shall not apply with respect to such sions made and issues raised after the date made by this section shall apply to taxable submission. on which the Secretary first prescribes a list years with respect to which the period for as- ‘‘(c) LISTING OF FRIVOLOUS POSITIONS.—The under section 6702(c) of the Internal Revenue sessing a deficiency did not expire before the Secretary shall prescribe (and periodically Code of 1986, as amended by subsection (a). date of the enactment of this Act. revise) a list of positions which the Sec- SEC. 414. REGULATION OF INDIVIDUALS PRAC- SEC. 417. DENIAL OF DEDUCTION FOR INTEREST retary has identified as being frivolous for TICING BEFORE THE DEPARTMENT ON UNDERPAYMENTS ATTRIB- purposes of this subsection. The Secretary OF TREASURY. UTABLE TO NONDISCLOSED RE- shall not include in such list any position (a) CENSURE; IMPOSITION OF PENALTY.— PORTABLE AND NONECONOMIC SUB- that the Secretary determines meets the re- (1) IN GENERAL.—Section 330(b) of title 31, STANCE TRANSACTIONS. (a) IN GENERAL.—Section 163 (relating to quirement of section 6662(d)(2)(B)(ii)(II). United States Code, is amended— ‘‘(d) REDUCTION OF PENALTY.—The Sec- (A) by inserting ‘‘, or censure,’’ after ‘‘De- deduction for interest) is amended by redes- retary may reduce the amount of any pen- partment’’, and ignating subsection (m) as subsection (n) and alty imposed under this section if the Sec- (B) by adding at the end the following new by inserting after subsection (l) the fol- retary determines that such reduction would flush sentence: lowing new subsection: promote compliance with and administra- ‘‘The Secretary may impose a monetary pen- ‘‘(m) INTEREST ON UNPAID TAXES ATTRIB- tion of the Federal tax laws. alty on any representative described in the UTABLE TO NONDISCLOSED REPORTABLE ‘‘(e) PENALTIES IN ADDITION TO OTHER PEN- preceding sentence. If the representative was TRANSACTIONS AND NONECONOMIC SUBSTANCE ALTIES.—The penalties imposed by this sec- acting on behalf of an employer or any firm TRANSACTIONS.—No deduction shall be al- tion shall be in addition to any other penalty or other entity in connection with the con- lowed under this chapter for any interest provided by law.’’. duct giving rise to such penalty, the Sec- paid or accrued under section 6601 on any un- (b) TREATMENT OF FRIVOLOUS REQUESTS retary may impose a monetary penalty on derpayment of tax which is attributable to— FOR HEARINGS BEFORE LEVY.— such employer, firm, or entity if it knew, or ‘‘(1) the portion of any reportable trans- (1) FRIVOLOUS REQUESTS DISREGARDED.— reasonably should have known, of such con- action understatement (as defined in section Section 6330 (relating to notice and oppor- duct. Such penalty shall not exceed the gross 6662A(b)) with respect to which the require- tunity for hearing before levy) is amended by income derived (or to be derived) from the ment of section 6664(d)(2)(A) is not met, or adding at the end the following new sub- conduct giving rise to the penalty and may ‘‘(2) any noneconomic substance trans- section: be in addition to, or in lieu of, any suspen- action understatement (as defined in section ‘‘(g) FRIVOLOUS REQUESTS FOR HEARING, sion, disbarment, or censure of the rep- 6662B(c)).’’. ETC.—Notwithstanding any other provision resentative.’’. (b) EFFECTIVE DATE.—The amendments made by this section shall apply to trans- of this section, if the Secretary determines (2) EFFECTIVE DATE.—The amendments that any portion of a request for a hearing made by this subsection shall apply to ac- actions in taxable years beginning after the under this section or section 6320 meets the tions taken after the date of the enactment date of the enactment of this Act. requirement of clause (i) or (ii) of section of this Act. SEC. 418. AUTHORIZATION OF APPROPRIATIONS FOR TAX LAW ENFORCEMENT. 6702(b)(2)(A), then the Secretary may treat (b) TAX SHELTER OPINIONS, ETC.—Section such portion as if it were never submitted 330 of such title 31 is amended by adding at There is authorized to be appropriated and such portion shall not be subject to any the end the following new subsection: $300,000,000 for each fiscal year beginning further administrative or judicial review.’’. ‘‘(d) Nothing in this section or in any other after September 30, 2003, for the purpose of (2) PRECLUSION FROM RAISING FRIVOLOUS provision of law shall be construed to limit carrying out tax law enforcement to combat ISSUES AT HEARING.—Section 6330(c)(4) is the authority of the Secretary of the Treas- tax avoidance transactions and other tax amended— ury to impose standards applicable to the shelters, including the use of offshore finan- (A) by striking ‘‘(A)’’ and inserting rendering of written advice with respect to cial accounts to conceal taxable income. ‘‘(A)(i)’’; any entity, transaction plan or arrangement, Subtitle B—Other Corporate Governance (B) by striking ‘‘(B)’’ and inserting ‘‘(ii)’’; or other plan or arrangement, which is of a Provisions (C) by striking the period at the end of the type which the Secretary determines as hav- SEC. 421. AFFIRMATION OF CONSOLIDATED RE- first sentence and inserting ‘‘; or’’; and ing a potential for tax avoidance or eva- TURN REGULATION AUTHORITY. (D) by inserting after subparagraph (A)(ii) sion.’’. (a) IN GENERAL.—Section 1502 (relating to (as so redesignated) the following: SEC. 415. PENALTY ON PROMOTERS OF TAX consolidated return regulations) is amended ‘‘(B) the issue meets the requirement of SHELTERS. by adding at the end the following new sen- clause (i) or (ii) of section 6702(b)(2)(A).’’. (a) PENALTY ON PROMOTING ABUSIVE TAX tence: ‘‘In prescribing such regulations, the (3) STATEMENT OF GROUNDS.—Section SHELTERS.—Section 6700(a) is amended by Secretary may prescribe rules applicable to 6330(b)(1) is amended by striking ‘‘under sub- adding at the end the following new sen- corporations filing consolidated returns section (a)(3)(B)’’ and inserting ‘‘in writing tence: ‘‘Notwithstanding the first sentence, under section 1501 that are different from under subsection (a)(3)(B) and states the if an activity with respect to which a pen- other provisions of this title that would grounds for the requested hearing’’. alty imposed under this subsection involves apply if such corporations filed separate re- (c) TREATMENT OF FRIVOLOUS REQUESTS a statement described in paragraph (2)(A), turns.’’. FOR HEARINGS UPON FILING OF NOTICE OF the amount of the penalty shall be equal to (b) RESULT NOT OVERTURNED.—Notwith- LIEN.—Section 6320 is amended— 50 percent of the gross income derived (or to standing subsection (a), the Internal Rev- (1) in subsection (b)(1), by striking ‘‘under be derived) from such activity by the person enue Code of 1986 shall be construed by treat- subsection (a)(3)(B)’’ and inserting ‘‘in writ- on which the penalty is imposed.’’. ing Treasury regulation § 1.1502–20(c)(1)(iii) ing under subsection (a)(3)(B) and states the (b) EFFECTIVE DATE.—The amendment (as in effect on January 1, 2001) as being in- grounds for the requested hearing’’, and made by this section shall apply to activities applicable to the type of factual situation in (2) in subsection (c), by striking ‘‘and (e)’’ after the date of the enactment of this Act. 255 F.3d 1357 (Fed. Cir. 2001). and inserting ‘‘(e), and (g)’’. SEC. 416. STATUTE OF LIMITATIONS FOR TAX- (c) EFFECTIVE DATE.—The provisions of (d) TREATMENT OF FRIVOLOUS APPLICATIONS ABLE YEARS FOR WHICH REQUIRED this section shall apply to taxable years be- FOR OFFERS-IN-COMPROMISE AND INSTALL- LISTED TRANSACTIONS NOT RE- ginning before, on, or after the date of the MENT AGREEMENTS.—Section 7122 is amended PORTED. enactment of this Act. by adding at the end the following new sub- (a) IN GENERAL.—Section 6501(c) (relating SEC. 422. SIGNING OF CORPORATE TAX RETURNS section: to exceptions) is amended by adding at the BY CHIEF EXECUTIVE OFFICER. ‘‘(e) FRIVOLOUS SUBMISSIONS, ETC.—Not- end the following new paragraph: (a) IN GENERAL.—Section 6062 (relating to withstanding any other provision of this sec- ‘‘(10) LISTED TRANSACTIONS.—If a taxpayer signing of corporation returns) is amended tion, if the Secretary determines that any fails to include on any return or statement by inserting after the first sentence the fol- portion of an application for an offer-in-com- for any taxable year any information with lowing new sentences: ‘‘The return of a cor- promise or installment agreement submitted respect to a listed transaction (as defined in poration with respect to income shall also under this section or section 6159 meets the section 6707A(c)(2)) which is required under include a declaration signed by the chief ex- requirement of clause (i) or (ii) of section section 6011 to be included with such return ecutive officer of such corporation (or other

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such officer of the corporation as the Sec- (2) CONFORMING AMENDMENTS.— (A) by striking ‘‘$100,000’’ and inserting retary may designate if the corporation does (A) Section 162(g) is amended— ‘‘$250,000’’, not have a chief executive officer), under (i) by striking ‘‘If’’ and inserting: (B) by striking ‘‘$500,000’’ and inserting penalties of perjury, that the chief executive ‘‘(1) TREBLE DAMAGES.—If’’, and ‘‘$1,000,000’’, and officer ensures that such return complies (ii) by redesignating paragraphs (1) and (2) (C) by striking ‘‘3 years’’ and inserting ‘‘5 with this title and that the chief executive as subparagraphs (A) and (B), respectively. years’’. officer was provided reasonable assurance of (B) The heading for section 162(g) is amend- (c) EFFECTIVE DATE.—The amendments the accuracy of all material aspects of such ed by inserting ‘‘OR PUNITIVE DAMAGES’’ made by this section shall apply to under- return. The preceding sentence shall not after ‘‘LAWS’’. payments and overpayments attributable to apply to any return of a regulated invest- (b) INCLUSION IN INCOME OF PUNITIVE DAM- actions occurring after the date of the enactment company (within the meaning of sec- AGES PAID BY INSURER OR OTHERWISE.— ment of this Act. tion 851).’’. (1) IN GENERAL.—Part II of subchapter B of Subtitle C—Enron-Related Tax Shelter (b) EFFECTIVE DATE.—The amendment chapter 1 (relating to items specifically in- Provisions made by this section shall apply to returns cluded in gross income) is amended by add- SEC. 431. LIMITATION ON TRANSFER OR IMPOR- filed after the date of the enactment of this ing at the end the following new section: TATION OF BUILT-IN LOSSES. Act. ‘‘SEC. 91. PUNITIVE DAMAGES COMPENSATED BY (a) IN GENERAL.—Section 362 (relating to SEC. 423. DENIAL OF DEDUCTION FOR CERTAIN INSURANCE OR OTHERWISE. basis to corporations) is amended by adding FINES, PENALTIES, AND OTHER at the end the following new subsection: AMOUNTS. ‘‘Gross income shall include any amount paid to or on behalf of a taxpayer as insur- ‘‘(e) LIMITATIONS ON BUILT-IN LOSSES.— (a) IN GENERAL.—Subsection (f) of section ‘‘(1) LIMITATION ON IMPORTATION OF BUILT-IN 162 (relating to trade or business expenses) is ance or otherwise by reason of the taxpayer’s liability (or agreement) to pay punitive dam- LOSSES.— amended to read as follows: ‘‘(A) IN GENERAL.—If in any transaction de- ‘‘(f) FINES, PENALTIES, AND OTHER ages.’’. scribed in subsection (a) or (b) there would AMOUNTS.— (2) REPORTING REQUIREMENTS.—Section 6041 (but for this subsection) be an importation of ‘‘(1) IN GENERAL.—Except as provided in (relating to information at source) is amend- a net built-in loss, the basis of each property paragraph (2), no deduction otherwise allowed by adding at the end the following new described in subparagraph (B) which is ac- able shall be allowed under this chapter for subsection: quired in such transaction shall (notwith- any amount paid or incurred (whether by ‘‘(f) SECTION TO APPLY TO PUNITIVE DAM- standing subsections (a) and (b)) be its fair suit, agreement, or otherwise) to, or at the AGES COMPENSATION.—This section shall market value immediately after such trans- direction of, a government or entity de- apply to payments by a person to or on be- action. scribed in paragraph (4) in relation to the half of another person as insurance or other- ‘‘(B) PROPERTY DESCRIBED.—For purposes violation of any law or the investigation or wise by reason of the other person’s liability of subparagraph (A), property is described in inquiry by such government or entity into (or agreement) to pay punitive damages.’’. this subparagraph if— the potential violation of any law. (3) CONFORMING AMENDMENT.—The table of ‘‘(i) gain or loss with respect to such prop- ‘‘(2) EXCEPTION FOR AMOUNTS CONSTITUTING sections for part II of subchapter B of chap- erty is not subject to tax under this subtitle RESTITUTION.—Paragraph (1) shall not apply ter 1 is amended by adding at the end the fol- in the hands of the transferor immediately to any amount which the taxpayer estab- lowing new item: before the transfer, and lishes constitutes restitution (including re- ‘‘Sec. 91. Punitive damages compensated by ‘‘(ii) gain or loss with respect to such prop- mediation of property) for damage or harm insurance or otherwise.’’. erty is subject to such tax in the hands of caused by or which may be caused by the (c) EFFECTIVE DATE.—The amendments the transferee immediately after such trans- violation of any law or the potential viola- made by this section shall apply to damages fer. tion of any law. This paragraph shall not paid or incurred on or after the date of the apply to any amount paid or incurred as re- In any case in which the transferor is a part- enactment of this Act. imbursement to the government or entity nership, the preceding sentence shall be ap- for the costs of any investigation or litiga- SEC. 425. INCREASE IN CRIMINAL MONETARY plied by treating each partner in such part- tion. PENALTY LIMITATION FOR THE UN- nership as holding such partner’s propor- DERPAYMENT OR OVERPAYMENT OF tionate share of the property of such part- ‘‘(3) EXCEPTION FOR AMOUNTS PAID OR IN- TAX DUE TO FRAUD. CURRED AS THE RESULT OF CERTAIN COURT OR nership. - (a) IN GENERAL.—Section 7206 (relating to DERS.—Paragraph (1) shall not apply to any ‘‘(C) IMPORTATION OF NET BUILT-IN LOSS.— fraud and false statements) is amended— For purposes of subparagraph (A), there is an amount paid or incurred by order of a court (1) by striking ‘‘Any person who—’’ and in- in a suit in which no government or entity importation of a net built-in loss in a trans- serting ‘‘(a) IN GENERAL.—Any person who— described in paragraph (4) is a party. action if the transferee’s aggregate adjusted ’’, and bases of property described in subparagraph ‘‘(4) CERTAIN NONGOVERNMENTAL REGU- (2) by adding at the end the following new LATORY ENTITIES.—An entity is described in (B) which is transferred in such transaction subsection: this paragraph if it is— would (but for this paragraph) exceed the ‘‘(b) INCREASE IN MONETARY LIMITATION FOR ‘‘(A) a nongovernmental entity which exer- fair market value of such property imme- UNDERPAYMENT OR OVERPAYMENT OF TAX DUE cises self-regulatory powers (including im- diately after such transaction.’’. TO FRAUD.—If any portion of any under- posing sanctions) in connection with a quali- ‘‘(2) LIMITATION ON TRANSFER OF BUILT-IN payment (as defined in section 6664(a)) or fied board or exchange (as defined in section LOSSES IN SECTION 351 TRANSACTIONS.— overpayment (as defined in section 6401(a)) of 1256(g)(7)), or ‘‘(A) IN GENERAL.—If— tax required to be shown on a return is at- ‘‘(B) to the extent provided in regulations, ‘‘(i) property is transferred by a transferor tributable to fraudulent action described in a nongovernmental entity which exercises in any transaction which is described in sub- subsection (a), the applicable dollar amount self-regulatory powers (including imposing section (a) and which is not described in under subsection (a) shall in no event be less sanctions) as part of performing an essential paragraph (1) of this subsection, and than an amount equal to such portion. A rule governmental function.’’. ‘‘(ii) the transferee’s aggregate adjusted (b) EFFECTIVE DATE.—The amendment similar to the rule under section 6663(b) shall bases of such property so transferred would made by this section shall apply to amounts apply for purposes of determining the por- (but for this paragraph) exceed the fair mar- paid or incurred after April 27, 2003, except tion so attributable.’’. ket value of such property immediately after that such amendment shall not apply to (b) INCREASE IN PENALTIES.— such transaction, amounts paid or incurred under any binding (1) ATTEMPT TO EVADE OR DEFEAT TAX.— then, notwithstanding subsection (a), the order or agreement entered into on or before Section 7201 is amended— transferee’s aggregate adjusted bases of the April 27, 2003. Such exception shall not apply (A) by striking ‘‘$100,000’’ and inserting property so transferred shall not exceed the to an order or agreement requiring court ap- ‘‘$250,000’’, fair market value of such property imme- proval unless the approval was obtained on (B) by striking ‘‘$500,000’’ and inserting diately after such transaction. or before April 27, 2003. ‘‘$1,000,000’’, and ‘‘(B) ALLOCATION OF BASIS REDUCTION.—The SEC. 424. DISALLOWANCE OF DEDUCTION FOR (C) by striking ‘‘5 years’’ and inserting ‘‘10 aggregate reduction in basis by reason of PUNITIVE DAMAGES. years’’. subparagraph (A) shall be allocated among (a) DISALLOWANCE OF DEDUCTION.— (2) WILLFUL FAILURE TO FILE RETURN, SUP- the property so transferred in proportion to (1) IN GENERAL.—Section 162(g) (relating to PLY INFORMATION, OR PAY TAX.—Section 7203 their respective built-in losses immediately treble damage payments under the antitrust is amended— before the transaction. laws) is amended by adding at the end the (A) in the first sentence— ‘‘(C) EXCEPTION FOR TRANSFERS WITHIN AF- following new paragraph: (i) by striking ‘‘misdemeanor’’ and insert- FILIATED GROUP.—Subparagraph (A) shall not ‘‘(2) PUNITIVE DAMAGES.—No deduction ing ‘‘felony’’, and apply to any transaction if the transferor shall be allowed under this chapter for any (ii) by striking ‘‘1 year’’ and inserting ‘‘10 owns stock in the transferee meeting the re- amount paid or incurred for punitive dam- years’’, and quirements of section 1504(a)(2). In the case ages in connection with any judgment in, or (B) by striking the third sentence. of property to which subparagraph (A) does settlement of, any action. This paragraph (3) FRAUD AND FALSE STATEMENTS.—Section not apply by reason of the preceding sen- shall not apply to punitive damages de- 7206(a) (as redesignated by subsection (a)) is tence, the transferor’s basis in the stock re- scribed in section 104(c).’’. amended— ceived for such property shall not exceed its

VerDate jul 14 2003 02:43 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00102 Fmt 4624 Sfmt 0634 E:\CR\FM\A03MR6.062 S03PT1 March 3, 2004 CONGRESSIONAL RECORD — SENATE S2121 fair market value immediately after the as a regular interest solely because the spec- (12) The table of parts for subchapter M of transfer.’’. ified principal amount of the regular interest chapter 1 is amended by striking the item re- (b) COMPARABLE TREATMENT WHERE LIQ- (or the amount of interest accrued on the lating to part V. UIDATION.—Paragraph (1) of section 334(b) (re- regular interest) can be reduced as a result (c) EFFECTIVE DATE.— lating to liquidation of subsidiary) is amend- of the nonoccurrence of 1 or more contingent (1) IN GENERAL.—Except as provided in ed to read as follows: payments with respect to any reverse mort- paragraph (2), the amendments made by this ‘‘(1) IN GENERAL.—If property is received by gage loan held by the REMIC if, on the start- section shall take effect on February 14, 2003. a corporate distributee in a distribution in a up day for the REMIC, the sponsor reason- (2) EXCEPTION FOR EXISTING FASITS.—Para- complete liquidation to which section 332 ap- ably believes that all principal and interest graph (1) shall not apply to any FASIT in ex- plies (or in a transfer described in section due under the regular interest will be paid at istence on the date of the enactment of this 337(b)(1)), the basis of such property in the or prior to the liquidation of the REMIC.’’. Act to the extent that regular interests hands of such distributee shall be the same (B) The last sentence of section 860G(a)(3) issued by the FASIT before such date con- as it would be in the hands of the transferor; is amended by inserting ‘‘, and any reverse tinue to remain outstanding in accordance except that the basis of such property in the mortgage loan (and each balance increase on with the original terms of issuance. hands of such distributee shall be the fair such loan meeting the requirements of sub- SEC. 434. EXPANDED DISALLOWANCE OF DEDUC- market value of the property at the time of paragraph (A)(iii)) shall be treated as an ob- TION FOR INTEREST ON CONVERT- the distribution— ligation secured by an interest in real prop- IBLE DEBT. (a) IN GENERAL.—Paragraph (2) of section ‘‘(A) in any case in which gain or loss is erty’’ before the period at the end. 163(l) is amended by striking ‘‘or a related recognized by the liquidating corporation (6) Paragraph (3) of section 860G(a) is party’’ and inserting ‘‘or equity held by the with respect to such property, or amended by adding ‘‘and’’ at the end of sub- issuer (or any related party) in any other ‘‘(B) in any case in which the liquidating paragraph (B), by striking ‘‘, and’’ at the end person’’. corporation is a foreign corporation, the cor- of subparagraph (C) and inserting a period, (b) CAPITALIZATION ALLOWED WITH RESPECT porate distributee is a domestic corporation, and by striking subparagraph (D). TO EQUITY OF PERSONS OTHER THAN ISSUER and the corporate distributee’s aggregate ad- (7) Section 860G(a)(3), as amended by para- AND RELATED PARTIES.—Section 163(l) is justed bases of property described in section graph (6), is amended by adding at the end amended by redesignating paragraphs (4) and 362(e)(1)(B) which is distributed in such liq- the following new sentence: ‘‘For purposes of (5) as paragraphs (5) and (6) and by inserting uidation would (but for this subparagraph) subparagraph (A), if more than 50 percent of after paragraph (3) the following new para- exceed the fair market value of such prop- the obligations transferred to, or purchased graph: erty immediately after such liquidation.’’. by, the REMIC are originated by the United ‘‘(4) CAPITALIZATION ALLOWED WITH RESPECT (c) EFFECTIVE DATE.—The amendments States or any State (or any political subdivi- TO EQUITY OF PERSONS OTHER THAN ISSUER made by this section shall apply to trans- sion, agency, or instrumentality of the AND RELATED PARTIES.—If the disqualified actions after February 13, 2003. United States or any State) and are prin- debt instrument of a corporation is payable SEC. 432. NO REDUCTION OF BASIS UNDER SEC- cipally secured by an interest in real prop- in equity held by the issuer (or any related TION 734 IN STOCK HELD BY PART- erty, then each obligation transferred to, or party) in any other person (other than a re- NERSHIP IN CORPORATE PARTNER. purchased by, the REMIC shall be treated as lated party), the basis of such equity shall be (a) IN GENERAL.—Section 755 is amended by secured by an interest in real property.’’. increased by the amount not allowed as a de- adding at the end the following new sub- (8)(A) Section 860G(a)(3)(A) is amended by duction by reason of paragraph (1) with re- section: striking ‘‘or’’ at the end of clause (i), by inspect to the instrument.’’. ‘‘(c) NO ALLOCATION OF BASIS DECREASE TO serting ‘‘or’’ at the end of clause (ii), and by (c) EXCEPTION FOR CERTAIN INSTRUMENTS STOCK OF CORPORATE PARTNER.—In making inserting after clause (ii) the following new ISSUED BY DEALERS IN SECURITIES.—Section an allocation under subsection (a) of any de- clause: 163(l), as amended by subsection (b), is crease in the adjusted basis of partnership ‘‘(iii) represents an increase in the prin- amended by redesignating paragraphs (5) and property under section 734(b)— cipal amount under the original terms of an (6) as paragraphs (6) and (7) and by inserting ‘‘(1) no allocation may be made to stock in obligation described in clause (i) or (ii) if after paragraph (4) the following new para- a corporation (or any person which is related such increase— graph: (within the meaning of section 267(b) or ‘‘(I) is attributable to an advance made to ‘‘(5) EXCEPTION FOR CERTAIN INSTRUMENTS 707(b)(1)) to such corporation) which is a the obligor pursuant to the original terms of ISSUED BY DEALERS IN SECURITIES.—For pur- partner in the partnership, and the obligation, poses of this subsection, the term ‘disquali- ‘‘(2) any amount not allocable to stock by ‘‘(II) occurs after the startup day, and fied debt instrument’ does not include in- reason of paragraph (1) shall be allocated ‘‘(III) is purchased by the REMIC pursuant debtedness issued by a dealer in securities under subsection (a) to other partnership to a fixed price contract in effect on the (or a related party) which is payable in, or property in such manner as the Secretary startup day.’’. by reference to, equity (other than equity of may prescribe. (B) Section 860G(a)(7)(B) is amended to the issuer or a related party) held by such dealer in its capacity as a dealer in securi- Gain shall be recognized to the partnership read as follows: ties. For purposes of this paragraph, the to the extent that the amount required to be ‘‘(B) QUALIFIED RESERVE FUND.—For pur- term ‘dealer in securities’ has the meaning allocated under paragraph (2) to other part- poses of subparagraph (A), the term ‘quali- given such term by section 475.’’. nership property exceeds the aggregate ad- fied reserve fund’ means any reasonably re- (c) CONFORMING AMENDMENTS.—Paragraph quired reserve to— justed basis of such other property imme- (3) of section 163(l) is amended— ‘‘(i) provide for full payment of expenses of diately before the allocation required by (1) by striking ‘‘or a related party’’ in the the REMIC or amounts due on regular inter- paragraph (2).’’. material preceding subparagraph (A) and in- ests in the event of defaults on qualified (b) EFFECTIVE DATE.—The amendment serting ‘‘or any other person’’, and mortgages or lower than expected returns on made by this section shall apply to distribu- (2) by striking ‘‘or interest’’ each place it cash flow investments, or tions after February 13, 2003. appears. ‘‘(ii) provide a source of funds for the pur- SEC. 433. REPEAL OF SPECIAL RULES FOR (d) EFFECTIVE DATE.—The amendments FASITS. chase of obligations described in clause (ii) made by this section shall apply to debt in- (a) IN GENERAL.—Part V of subchapter M of or (iii) of paragraph (3)(A). struments issued after February 13, 2003. chapter 1 (relating to financial asset The aggregate fair market value of the as- SEC. 435. EXPANDED AUTHORITY TO DISALLOW securitization investment trusts) is hereby sets held in any such reserve shall not exceed TAX BENEFITS UNDER SECTION 269. repealed. 50 percent of the aggregate fair market value (a) IN GENERAL.—Subsection (a) of section (b) CONFORMING AMENDMENTS.— of all of the assets of the REMIC on the 269 (relating to acquisitions made to evade or (1) Paragraph (6) of section 56(g) is amend- startup day, and the amount of any such re- avoid income tax) is amended to read as fol- ed by striking ‘‘REMIC, or FASIT’’ and in- serve shall be promptly and appropriately re- lows: serting ‘‘or REMIC’’. duced to the extent the amount held in such ‘‘(a) IN GENERAL.—If— (2) Clause (ii) of section 382(l)(4)(B) is reserve is no longer reasonably required for ‘‘(1)(A) any person or persons acquire, di- amended by striking ‘‘a REMIC to which purposes specified in clause (i) or (ii) of para- rectly or indirectly, control of a corporation, part IV of subchapter M applies, or a FASIT graph (3)(A).’’. or to which part V of subchapter M applies,’’ (9) Subparagraph (C) of section 1202(e)(4) is ‘‘(B) any corporation acquires, directly or and inserting ‘‘or a REMIC to which part IV amended by striking ‘‘REMIC, or FASIT’’ indirectly, property of another corporation of subchapter M applies,’’. and inserting ‘‘or REMIC’’. and the basis of such property, in the hands (3) Paragraph (1) of section 582(c) is amend- (10) Clause (xi) of section 7701(a)(19)(C) is of the acquiring corporation, is determined ed by striking ‘‘, and any regular interest in amended— by reference to the basis in the hands of the a FASIT,’’. (A) by striking ‘‘and any regular interest transferor corporation, and (4) Subparagraph (E) of section 856(c)(5) is in a FASIT,’’, and ‘‘(2) the principal purpose for which such amended by striking the last sentence. (B) by striking ‘‘or FASIT’’ each place it acquisition was made is evasion or avoidance (5)(A) Section 860G(a)(1) is amended by appears. of Federal income tax, adding at the end the following new sen- (11) Subparagraph (A) of section 7701(i)(2) is then the Secretary may disallow such deduc- tence: ‘‘An interest shall not fail to qualify amended by striking ‘‘or a FASIT’’. tion, credit, or other allowance. For purposes

VerDate jul 14 2003 02:43 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00103 Fmt 4624 Sfmt 0634 E:\CR\FM\A03MR6.062 S03PT1 S2122 CONGRESSIONAL RECORD — SENATE March 3, 2004 of paragraph (1)(A), control means the own- rities market at any time during the 4-year ‘‘(B) the inversion gain of any partner for ership of stock possessing at least 50 percent period ending on the date of the acquisition. any taxable year shall be equal to the sum of the total combined voting power of all ‘‘(b) PRESERVATION OF DOMESTIC TAX BASE of— classes of stock entitled to vote or at least 50 IN CERTAIN INVERSION TRANSACTIONS TO ‘‘(i) the partner’s distributive share of in- percent of the total value of all shares of all WHICH SUBSECTION (a) DOES NOT APPLY.— version gain of the partnership for such tax- classes of stock of the corporation.’’. ‘‘(1) IN GENERAL.—If a foreign incorporated able year, plus (b) EFFECTIVE DATE.—The amendment entity would be treated as an inverted do- ‘‘(ii) income or gain required to be recog- made by this section shall apply to stock and mestic corporation with respect to an ac- nized for the taxable year by the partner property acquired after February 13, 2003. quired entity if either— under section 367(a), 741, or 1001, or under SEC. 436. MODIFICATION OF INTERACTION BE- ‘‘(A) subsection (a)(2)(A) were applied by any other provision of chapter 1, by reason of TWEEN SUBPART F AND PASSIVE substituting ‘after December 31, 1996, and on the transfer during the applicable period of FOREIGN INVESTMENT COMPANY or before March 20, 2002’ for ‘after March 20, any partnership interest of the partner in RULES. 2002’ and subsection (a)(2)(B) were applied by such partnership to the foreign incorporated (a) LIMITATION ON EXCEPTION FROM PFIC substituting ‘more than 50 percent’ for ‘at entity, and RULES FOR UNITED STATES SHAREHOLDERS OF least 80 percent’, or ‘‘(C) the highest rate of tax specified in the CONTROLLED FOREIGN CORPORATIONS.—Para- ‘‘(B) subsection (a)(2)(B) were applied by rate schedule applicable to the partner under graph (2) of section 1297(e) (relating to pas- substituting ‘more than 50 percent’ for ‘at chapter 1 shall be substituted for the rate of sive foreign investment company) is amend- least 80 percent’, tax under paragraph (2)(B). ed by adding at the end the following flush then the rules of subsection (c) shall apply to ‘‘(4) INVERSION GAIN.—For purposes of this sentence: any inversion gain of the acquired entity section, the term ‘inversion gain’ means any ‘‘Such term shall not include any period if during the applicable period and the rules of income or gain required to be recognized the earning of subpart F income by such cor- subsection (d) shall apply to any related under section 304, 311(b), 367, 1001, or 1248, or poration during such period would result in party transaction of the acquired entity dur- under any other provision of chapter 1, by only a remote likelihood of an inclusion in ing the applicable period. This subsection reason of the transfer during the applicable gross income under section 951(a)(1)(A)(i).’’. shall not apply for any taxable year if sub- period of stock or other properties by an ac- (b) EFFECTIVE DATE.—The amendment section (a) applies to such foreign incor- quired entity— made by this section shall apply to taxable porated entity for such taxable year. ‘‘(A) as part of the acquisition described in years of controlled foreign corporations be- ‘‘(2) ACQUIRED ENTITY.—For purposes of subsection (a)(2)(A) to which subsection (b) ginning after February 13, 2003, and to tax- this section— applies, or able years of United States shareholders ‘‘(A) IN GENERAL.—The term ‘acquired enti- ‘‘(B) after such acquisition to a foreign re- with or within which such taxable years of ty’ means the domestic corporation or part- lated person. controlled foreign corporations end. nership substantially all of the properties of The Secretary may provide that income or Subtitle D—Provisions to Discourage which are directly or indirectly acquired in gain from the sale of inventories or other Expatriation an acquisition described in subsection transactions in the ordinary course of a SEC. 441. TAX TREATMENT OF INVERTED COR- (a)(2)(A) to which this subsection applies. trade or business shall not be treated as in- PORATE ENTITIES ‘‘(B) AGGREGATION RULES.—Any domestic version gain under subparagraph (B) to the (a) IN GENERAL.—Subchapter C of chapter person bearing a relationship described in extent the Secretary determines such treat- 80 (relating to provisions affecting more than section 267(b) or 707(b) to an acquired entity ment would not be inconsistent with the pur- one subtitle) is amended by adding at the shall be treated as an acquired entity with poses of this section. end the following new section: respect to the acquisition described in sub- ‘‘(5) COORDINATION WITH SECTION 172 AND ‘‘SEC. 7874. RULES RELATING TO INVERTED COR- paragraph (A). MINIMUM TAX.—Rules similar to the rules of PORATE ENTITIES ‘‘(3) APPLICABLE PERIOD.—For purposes of paragraphs (3) and (4) of section 860E(a) shall ‘‘(a) INVERTED CORPORATIONS TREATED AS this section— apply for purposes of this section. DOMESTIC CORPORATIONS.— ‘‘(A) IN GENERAL.—The term ‘applicable pe- ‘‘(6) STATUTE OF LIMITATIONS.— ‘‘(1) IN GENERAL.—If a foreign incorporated riod’ means the period— ‘‘(A) IN GENERAL.—The statutory period for entity is treated as an inverted domestic cor- ‘‘(i) beginning on the first date properties the assessment of any deficiency attrib- poration, then, notwithstanding section are acquired as part of the acquisition de- utable to the inversion gain of any taxpayer 7701(a)(4), such entity shall be treated for scribed in subsection (a)(2)(A) to which this for any pre-inversion year shall not expire purposes of this title as a domestic corpora- subsection applies, and before the expiration of 3 years from the date tion. ‘‘(ii) ending on the date which is 10 years the Secretary is notified by the taxpayer (in ‘‘(2) INVERTED DOMESTIC CORPORATION.—For after the last date properties are acquired as such manner as the Secretary may prescribe) purposes of this section, a foreign incor- part of such acquisition. of the acquisition described in subsection porated entity shall be treated as an in- ‘‘(B) SPECIAL RULE FOR INVERSIONS OCCUR- (a)(2)(A) to which such gain relates and such verted domestic corporation if, pursuant to a RING BEFORE MARCH 21, 2002.—In the case of deficiency may be assessed before the expira- plan (or a series of related transactions)— any acquired entity to which paragraph tion of such 3-year period notwithstanding ‘‘(A) the entity completes after March 20, (1)(A) applies, the applicable period shall be the provisions of any other law or rule of law 2002, the direct or indirect acquisition of sub- the 10-year period beginning on January 1, which would otherwise prevent such assess- stantially all of the properties held directly 2003. ment. or indirectly by a domestic corporation or ‘‘(c) TAX ON INVERSION GAINS MAY NOT BE ‘‘(B) PRE-INVERSION YEAR.—For purposes of substantially all of the properties consti- OFFSET.—If subsection (b) applies— subparagraph (A), the term ‘pre-inversion tuting a trade or business of a domestic part- ‘‘(1) IN GENERAL.—The taxable income of an year’ means any taxable year if— nership, acquired entity (or any expanded affiliated ‘‘(i) any portion of the applicable period is ‘‘(B) after the acquisition at least 80 per- group which includes such entity) for any included in such taxable year, and cent of the stock (by vote or value) of the en- taxable year which includes any portion of ‘‘(ii) such year ends before the taxable year tity is held— the applicable period shall in no event be in which the acquisition described in sub- ‘‘(i) in the case of an acquisition with re- less than the inversion gain of the entity for section (a)(2)(A) is completed. spect to a domestic corporation, by former the taxable year. ‘‘(d) SPECIAL RULES APPLICABLE TO AC- shareholders of the domestic corporation by ‘‘(2) CREDITS NOT ALLOWED AGAINST TAX ON QUIRED ENTITIES TO WHICH SUBSECTION (b) reason of holding stock in the domestic cor- INVERSION GAIN.—Credits shall be allowed APPLIES.— poration, or against the tax imposed by this chapter on ‘‘(1) INCREASES IN ACCURACY-RELATED PEN- ‘‘(ii) in the case of an acquisition with re- an acquired entity for any taxable year de- ALTIES.—In the case of any underpayment of spect to a domestic partnership, by former scribed in paragraph (1) only to the extent tax of an acquired entity to which subsection partners of the domestic partnership by rea- such tax exceeds the product of— (b) applies— son of holding a capital or profits interest in ‘‘(A) the amount of the inversion gain for ‘‘(A) section 6662(a) shall be applied with the domestic partnership, and the taxable year, and respect to such underpayment by sub- ‘‘(C) the expanded affiliated group which ‘‘(B) the highest rate of tax specified in stituting ‘30 percent’ for ‘20 percent’, and after the acquisition includes the entity does section 11(b)(1). ‘‘(B) if such underpayment is attributable not have substantial business activities in For purposes of determining the credit al- to one or more gross valuation understate- the foreign country in which or under the lowed by section 901 inversion gain shall be ments, the increase in the rate of penalty law of which the entity is created or orga- treated as from sources within the United under section 6662(h) shall be to 50 percent nized when compared to the total business States. rather than 40 percent. activities of such expanded affiliated group. ‘‘(3) SPECIAL RULES FOR PARTNERSHIPS.—In ‘‘(2) MODIFICATIONS OF LIMITATION ON INTER- Except as provided in regulations, an acqui- the case of an acquired entity which is a EST DEDUCTION.—In the case of an acquired sition of properties of a domestic corporation partnership— entity to which subsection (b) applies, sec- shall not be treated as described in subpara- ‘‘(A) the limitations of this subsection tion 163(j) shall be applied— graph (A) if none of the corporation’s stock shall apply at the partner rather than the ‘‘(A) without regard to paragraph (2)(A)(ii) was readily tradeable on an established secu- partnership level, thereof, and

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‘‘(B) by substituting ‘25 percent’ for ‘50 per- ‘‘(B) REQUIREMENTS.—The requirements of ‘‘(A) notwithstanding any other provision cent’ each place it appears in paragraph the subparagraph are met with respect to a of this title, any gain arising from such sale (2)(B) thereof. transaction involving any acquisition de- shall be taken into account for the taxable ‘‘(e) OTHER DEFINITIONS AND SPECIAL scribed in subparagraph (A) if— year of the sale, and RULES.—For purposes of this section— ‘‘(i) before such transaction the domestic ‘‘(B) any loss arising from such sale shall ‘‘(1) RULES FOR APPLICATION OF SUBSECTION corporation did not have a relationship de- be taken into account for the taxable year of (a)(2).—In applying subsection (a)(2) for pur- scribed in section 267(b) or 707(b), and was the sale to the extent otherwise provided by poses of subsections (a) and (b), the following not under common control (within the mean- this title, except that section 1091 shall not rules shall apply: ing of section 482), with the acquired entity, apply to any such loss. ‘‘(A) CERTAIN STOCK DISREGARDED.—There or any member of an expanded affiliated Proper adjustment shall be made in the shall not be taken into account in deter- group including such entity, and amount of any gain or loss subsequently remining ownership for purposes of subsection ‘‘(ii) after such transaction, such acquired alized for gain or loss taken into account (a)(2)(B)— entity— under the preceding sentence. ‘‘(i) stock held by members of the expanded ‘‘(I) is a member of the same expanded af- ‘‘(3) EXCLUSION FOR CERTAIN GAIN.— affiliated group which includes the foreign filiated group which includes the domestic ‘‘(A) IN GENERAL.—The amount which, but incorporated entity, or corporation or has such a relationship or is for this paragraph, would be includible in the ‘‘(ii) stock of such entity which is sold in under such common control with any mem- gross income of any individual by reason of a public offering or private placement re- ber of such group, and this section shall be reduced (but not below lated to the acquisition described in sub- ‘‘(II) is not a member of, and does not have zero) by $600,000. For purposes of this para- section (a)(2)(A). such a relationship and is not under such graph, allocable expatriation gain taken into ‘‘(B) PLAN DEEMED IN CERTAIN CASES.—If a common control with any member of, the ex- account under subsection (f)(2) shall be foreign incorporated entity acquires directly panded affiliated group which before such ac- treated in the same manner as an amount re- or indirectly substantially all of the prop- quisition included such entity. quired to be includible in gross income. erties of a domestic corporation or partner- ‘‘(f) REGULATIONS.—The Secretary shall ‘‘(B) COST-OF-LIVING ADJUSTMENT.— ship during the 4-year period beginning on provide such regulations as are necessary to ‘‘(i) IN GENERAL.—In the case of an expa- the date which is 2 years before the owner- carry out this section, including regulations triation date occurring in any calendar year ship requirements of subsection (a)(2)(B) are providing for such adjustments to the appli- after 2004, the $600,000 amount under sub- met with respect to such domestic corpora- cation of this section as are necessary to pre- paragraph (A) shall be increased by an tion or partnership, such actions shall be vent the avoidance of the purposes of this amount equal to— treated as pursuant to a plan. section, including the avoidance of such pur- ‘‘(I) such dollar amount, multiplied by ‘‘(II) the cost-of-living adjustment deter- ‘‘(C) CERTAIN TRANSFERS DISREGARDED.— poses through— The transfer of properties or liabilities (in- ‘‘(1) the use of related persons, pass-thru or mined under section 1(f)(3) for such calendar cluding by contribution or distribution) shall other noncorporate entities, or other inter- year, determined by substituting ‘calendar be disregarded if such transfers are part of a mediaries, or year 2003’ for ‘calendar year 1992’ in subpara- plan a principal purpose of which is to avoid ‘‘(2) transactions designed to have persons graph (B) thereof. OUNDING RULES.—If any amount after the purposes of this section. cease to be (or not become) members of ex- ‘‘(ii) R adjustment under clause (i) is not a multiple ‘‘(D) SPECIAL RULE FOR RELATED PARTNER- panded affiliated groups or related persons.’’. (b) INFORMATION REPORTING.—The Sec- of $1,000, such amount shall be rounded to SHIPS.—For purposes of applying subsection retary of the Treasury shall exercise the Sec- the next lower multiple of $1,000. (a)(2) to the acquisition of a domestic part- retary’s authority under the Internal Rev- ‘‘(4) ELECTION TO CONTINUE TO BE TAXED AS nership, except as provided in regulations, enue Code of 1986 to require entities involved UNITED STATES CITIZEN.— all partnerships which are under common in transactions to which section 7874 of such ‘‘(A) IN GENERAL.—If a covered expatriate control (within the meaning of section 482) Code (as added by subsection (a)) applies to elects the application of this paragraph— shall be treated as 1 partnership. report to the Secretary, shareholders, part- ‘‘(i) this section (other than this paragraph ‘‘(E) TREATMENT OF CERTAIN RIGHTS.—The ners, and such other persons as the Secretary and subsection (i)) shall not apply to the ex- Secretary shall prescribe such regulations as may prescribe such information as is nec- patriate, but may be necessary— essary to ensure the proper tax treatment of ‘‘(ii) in the case of property to which this ‘‘(i) to treat warrants, options, contracts such transactions. section would apply but for such election, to acquire stock, convertible debt instru- (c) CONFORMING AMENDMENT.—The table of the expatriate shall be subject to tax under ments, and other similar interests as stock, sections for subchapter C of chapter 80 is this title in the same manner as if the indi- and amended by adding at the end the following vidual were a United States citizen. ‘‘(ii) to treat stock as not stock. new item: ‘‘(B) REQUIREMENTS.—Subparagraph (A) ‘‘(2) EXPANDED AFFILIATED GROUP.—The shall not apply to an individual unless the ‘‘Sec. 7874. Rules relating to inverted cor- term ‘expanded affiliated group’ means an individual— porate entities.’’. affiliated group as defined in section 1504(a) ‘‘(i) provides security for payment of tax in but without regard to section 1504(b)(3), ex- (d) TRANSITION RULE FOR CERTAIN REGU- such form and manner, and in such amount, cept that section 1504(a) shall be applied by LATED INVESTMENT COMPANIES AND UNIT IN- as the Secretary may require, substituting ‘more than 50 percent’ for ‘at VESTMENT TRUSTS.—Notwithstanding section ‘‘(ii) consents to the waiver of any right of least 80 percent’ each place it appears. 7874 of the Internal Revenue Code of 1986 (as the individual under any treaty of the ‘‘(3) FOREIGN INCORPORATED ENTITY.—The added by subsection (a)), a regulated invest- United States which would preclude assess- term ‘foreign incorporated entity’ means any ment company, or other pooled fund or trust ment or collection of any tax which may be entity which is, or but for subsection (a)(1) specified by the Secretary of the Treasury, imposed by reason of this paragraph, and would be, treated as a foreign corporation for may elect to recognize gain by reason of sec- ‘‘(iii) complies with such other require- purposes of this title. tion 367(a) of such Code with respect to a ments as the Secretary may prescribe. ‘‘(4) FOREIGN RELATED PERSON.—The term transaction under which a foreign incor- ‘‘(C) ELECTION.—An election under sub- ‘foreign related person’ means, with respect porated entity is treated as an inverted do- paragraph (A) shall apply to all property to to any acquired entity, a foreign person mestic corporation under section 7874(a) of which this section would apply but for the which— such Code by reason of an acquisition com- election and, once made, shall be irrev- ‘‘(A) bears a relationship to such entity depleted after March 20, 2002, and before Janu- ocable. Such election shall also apply to scribed in section 267(b) or 707(b), or ary 1, 2004. property the basis of which is determined in ‘‘(B) is under the same common control SEC. 442. IMPOSITION OF MARK-TO-MARKET TAX whole or in part by reference to the property (within the meaning of section 482) as such ON INDIVIDUALS WHO EXPATRIATE. with respect to which the election was made. entity. (a) IN GENERAL.—Subpart A of part II of ‘‘(b) ELECTION TO DEFER TAX.— ‘‘(5) SUBSEQUENT ACQUISITIONS BY UNRE- subchapter N of chapter 1 is amended by in- ‘‘(1) IN GENERAL.—If the taxpayer elects the LATED DOMESTIC CORPORATIONS.— serting after section 877 the following new application of this subsection with respect to ‘‘(A) IN GENERAL.—Subject to such condi- section: any property treated as sold by reason of tions, limitations, and exceptions as the Sec- ‘‘SEC. 877A. TAX RESPONSIBILITIES OF EXPATRIA- subsection (a), the payment of the additional retary may prescribe, if, after an acquisition TION. tax attributable to such property shall be described in subsection (a)(2)(A) to which ‘‘(a) GENERAL RULES.—For purposes of this postponed until the due date of the return subsection (b) applies, a domestic corpora- subtitle— for the taxable year in which such property tion stock of which is traded on an estab- ‘‘(1) MARK TO MARKET.—Except as provided is disposed of (or, in the case of property dis- lished securities market acquires directly or in subsections (d) and (f), all property of a posed of in a transaction in which gain is not indirectly any properties of one or more ac- covered expatriate to whom this section ap- recognized in whole or in part, until such quired entities in a transaction with respect plies shall be treated as sold on the day be- other date as the Secretary may prescribe). to which the requirements of subparagraph fore the expatriation date for its fair market ‘‘(2) DETERMINATION OF TAX WITH RESPECT (B) are met, this section shall cease to apply value. TO PROPERTY.—For purposes of paragraph (1), to any such acquired entity with respect to ‘‘(2) RECOGNITION OF GAIN OR LOSS.—In the the additional tax attributable to any prop- which such requirements are met. case of any sale under paragraph (1)— erty is an amount which bears the same

VerDate jul 14 2003 02:43 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00105 Fmt 4624 Sfmt 0634 E:\CR\FM\A03MR6.062 S03PT1 S2124 CONGRESSIONAL RECORD — SENATE March 3, 2004 ratio to the additional tax imposed by this than stock of a United States real property ‘‘(B) the date the individual furnishes to chapter for the taxable year solely by reason holding corporation which does not, on the the United States Department of State a of subsection (a) as the gain taken into ac- day before the expatriation date, meet the signed statement of voluntary relinquish- count under subsection (a) with respect to requirements of section 897(c)(2). ment of United States nationality con- such property bears to the total gain taken ‘‘(B) SPECIFIED PROPERTY.—Any property firming the performance of an act of expa- into account under subsection (a) with re- or interest in property not described in sub- triation specified in paragraph (1), (2), (3), or spect to all property to which subsection (a) paragraph (A) which the Secretary specifies (4) of section 349(a) of the Immigration and applies. in regulations. Nationality Act (8 U.S.C. 1481(a)(1)–(4)), ‘‘(3) TERMINATION OF POSTPONEMENT.—No ‘‘(2) SPECIAL RULES FOR CERTAIN RETIRE- ‘‘(C) the date the United States Depart- tax may be postponed under this subsection MENT PLANS.— ment of State issues to the individual a cer- later than the due date for the return of tax ‘‘(A) IN GENERAL.—If a covered expatriate tificate of loss of nationality, or imposed by this chapter for the taxable year holds on the day before the expatriation date ‘‘(D) the date a court of the United States which includes the date of death of the expa- any interest in a retirement plan to which cancels a naturalized citizen’s certificate of triate (or, if earlier, the time that the secu- this paragraph applies— naturalization. rity provided with respect to the property ‘‘(i) such interest shall not be treated as fails to meet the requirements of paragraph sold for purposes of subsection (a)(1), but Subparagraph (A) or (B) shall not apply to (4), unless the taxpayer corrects such failure ‘‘(ii) an amount equal to the present value any individual unless the renunciation or within the time specified by the Secretary). of the expatriate’s nonforfeitable accrued voluntary relinquishment is subsequently ‘‘(4) SECURITY.— benefit shall be treated as having been re- approved by the issuance to the individual of ‘‘(A) IN GENERAL.—No election may be ceived by such individual on such date as a a certificate of loss of nationality by the made under paragraph (1) with respect to distribution under the plan. United States Department of State. any property unless adequate security is pro- ‘‘(B) TREATMENT OF SUBSEQUENT DISTRIBU- ‘‘(4) LONG-TERM RESIDENT.—The term ‘long- vided to the Secretary with respect to such TIONS.—In the case of any distribution on or term resident’ has the meaning given to such property. after the expatriation date to or on behalf of term by section 877(e)(2). ‘‘(B) ADEQUATE SECURITY.—For purposes of the covered expatriate from a plan from ‘‘(f) SPECIAL RULES APPLICABLE TO BENE- subparagraph (A), security with respect to which the expatriate was treated as receiv- any property shall be treated as adequate se- FICIARIES’ INTERESTS IN TRUST.— ing a distribution under subparagraph (A), ‘‘(1) IN GENERAL.—Except as provided in curity if— the amount otherwise includible in gross in- ‘‘(i) it is a bond in an amount equal to the paragraph (2), if an individual is determined come by reason of the subsequent distribu- under paragraph (3) to hold an interest in a deferred tax amount under paragraph (2) for tion shall be reduced by the excess of the the property, or trust on the day before the expatriation amount includible in gross income under date— ‘‘(ii) the taxpayer otherwise establishes to subparagraph (A) over any portion of such the satisfaction of the Secretary that the se- ‘‘(A) the individual shall not be treated as amount to which this subparagraph pre- having sold such interest, curity is adequate. viously applied. ‘‘(5) WAIVER OF CERTAIN RIGHTS.—No elec- ‘‘(B) such interest shall be treated as a sep- ‘‘(C) TREATMENT OF SUBSEQUENT DISTRIBU- tion may be made under paragraph (1) unless arate share in the trust, and TIONS BY PLAN.—For purposes of this title, a the taxpayer consents to the waiver of any ‘‘(C)(i) such separate share shall be treated retirement plan to which this paragraph ap- right under any treaty of the United States as a separate trust consisting of the assets plies, and any person acting on the plan’s be- which would preclude assessment or collec- allocable to such share, half, shall treat any subsequent distribution tion of any tax imposed by reason of this sec- ‘‘(ii) the separate trust shall be treated as described in subparagraph (B) in the same tion. having sold its assets on the day before the manner as such distribution would be treat- ‘‘(6) ELECTIONS.—An election under para- expatriation date for their fair market value ed without regard to this paragraph. graph (1) shall only apply to property de- and as having distributed all of its assets to ‘‘(D) APPLICABLE PLANS.—This paragraph scribed in the election and, once made, is ir- the individual as of such time, and shall apply to— revocable. An election may be made under ‘‘(iii) the individual shall be treated as ‘‘(i) any qualified retirement plan (as de- paragraph (1) with respect to an interest in a having recontributed the assets to the sepa- fined in section 4974(c)), trust with respect to which gain is required rate trust. ‘‘(ii) an eligible deferred compensation to be recognized under subsection (f)(1). plan (as defined in section 457(b)) of an eligi- Subsection (a)(2) shall apply to any income, ‘‘(7) INTEREST.—For purposes of section ble employer described in section gain, or loss of the individual arising from a 6601— 457(e)(1)(A), and distribution described in subparagraph ‘‘(A) the last date for the payment of tax ‘‘(iii) to the extent provided in regulations, (C)(ii). In determining the amount of such shall be determined without regard to the any foreign pension plan or similar retire- distribution, proper adjustments shall be election under this subsection, and ment arrangements or programs. made for liabilities of the trust allocable to ‘‘(B) section 6621(a)(2) shall be applied by an individual’s share in the trust. substituting ‘5 percentage points’ for ‘3 per- ‘‘(e) DEFINITIONS.—For purposes of this section— ‘‘(2) SPECIAL RULES FOR INTERESTS IN QUALI- centage points’ in subparagraph (B) thereof. FIED TRUSTS.— ‘‘(c) COVERED EXPATRIATE.—For purposes ‘‘(1) EXPATRIATE.—The term ‘expatriate’ ‘‘(A) IN GENERAL.—If the trust interest de- of this section— means— scribed in paragraph (1) is an interest in a ‘‘(1) IN GENERAL.—Except as provided in ‘‘(A) any United States citizen who relin- qualified trust— paragraph (2), the term ‘covered expatriate’ quishes citizenship, and ‘‘(i) paragraph (1) and subsection (a) shall means an expatriate. ‘‘(B) any long-term resident of the United not apply, and ‘‘(2) EXCEPTIONS.—An individual shall not States who— ‘‘(ii) in addition to any other tax imposed be treated as a covered expatriate if— ‘‘(i) ceases to be a lawful permanent resi- ‘‘(A) the individual— dent of the United States (within the mean- by this title, there is hereby imposed on each ‘‘(i) became at birth a citizen of the United ing of section 7701(b)(6)), or distribution with respect to such interest a States and a citizen of another country and, ‘‘(ii) commences to be treated as a resident tax in the amount determined under sub- as of the expatriation date, continues to be a of a foreign country under the provisions of paragraph (B). citizen of, and is taxed as a resident of, such a tax treaty between the United States and ‘‘(B) AMOUNT OF TAX.—The amount of tax other country, and the foreign country and who does not waive under subparagraph (A)(ii) shall be equal to ‘‘(ii) has not been a resident of the United the benefits of such treaty applicable to resi- the lesser of— States (as defined in section 7701(b)(1)(A)(ii)) dents of the foreign country. ‘‘(i) the highest rate of tax imposed by sec- during the 5 taxable years ending with the ‘‘(2) EXPATRIATION DATE.—The term ‘expa- tion 1(e) for the taxable year which includes taxable year during which the expatriation triation date’ means— the day before the expatriation date, multi- date occurs, or ‘‘(A) the date an individual relinquishes plied by the amount of the distribution, or ‘‘(B)(i) the individual’s relinquishment of United States citizenship, or ‘‘(ii) the balance in the deferred tax ac- United States citizenship occurs before such ‘‘(B) in the case of a long-term resident of count immediately before the distribution individual attains age 181⁄2, and the United States, the date of the event de- determined without regard to any increases ‘‘(ii) the individual has been a resident of scribed in clause (i) or (ii) of paragraph under subparagraph (C)(ii) after the 30th day the United States (as so defined) for not (1)(B). preceding the distribution. more than 5 taxable years before the date of ‘‘(3) RELINQUISHMENT OF CITIZENSHIP.—A ‘‘(C) DEFERRED TAX ACCOUNT.—For purposes relinquishment. citizen shall be treated as relinquishing of subparagraph (B)(ii)— ‘‘(d) EXEMPT PROPERTY; SPECIAL RULES FOR United States citizenship on the earliest of— ‘‘(i) OPENING BALANCE.—The opening bal- PENSION PLANS.— ‘‘(A) the date the individual renounces ance in a deferred tax account with respect ‘‘(1) EXEMPT PROPERTY.—This section shall such individual’s United States nationality to any trust interest is an amount equal to not apply to the following: before a diplomatic or consular officer of the the tax which would have been imposed on ‘‘(A) UNITED STATES REAL PROPERTY INTER- United States pursuant to paragraph (5) of the allocable expatriation gain with respect ESTS.—Any United States real property in- section 349(a) of the Immigration and Na- to the trust interest if such gain had been interest (as defined in section 897(c)(1)), other tionality Act (8 U.S.C. 1481(a)(5)), cluded in gross income under subsection (a).

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‘‘(ii) INCREASE FOR INTEREST.—The balance beneficiary and the occurrence of all contin- ferred amount) shall be a lien in favor of the in the deferred tax account shall be in- gencies in favor of the beneficiary. United States on all property of the expa- creased by the amount of interest deter- ‘‘(iv) ADJUSTMENTS.—The Secretary may triate located in the United States (without mined (on the balance in the account at the provide for such adjustments to the bases of regard to whether this section applies to the time the interest accrues), for periods after assets in a trust or a deferred tax account, property). the 90th day after the expatriation date, by and the timing of such adjustments, in order ‘‘(B) DEFERRED AMOUNT.—For purposes of using the rates and method applicable under to ensure that gain is taxed only once. this subsection, the deferred amount is the section 6621 for underpayments of tax for ‘‘(v) COORDINATION WITH RETIREMENT PLAN amount of the increase in the covered expa- such periods, except that section 6621(a)(2) RULES.—This subsection shall not apply to triate’s income tax which, but for the elec- shall be applied by substituting ‘5 percentage an interest in a trust which is part of a re- tion under subsection (a)(4) or (b), would points’ for ‘3 percentage points’ in subpara- tirement plan to which subsection (d)(2) ap- have occurred by reason of this section for graph (B) thereof. plies. the taxable year including the expatriation ‘‘(iii) DECREASE FOR TAXES PREVIOUSLY ‘‘(3) DETERMINATION OF BENEFICIARIES’ IN- date. PAID.—The balance in the tax deferred ac- TEREST IN TRUST.— ‘‘(2) PERIOD OF LIEN.—The lien imposed by count shall be reduced— ‘‘(A) DETERMINATIONS UNDER PARAGRAPH this subsection shall arise on the expatria- ‘‘(I) by the amount of taxes imposed by (1).—For purposes of paragraph (1), a bene- tion date and continue until— subparagraph (A) on any distribution to the ficiary’s interest in a trust shall be based ‘‘(A) the liability for tax by reason of this person holding the trust interest, and upon all relevant facts and circumstances, section is satisfied or has become unenforce- ‘‘(II) in the case of a person holding a non- including the terms of the trust instrument able by reason of lapse of time, or vested interest, to the extent provided in and any letter of wishes or similar docu- ‘‘(B) it is established to the satisfaction of regulations, by the amount of taxes imposed ment, historical patterns of trust distribu- the Secretary that no further tax liability by subparagraph (A) on distributions from tions, and the existence of and functions per- may arise by reason of this section. the trust with respect to nonvested interests formed by a trust protector or any similar ‘‘(3) CERTAIN RULES APPLY.—The rules set not held by such person. adviser. forth in paragraphs (1), (3), and (4) of section ‘‘(D) ALLOCABLE EXPATRIATION GAIN.—For ‘‘(B) OTHER DETERMINATIONS.—For purposes 6324A(d) shall apply with respect to the lien purposes of this paragraph, the allocable ex- of this section— imposed by this subsection as if it were a patriation gain with respect to any bene- ‘‘(i) CONSTRUCTIVE OWNERSHIP.—If a bene- lien imposed by section 6324A. ficiary of a trust is a corporation, partner- ficiary’s interest in a trust is the amount of ‘‘(j) REGULATIONS.—The Secretary shall gain which would be allocable to such bene- ship, trust, or estate, the shareholders, part- prescribe such regulations as may be nec- ficiary’s vested and nonvested interests in ners, or beneficiaries shall be deemed to be essary or appropriate to carry out the pur- the trust if the beneficiary held directly all the trust beneficiaries for purposes of this poses of this section.’’. section. assets allocable to such interests. (b) INCLUSION IN INCOME OF GIFTS AND BE- ‘‘(ii) TAXPAYER RETURN POSITION.—A tax- ‘‘(E) TAX DEDUCTED AND WITHHELD.— QUESTS RECEIVED BY UNITED STATES CITIZENS payer shall clearly indicate on its income ‘‘(i) IN GENERAL.—The tax imposed by sub- AND RESIDENTS FROM EXPATRIATES.—Section tax return— paragraph (A)(ii) shall be deducted and with- 102 (relating to gifts, etc. not included in ‘‘(I) the methodology used to determine held by the trustees from the distribution to gross income) is amended by adding at the that taxpayer’s trust interest under this sec- which it relates. end the following new subsection: tion, and ‘‘(ii) EXCEPTION WHERE FAILURE TO WAIVE ‘‘(d) GIFTS AND INHERITANCES FROM COV- ‘‘(II) if the taxpayer knows (or has reason TREATY RIGHTS.—If an amount may not be ERED EXPATRIATES.— to know) that any other beneficiary of such deducted and withheld under clause (i) by ‘‘(1) IN GENERAL.—Subsection (a) shall not trust is using a different methodology to de- reason of the distributee failing to waive any exclude from gross income the value of any termine such beneficiary’s trust interest treaty right with respect to such distribu- property acquired by gift, bequest, devise, or under this section. tion— inheritance from a covered expatriate after ‘‘(g) TERMINATION OF DEFERRALS, ETC.—In ‘‘(I) the tax imposed by subparagraph the case of any covered expatriate, notwith- the expatriation date. For purposes of this (A)(ii) shall be imposed on the trust and each standing any other provision of this title— subsection, any term used in this subsection trustee shall be personally liable for the ‘‘(1) any period during which recognition of which is also used in section 877A shall have amount of such tax, and income or gain is deferred shall terminate on the same meaning as when used in section ‘‘(II) any other beneficiary of the trust the day before the expatriation date, and 877A. shall be entitled to recover from the dis- ‘‘(2) any extension of time for payment of ‘‘(2) EXCEPTIONS FOR TRANSFERS OTHERWISE tributee the amount of such tax imposed on tax shall cease to apply on the day before the SUBJECT TO ESTATE OR GIFT TAX.—Paragraph the other beneficiary. expatriation date and the unpaid portion of (1) shall not apply to any property if either— ‘‘(F) DISPOSITION.—If a trust ceases to be a such tax shall be due and payable at the time ‘‘(A) the gift, bequest, devise, or inherit- qualified trust at any time, a covered expa- and in the manner prescribed by the Sec- ance is— triate disposes of an interest in a qualified retary. ‘‘(i) shown on a timely filed return of tax trust, or a covered expatriate holding an in- ‘‘(h) IMPOSITION OF TENTATIVE TAX.— imposed by chapter 12 as a taxable gift by terest in a qualified trust dies, then, in lieu ‘‘(1) IN GENERAL.—If an individual is re- the covered expatriate, or of the tax imposed by subparagraph (A)(ii), quired to include any amount in gross in- ‘‘(ii) included in the gross estate of the there is hereby imposed a tax equal to the come under subsection (a) for any taxable covered expatriate for purposes of chapter 11 lesser of— year, there is hereby imposed, immediately and shown on a timely filed return of tax im- ‘‘(i) the tax determined under paragraph (1) before the expatriation date, a tax in an posed by chapter 11 of the estate of the cov- as if the day before the expatriation date amount equal to the amount of tax which ered expatriate, or were the date of such cessation, disposition, would be imposed if the taxable year were a ‘‘(B) no such return was timely filed but no or death, whichever is applicable, or short taxable year ending on the expatria- such return would have been required to be ‘‘(ii) the balance in the tax deferred action date. filed even if the covered expatriate were a count immediately before such date. ‘‘(2) DUE DATE.—The due date for any tax citizen or long-term resident of the United Such tax shall be imposed on the trust and imposed by paragraph (1) shall be the 90th States.’’. each trustee shall be personally liable for the day after the expatriation date. (c) DEFINITION OF TERMINATION OF UNITED amount of such tax and any other bene- ‘‘(3) TREATMENT OF TAX.—Any tax paid STATES CITIZENSHIP.—Section 7701(a) is ficiary of the trust shall be entitled to re- under paragraph (1) shall be treated as a pay- amended by adding at the end the following cover from the covered expatriate or the es- ment of the tax imposed by this chapter for new paragraph: tate the amount of such tax imposed on the the taxable year to which subsection (a) ap- ‘‘(48) TERMINATION OF UNITED STATES CITI- other beneficiary. plies. ZENSHIP.— ‘‘(G) DEFINITIONS AND SPECIAL RULES.—For ‘‘(4) DEFERRAL OF TAX.—The provisions of ‘‘(A) IN GENERAL.—An individual shall not purposes of this paragraph— subsection (b) shall apply to the tax imposed cease to be treated as a United States citizen ‘‘(i) QUALIFIED TRUST.—The term ‘qualified by this subsection to the extent attributable before the date on which the individual’s trust’ means a trust which is described in to gain includible in gross income by reason citizenship is treated as relinquished under section 7701(a)(30)(E). of this section. section 877A(e)(3). ‘‘(ii) VESTED INTEREST.—The term ‘vested ‘‘(i) SPECIAL LIENS FOR DEFERRED TAX ‘‘(B) DUAL CITIZENS.—Under regulations interest’ means any interest which, as of the AMOUNTS.— prescribed by the Secretary, subparagraph day before the expatriation date, is vested in ‘‘(1) IMPOSITION OF LIEN.— (A) shall not apply to an individual who be- the beneficiary. ‘‘(A) IN GENERAL.—If a covered expatriate came at birth a citizen of the United States ‘‘(iii) NONVESTED INTEREST.—The term makes an election under subsection (a)(4) or and a citizen of another country.’’. ‘nonvested interest’ means, with respect to (b) which results in the deferral of any tax (d) INELIGIBILITY FOR VISA OR ADMISSION TO any beneficiary, any interest in a trust imposed by reason of subsection (a), the de- UNITED STATES.— which is not a vested interest. Such interest ferred amount (including any interest, addi- (1) IN GENERAL.—Section 212(a)(10)(E) of the shall be determined by assuming the max- tional amount, addition to tax, assessable Immigration and Nationality Act (8 U.S.C. imum exercise of discretion in favor of the penalty, and costs attributable to the de- 1182(a)(10)(E)) is amended to read as follows:

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‘‘(E) FORMER CITIZENS NOT IN COMPLIANCE (g) EFFECTIVE DATE.— ‘‘(2) any specified stock compensation WITH EXPATRIATION REVENUE PROVISIONS.— (1) IN GENERAL.—Except as provided in this which is exercised, sold, exchanged, distrib- Any alien who is a former citizen of the subsection, the amendments made by this uted, cashed out, or otherwise paid during United States who relinquishes United section shall apply to expatriates (within the such period in a transaction in which gain or States citizenship (within the meaning of meaning of section 877A(e) of the Internal loss is recognized in full. section 877A(e)(3) of the Internal Revenue Revenue Code of 1986, as added by this sec- ‘‘(e) DEFINITIONS.—For purposes of this sec- Code of 1986) and who is not in compliance tion) whose expatriation date (as so defined) tion— with section 877A of such Code (relating to occurs on or after January 1, 2004. ‘‘(1) DISQUALIFIED INDIVIDUAL.—The term expatriation).’’. (2) GIFTS AND BEQUESTS.—Section 102(d) of ‘disqualified individual’ means, with respect (2) AVAILABILITY OF INFORMATION.— the Internal Revenue Code of 1986 (as added to a corporation, any individual who, at any (A) IN GENERAL.—Section 6103(l) (relating by subsection (b)) shall apply to gifts and be- time during the 12-month period beginning to disclosure of returns and return informa- quests received on or after January 1, 2004, on the date which is 6 months before the in- tion for purposes other than tax administra- from an individual or the estate of an indi- version date— tion) is amended by adding at the end the vidual whose expatriation date (as so de- ‘‘(A) is subject to the requirements of sec- following new paragraph: fined) occurs after such date. tion 16(a) of the Securities Exchange Act of ‘‘(19) DISCLOSURE TO DENY VISA OR ADMIS- (3) DUE DATE FOR TENTATIVE TAX.—The due 1934 with respect to such corporation, or SION TO CERTAIN EXPATRIATES.—Upon written date under section 877A(h)(2) of the Internal ‘‘(B) would be subject to such requirements request of the Attorney General or the At- Revenue Code of 1986, as added by this sec- if such corporation were an issuer of equity torney General’s delegate, the Secretary tion, shall in no event occur before the 90th securities referred to in such section. shall disclose whether an individual is in day after the date of the enactment of this ‘‘(2) INVERTED CORPORATION; INVERSION compliance with section 877A (and if not in Act. DATE.— compliance, any items of noncompliance) to SEC. 443. EXCISE TAX ON STOCK COMPENSATION ‘‘(A) INVERTED CORPORATION.—The term officers and employees of the Federal agency OF INSIDERS IN INVERTED COR- ‘inverted corporation’ means any corpora- responsible for administering section PORATIONS. tion to which subsection (a) or (b) of section 212(a)(10)(E) of the Immigration and Nation- (a) IN GENERAL.—Subtitle D is amended by 7874 applies determined— ality Act solely for the purpose of, and to the adding at the end the following new chapter: ‘‘(i) by substituting ‘July 10, 2002’ for extent necessary in, administering such sec- ‘‘CHAPTER 48—STOCK COMPENSATION OF ‘March 20, 2002’ in section 7874(a)(2)(A), and tion 212(a)(10)(E).’’. INSIDERS IN INVERTED CORPORATIONS ‘‘(ii) without regard to subsection (b)(1)(A). (B) SAFEGUARDS.— Such term includes any predecessor or suc- (i) TECHNICAL AMENDMENTS.—Paragraph (4) ‘‘Sec. 5000A. Stock compensation of insiders of section 6103(p) of the Internal Revenue in inverted corporations enti- cessor of such a corporation. Code of 1986, as amended by section ties. ‘‘(B) INVERSION DATE.—The term ‘inversion 202(b)(2)(B) of the Trade Act of 2002 (Public ‘‘SEC. 5000A. STOCK COMPENSATION OF INSIDERS date’ means, with respect to a corporation, Law 107–210; 116 Stat. 961), is amended by IN INVERTED CORPORATIONS. the date on which the corporation first be- striking ‘‘or (17)’’ after ‘‘any other person de- ‘‘(a) IMPOSITION OF TAX.—In the case of an comes an inverted corporation. scribed in subsection (l)(16)’’ each place it individual who is a disqualified individual ‘‘(3) SPECIFIED STOCK COMPENSATION.— appears and inserting ‘‘or (18)’’. with respect to any inverted corporation, ‘‘(A) IN GENERAL.—The term ‘specified (ii) CONFORMING AMENDMENTS.—Section there is hereby imposed on such person a tax stock compensation’ means payment (or 6103(p)(4) (relating to safeguards), as amend- equal to 20 percent of the value (determined right to payment) granted by the inverted ed by clause (i), is amended by striking ‘‘or under subsection (b)) of the specified stock corporation (or by any member of the ex- (18)’’ after ‘‘any other person described in compensation held (directly or indirectly) by panded affiliated group which includes such subsection (l)(16)’’ each place it appears and or for the benefit of such individual or a corporation) to any person in connection inserting ‘‘(18), or (19)’’. member of such individual’s family (as de- with the performance of services by a dis- (3) EFFECTIVE DATES.— fined in section 267) at any time during the qualified individual for such corporation or (A) IN GENERAL.—Except as provided in 12-month period beginning on the date which member if the value of such payment or subparagraph (B), the amendments made by is 6 months before the inversion date. right is based on (or determined by reference this subsection shall apply to individuals ‘‘(b) VALUE.—For purposes of subsection to) the value (or change in value) of stock in who relinquish United States citizenship on (a)— such corporation (or any such member). or after the date of the enactment of this ‘‘(1) IN GENERAL.—The value of specified ‘‘(B) EXCEPTIONS.—Such term shall not in- Act. stock compensation shall be— clude— (B) TECHNICAL AMENDMENTS.—The amend- ‘‘(A) in the case of a stock option (or other ‘‘(i) any option to which part II of sub- ments made by paragraph (2)(B)(i) shall take similar right) or any stock appreciation chapter D of chapter 1 applies, or effect as if included in the amendments made right, the fair value of such option or right, ‘‘(ii) any payment or right to payment by section 202(b)(2)(B) of the Trade Act of and from a plan referred to in section 280G(b)(6). 2002 (Public Law 107–210; 116 Stat. 961). ‘‘(B) in any other case, the fair market ‘‘(4) EXPANDED AFFILIATED GROUP.—The (e) CONFORMING AMENDMENTS.— value of such compensation. term ‘expanded affiliated group’ means an (1) Section 877 is amended by adding at the ‘‘(2) DATE FOR DETERMINING VALUE.—The affiliated group (as defined in section 1504(a) end the following new subsection: determination of value shall be made— without regard to section 1504(b)(3)); except ‘‘(g) APPLICATION.—This section shall not ‘‘(A) in the case of specified stock com- that section 1504(a) shall be applied by sub- apply to an expatriate (as defined in section pensation held on the inversion date, on such stituting ‘more than 50 percent’ for ‘at least 877A(e)) whose expatriation date (as so de- date, 80 percent’ each place it appears. fined) occurs on or after January 1, 2004.’’. ‘‘(B) in the case of such compensation ‘‘(f) SPECIAL RULES.—For purposes of this (2) Section 2107 is amended by adding at which is canceled during the 6 months before section— the end the following new subsection: the inversion date, on the day before such ‘‘(1) CANCELLATION OF RESTRICTION.—The ‘‘(f) APPLICATION.—This section shall not cancellation, and cancellation of a restriction which by its apply to any expatriate subject to section ‘‘(C) in the case of such compensation terms will never lapse shall be treated as a 877A.’’. which is granted after the inversion date, on grant. (3) Section 2501(a)(3) is amended by adding the date such compensation is granted. ‘‘(2) PAYMENT OR REIMBURSEMENT OF TAX BY at the end the following new subparagraph: ‘‘(c) TAX TO APPLY ONLY IF SHAREHOLDER CORPORATION TREATED AS SPECIFIED STOCK ‘‘(F) APPLICATION.—This paragraph shall GAIN RECOGNIZED.—Subsection (a) shall COMPENSATION.—Any payment of the tax im- not apply to any expatriate subject to sec- apply to any disqualified individual with re- posed by this section directly or indirectly tion 877A.’’. spect to an inverted corporation only if gain by the inverted corporation or by any mem- (4)(A) Paragraph (1) of section 6039G(d) is (if any) on any stock in such corporation is ber of the expanded affiliated group which amended by inserting ‘‘or 877A’’ after ‘‘sec- recognized in whole or part by any share- includes such corporation— tion 877’’. holder by reason of the acquisition referred ‘‘(A) shall be treated as specified stock (B) The second sentence of section 6039G(e) to in section 7874(a)(2)(A) (determined by compensation, and is amended by inserting ‘‘or who relinquishes substituting ‘July 10, 2002’ for ‘March 20, ‘‘(B) shall not be allowed as a deduction United States citizenship (within the mean- 2002’) with respect to such corporation. under any provision of chapter 1. ing of section 877A(e)(3))’’ after ‘‘877(a))’’. ‘‘(d) EXCEPTION WHERE GAIN RECOGNIZED ON ‘‘(3) CERTAIN RESTRICTIONS IGNORED.— (C) Section 6039G(f) is amended by insert- COMPENSATION.—Subsection (a) shall not Whether there is specified stock compensa- ing ‘‘or 877A(e)(2)(B)’’ after ‘‘877(e)(1)’’. apply to— tion, and the value thereof, shall be deter- (f) CLERICAL AMENDMENT.—The table of ‘‘(1) any stock option which is exercised on mined without regard to any restriction sections for subpart A of part II of sub- the inversion date or during the 6-month pe- other than a restriction which by its terms chapter N of chapter 1 is amended by insert- riod before such date and to the stock ac- will never lapse. ing after the item relating to section 877 the quired in such exercise, if income is recog- ‘‘(4) PROPERTY TRANSFERS.—Any transfer of following new item: nized under section 83 on or before the inver- property shall be treated as a payment and ‘‘Sec. 877A. Tax responsibilities of expatria- sion date with respect to the stock acquired any right to a transfer of property shall be tion.’’. pursuant to such exercise, and treated as a right to a payment.

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‘‘(5) OTHER ADMINISTRATIVE PROVISIONS.— ‘‘(b) NOMINEE REPORTING.—Any person who SEC. 452. PROHIBITION ON NONRECOGNITION OF For purposes of subtitle F, any tax imposed holds stock as a nominee for another person GAIN THROUGH COMPLETE LIQ- by this section shall be treated as a tax im- shall furnish in the manner prescribed by the UIDATION OF HOLDING COMPANY. posed by subtitle A. Secretary to such other person the informa- (a) IN GENERAL.—Section 332 is amended by ‘‘(g) REGULATIONS.—The Secretary shall tion provided by the corporation under sub- adding at the end the following new sub- prescribe such regulations as may be nec- section (d). section: essary or appropriate to carry out the pur- ‘‘(c) TAXABLE ACQUISITION.—For purposes ‘‘(d) RECOGNITION OF GAIN ON LIQUIDATION poses of this section.’’. of this section, the term ‘taxable acquisition’ OF CERTAIN HOLDING COMPANIES.— (b) DENIAL OF DEDUCTION.— means any acquisition by a corporation of ‘‘(1) IN GENERAL.—In the case of any dis- (1) IN GENERAL.—Paragraph (6) of section stock in or property of another corporation tribution to a foreign corporation in com- 275(a) is amended by inserting ‘‘48,’’ after if any shareholder of the acquired corpora- plete liquidation of an applicable holding ‘‘46,’’. tion is required to recognize gain (if any) as company— (2) $1,000,000 LIMIT ON DEDUCTIBLE COM- a result of such acquisition. ‘‘(A) subsection (a) and section 331 shall PENSATION REDUCED BY PAYMENT OF EXCISE ‘‘(d) STATEMENTS TO BE FURNISHED TO not apply to such distribution, and TAX ON SPECIFIED STOCK COMPENSATION.— SHAREHOLDERS.—Every person required to ‘‘(B) such distribution shall be treated as a Paragraph (4) of section 162(m) is amended make a return under subsection (a) shall fur- distribution to which section 301 applies. by adding at the end the following new sub- nish to each shareholder whose name is re- ‘‘(2) APPLICABLE HOLDING COMPANY.—For paragraph: quired to be set forth in such return a writ- purposes of this subsection— ‘‘(G) COORDINATION WITH EXCISE TAX ON ten statement showing— ‘‘(A) IN GENERAL.—The term ‘applicable SPECIFIED STOCK COMPENSATION.—The dollar ‘‘(1) the name, address, and phone number holding company’ means any domestic cor- limitation contained in paragraph (1) with of the information contact of the person re- poration— respect to any covered employee shall be required to make such return, ‘‘(i) which is a common parent of an affili- duced (but not below zero) by the amount of ‘‘(2) the information required to be shown ated group, any payment (with respect to such em- on such return with respect to such share- ‘‘(ii) stock of which is directly owned by ployee) of the tax imposed by section 5000A holder, and the distributee foreign corporation, directly or indirectly by the inverted cor- ‘‘(3) such other information as the Sec- ‘‘(iii) substantially all of the assets of poration (as defined in such section) or by retary may prescribe. which consist of stock in other members of any member of the expanded affiliated group The written statement required under the such affiliated group, and (as defined in such section) which includes preceding sentence shall be furnished to the ‘‘(iv) which has not been in existence at all such corporation.’’. shareholder on or before January 31 of the times during the 5 years immediately pre- (c) CONFORMING AMENDMENTS.— year following the calendar year during ceding the date of the liquidation. (1) The last sentence of section 3121(v)(2)(A) which the taxable acquisition occurred.’’. ‘‘(B) AFFILIATED GROUP.—For purposes of is amended by inserting before the period ‘‘or (b) ASSESSABLE PENALTIES.— this subsection, the term ‘affiliated group’ to any specified stock compensation (as de- (1) Subparagraph (B) of section 6724(d)(1) has the meaning given such term by section fined in section 5000A) on which tax is im- (relating to definitions) is amended by redes- 1504(a) (without regard to paragraphs (2) and posed by section 5000A’’. ignating clauses (ii) through (xvii) as clauses (4) of section 1504(b)). (2) The table of chapters for subtitle D is (iii) through (xviii), respectively, and by in- ‘‘(3) COORDINATION WITH SUBPART F.—If the amended by adding at the end the following serting after clause (i) the following new distributee of a distribution described in new item: clause: paragraph (1) is a controlled foreign corpora- ‘‘Chapter 48. Stock compensation of insiders ‘‘(ii) section 6043A(a) (relating to returns tion (as defined in section 957), then notwith- in inverted corporations.’’. relating to taxable mergers and acquisi- standing paragraph (1) or subsection (a), tions),’’. (d) EFFECTIVE DATE.—The amendments such distribution shall be treated as a dis- (2) Paragraph (2) of section 6724(d) is made by this section shall take effect on tribution to which section 331 applies. amended by redesignating subparagraphs (F) July 11, 2002; except that periods before such ‘‘(4) REGULATIONS.—The Secretary shall through (AA) as subparagraphs (G) through date shall not be taken into account in ap- provide such regulations as appropriate to (BB), respectively, and by inserting after plying the periods in subsections (a) and prevent the abuse of this subsection, includ- subparagraph (E) the following new subpara- (e)(1) of section 5000A of the Internal Rev- ing regulations which provide, for the pur- graph: enue Code of 1986, as added by this section. poses of clause (iv) of paragraph (2)(A), that ‘‘(F) subsections (b) and (d) of section 6043A a corporation is not in existence for any pe- SEC. 444. REINSURANCE OF UNITED STATES (relating to returns relating to taxable merg- RISKS IN FOREIGN JURISDICTIONS. riod unless it is engaged in the active con- ers and acquisitions).’’. (a) IN GENERAL.—Section 845(a) (relating to duct of a trade or business or owns a signifi- (c) CLERICAL AMENDMENT.—The table of allocation in case of reinsurance agreement cant ownership interest in another corpora- sections for subpart B of part III of sub- tion so engaged.’’. involving tax avoidance or evasion) is chapter A of chapter 61 is amended by insert- (b) EFFECTIVE DATE.—The amendment amended by striking ‘‘source and character’’ ing after the item relating to section 6043 the made by this section shall apply to distribu- and inserting ‘‘amount, source, or char- following new item: acter’’. tions in complete liquidation occurring on or (b) EFFECTIVE DATE.—The amendments ‘‘Sec. 6043A. Returns relating to taxable after the date of the enactment of this Act. made by this section shall apply to any risk mergers and acquisitions.’’. SEC. 453. PREVENTION OF MISMATCHING OF IN- reinsured after April 11, 2002. (d) EFFECTIVE DATE.—The amendments TEREST AND ORIGINAL ISSUE DIS- SEC. 445. REPORTING OF TAXABLE MERGERS made by this section shall apply to acquisi- COUNT DEDUCTIONS AND INCOME AND ACQUISITIONS. tions after the date of the enactment of this INCLUSIONS IN TRANSACTIONS (a) IN GENERAL.—Subpart B of part III of Act. WITH RELATED FOREIGN PERSONS. subchapter A of chapter 61 is amended by in- Subtitle E—International Tax (a) ORIGINAL ISSUE DISCOUNT.—Section serting after section 6043 the following new 163(e)(3) (relating to special rule for original section: SEC. 451. CLARIFICATION OF BANKING BUSINESS FOR PURPOSES OF DETERMINING issue discount on obligation held by related ‘‘SEC. 6043A. TAXABLE MERGERS AND ACQUISI- INVESTMENT OF EARNINGS IN foreign person) is amended by redesignating TIONS. UNITED STATES PROPERTY. subparagraph (B) as subparagraph (C) and by ‘‘(a) IN GENERAL.—The acquiring corpora- (a) IN GENERAL.—Subparagraph (A) of sec- inserting after subparagraph (A) the fol- tion in any taxable acquisition shall make a tion 956(c)(2) is amended to read as follows: lowing new subparagraph: return (according to the forms or regulations ‘‘(A) obligations of the United States, ‘‘(B) SPECIAL RULE FOR CERTAIN FOREIGN prescribed by the Secretary) setting forth— money, or deposits with— ENTITIES.— ‘‘(1) a description of the acquisition, ‘‘(i) any bank (as defined by section 2(c) of ‘‘(i) IN GENERAL.—In the case of any debt ‘‘(2) the name and address of each share- the Bank Holding Company Act of 1956 (12 instrument having original issue discount holder of the acquired corporation who is re- U.S.C. 1841(c)), without regard to subpara- which is held by a related foreign person quired to recognize gain (if any) as a result graphs (C) and (G) of paragraph (2) of such which is a foreign personal holding company of the acquisition, section), or (as defined in section 552), a controlled for- ‘‘(3) the amount of money and the fair mar- ‘‘(ii) any corporation not described in eign corporation (as defined in section 957), ket value of other property transferred to clause (i) with respect to which a bank hold- or a passive foreign investment company (as each such shareholder as part of such acqui- ing company (as defined by section 2(a) of defined in section 1297), a deduction shall be sition, and such Act) or financial holding company (as allowable to the issuer with respect to such ‘‘(4) such other information as the Sec- defined by section 2(p) of such Act) owns di- original issue discount for any taxable year retary may prescribe. rectly or indirectly more than 80 percent by before the taxable year in which paid only to To the extent provided by the Secretary, the vote or value of the stock of such corpora- the extent such original issue discount is in- requirements of this section applicable to tion;’’. cluded during such prior taxable year in the the acquiring corporation shall be applicable (b) EFFECTIVE DATE.—The amendment gross income of a United States person who to the acquired corporation and not to the made by this section shall take effect on the owns (within the meaning of section 958(a)) acquiring corporation. date of the enactment of this Act. stock in such corporation.

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‘‘(ii) SECRETARIAL AUTHORITY.—The Sec- (m) and by inserting after subsection (k) the ‘‘(f) TREATMENT OF STRIPPED INTERESTS IN retary may by regulation exempt trans- following new subsection: BOND AND PREFERRED STOCK FUNDS, ETC.—In actions from the application of clause (i), in- ‘‘(l) MINIMUM HOLDING PERIOD FOR WITH- the case of an account or entity substan- cluding any transaction which is entered HOLDING TAXES ON GAIN AND INCOME OTHER tially all of the assets of which consist of into by a payor in the ordinary course of a THAN DIVIDENDS ETC.— bonds, preferred stock, or a combination trade or business in which the payor is pre- ‘‘(1) IN GENERAL.—In no event shall a credit thereof, the Secretary may by regulations dominantly engaged.’’. be allowed under subsection (a) for any with- provide that rules similar to the rules of this (b) INTEREST AND OTHER DEDUCTIBLE holding tax (as defined in subsection (k)) on section and 305(e), as appropriate, shall apply AMOUNTS.—Section 267(a)(3) is amended— any item of income or gain with respect to to interests in such account or entity to (1) by striking ‘‘The Secretary’’ and insert- any property if— which (but for this subsection) this section ing: ‘‘(A) such property is held by the recipient or section 305(e), as the case may be, would ‘‘(A) IN GENERAL.—The Secretary’’, and of the item for 15 days or less during the 30- not apply.’’. (2) by adding at the end the following new day period beginning on the date which is 15 (b) CROSS REFERENCE.—Subsection (e) of subparagraph: days before the date on which the right to section 305 is amended by adding at the end ‘‘(B) SPECIAL RULE FOR CERTAIN FOREIGN receive payment of such item arises, or the following new paragraph: ENTITIES.— ‘‘(B) to the extent that the recipient of the ‘‘(7) CROSS REFERENCE.— ‘‘(i) IN GENERAL.—Notwithstanding sub- item is under an obligation (whether pursu- ‘‘For treatment of stripped interests in cer- paragraph (A), in the case of any amount ant to a short sale or otherwise) to make retain accounts or entities holding preferred payable to a foreign personal holding com- lated payments with respect to positions in stock, see section 1286(f).’’. pany (as defined in section 552), a controlled substantially similar or related property. (c) EFFECTIVE DATE.—The amendments foreign corporation (as defined in section This paragraph shall not apply to any divi- made by this section shall apply to pur- 957), or a passive foreign investment com- dend to which subsection (k) applies. chases and dispositions after the date of the pany (as defined in section 1297), a deduction ‘‘(2) EXCEPTION FOR TAXES PAID BY DEAL- enactment of this Act. shall be allowable to the payor with respect ERS.— to such amount for any taxable year before SEC. 462. APPLICATION OF EARNINGS STRIPPING ‘‘(A) IN GENERAL.—Paragraph (1) shall not RULES TO PARTNERSHIPS AND S the taxable year in which paid only to the apply to any qualified tax with respect to CORPORATIONS. extent such amount is included during such any property held in the active conduct in a (a) IN GENERAL.—Section 168(j) (relating to prior taxable year in the gross income of a foreign country of a business as a dealer in limitation on deduction for interest on cer- United States person who owns (within the such property. tain indebtedness) is amended by redesig- meaning of section 958(a)) stock in such cor- ‘‘(B) QUALIFIED TAX.—For purposes of sub- nating paragraph (8) as paragraph (9) and by poration. paragraph (A), the term ‘qualified tax’ means inserting after paragraph (7) the following ‘‘(ii) SECRETARIAL AUTHORITY.—The Sec- a tax paid to a foreign country (other than new paragraph: retary may by regulation exempt trans- the foreign country referred to in subpara- ‘‘(8) APPLICATION TO PARTNERSHIPS AND S actions from the application of clause (i), in- graph (A)) if— CORPORATIONS.— cluding any transaction which is entered ‘‘(i) the item to which such tax is attrib- ‘‘(A) IN GENERAL.—This subsection shall into by a payor in the ordinary course of a utable is subject to taxation on a net basis apply to partnerships and S corporations in trade or business in which the payor is pre- by the country referred to in subparagraph the same manner as it applies to C corpora- dominantly engaged and in which the pay- (A), and tions. ment of the accrued amounts occurs within ‘‘(ii) such country allows a credit against ‘‘(B) ALLOCATIONS TO CERTAIN CORPORATE 1 8 ⁄2 months after accrual or within such other its net basis tax for the full amount of the PARTNERS.—If a C corporation is a partner in period as the Secretary may prescribe.’’. tax paid to such other foreign country. a partnership— (c) EFFECTIVE DATE.—The amendments ‘‘(C) DEALER.—For purposes of subpara- ‘‘(i) the corporation’s allocable share of in- made by this section shall apply to payments graph (A), the term ‘dealer’ means— debtedness and interest income of the part- accrued on or after the date of the enact- ‘‘(i) with respect to a security, any person nership shall be taken into account in apply- ment of this Act. to whom paragraphs (1) and (2) of subsection ing this subsection to the corporation, and SEC. 454. EFFECTIVELY CONNECTED INCOME TO (k) would not apply by reason of paragraph ‘‘(ii) if a deduction is not disallowed under INCLUDE CERTAIN FOREIGN (4) thereof if such security were stock, and SOURCE INCOME. this subsection with respect to any interest ‘‘(ii) with respect to any other property, expense of the partnership, this subsection (a) IN GENERAL.—Section 864(c)(4)(B) (relat- any person with respect to whom such prop- ing to treatment of income from sources shall be applied separately in determining erty is described in section 1221(a)(1). without the United States as effectively con- whether a deduction is allowable to the cor- ‘‘(D) REGULATIONS.—The Secretary may nected income) is amended by adding at the poration with respect to the corporation’s al- prescribe such regulations as may be appro- end the following new flush sentence: locable share of such interest expense.’’. priate to carry out this paragraph, including (b) EFFECTIVE DATE.—The amendments ‘‘Any income or gain which is equivalent to regulations to prevent the abuse of the ex- made by this section shall apply to taxable any item of income or gain described in ception provided by this paragraph and to years beginning after the date of the enact- clause (i), (ii), or (iii) shall be treated in the treat other taxes as qualified taxes. ment of this Act. same manner as such item for purposes of ‘‘(3) EXCEPTIONS.—The Secretary may by SEC. 463. RECOGNITION OF CANCELLATION OF this subparagraph.’’. regulation provide that paragraph (1) shall INDEBTEDNESS INCOME REALIZED (b) EFFECTIVE DATE.—The amendment not apply to property where the Secretary ON SATISFACTION OF DEBT WITH made by this section shall apply to taxable determines that the application of paragraph PARTNERSHIP INTEREST. years beginning after the date of the enact- (1) to such property is not necessary to carry (a) IN GENERAL.—Paragraph (8) of section ment of this Act. out the purposes of this subsection. 108(e) (relating to general rules for discharge SEC. 455. RECAPTURE OF OVERALL FOREIGN ‘‘(4) CERTAIN RULES TO APPLY.—Rules simi- of indebtedness (including discharges not in LOSSES ON SALE OF CONTROLLED lar to the rules of paragraphs (5), (6), and (7) title 11 cases or insolvency)) is amended to FOREIGN CORPORATION. of subsection (k) shall apply for purposes of read as follows: (a) IN GENERAL.—Section 904(f)(3) (relating this subsection. ‘‘(8) INDEBTEDNESS SATISFIED BY CORPORATE to dispositions) is amending by adding at the ‘‘(5) DETERMINATION OF HOLDING PERIOD.— STOCK OR PARTNERSHIP INTEREST.—For pur- end the following new subparagraph: Holding periods shall be determined for purposes of determining income of a debtor from ‘‘(D) APPLICATION TO DISPOSITIONS OF STOCK poses of this subsection without regard to discharge of indebtedness, if— IN CONTROLLED FOREIGN CORPORATIONS.—In section 1235 or any similar rule.’’. ‘‘(A) a debtor corporation transfers stock, the case of any disposition by a taxpayer of (b) CONFORMING AMENDMENT.—The heading or any share of stock in a controlled foreign of subsection (k) of section 901 is amended by ‘‘(B) a debtor partnership transfers a cap- corporation (as defined in section 957), this inserting ‘‘ON DIVIDENDS’’ after ‘‘TAXES’’. ital or profits interest in such partnership, paragraph shall apply to such disposition in (c) EFFECTIVE DATE.—The amendments to a creditor in satisfaction of its recourse or the same manner as if it were a disposition made by this section shall apply to amounts of property described in subparagraph (A), nonrecourse indebtedness, such corporation paid or accrued more than 30 days after the or partnership shall be treated as having sat- except that the exception contained in sub- date of the enactment of this Act. paragraph (C)(i) shall not apply.’’. isfied the indebtedness with an amount of (b) EFFECTIVE DATE.—The amendment Subtitle F—Other Revenue Provisions money equal to the fair market value of the made by this section shall apply to disposi- PART I—FINANCIAL INSTRUMENTS stock or interest. In the case of any partner- tions after the date of the enactment of this SEC. 461. TREATMENT OF STRIPPED INTERESTS ship, any discharge of indebtedness income Act. IN BOND AND PREFERRED STOCK recognized under this paragraph shall be in- SEC. 456. MINIMUM HOLDING PERIOD FOR FOR- FUNDS, ETC. cluded in the distributive shares of taxpayers EIGN TAX CREDIT ON WITHHOLDING (a) IN GENERAL.—Section 1286 (relating to which were the partners in the partnership TAXES ON INCOME OTHER THAN tax treatment of stripped bonds) is amended immediately before such discharge.’’. DIVIDENDS. by redesignating subsection (f) as subsection (b) EFFECTIVE DATE.—The amendment (a) IN GENERAL.—Section 901 is amended by (g) and by inserting after subsection (e) the made by this section shall apply with respect redesignating subsection (l) as subsection following new subsection: to cancellations of indebtedness occurring on

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or after the date of the enactment of this (c) REPEAL OF STOCK EXCEPTION.— lating to other definitions and rules) is Act. (1) IN GENERAL.—Section 1092(d)(3) is re- amended by adding at the end the following SEC. 464. MODIFICATION OF STRADDLE RULES. pealed. new paragraph: (a) RULES RELATING TO IDENTIFIED STRAD- (2) CONFORMING AMENDMENT.—Section ‘‘(5) BROTHER-SISTER CONTROLLED GROUP DLES.— 1258(d)(1) is amended by striking ‘‘; except DEFINITION FOR PROVISIONS OTHER THAN THIS (1) IN GENERAL.—Subparagraph (A) of sec- that the term ‘personal property’ shall in- PART.— tion 1092(a)(2) (relating to special rule for clude stock’’. ‘‘(A) IN GENERAL.—Except as specifically identified straddles) is amended to read as (d) REPEAL OF QUALIFIED COVERED CALL provided in an applicable provision, sub- follows: EXCEPTION.—Section 1092(c)(4) is amended by section (a)(2) shall be applied to an applica- ‘‘(A) IN GENERAL.—In the case of any strad- adding at the end the following new subpara- ble provision as if it read as follows: dle which is an identified straddle— graph: ‘(2) BROTHER-SISTER CONTROLLED GROUP.— ‘‘(i) paragraph (1) shall not apply with re- ‘‘(I) TERMINATION.—This paragraph shall Two or more corporations if 5 or fewer per- spect to identified positions comprising the not apply to any position established on or sons who are individuals, estates, or trusts identified straddle, after the date of the enactment of this sub- own (within the meaning of subsection (d)(2) ‘‘(ii) if there is any loss with respect to any paragraph.’’. stock possessing— identified position of the identified straddle, (e) EFFECTIVE DATE.—The amendments ‘(A) at least 80 percent of the total com- the basis of each of the identified offsetting made by this section shall apply to positions bined voting power of all classes of stock en- positions in the identified straddle shall be established on or after the date of the enact- titled to vote, or at least 80 percent of the increased by an amount which bears the ment of this Act. total value of shares of all classes of stock, same ratio to the loss as the unrecognized SEC. 465. DENIAL OF INSTALLMENT SALE TREAT- of each corporation, and gain with respect to such offsetting position MENT FOR ALL READILY ‘(B) more than 50 percent of the total com- bears to the aggregate unrecognized gain TRADEABLE DEBT. bined voting power of all classes of stock en- with respect to all such offsetting positions, (a) IN GENERAL.—Section 453(f)(4)(B) (relat- titled to vote or more than 50 percent of the and ing to purchaser evidences of indebtedness total value of shares of all classes of stock of ‘‘(iii) any loss described in clause (ii) shall payable on demand or readily tradeable) is each corporation, taking into account the not otherwise be taken into account for pur- amended by striking ‘‘is issued by a corpora- stock ownership of each such person only to poses of this title.’’. tion or a government or political subdivision the extent such stock ownership is identical (2) IDENTIFIED STRADDLE.—Section thereof and’’. with respect to each such corporation.’ 1092(a)(2)(B) (defining identified straddle) is (b) EFFECTIVE DATE.—The amendment ‘‘(B) APPLICABLE PROVISION.—For purposes amended— made by this section shall apply to sales oc- of this paragraph, an applicable provision is (A) by striking clause (ii) and inserting the curring on or after the date of the enactment any provision of law (other than this part) following: of this Act. which incorporates the definition of con- ‘‘(ii) to the extent provided by regulations, PART II—CORPORATIONS AND trolled group of corporations under sub- the value of each position of which (in the PARTNERSHIPS section (a).’’. (c) EFFECTIVE DATE.—The amendments hands of the taxpayer immediately before SEC. 466. MODIFICATION OF TREATMENT OF the creation of the straddle) is not less than TRANSFERS TO CREDITORS IN DIVI- made by this section shall apply to taxable the basis of such position in the hands of the SIVE REORGANIZATIONS. years beginning after the date of the enact- taxpayer at the time the straddle is created, (a) IN GENERAL.—Section 361(b)(3) (relating ment of this Act. and’’, and to treatment of transfers to creditors) is SEC. 469. MANDATORY BASIS ADJUSTMENTS IN (B) by adding at the end the following new amended by adding at the end the following CONNECTION WITH PARTNERSHIP flush sentence: DISTRIBUTIONS AND TRANSFERS OF new sentence: ‘‘In the case of a reorganiza- PARTNERSHIP INTERESTS. tion described in section 368(a)(1)(D) with re- ‘‘The Secretary shall prescribe regulations (a) IN GENERAL.—Section 754 is repealed. which specify the proper methods for clearly spect to which stock or securities of the cor- (b) ADJUSTMENT TO BASIS OF UNDISTRIB- identifying a straddle as an identified strad- poration to which the assets are transferred UTED PARTNERSHIP PROPERTY.—Section 734 is dle (and the positions comprising such strad- are distributed in a transaction which quali- amended— dle), which specify the rules for the applica- fies under section 355, this paragraph shall (1) by striking ‘‘, with respect to which the tion of this section for a taxpayer which fails apply only to the extent that the sum of the election provided in section 754 is in effect,’’ to properly identify the positions of an iden- money and the fair market value of other in the matter preceding paragraph (1) of sub- tified straddle, and which specify the order- property transferred to such creditors does section (b), ing rules in cases where a taxpayer disposes not exceed the adjusted bases of such assets (2) by striking ‘‘(as adjusted by section of less than an entire position which is part transferred.’’. 732(d))’’ both places it appears in subsection of an identified straddle.’’. (b) LIABILITIES IN EXCESS OF BASIS.—Sec- (b), (3) UNRECOGNIZED GAIN.—Section 1092(a)(3) tion 357(c)(1)(B) is amended by inserting (3) by striking the last sentence of sub- (defining unrecognized gain) is amended by ‘‘with respect to which stock or securities of section (b), redesignating subparagraph (B) as subpara- the corporation to which the assets are (4) by striking subsection (a) and by redes- graph (C) and by inserting after subpara- transferred are distributed in a transaction ignating subsections (b) and (c) as sub- graph (A) the following new subparagraph: which qualifies under section 355’’ after ‘‘sec- sections (a) and (b), respectively, and ‘‘(B) SPECIAL RULE FOR IDENTIFIED STRAD- tion 368(a)(1)(D)’’. (5) by striking ‘‘optional’’ in the heading. DLES.—For purposes of paragraph (2)(A)(ii), (c) EFFECTIVE DATE.—The amendments (c) ADJUSTMENT TO BASIS OF PARTNERSHIP the unrecognized gain with respect to any made by this section shall apply to transfers PROPERTY.—Section 743 is amended— identified offsetting position shall be the ex- of money or other property, or liabilities as- (1) by striking ‘‘with respect to which the cess of the fair market value of the position sumed, in connection with a reorganization election provided in section 754 is in effect’’ at the time of the determination over the occurring on or after the date of the enact- in the matter preceding paragraph (1) of sub- fair market value of the position at the time ment of this Act. section (b), the taxpayer identified the position as a po- SEC. 467. CLARIFICATION OF DEFINITION OF (2) by striking subsection (a) and by redes- sition in an identified straddle.’’ NONQUALIFIED PREFERRED STOCK. ignating subsections (b) and (c) as sub- (4) CONFORMING AMENDMENT.—Section (a) IN GENERAL.—Section 351(g)(3)(A) is sections (a) and (b), respectively, 1092(c)(2) is amended by striking subpara- amended by adding at the end the following: (3) by adding at the end the following new graph (B) and by redesignating subparagraph ‘‘Stock shall not be treated as participating subsection: (C) as subparagraph (B). in corporate growth to any significant ex- ‘‘(c) ELECTION TO ADJUST BASIS FOR TRANS- (b) PHYSICALLY SETTLED POSITIONS.—Sec- tent unless there is a real and meaningful FERS UPON DEATH OF PARTNER.—Subsection tion 1092(d) (relating to definitions and spe- likelihood of the shareholder actually par- (a) shall not apply and no adjustments shall cial rules) is amended by adding at the end ticipating in the earnings and growth of the be made in the case of any transfer of an in- the following new paragraph: corporation.’’. terest in a partnership upon the death of a ‘‘(8) SPECIAL RULES FOR PHYSICALLY SET- (b) EFFECTIVE DATE.—The amendment partner unless an election to do so is made TLED POSITIONS.—For purposes of subsection made by this section shall apply to trans- by the partnership. Such an election shall (a), if a taxpayer settles a position which is actions after May 14, 2003. apply with respect to all such transfers of in- part of a straddle by delivering property to SEC. 468. MODIFICATION OF DEFINITION OF CON- terests in the partnership. Any election which the position relates (and such posi- TROLLED GROUP OF CORPORA- under section 754 in effect on the date of the tion, if terminated, would result in a realiza- TIONS. enactment of this subsection shall constitute tion of a loss), then such taxpayer shall be (a) IN GENERAL.—Section 1563(a)(2) (relat- an election made under this subsection. Such treated as if such taxpayer— ing to brother-sister controlled group) is election may be revoked by the partnership, ‘‘(A) terminated the position for its fair amended by striking ‘‘possessing—’’ and all subject to such limitations as may be pro- market value immediately before the settle- that follows through ‘‘(B)’’ and inserting vided by regulations prescribed by the Sec- ment, and ‘‘possessing’’. retary.’’, and ‘‘(B) sold the property so delivered by the (b) APPLICATION OF EXISTING RULES TO (4) by striking ‘‘optional’’ in the heading. taxpayer at its fair market value.’’. OTHER CODE PROVISIONS.—Section 1563(f) (re- (d) CONFORMING AMENDMENTS.—

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(1) Subsection (d) of section 732 is repealed. or other similar arrangement treated as a (c) EFFECTIVE DATE.—The amendments (2) Section 755(a) is amended— lease under subsection (h)(7), the lease term made by this section shall apply to property (A) by striking ‘‘section 734(b) (relating to shall be determined in the same manner as a placed in service after the date of the enact- the optional adjustment’’ and inserting ‘‘sec- lease.’’. ment of this Act. (c) CONFORMING AMENDMENTS.—Section tion 734(a) (relating to the adjustment’’, and SEC. 475. CONSISTENT AMORTIZATION OF PERI- (B) by striking ‘‘section 743(b) (relating to 168(g)(3)(A) is amended— ODS FOR INTANGIBLES. the optional adjustment’’ and inserting ‘‘sec- (1) by inserting ‘‘(as defined in subsection tion 743(a) (relating to the adjustment’’. (h)(7)’’ after ‘‘lease’’ the first place it ap- (a) START-UP EXPENDITURES.— (3) Section 755(c), as added by this Act, is pears, and (1) ALLOWANCE OF DEDUCTION.—Paragraph amended by striking ‘‘section 734(b)’’ and in- (2) by inserting ‘‘(as determined under sub- (1) of section 195(b) (relating to start-up ex- serting ‘‘section 734(a)’’. section (i)(3))’’ after ‘‘term’’. penditures) is amended to read as follows: (4) Section 761(e)(2) is amended by striking (d) EFFECTIVE DATE.—The amendments ‘‘(1) ALLOWANCE OF DEDUCTION.—If a tax- ‘‘optional’’. made by this section shall apply to leases payer elects the application of this sub- (5) Section 774(a) is amended by striking and service contracts or other similar ar- section with respect to any start-up expendi- ‘‘743(b)’’ both places it appears and inserting rangements entered into after the date of the tures— ‘‘743(a)’’. enactment of this Act. ‘‘(A) the taxpayer shall be allowed a deduc- (6) The item relating to section 734 in the SEC. 473. CLASS LIVES FOR UTILITY GRADING tion for the taxable year in which the active table of sections for subpart B of part II of COSTS. trade or business begins in an amount equal subchapter K of chapter 1 is amended by (a) GAS UTILITY PROPERTY.—Section to the lesser of— striking ‘‘Optional’’. 168(e)(3)(E) (defining 15-year property) is ‘‘(i) the amount of start-up expenditures amended by striking ‘‘and’’ at the end of (7) The item relating to section 743 in the with respect to the active trade or business, clause (ii), by striking the period at the end table of sections for subpart C of part II of or of clause (iii) and inserting ‘‘, and’’, and by subchapter K of chapter 1 is amended by ‘‘(ii) $5,000, reduced (but not below zero) by adding at the end the following new clause: striking ‘‘Optional’’. the amount by which such start-up expendi- ‘‘(iv) initial clearing and grading land im- (e) EFFECTIVE DATES.— tures exceed $50,000, and provements with respect to gas utility prop- (1) IN GENERAL.—Except as provided in ‘‘(B) the remainder of such start-up ex- paragraph (2), the amendments made by this erty.’’. penditures shall be allowed as a deduction (b) ELECTRIC UTILITY PROPERTY.—Section section shall apply to transfers and distribu- ratably over the 180-month period beginning 168(e)(3) is amended by adding at the end the with the month in which the active trade or tions made after the date of the enactment following new subparagraph: of this Act. business begins.’’. ‘‘(F) 20-YEAR PROPERTY.—The term ‘20-year EPEAL OF SECTION 732(d).—The amend- (2) CONFORMING AMENDMENT.—Subsection (2) R property’ means initial clearing and grading ments made by subsections (b)(2) and (d)(1) (b) of section 195 is amended by striking land improvements with respect to any elec- shall apply to— ‘‘AMORTIZE’’ and inserting ‘‘DEDUCT’’ in the tric utility transmission and distribution (A) except as provided in subparagraph (B), heading. plant.’’. (b) ORGANIZATIONAL EXPENDITURES.—Sub- transfers made after the date of the enact- (c) CONFORMING AMENDMENTS.—The table ment of this Act, and contained in section 168(g)(3)(B) is amend- section (a) of section 248 (relating to organi- (B) in the case of any transfer made on or ed— zational expenditures) is amended to read as before such date to which section 732(d) ap- (1) by inserting ‘‘or (E)(iv)’’ after ‘‘(E)(iii)’’, follows: plies, distributions made after the date and ‘‘(a) ELECTION TO DEDUCT.—If a corporation which is 2 years after such date of enact- (2) by adding at the end the following new elects the application of this subsection (in ment. item: accordance with regulations prescribed by PART III—DEPRECIATION AND ‘‘(F) ...... 25’’. the Secretary) with respect to any organiza- AMORTIZATION tional expenditures— (d) EFFECTIVE DATE.—The amendments ‘‘(1) the corporation shall be allowed a de- SEC. 471. EXTENSION OF AMORTIZATION OF IN- made by this section shall apply to property duction for the taxable year in which the TANGIBLES TO SPORTS FRAN- placed in service after the date of the enact- CHISES. corporation begins business in an amount ment of this Act. (a) IN GENERAL.—Section 197(e) (relating to equal to the lesser of— exceptions to definition of section 197 intan- SEC. 474. EXPANSION OF LIMITATION ON DEPRE- CIATION OF CERTAIN PASSENGER ‘‘(A) the amount of organizational expendi- gible) is amended by striking paragraph (6) AUTOMOBILES. tures with respect to the taxpayer, or and by redesignating paragraphs (7) and (8) (a) IN GENERAL.—Section 179(b) (relating to ‘‘(B) $5,000, reduced (but not below zero) by as paragraphs (6) and (7), respectively. limitations) is amended by adding at the end the amount by which such organizational ex- (b) CONFORMING AMENDMENTS.— the following new paragraph: penditures exceed $50,000, and (1)(A) Section 1056 (relating to basis limi- ‘‘(6) LIMITATION ON COST TAKEN INTO AC- ‘‘(2) the remainder of such organizational tation for player contracts transferred in COUNT FOR CERTAIN PASSENGER VEHICLES.— expenditures shall be allowed as a deduction connection with the sale of a franchise) is re- ‘‘(A) IN GENERAL.—The cost of any sport ratably over the 180-month period beginning pealed. utility vehicle for any taxable year which with the month in which the corporation be- (B) The table of sections for part IV of sub- may be taken into account under this sec- gins business.’’. chapter O of chapter 1 is amended by strik- tion shall not exceed $25,000. (c) TREATMENT OF ORGANIZATIONAL AND ing the item relating to section 1056. ‘‘(B) SPORT UTILITY VEHICLE.—For purposes SYNDICATION FEES OR PARTNERSHIPS.— (2) Section 1245(a) (relating to gain from of subparagraph (A)— (1) IN GENERAL.—Section 709(b) (relating to disposition of certain depreciable property) ‘‘(i) IN GENERAL.—The term ‘sport utility amortization of organization fees) is amend- is amended by striking paragraph (4). vehicle’ means any 4-wheeled vehicle ed by redesignating paragraph (2) as para- (3) Section 1253 (relating to transfers of which— graph (3) and by amending paragraph (1) to franchises, trademarks, and trade names) is ‘‘(I) is manufactured primarily for use on read as follows: amended by striking subsection (e). public streets, roads, and highways, ‘‘(1) ALLOWANCE OF DEDUCTION.—If a tax- (c) EFFECTIVE DATES.— ‘‘(II) is not subject to section 280F, and payer elects the application of this sub- (1) IN GENERAL.—Except as provided in ‘‘(III) is rated at not more than 14,000 section (in accordance with regulations pre- paragraph (2), the amendments made by this pounds gross vehicle weight. scribed by the Secretary) with respect to any section shall apply to property acquired ‘‘(ii) CERTAIN VEHICLES EXCLUDED.—Such organizational expenses— after the date of the enactment of this Act. term does not include any vehicle which— ‘‘(A) the taxpayer shall be allowed a deduc- (2) SECTION 1245.—The amendment made by ‘‘(I) does not have the primary load car- tion for the taxable year in which the part- subsection (b)(2) shall apply to franchises ac- rying device or container attached, nership begins business in an amount equal quired after the date of the enactment of ‘‘(II) has a seating capacity of more than 12 to the lesser of— this Act. individuals, ‘‘(i) the amount of organizational expenses SEC. 472. SERVICE CONTRACTS TREATED IN ‘‘(III) is designed for more than 9 individ- with respect to the partnership, or SAME MANNER AS LEASES FOR RULES RELATING TO TAX-EXEMPT uals in seating rearward of the driver’s seat, ‘‘(ii) $5,000, reduced (but not below zero) by USE PROPERTY. ‘‘(IV) is equipped with an open cargo area, the amount by which such organizational ex- (a) IN GENERAL.—Section 168(h)(7) (defining or a covered box not readily accessible from penses exceed $50,000, and lease) is amended by adding at the end the the passenger compartment, of at least 72.0 ‘‘(B) the remainder of such organizational following: ‘‘Such term shall also include any inches in interior length, or expenses shall be allowed as a deduction rat- service contract or other similar arrange- ‘‘(V) has an integral enclosure, fully en- ably over the 180-month period beginning ment.’’. closing the driver compartment and load with the month in which the partnership be- (b) LEASE TERM.—Section 168(i)(3) (relating carrying device, does not have seating rear- gins business. to lease term) is amended by adding at the ward of the driver’s seat, and has no body ‘‘(2) DISPOSITIONS BEFORE CLOSE OF AMORTI- end the following new subparagraph: section protruding more than 30 inches ZATION PERIOD.—In any case in which a part- ‘‘(C) SPECIAL RULE FOR SERVICE CON- ahead of the leading edge of the wind- nership is liquidated before the end of the pe- TRACTS.—In the case of any service contract shield.’’. riod to which paragraph (1)(B) applies, any

VerDate jul 14 2003 02:43 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00112 Fmt 4624 Sfmt 0634 E:\CR\FM\A03MR6.064 S03PT1 March 3, 2004 CONGRESSIONAL RECORD — SENATE S2131 deferred expenses attributable to the part- essary or appropriate to carry out the provi- Secretary of the Treasury or his delegate nership which were not allowed as a deduc- sions of this section.’’. within a reasonable period of time following tion by reason of this section may be de- (b) CONFORMING AMENDMENT.—The table of the request. ducted to the extent allowable under section sections for subpart C of part II of sub- (c) EFFECTIVE DATE.—The provisions of 165.’’. chapter E of chapter 1 is amended by adding this section shall apply to interest, pen- (2) CONFORMING AMENDMENT.—Subsection at the end the following new item: alties, additions to tax, and fines with re- (b) of section 709 is amended by striking ‘‘Sec. 470. Deductions allocable to property spect to any taxable year if as of the date of ‘‘AMORTIZATION’’ and inserting ‘‘DEDUCTION’’ used by governments or other the enactment of this Act, the assessment of in the heading. tax-exempt entities.’’. any tax, penalty, or interest with respect to (d) EFFECTIVE DATE.—The amendments such taxable year is not prevented by the op- (c) EFFECTIVE DATE.—The amendments made by this section shall apply to amounts made by this section shall apply to leases eration of any law or rule of law. paid or incurred after the date of the enact- and service contracts or similar arrange- SEC. 484. PARTIAL PAYMENT OF TAX LIABILITY ment of this Act. ments entered into after the date of the en- IN INSTALLMENT AGREEMENTS. (a) IN GENERAL.— SEC. 476. LIMITATION ON DEDUCTIONS ALLO- actment of this Act. CABLE TO PROPERTY USED BY GOV- (1) Section 6159(a) (relating to authoriza- ERNMENTS OR OTHER TAX-EXEMPT PART IV—ADMINISTRATIVE PROVISIONS tion of agreements) is amended— ENTITIES. SEC. 481. CLARIFICATION OF RULES FOR PAY- (A) by striking ‘‘satisfy liability for pay- (a) IN GENERAL.—Subpart C of part II of MENT OF ESTIMATED TAX FOR CER- ment of’’ and inserting ‘‘make payment on’’, subchapter E of chapter 1 (relating to tax- TAIN DEEMED ASSET SALES. and able year for which deductions taken) is (a) IN GENERAL.—Paragraph (13) of section (B) by inserting ‘‘full or partial’’ after ‘‘fa- amended by adding at the end the following 338(h) (relating to tax on deemed sale not cilitate’’. new section: taken into account for estimated tax pur- (2) Section 6159(c) (relating to Secretary ‘‘SEC. 470. DEDUCTIONS ALLOCABLE TO PROP- poses) is amended by adding at the end the required to enter into installment agree- ERTY USED BY GOVERNMENTS OR following: ‘‘The preceding sentence shall not ments in certain cases) is amended in the OTHER TAX-EXEMPT ENTITIES. apply with respect to a qualified stock pur- matter preceding paragraph (1) by inserting ‘‘(a) GENERAL RULE.—The aggregate chase for which an election is made under ‘‘full’’ before ‘‘payment’’. amount of deductions otherwise allowable to paragraph (10).’’. (b) REQUIREMENT TO REVIEW PARTIAL PAY- the taxpayer with respect to tax-exempt use (b) EFFECTIVE DATE.—The amendment MENT AGREEMENTS EVERY TWO YEARS.—Sec- property for any taxable year shall not ex- made by subsection (a) shall apply to trans- tion 6159, as amended by this Act, is amend- ceed the aggregate amount of income includ- actions occurring after the date of the enacted by redesignating subsections (d), (e), and ible in gross income of the taxpayer for the ment of this Act. (f) as subsections (e), (f), and (g), respec- taxable year with respect to such property. SEC. 482. EXTENSION OF IRS USER FEES. tively, and inserting after subsection (c) the ‘‘(b) DISALLOWED DEDUCTION CARRIED TO (a) IN GENERAL.—Section 7528(c) (relating following new subsection: NEXT YEAR.—Except as otherwise provided in to termination) is amended by striking ‘‘De- ‘‘(d) SECRETARY REQUIRED TO REVIEW IN- this section, any deduction with respect to cember 31, 2004’’ and inserting ‘‘September STALLMENT AGREEMENTS FOR PARTIAL COL- any tax-exempt use property which is dis- 30, 2013’’. LECTION EVERY TWO YEARS.—In the case of allowed under subsection (a) shall, subject to (b) EFFECTIVE DATE.—The amendment an agreement entered into by the Secretary the limitation under subsection (a), be treat- made by this section shall apply to requests under subsection (a) for partial collection of ed as a deduction with respect to such prop- after the date of the enactment of this Act. a tax liability, the Secretary shall review erty in the next taxable year. SEC. 483. DOUBLING OF CERTAIN PENALTIES, the agreement at least once every 2 years.’’. ‘‘(c) TAX-EXEMPT USE PROPERTY.—For pur- FINES, AND INTEREST ON UNDER- (c) EFFECTIVE DATE.—The amendments poses of this section— PAYMENTS RELATED TO CERTAIN made by this section shall apply to agree- ‘‘(1) IN GENERAL.—The term ‘tax-exempt OFFSHORE FINANCIAL ARRANGE- ments entered into on or after the date of use property’ has the meaning given such MENT. the enactment of this Act. (a) GENERAL RULE.—If— term by section 168(h), except that such sec- SEC. 485. EXTENSION OF CUSTOMS USER FEES. (1) a taxpayer eligible to participate in— tion shall be applied without regard to para- Section 13031(j)(3) of the Consolidated Om- (A) the Department of the Treasury’s Off- graphs (2)(C)(ii) and (3). nibus Budget Reconciliation Act of 1985 (19 shore Voluntary Compliance Initiative, or ‘‘(2) SPECIAL RULES FOR SERVICE CONTRACTS U.S.C. 58c(j)(3)) is amended by striking (B) the Department of the Treasury’s vol- AND SIMILAR ARRANGEMENTS.—If tangible ‘‘March 31, 2004’’ and inserting ‘‘September untary disclosure initiative which applies to property is subject to a service contract or 30, 2013’’. other similar arrangement between a tax- the taxpayer by reason of the taxpayer’s underreporting of United States income tax SEC. 486. DEPOSITS MADE TO SUSPEND RUNNING payer (or any related person) and any tax-ex- OF INTEREST ON POTENTIAL UN- empt entity, such contract or arrangement liability through financial arrangements DERPAYMENTS. shall be treated in the same manner as if it which rely on the use of offshore arrange- (a) IN GENERAL.—Subchapter A of chapter were a lease for purposes of determining ments which were the subject of the initia- 67 (relating to interest on underpayments) is whether such property is tax-exempt use tive described in subparagraph (A), and amended by adding at the end the following property under paragraph (1). (2) any interest or applicable penalty is im- new section: ‘‘(d) SPECIAL RULES.— posed with respect to any arrangement to ‘‘SEC. 6603. DEPOSITS MADE TO SUSPEND RUN- ‘‘(1) ALLOCABLE DEDUCTIONS.—Subsection which any initiative described in paragraph NING OF INTEREST ON POTENTIAL (a) shall apply to— (1) applied or to any underpayment of Fed- UNDERPAYMENTS, ETC. ‘‘(A) any deduction directly allocable to eral income tax attributable to items arising ‘‘(a) AUTHORITY TO MAKE DEPOSITS OTHER any tax-exempt use property, and in connection with any arrangement de- THAN AS PAYMENT OF TAX.—A taxpayer may ‘‘(B) a proper share of other deductions scribed in paragraph (1), make a cash deposit with the Secretary that are not directly allocable to such prop- then, notwithstanding any other provision of which may be used by the Secretary to pay erty. law, the amount of such interest or penalty any tax imposed under subtitle A or B or ‘‘(2) PROPERTY CEASING TO BE TAX-EXEMPT shall be equal to twice that determined with- chapter 41, 42, 43, or 44 which has not been USE PROPERTY.—If property of a taxpayer out regard to this section. assessed at the time of the deposit. Such a ceases to be tax-exempt use property in the (b) DEFINITIONS AND RULES.—For purposes deposit shall be made in such manner as the hands of the taxpayer— of this section— Secretary shall prescribe. ‘‘(A) any unused deduction allocable to (1) APPLICABLE PENALTY.—The term ‘‘appli- ‘‘(b) NO INTEREST IMPOSED.—To the extent such property under subsection (b) shall only cable penalty’’ means any penalty, addition that such deposit is used by the Secretary to be allowable as a deduction for any taxable to tax, or fine imposed under chapter 68 of pay tax, for purposes of section 6601 (relating year to the extent of any net income of the the Internal Revenue Code of 1986. to interest on underpayments), the tax shall taxpayer allocable to such property, and (2) VOLUNTARY OFFSHORE COMPLIANCE INI- be treated as paid when the deposit is made. ‘‘(B) any portion of such unused deduction TIATIVE.—The term ‘‘Voluntary Offshore ‘‘(c) RETURN OF DEPOSIT.—Except in a case remaining after application of subparagraph Compliance Initiative’’ means the program where the Secretary determines that collec- (A) shall, subject to the limitation of sub- established by the Department of the Treas- tion of tax is in jeopardy, the Secretary shall paragraph (A), be treated as a deduction allo- ury in January of 2003 under which any tax- return to the taxpayer any amount of the de- cable to such property in the next taxable payer was eligible to voluntarily disclose posit (to the extent not used for a payment year. previously undisclosed income on assets of tax) which the taxpayer requests in writ- ‘‘(3) DISPOSITION OF ENTIRE INTEREST IN placed in offshore accounts and accessed ing. PROPERTY.—If during the taxable year a tax- through credit card and other financial ar- ‘‘(d) PAYMENT OF INTEREST.— payer disposes of the taxpayer’s entire inter- rangements. ‘‘(1) IN GENERAL.—For purposes of section est in tax-exempt use property, rules similar (3) PARTICIPATION.—A taxpayer shall be 6611 (relating to interest on overpayments), a to the rules of section 469(g) shall apply for treated as having participated in the Vol- deposit which is returned to a taxpayer shall purposes of this section. untary Offshore Compliance Initiative if the be treated as a payment of tax for any period ‘‘(e) REGULATIONS.—The Secretary shall taxpayer submitted the request in a timely to the extent (and only to the extent) attrib- prescribe such regulations as may be nec- manner and all information requested by the utable to a disputable tax for such period.

VerDate jul 14 2003 02:43 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00113 Fmt 4624 Sfmt 0634 E:\CR\FM\A03MR6.064 S03PT1 S2132 CONGRESSIONAL RECORD — SENATE March 3, 2004 Under regulations prescribed by the Sec- ‘‘(B) to request full payment from such brought against the person who entered into retary, rules similar to the rules of section taxpayer of an amount of Federal tax speci- the qualified tax collection contract with 6611(b)(2) shall apply. fied by the Secretary and, if such request the Secretary and shall not be brought ‘‘(2) DISPUTABLE TAX.— cannot be met by the taxpayer, to offer the against the United States. ‘‘(A) IN GENERAL.—For purposes of this sec- taxpayer an installment agreement pro- ‘‘(2) Such person and not the United States tion, the term ‘disputable tax’ means the viding for full payment of such amount dur- shall be liable for any damages and costs de- amount of tax specified at the time of the de- ing a period not to exceed 3 years, and termined in such civil action. posit as the taxpayer’s reasonable estimate ‘‘(C) to obtain financial information speci- ‘‘(3) Such civil action shall not be an exclu- of the maximum amount of any tax attrib- fied by the Secretary with respect to such sive remedy with respect to such person. utable to disputable items. taxpayer, ‘‘(4) Subsections (c), (d)(1), and (e) of sec- ‘‘(B) SAFE HARBOR BASED ON 30-DAY LET- ‘‘(2) prohibits each person providing such tion 7433 shall not apply.’’. TER.—In the case of a taxpayer who has been services under such contract from commit- (2) CLERICAL AMENDMENT.—The table of issued a 30-day letter, the maximum amount ting any act or omission which employees of sections for subchapter B of chapter 76 is of tax under subparagraph (A) shall not be the Internal Revenue Service are prohibited amended by inserting after the item relating less than the amount of the proposed defi- from committing in the performance of simi- to section 7433 the following new item: ciency specified in such letter. lar services, ‘‘(3) OTHER DEFINITIONS.—For purposes of ‘‘(3) prohibits subcontractors from— ‘‘Sec. 7433A. Civil damages for certain unau- paragraph (2)— ‘‘(A) having contacts with taxpayers, thorized collection actions by ‘‘(A) DISPUTABLE ITEM.—The term ‘disput- ‘‘(B) providing quality assurance services, persons performing services able item’ means any item of income, gain, and under a qualified tax collection loss, deduction, or credit if the taxpayer— ‘‘(C) composing debt collection notices, contract.’’. ‘‘(i) has a reasonable basis for its treat- and (c) APPLICATION OF TAXPAYER ASSISTANCE ment of such item, and ‘‘(4) permits subcontractors to perform ORDERS TO PERSONS PERFORMING SERVICES ‘‘(ii) reasonably believes that the Sec- other services only with the approval of the UNDER A QUALIFIED TAX COLLECTION CON- retary also has a reasonable basis for dis- Secretary. TRACT.—Section 7811 (relating to taxpayer allowing the taxpayer’s treatment of such ‘‘(c) FEES.—The Secretary may retain and assistance orders) is amended by adding at item. use an amount not in excess of 25 percent of the end the following new subsection: ‘‘(B) 30-DAY LETTER.—The term ‘30-day let- the amount collected under any qualified tax ‘‘(g) APPLICATION TO PERSONS PERFORMING ter’ means the first letter of proposed defi- collection contract for the costs of services SERVICES UNDER A QUALIFIED TAX COLLEC- ciency which allows the taxpayer an oppor- performed under such contract. The Sec- TION CONTRACT.—Any order issued or action tunity for administrative review in the In- retary shall keep adequate records regarding taken by the National Taxpayer Advocate ternal Revenue Service Office of Appeals. amounts so retained and used. The amount pursuant to this section shall apply to per- ‘‘(4) RATE OF INTEREST.—The rate of inter- credited as paid by any taxpayer shall be de- sons performing services under a qualified est allowable under this subsection shall be termined without regard to this subsection. the Federal short-term rate determined tax collection contract (as defined in section ‘‘(d) NO FEDERAL LIABILITY.—The United 6306(b)) to the same extent and in the same under section 6621(b), compounded daily. States shall not be liable for any act or SE OF DEPOSITS.— manner as such order or action applies to the ‘‘(e) U omission of any person performing services ‘‘(1) PAYMENT OF TAX.—Except as otherwise Secretary.’’. under a qualified tax collection contract. provided by the taxpayer, deposits shall be (d) INELIGIBILITY OF INDIVIDUALS WHO COM- ‘‘(e) APPLICATION OF FAIR DEBT COLLECTION treated as used for the payment of tax in the MIT MISCONDUCT TO PERFORM UNDER CON- PRACTICES ACT.—The provisions of the Fair TRACT.—Section 1203 of the Internal Revenue order deposited. Debt Collection Practices Act (15 U.S.C. 1692 ‘‘(2) RETURNS OF DEPOSITS.—Deposits shall Service Restructuring Act of 1998 (relating et seq.) shall apply to any qualified tax col- be treated as returned to the taxpayer on a to termination of employment for mis- lection contract, except to the extent super- last-in, first-out basis.’’. conduct) is amended by adding at the end the seded by section 6304, section 7602(c), or by (b) CLERICAL AMENDMENT.—The table of following new subsection: any other provision of this title. sections for subchapter A of chapter 67 is ‘‘(e) INDIVIDUALS PERFORMING SERVICES ‘‘(f) CROSS REFERENCES.— amended by adding at the end the following UNDER A QUALIFIED TAX COLLECTION CON- ‘‘(1) For damages for certain unauthorized new item: TRACT.— An individual shall cease to be per- collection actions by persons performing mitted to perform any services under any ‘‘Sec. 6603. Deposits made to suspend running services under a qualified tax collection con- qualified tax collection contract (as defined of interest on potential under- tract, see section 7433A. in section 6306(b) of the Internal Revenue payments, etc.’’. ‘‘(2) For application of Taxpayer Assist- Code of 1986) if there is a final determination (c) EFFECTIVE DATE.— ance Orders to persons performing services by the Secretary of the Treasury under such (1) IN GENERAL.—The amendments made by under a qualified tax collection contract, see contract that such individual committed any this section shall apply to deposits made section 7811(a)(4).’’. act or omission described under subsection after the date of the enactment of this Act. (2) CONFORMING AMENDMENTS.— (b) in connection with the performance of (2) COORDINATION WITH DEPOSITS MADE (A) Section 7809(a) is amended by inserting such services.’’. UNDER REVENUE PROCEDURE 84–58.—In the case ‘‘6306,’’ before ‘‘7651’’. of an amount held by the Secretary of the (B) The table of sections for subchapter A (e) EFFECTIVE DATE.—The amendments Treasury or his delegate on the date of the of chapter 64 is amended by adding at the made to this section shall take effect on the enactment of this Act as a deposit in the na- end the following new item: date of the enactment of this Act. ture of a cash bond deposit pursuant to Rev- PART V—MISCELLANEOUS PROVISIONS ‘‘Sec. 6306. Qualified Tax Collection Con- enue Procedure 84–58, the date that the tax- tracts.’’. SEC. 491. ADDITION OF VACCINES AGAINST HEPA- payer identifies such amount as a deposit TITIS A TO LIST OF TAXABLE VAC- made pursuant to section 6603 of the Internal (b) CIVIL DAMAGES FOR CERTAIN UNAUTHOR- CINES. IZED COLLECTION ACTIONS BY PERSONS PER- Revenue Code (as added by this Act) shall be (a) IN GENERAL.—Section 4132(a)(1) (defin- FORMING SERVICES UNDER QUALIFIED TAX treated as the date such amount is deposited ing taxable vaccine) is amended by redesig- COLLECTION CONTRACTS.— for purposes of such section 6603. nating subparagraphs (I), (J), (K), and (L) as (1) IN GENERAL.—Subchapter B of chapter SEC. 487. QUALIFIED TAX COLLECTION CON- subparagraphs (J), (K), (L), and (M), respec- TRACTS. 76 (relating to proceedings by taxpayers and tively, and by inserting after subparagraph (a) CONTRACT REQUIREMENTS.— third parties) is amended by inserting after (H) the following new subparagraph: (1) IN GENERAL.—Subchapter A of chapter section 7433 the following new section: ‘‘(I) Any vaccine against hepatitis A.’’. 64 (relating to collection) is amended by add- ‘‘SEC. 7433A. CIVIL DAMAGES FOR CERTAIN UN- (b) CONFORMING AMENDMENT.—Section ing at the end the following new section: AUTHORIZED COLLECTION ACTIONS 9510(c)(1)(A) is amended by striking ‘‘October ‘‘SEC. 6306. QUALIFIED TAX COLLECTION CON- BY PERSONS PERFORMING SERV- TRACTS. ICES UNDER QUALIFIED TAX COL- 18, 2000’’ and inserting ‘‘May 8, 2003’’. ‘‘(a) IN GENERAL.—Nothing in any provi- LECTION CONTRACTS. (c) EFFECTIVE DATE.— sion of law shall be construed to prevent the ‘‘(a) IN GENERAL.—Subject to the modifica- (1) SALES, ETC.—The amendments made by Secretary from entering into a qualified tax tions provided by subsection (b), section 7433 this section shall apply to sales and uses on collection contract. shall apply to the acts and omissions of any or after the first day of the first month ‘‘(b) QUALIFIED TAX COLLECTION CON- person performing services under a qualified which begins more than 4 weeks after the TRACT.—For purposes of this section, the tax collection contract (as defined in section date of the enactment of this Act. term ‘qualified tax collection contract’ 6306(b)) to the same extent and in the same (2) DELIVERIES.—For purposes of paragraph means any contract which— manner as if such person were an employee (1) and section 4131 of the Internal Revenue ‘‘(1) is for the services of any person (other of the Internal Revenue Service. Code of 1986, in the case of sales on or before than an officer or employee of the Treasury ‘‘(b) MODIFICATIONS.—For purposes of sub- the effective date described in such para- Department)— section (a)— graph for which delivery is made after such ‘‘(A) to locate and contact any taxpayer ‘‘(1) Any civil action brought under section date, the delivery date shall be considered specified by the Secretary, 7433 by reason of this section shall be the sale date.

VerDate jul 14 2003 02:43 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00114 Fmt 4624 Sfmt 0634 E:\CR\FM\A03MR6.064 S03PT1 March 3, 2004 CONGRESSIONAL RECORD — SENATE S2133 SEC. 492. RECOGNITION OF GAIN FROM THE SALE property described in paragraph (1)(B)(iii) or other administrative guidance as may be OF A PRINCIPAL RESIDENCE AC- has a qualified interest in the property— necessary or appropriate to prevent the QUIRED IN A LIKE-KIND EXCHANGE ‘‘(i) any payment pursuant to the qualified avoidance of the purposes of section WITHIN 5 YEARS OF SALE. interest shall be treated as ordinary income 170(e)(1)(B)(iii) of the Internal Revenue Code (a) IN GENERAL.—Section 121(d) (relating to and shall be includible in gross income of the of 1986 (as added by subsection (a)), including special rules for exclusion of gain from sale taxpayer for the taxable year in which the preventing— of principal residence) is amended by adding payment is received by the taxpayer, and (1) the circumvention of the reduction of at the end the following new paragraph: ‘‘(ii) subsection (f)(3) and section 1011(b) the charitable deduction by embedding or ‘‘(10) PROPERTY ACQUIRED IN LIKE-KIND EX- shall not apply to the transfer of the prop- bundling the patent or similar property as CHANGE.—If a taxpayer acquired property in erty from the taxpayer to the donee. part of a charitable contribution of property an exchange to which section 1031 applied, ‘‘(C) QUALIFIED INTEREST.—For purposes of that includes the patent or similar property, subsection (a) shall not apply to the sale or this paragraph— (2) the manipulation of the basis of the exchange of such property if it occurs during ‘‘(i) IN GENERAL.—The term ‘qualified in- property to increase the amount of the char- the 5-year period beginning with the date of terest’ means, with respect to any taxpayer, itable deduction through the use of related the acquisition of such property.’’. a right to receive from the donee a percent- persons, pass-thru entities, or other inter- (b) EFFECTIVE DATE.—The amendment age (not greater than 50 percent) of any roy- mediaries, or through the use of any provi- made by this section shall apply to sales or alty payment received by the donee with re- sion of law or regulation (including the con- exchanges after the date of the enactment of spect to property described in paragraph solidated return regulations), and this Act. (1)(B)(iii) (other than copyrights which are (3) a donor from changing the form of the SEC. 493. CLARIFICATION OF EXEMPTION FROM described in section 1221(a)(3) or 1231(b)(1)(C)) patent or similar property to property of a TAX FOR SMALL PROPERTY AND contributed by the taxpayer to the donee. form for which different deduction rules CASUALTY INSURANCE COMPANIES. ‘‘(ii) SECRETARIAL AUTHORITY.— would apply. (a) IN GENERAL.—Section 501(c)(15)(A) is ‘‘(I) IN GENERAL.—Except as provided in (e) EFFECTIVE DATE.—The amendments amended to read as follows: subclause (II), the Secretary may by regula- made by this section shall apply to contribu- ‘‘(A) Insurance companies (as defined in tion or other administrative guidance treat tions made after October 1, 2003. section 816(a)) other than life (including as a qualified interest the right to receive SEC. 496. REPEAL OF 10-PERCENT REHABILITA- interinsurers and reciprocal underwriters) other payments from the donee, but only if TION TAX CREDIT. if— the donee does not possess a right to receive Section 47 is amended by adding at the end ‘‘(i) the gross receipts for the taxable year any payment (whether royalties or other- the following new subsection: do not exceed $600,000, and wise) from a third party with respect to the ‘‘(e) TERMINATION.—This section shall not ‘‘(ii) more than 50 percent of such gross recontributed property. apply to expenditures described in sub- ceipts consist of premiums.’’. ‘‘(II) EXCEPTIONS.—The Secretary may not section (a)(1) incurred in taxable years be- (b) CONTROLLED GROUP RULE.—Section treat as a qualified interest the right to re- ginning after December 31, 2003.’’. 501(c)(15)(C) is amended by inserting ‘‘, ex- ceive any payment which provides a benefit SEC. 497. INCREASE IN AGE OF MINOR CHILDREN cept that in applying section 1563 for pur- to the donor which is greater than the ben- WHOSE UNEARNED INCOME IS poses of section 831(b)(2)(B)(ii), subpara- efit retained by the donee or the right to re- TAXED AS IF PARENT’S INCOME. graphs (B) and (C) of section 1563(b)(2) shall ceive any portion of the proceeds from the (a) IN GENERAL.—Section 1(g)(2)(A) (relat- be disregarded’’ before the period at the end. sale of the property contributed. ing to child to whom subsection applies) is (c) CONFORMING AMENDMENT.—Clause (i) of ‘‘(iii) LIMITATION.—An interest shall be amended by striking ‘‘age 14’’ and inserting section 831(b)(2)(A) is amended by striking treated as a qualified interest under this sub- ‘‘age 18’’. ‘‘exceed $350,000 but’’. paragraph only if the taxpayer has no right (b) EFFECTIVE DATE.—The amendment (d) EFFECTIVE DATE.—The amendments to receive any payment described in clause made by this section shall apply to taxable made by this section shall apply to taxable (i) or (ii)(I) after the earlier of the date on years beginning after December 31, 2003. years beginning after December 31, 2003. which the legal life of the contributed prop- SEC. 494. DEFINITION OF INSURANCE COMPANY erty expires or the date which is 20 years SA 2646. Mr. GRASSLEY (for himself FOR SECTION 831. after the date of the contribution.’’. and Mr. BAUCUS) proposed an amend- (a) IN GENERAL.—Section 831 is amended by (c) REPORTING REQUIREMENTS.— ment to amendment SA 2645 proposed redesignating subsection (c) as subsection (d) (1) IN GENERAL.—Section 6050L(a) (relating by Mr. GRASSLEY (for himself and Mr. and by inserting after subsection (b) the fol- to returns regarding certain dispositions of BAUCUS) to the bill S. 1637, to amend lowing new subsection: donated property) is amended— ‘‘(c) INSURANCE COMPANY DEFINED.—For (A) by striking ‘‘If’’ and inserting: the Internal Revenue Code of 1986 to purposes of this section, the term ‘insurance ‘‘(1) DISPOSITIONS OF DONATED PROPERTY.— comply with the World Trade Organiza- company’ has the meaning given to such If’’, tion rulings on the FSC/ETI benefit in term by section 816(a)).’’. (B) by redesignating paragraphs (1) a manner that preserves jobs and pro- (b) EFFECTIVE DATE.—The amendment through (5) as subparagraphs (A) through (E), duction activities in the United States, made by this section shall apply to taxable respectively, and to reform and simplify the inter- years beginning after December 31, 2003. (C) by adding at the end the following new national taxation rules of the United paragraph: SEC. 495. LIMITATIONS ON DEDUCTION FOR States, and for other purposes as fol- CHARITABLE CONTRIBUTIONS OF ‘‘(2) PAYMENTS OF QUALIFIED INTERESTS.— PATENTS AND SIMILAR PROPERTY. Each donee of property described in section lows: (a) DEDUCTION ALLOWED ONLY TO THE EX- 170(e)(1)(B)(iii) which makes a payment to a Strike sections 472 through 476 and insert: TENT OF BASIS.—Section 170(e)(1)(B) (relating donor pursuant to a qualified interest (as de- SEC. 472. CLASS LIVES FOR UTILITY GRADING to certain contributions of ordinary income fined in section 170(e)(7)) during any calendar COSTS. and capital gain property) is amended by year shall make a return (in accordance with (a) GAS UTILITY PROPERTY.—Section striking ‘‘or’’ at the end of clause (i), by add- forms and regulations prescribed by the Sec- 168(e)(3)(E) (defining 15-year property) is ing ‘‘or’’ at the end of clause (ii), and by in- retary) showing— amended by striking ‘‘and’’ at the end of serting after clause (ii) the following new ‘‘(A) the name, address, and TIN of the clause (ii), by striking the period at the end clause: payor and the payee with respect to such a of clause (iii) and inserting ‘‘, and’’, and by ‘‘(iii) of any patent, copyright, trademark, payment, adding at the end the following new clause: trade name, trade secret, know-how, soft- ‘‘(B) a description, and date of contribu- ‘‘(iv) initial clearing and grading land im- ware, or similar property, or applications or tion, of the property to which the qualified provements with respect to gas utility prop- registrations of such property,’’. interest relates, erty.’’. (b) TREATMENT OF CONTRIBUTIONS WHERE ‘‘(C) the dates and amounts of any royalty (b) ELECTRIC UTILITY PROPERTY.—Section DONOR RECEIVES INTEREST.—Section 170(e) is payments received by the donee with respect 168(e)(3) is amended by adding at the end the amended by adding at the end the following to such property, following new subparagraph: new paragraph: ‘‘(D) the date and the amount of the pay- ‘‘(F) 20-YEAR PROPERTY.—The term ‘20-year ‘‘(7) SPECIAL RULES FOR CONTRIBUTIONS OF ment pursuant to the qualified interest, and property’ means initial clearing and grading PATENTS AND SIMILAR PROPERTY WHERE DONOR ‘‘(E) a description of the terms of the land improvements with respect to any elec- RECEIVES INTEREST.— qualified interest.’’. tric utility transmission and distribution ‘‘(A) DISALLOWANCE OF DEDUCTION.—No de- (2) CONFORMING AMENDMENTS.— plant.’’. duction shall be allowed under this section (A) The heading for section 6050L is amend- (c) CONFORMING AMENDMENTS.—The table with respect to a contribution of property ed by striking ‘‘certain dispositions of’’. contained in section 168(g)(3)(B) is amend- described in paragraph (1)(B)(iii) if the tax- (B) The item relating to section 6050L in ed— payer after the contribution has any interest the table of sections for subpart B of part III (1) by inserting ‘‘or (E)(iv)’’ after ‘‘(E)(iii)’’, in the property other than a qualified inter- of subchapter A of chapter 61 is amended by and est. striking ‘‘certain dispositions of’’. (2) by adding at the end the following new ‘‘(B) CONTRIBUTIONS WITH QUALIFIED INTER- (d) ANTI-ABUSE RULES.—The Secretary of item: EST.—If a taxpayer after a contribution of the Treasury may prescribe such regulations ‘‘(F) ...... 25’’.

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(d) EFFECTIVE DATE.—The amendments corporation begins business in an amount ‘‘(I) which is part of the same transaction made by this section shall apply to property equal to the lesser of— (or series of related transactions) which in- placed in service after the date of the enact- ‘‘(A) the amount of organizational expendi- cludes the lease, and ment of this Act. tures with respect to the taxpayer, or ‘‘(II) which is with respect to the property SEC. 473. EXPANSION OF LIMITATION ON DEPRE- ‘‘(B) $5,000, reduced (but not below zero) by subject to the lease or substantially similar CIATION OF CERTAIN PASSENGER the amount by which such organizational ex- property, and’’. AUTOMOBILES. penditures exceed $50,000, and (d) EFFECTIVE DATE.—The amendments (a) IN GENERAL.—Section 179(b) (relating to ‘‘(2) the remainder of such organizational made by this section shall apply to leases en- limitations) is amended by adding at the end expenditures shall be allowed as a deduction tered into after December 31, 2003. the following new paragraph: ratably over the 180-month period beginning SEC. 476. LIMITATION ON DEDUCTIONS ALLO- ‘‘(6) LIMITATION ON COST TAKEN INTO AC- with the month in which the corporation be- CABLE TO PROPERTY USED BY GOV- COUNT FOR CERTAIN PASSENGER VEHICLES.— gins business.’’. ERNMENTS OR OTHER TAX-EXEMPT ‘‘(A) IN GENERAL.—The cost of any sport (c) TREATMENT OF ORGANIZATIONAL AND ENTITIES. utility vehicle for any taxable year which SYNDICATION FEES OR PARTNERSHIPS.— (a) IN GENERAL.—Subpart C of part II of may be taken into account under this sec- (1) IN GENERAL.—Section 709(b) (relating to subchapter E of chapter 1 (relating to tax- tion shall not exceed $25,000. amortization of organization fees) is amend- able year for which deductions taken) is ‘‘(B) SPORT UTILITY VEHICLE.—For purposes ed by redesignating paragraph (2) as para- amended by adding at the end the following of subparagraph (A)— graph (3) and by amending paragraph (1) to new section: ‘‘(i) IN GENERAL.—The term ‘sport utility read as follows: ‘‘SEC. 470. LIMITATIONS ON LOSSES FROM TAX- vehicle’ means any 4-wheeled vehicle ‘‘(1) ALLOWANCE OF DEDUCTION.—If a tax- EXEMPT USE PROPERTY. which— payer elects the application of this sub- ‘‘(a) LIMITATION ON LOSSES.—Except as oth- ‘‘(I) is manufactured primarily for use on section (in accordance with regulations pre- erwise provided in this section, a tax-exempt public streets, roads, and highways, scribed by the Secretary) with respect to any use loss for any taxable year shall not be al- ‘‘(II) is not subject to section 280F, and organizational expenses— lowed. ‘‘(III) is rated at not more than 14,000 ‘‘(A) the taxpayer shall be allowed a deduc- ‘‘(b) DISALLOWED LOSS CARRIED TO NEXT pounds gross vehicle weight. tion for the taxable year in which the part- YEAR.—Any tax-exempt use loss with respect ‘‘(ii) CERTAIN VEHICLES EXCLUDED.—Such nership begins business in an amount equal term does not include any vehicle which— to any tax-exempt use property which is dis- to the lesser of— ‘‘(I) does not have the primary load car- allowed under subsection (a) for any taxable ‘‘(i) the amount of organizational expenses rying device or container attached, year shall be treated as a deduction with re- with respect to the partnership, or ‘‘(II) has a seating capacity of more than 12 spect to such property in the next taxable ‘‘(ii) $5,000, reduced (but not below zero) by individuals, year. the amount by which such organizational ex- ‘‘(III) is designed for more than 9 individ- ‘‘(c) DEFINITIONS.—For purposes of this sec- penses exceed $50,000, and uals in seating rearward of the driver’s seat, tion— ‘‘(B) the remainder of such organizational ‘‘(IV) is equipped with an open cargo area, ‘‘(1) TAX-EXEMPT USE LOSS.—The term ‘tax- expenses shall be allowed as a deduction rat- or a covered box not readily accessible from exempt use loss’ means, with respect to any the passenger compartment, of at least 72.0 ably over the 180-month period beginning taxable year, the amount (if any) by which— inches in interior length, or with the month in which the partnership be- ‘‘(A) the sum of— ‘‘(V) has an integral enclosure, fully en- gins business. ‘‘(i) the aggregate deductions (other than closing the driver compartment and load ‘‘(2) DISPOSITIONS BEFORE CLOSE OF AMORTI- interest) directly allocable to a tax-exempt carrying device, does not have seating rear- ZATION PERIOD.—In any case in which a part- use property, plus ward of the driver’s seat, and has no body nership is liquidated before the end of the pe- ‘‘(ii) the aggregate deductions for interest section protruding more than 30 inches riod to which paragraph (1)(B) applies, any properly allocable to such property, exceed ahead of the leading edge of the wind- deferred expenses attributable to the part- ‘‘(B) the aggregate income from such prop- shield.’’. nership which were not allowed as a deduc- erty. (c) EFFECTIVE DATE.—The amendments tion by reason of this section may be de- ‘‘(2) TAX-EXEMPT USE PROPERTY.—The term made by this section shall apply to property ducted to the extent allowable under section ‘tax-exempt use property’ has the meaning placed in service after the date of the enact- 165.’’. given to such term by section 168(h) (without ment of this Act. (2) CONFORMING AMENDMENT.—Subsection regard to paragraph (1)(C) or (3)(C) thereof SEC. 474. CONSISTENT AMORTIZATION OF PERI- (b) of section 709 is amended by striking and determined as if property described in ODS FOR INTANGIBLES. ‘‘AMORTIZATION’’ and inserting ‘‘DEDUCTION’’ section 167(f)(1)(B) were tangible property). (a) START-UP EXPENDITURES.— in the heading. ‘‘(d) EXCEPTION FOR CERTAIN LEASES.—This (1) ALLOWANCE OF DEDUCTION.—Paragraph (d) EFFECTIVE DATE.—The amendments section shall not apply to any lease of prop- (1) of section 195(b) (relating to start-up ex- made by this section shall apply to amounts erty which meets the requirements of all of penditures) is amended to read as follows: paid or incurred after the date of the enact- the following paragraphs: ‘‘(1) ALLOWANCE OF DEDUCTION.—If a tax- ment of this Act. ‘‘(1) PROPERTY NOT FINANCED WITH TAX-EX- payer elects the application of this sub- SEC. 475. REFORM OF TAX TREATMENT OF LEAS- EMPT BONDS.—A lease of property meets the section with respect to any start-up expendi- ING OPERATIONS. requirements of this paragraph if no part of tures— (a) CLARIFICATION OF RECOVERY PERIOD FOR the property was financed (directly or indi- ‘‘(A) the taxpayer shall be allowed a deduc- TAX-EXEMPT USE PROPERTY SUBJECT TO rectly) from the proceeds of an obligation tion for the taxable year in which the active LEASE.—Subparagraph (A) of section 168(g)(3) the interest on which is exempt from tax trade or business begins in an amount equal (relating to special rules for determining under section 103(a) and which (or any re- to the lesser of— class life) is amended by inserting ‘‘(notwith- funding bond of which) is outstanding when ‘‘(i) the amount of start-up expenditures standing any other subparagraph of this the lease is entered into. The Secretary may with respect to the active trade or business, paragraph)’’ after ‘‘shall’’. by regulations provide for a de minimis ex- (b) LIMITATION ON DEPRECIATION PERIOD or ception from this paragraph. FOR SOFTWARE LEASED TO TAX-EXEMPT ENTI- ‘‘(ii) $5,000, reduced (but not below zero) by ‘‘(2) AVAILABILITY OF FUNDS.— TY.—Paragraph (1) of section 167(f) is amend- the amount by which such start-up expendi- ‘‘(A) IN GENERAL.—A lease of property tures exceed $50,000, and ed by adding at the end the following new subparagraph: meets the requirements of this paragraph if ‘‘(B) the remainder of such start-up ex- (at any time during the lease term) not more ‘‘(C) TAX-EXEMPT USE PROPERTY SUBJECT TO penditures shall be allowed as a deduction than an allowable amount of funds are— ratably over the 180-month period beginning LEASE.—In the case of computer software which would be tax-exempt use property as ‘‘(i) subject to any arrangement referred to with the month in which the active trade or in subparagraph (B), or business begins.’’. defined in subsection (h) of section 168 if such section applied to computer software, ‘‘(ii) otherwise reasonably expected to re- (2) CONFORMING AMENDMENT.—Subsection main available, (b) of section 195 is amended by striking the useful life under subparagraph (A) shall to or for the benefit of the lessor or any lend- ‘‘AMORTIZE’’ and inserting ‘‘DEDUCT’’ in the not be less than 125 percent of the lease term heading. (within the meaning of section 168(i)(3)).’’ er, or to or for the benefit of the lessee to (b) ORGANIZATIONAL EXPENDITURES.—Sub- (c) LEASE TERM TO INCLUDE RELATED SERV- satisfy the lessee’s obligations or options section (a) of section 248 (relating to organi- ICE CONTRACTS.—Subparagraph (A) of section under the lease. zational expenditures) is amended to read as 168(i)(3) (relating to lease term) is amended ‘‘(B) ARRANGEMENTS.—The arrangements follows: by striking ‘‘and’’ at the end of clause (i), by referred to in this subparagraph are— ‘‘(a) ELECTION TO DEDUCT.—If a corporation redesignating clause (ii) as clause (iii), and ‘‘(i) a defeasance arrangement, a loan by elects the application of this subsection (in by inserting after clause (i) the following the lessee to the lessor or any lender, a de- accordance with regulations prescribed by new clause: posit arrangement, a letter of credit the Secretary) with respect to any organiza- ‘‘(ii) the term of a lease shall include the collateralized with cash or cash equivalents, tional expenditures— term of any service contract or similar ar- a payment undertaking agreement, a lease ‘‘(1) the corporation shall be allowed a de- rangement (whether or not treated as a lease prepayment, a sinking fund arrangement, or duction for the taxable year in which the under section 7701(e))— any similar arrangement (whether or not

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such arrangement provides credit support), ‘‘(i) is not tax-exempt use property for the (c) ALTERNATIVE SIMPLIFIED CREDIT FOR and taxable year, but QUALIFIED RESEARCH EXPENSES.— ‘‘(ii) any other arrangement identified by ‘‘(ii) was tax-exempt use property for any (1) IN GENERAL.—Subsection (c) of section the Secretary in regulations. prior taxable year. 41 (relating to base amount) is amended by ‘‘(C) ALLOWABLE AMOUNT.— ‘‘(2) DISPOSITION OF ENTIRE INTEREST IN redesignating paragraphs (5) and (6) as para- ‘‘(i) IN GENERAL.—Except as otherwise pro- PROPERTY.—If during the taxable year a tax- graphs (6) and (7), respectively, and by in- vided in this subparagraph, the term ‘allow- payer disposes of the taxpayer’s entire inter- serting after paragraph (4) the following new able amount’ means an amount equal to 20 est in tax-exempt use property (or former paragraph: percent of the lessor’s adjusted basis in the tax-exempt use property), rules similar to ‘‘(5) ELECTION OF ALTERNATIVE SIMPLIFIED property at the time the lease is entered the rules of section 469(g) shall apply for pur- CREDIT.— into. poses of this section. ‘‘(A) IN GENERAL.—At the election of the ‘‘(ii) HIGHER AMOUNT PERMITTED IN CERTAIN ‘‘(3) COORDINATION WITH SECTION 469.—This taxpayer, the credit determined under sub- CASES.—To the extent provided in regula- section shall be applied before the applica- section (a)(1) shall be equal to 12 percent of tions, a higher percentage shall be permitted tion of section 469. so much of the qualified research expenses under clause (i) where necessary because of ‘‘(f) OTHER DEFINITIONS.—For purposes of for the taxable year as exceeds 50 percent of the credit-worthiness of the lessee. In no this section— the average qualified research expenses for event may such regulations permit a per- ‘‘(1) RELATED PARTIES.—The terms ‘lessor’, the 3 taxable years preceding the taxable centage of more than 50 percent. ‘lessee’, and ‘lender’ include any related year for which the credit is being deter- ‘‘(iii) OPTION TO PURCHASE.—If under the party (within the meaning of section mined. 197(f)(9)(C)(i)). lease the lessee has the option to purchase ‘‘(B) SPECIAL RULE IN CASE OF NO QUALIFIED ‘‘(2) LEASE TERM.—The term ‘lease term’ the property for other than the fair market RESEARCH EXPENSES IN ANY OF 3 PRECEDING has the meaning given to such term by sec- value of the property (determined at the TAXABLE YEARS.— tion 168(i)(3). time of exercise), the allowable amount at ‘‘(i) TAXPAYERS TO WHICH SUBPARAGRAPH the time such option may be exercised may ‘‘(3) LENDER.—The term ‘lender’ means, APPLIES.—The credit under this paragraph with respect to any lease, a person that not exceed 50 percent of the price at which shall be determined under this subparagraph makes a loan to the lessor which is secured such option may be exercised. if the taxpayer has no qualified research ex- (or economically similar to being secured) by ‘‘(3) LESSOR MUST MAKE SUBSTANTIAL EQ- penses in any 1 of the 3 taxable years pre- the lease or the leased property. UITY INVESTMENT.—A lease of property meets ceding the taxable year for which the credit ‘‘(4) LOAN.—The term ‘loan’ includes any the requirements of this paragraph if— is being determined. ‘‘(A) the lessor— similar arrangement. ‘‘(ii) CREDIT RATE.—The credit determined ‘‘(i) has at the time the lease is entered ‘‘(g) REGULATIONS.—The Secretary shall under this subparagraph shall be equal to 6 into an unconditional at-risk equity invest- prescribe such regulations as may be nec- percent of the qualified research expenses for ment (as determined by the Secretary) in the essary or appropriate to carry out the provi- the taxable year. property of at least 20 percent of the lessor’s sions of this section, including regulation ‘‘(C) ELECTION.—An election under this adjusted basis in the property as of that which— paragraph shall apply to the taxable year for time, and ‘‘(1) allow in appropriate cases the aggrega- which made and all succeeding taxable years ‘‘(ii) maintains such investment through- tion of property subject to the same lease, unless revoked with the consent of the Sec- out the term of the lease, and and retary. An election under this paragraph ‘‘(B) the fair market value of the property ‘‘(2) provide for the determination of the may not be made for any taxable year to at the end of the lease term is reasonably ex- allocation of interest expense for purposes of pected to be equal to at least 20 percent of this section.’’ which an election under paragraph (4) ap- such basis. (b) CONFORMING AMENDMENT.—The table of plies.’’ sections for subpart C of part II of sub- (2) COORDINATION WITH ELECTION OF ALTER- ‘‘(4) LESSEE MAY NOT BEAR MORE THAN MINI- chapter E of chapter 1 is amended by adding NATIVE INCREMENTAL CREDIT.— MAL RISK OF LOSS.— at the end the following new item: (A) IN GENERAL.—Section 41(c)(4)(B) (relat- ‘‘(A) IN GENERAL.—A lease of property meets the requirements of this paragraph if ‘‘Sec. 470. Limitations on losses from tax-ex- ing to election) is amended by adding at the there is no arrangement under which more empt use property.’’ end the following: ‘‘An election under this than a minimal risk of loss (as determined (c) EFFECTIVE DATE.—The amendments paragraph may not be made for any taxable under regulations) in the value of the prop- made by this section shall apply to leases en- year to which an election under paragraph erty is borne by the lessee. tered into after December 31, 2003. (5) applies.’’ ‘‘(B) CERTAIN ARRANGEMENTS FAIL REQUIRE- (B) TRANSITION RULE.—In the case of an MENT.—In no event will the requirements of SA 2647. Mr. HATCH (for himself, election under section 41(c)(4) of the Internal this paragraph be met if there is any ar- Mrs. MURRAY, Mr. BAUCUS, Ms. CANT- Revenue Code of 1986 which applies to the rangement under which the lessee bears— WELL, Mr. SMITH, Mr. BUNNING, and Mr. taxable year which includes the date of the ‘‘(i) any portion of the loss that would GRASSLEY) proposed an amendment to enactment of this Act, such election shall be occur if the fair market value of the leased the bill S. 1637, to amend the Internal treated as revoked with the consent of the property at the time the lease is terminated Secretary of the Treasury if the taxpayer Revenue Code of 1986 to comply with makes an election under section 41(c)(5) of were 25 percent less than its projected fair the World Trade Organization rulings market value at the end of the lease term, or such Code (as added by paragraph (1)) for ‘‘(ii) more than 50 percent of the loss that on the FSC/ETI benefit in a manner such year. that preserves jobs and production ac- would occur if the fair market value of the (f) EFFECTIVE DATES.— leased property at the time the lease is ter- tivities in the United States, to reform (1) SUBSECTION (a).—The amendments made minated were zero. and simplify the international taxation by subsection (a) shall apply to amounts paid ‘‘(5) REGULATORY REQUIREMENTS.—A lease rules of the United States, and for or incurred after the date of the enactment of property meets the requirements of this other purposes; as follows: of this Act. paragraph if such lease of property meets At the end of subtitle A of title III add the (2) SUBSECTIONS (b) AND (c).—The amend- such requirements as the Secretary may pre- following: ments made by subsections (b) and (c) shall scribe by regulations. SEC. ll. EXTENSION AND MODIFICATION OF RE- apply to taxable years beginning after De- ‘‘(e) SPECIAL RULES.— SEARCH CREDIT. cember 31, 2004. ‘‘(1) TREATMENT OF FORMER TAX-EXEMPT (a) EXTENSION.— USE PROPERTY.— (1) IN GENERAL.—Section 41(h)(1)(B) (relat- ‘‘(A) IN GENERAL.—In the case of any ing to termination) is amended by striking SA 2648. Ms. CANTWELL submitted former tax-exempt use property— ‘‘June 30, 2004’’ and inserting ‘‘December 31, an amendment intended to be proposed ‘‘(i) any deduction allowable under sub- 2005’’. by her to the bill S. 1637, to amend the section (b) with respect to such property for (2) CONFORMING AMENDMENT.—Section Internal Revenue Code of 1986 to com- any taxable year shall be allowed only to the 45C(b)(1)(D) is amended by striking ‘‘June 30, extent of any net income (without regard to 2004’’ and inserting ‘‘December 31, 2005’’. ply with the World Trade Organization such deduction) from such property for such (b) INCREASE IN RATES OF ALTERNATIVE IN- rulings on the FSC/ETI benefit in a taxable year, and CREMENTAL CREDIT.—Subparagraph (A) of manner that preserves jobs and produc- ‘‘(ii) any portion of such unused deduction section 41(c)(4) (relating to election of alter- tion activities in the United States, to remaining after application of clause (i) native incremental credit) is amended— shall be treated as a deduction allocable to (1) by striking ‘‘2.65 percent’’ and inserting reform and simplify the international such property in the next taxable year. ‘‘3 percent’’, taxation rules of the United States, ‘‘(B) FORMER TAX-EXEMPT USE PROPERTY.— (2) by striking ‘‘3.2 percent’’ and inserting and for other purposes; which was or- For purposes of this subsection, the term ‘‘4 percent’’, and dered to lie on the table; as follows: ‘former tax-exempt use property’ means any (3) by striking ‘‘3.75 percent’’ and inserting property which— ‘‘5 percent’’. At the end, add the following:

VerDate jul 14 2003 02:43 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00117 Fmt 4624 Sfmt 0634 E:\CR\FM\A03MR6.060 S03PT1 S2136 CONGRESSIONAL RECORD — SENATE March 3, 2004 TITLE ll—UNEMPLOYMENT amended by inserting ‘‘(including a non- Act of 1998 (29 U.S.C. 2918(f)(2)(B)(ii)(I)) is COMPENSATION market economy country)’’ after ‘‘country’’ amended by inserting ‘‘(prior to the employ- SEC. ll01. EXTENSION OF THE TEMPORARY EX- each place it appears. ment separation necessary to attain the sta- TENDED UNEMPLOYMENT COM- (b) DEFINITIONS.—Section 771(5)(C) of the tus of an eligible individual)’’ after ‘‘1986’’. PENSATION ACT OF 2002. Tariff Act of 1930 (19 U.S.C. 1677(5)(C)) is (c) EFFECTIVE DATE.—The amendments (a) IN GENERAL.—Section 208 of the Tem- amended— made by this section take effect on the date porary Extended Unemployment Compensa- (1) by striking ‘‘owned and’’ and inserting of enactment of this Act. tion Act of 2002 (Public Law 107–147; 116 Stat. ‘‘owned,’’; and SEC. ll04. DECREASE IN PGBC PENSION RECIPI- 30), as amended by Public Law 108–1 (117 (2) by striking ‘‘merchandise.’’ and insert- ENT AGE ELIGIBILITY REQUIRE- Stat. 3) and the Unemployment Compensa- ing ‘‘merchandise, and without regard to MENT. tion Amendments of 2003 (Public Law 108–26; whether the country is a nonmarket econ- (a) IN GENERAL.—Subparagraph (A) of sec- 117 Stat. 751), is amended— omy country.’’. tion 35(c)(4) of the Internal Revenue Code of 1986 (defining eligible PBGC pension recipi- (1) in subsection (a)(2), by striking ‘‘De- (c) EFFECTIVE DATE.—The amendments cember 31, 2003’’ and inserting ‘‘June 30, made by this section apply to petitions filed ent) is amended by striking ‘‘age 55’’ and in- 2004’’; under section 702 of the Tariff Act of 1930 on serting ‘‘age 50’’. (b) EFFECTIVE DATE.—The amendments (2) in subsection (b)(1), by striking ‘‘De- or after the date of the enactment of this made by this section apply to taxable years cember 31, 2003’’ and inserting ‘‘June 30, Act. 2004’’; beginning after December 31, 2004. (3) in subsection (b)(2)— SA 2650. Mr. BAYH submitted an SA 2651. Mr. BINGAMAN (for himself (A) in the heading, by striking ‘‘DECEMBER amendment intended to be proposed by and Mr. DOMENICI) proposed an amend- 31, 2003’’ and inserting ‘‘JUNE 30, 2004’’; and him to the bill S. 1637, to amend the In- (B) by striking ‘‘December 31, 2003’’ and in- ment to SA 2647 proposed by Mr. HATCH serting ‘‘June 30, 2004’’; and ternal Revenue Code of 1986 to comply (for himself, Mrs. MURRAY, Mr. BAUCUS, (4) in subsection (b)(3), by striking ‘‘March with the World Trade Organization rul- Ms. CANTWELL, Mr. SMITH, Mr. 31, 2004’’ and inserting ‘‘September 30, 2004’’. ings on the FSC/ETI benefit in a man- BUNNING, and Mr. GRASSLEY) to the bill (b) EFFECTIVE DATE.—The amendments ner that preserves jobs and production S. 1637, to amend the Internal Revenue made by this section shall take effect as if activities in the United States, to re- Code of 1986 to comply with the World included in the enactment of the Temporary form and simplify the international Extended Unemployment Compensation Act Trade Organization rulings on the FSC/ of 2002 (Public Law 107–147; 116 Stat. 21). taxation rules of the United States, ETI benefit in a manner that preserves SEC. ll02. ADDITIONAL REVISION TO CURRENT and for other purposes; which was or- jobs and production activities in the TEUC–X TRIGGER. dered to lie on the table; as follows: United States, to reform and simplify (a) IN GENERAL.—Section 203(c)(2)(B) of the At the appropriate place, insert the fol- the international taxation rules of the Temporary Extended Unemployment Com- lowing: United States, and for other purposes; pensation Act of 2002 (Public Law 107–147; 116 TITLE ll—IMPROVEMENT OF CREDIT as follows: Stat. 30) is amended to read as follows: FOR HEALTH INSURANCE COSTS OF ELI- At the end of the amendment add the fol- ‘‘(B) such a period would then be in effect GIBLE INDIVIDUALS lowing: for such State under such Act if— ‘‘(i) section 203(d) of such Act were applied SEC. ll01. IMPROVEMENT OF THE AFFORD- SEC. ll. EXPANSION OF RESEARCH CREDIT. ABILITY OF THE CREDIT. (a) CREDIT FOR EXPENSES ATTRIBUTABLE TO as if it had been amended by striking ‘5’ each (a) IN GENERAL.—Section 35(a) of the Inter- CERTAIN COLLABORATIVE RESEARCH CON- place it appears and inserting ‘4’; and nal Revenue Code of 1986 (relating to credit SORTIA.— ‘‘(ii) with respect to weeks of unemploy- (1) IN GENERAL.—Section 41(a) (relating to ment beginning after December 27, 2003— for health insurance costs of eligible individ- credit for increasing research activities) is ‘‘(I) paragraph (1)(A) of such section 203(d) uals) is amended by striking ‘‘65’’ and insert- amended by striking ‘‘and’’ at the end of did not apply; and ing ‘‘75’’. (b) CONFORMING AMENDMENT.—Section paragraph (1), by striking the period at the ‘‘(II) clause (ii) of section 203(f)(1)(A) of end of paragraph (2) and inserting ‘‘, and’’, such Act did not apply.’’. 7527(b) of such Code (relating to advance pay- and by adding at the end the following new (b) APPLICATION.—Section 203(c)(2)(B)(ii) of ment of credit for health insurance costs of the Temporary Extended Unemployment eligible individuals) is amended by striking paragraph: Compensation Act of 2002 (Public Law 107– ‘‘65’’ and inserting ‘‘75’’. ‘‘(3) 20 percent of the amounts paid or in- 147; 116 Stat. 30), as added by subsection (a), (c) EFFECTIVE DATE.—The amendments curred by the taxpayer in carrying on any shall apply with respect to payments for made by this section apply to taxable years trade or business of the taxpayer during the weeks of unemployment beginning on or beginning after December 31, 2004. taxable year (including as contributions) to after the date of enactment this Act. SEC. ll02. ELIGIBILITY OF SPOUSE OF CERTAIN a research consortium.’’. SEC. ll03. TEMPORARY STATE AUTHORITY TO INDIVIDUALS ENTITLED TO MEDI- (2) RESEARCH CONSORTIUM DEFINED.—Sec- WAIVE APPLICATION OF CARE. tion 41(f) (relating to special rules) is amend- LOOKBACKS UNDER THE FEDERAL- (a) IN GENERAL.—Subsection (b) of section ed by adding at the end the following new STATE EXTENDED UNEMPLOYMENT 35 of the Internal Revenue Code of 1986 (de- paragraph: COMPENSATION ACT OF 1970. fining eligible coverage month) is amended ‘‘(6) RESEARCH CONSORTIUM.— For purposes of conforming with the provi- by adding at the end the following: ‘‘(A) IN GENERAL.—The term ‘research con- sions of the Federal-State Extended Unem- ‘‘(3) SPECIAL RULE FOR SPOUSE OF INDI- sortium’ means any organization— ployment Compensation Act of 1970 (26 VIDUAL ENTITLED TO MEDICARE.—Any month ‘‘(i) which is— U.S.C. 3304 note), a State may, during the pe- which would be an eligible coverage month ‘‘(I) described in section 501(c)(3) and is ex- riod beginning on the date of enactment of with respect to a taxpayer (determined with- empt from tax under section 501(a) and is or- this Act and ending on June 30, 2004, waive out regard to subsection (f)(2)(A)) shall be an ganized and operated primarily to conduct the application of either subsection (d)(1)(A) eligible coverage month for any spouse of energy research, or of section 203 of such Act or subsection such taxpayer.’’. ‘‘(II) organized and operated primarily to (f)(1)(A)(ii) of such section, or both. (b) CONFORMING AMENDMENT.—Section conduct research in the public interest (within the meaning of section 501(c)(3)), Mr. BAYH submitted an 173(f)(5)(A)(i) of the Workforce Investment SA 2649. Act of 1998 (29 U.S.C. 2918(f)(5)(A)(i)) is ‘‘(ii) which is not a private foundation, amendment intended to be proposed by amended by inserting ‘‘(including with re- ‘‘(iii) to which at least 5 unrelated persons him to the bill S. 1637, to amend the In- spect to any month for which the eligible in- paid or incurred during the calendar year in ternal Revenue Code of 1986 to comply dividual would have been treated as such but which the taxable year of the organization with the World Trade Organization rul- for the application of paragraph (7)(B)(i))’’ begins amounts (including as contributions) ings on the FSC/ETI benefit in a man- before the comma. to such organization for research, and ner that preserves jobs and production (c) EFFECTIVE DATE.—The amendments ‘‘(iv) to which no single person paid or in- activities in the United States, to re- made by this section take effect on the date curred (including as contributions) during form and simplify the international of enactment of this Act. such calendar year an amount equal to more than 50 percent of the total amounts re- taxation rules of the United States, SEC. ll03. CLARIFICATION OF 3-MONTH RE- QUIREMENT OF EXISTING COV- ceived by such organization during such cal- and for other purposes; which was or- ERAGE. endar year for research. dered to lie on the table; as follows: (a) IN GENERAL.—Clause (i) of section ‘‘(B) TREATMENT OF PERSONS.—All persons At the end of the bill, add the following: 35(e)(2)(B) of the Internal Revenue Code of treated as a single employer under sub- TITLE V—MISCELLANEOUS PROVISIONS 1986 (defining qualifying individual) is section (a) or (b) of section 52 shall be treat- SEC. 501. APPLICATION OF COUNTERVAILING amended by inserting ‘‘(prior to the employed as related persons for purposes of subpara- DUTY LAWS TO NONMARKET ECONO- ment separation necessary to attain the sta- graph (A)(iii) and as a single person for pur- MIES. tus of an eligible individual)’’ after ‘‘9801(c)’’. poses of subparagraph (A)(iv).’’. (a) IN GENERAL.—Section 701(a)(1) of the (b) CONFORMING AMENDMENT.—Section (3) CONFORMING AMENDMENT.—Section Tariff Act of 1930 (19 U.S.C. 1671(a)(1)) is 173(f)(2)(B)(ii)(I) of the Workforce Investment 41(b)(3)(C) is amended by inserting ‘‘(other

VerDate jul 14 2003 04:19 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00118 Fmt 4624 Sfmt 0634 E:\CR\FM\A03MR6.071 S03PT1 March 3, 2004 CONGRESSIONAL RECORD — SENATE S2137

than a research consortium)’’ after ‘‘organi- ‘‘(i) IN GENERAL.—The term ‘qualified prop- (c) GEOTHERMAL ENERGY DEFINED.—Section zation’’. erty’ includes property— 45(c) (relating to definitions) is amended by (b) REPEAL OF LIMITATION ON CONTRACT RE- ‘‘(I) which meets the requirements of adding at the end the following new para- SEARCH EXPENSES PAID TO SMALL BUSI- clauses (i), (ii), and (iii) of subparagraph (A), graph: NESSES, UNIVERSITIES, AND FEDERAL LABORA- ‘‘(II) which is an aircraft, ‘‘(5) GEOTHERMAL ENERGY.—The term ‘geo- TORIES.—Section 41(b)(3) (relating to con- ‘‘(III) which is purchased and on which thermal energy’ means energy derived from tract research expenses) is amended by add- such purchaser, at the time of the contract a geothermal deposit (within the meaning of ing at the end the following new subpara- for purchase, has made a nonrefundable de- section 613(e)(2)).’’. graph: posit of the lesser of 10 percent of the cost or (d) EFFECTIVE DATE.—The amendments ‘‘(D) AMOUNTS PAID TO ELIGIBLE SMALL $100,000, and made by this section shall apply to elec- BUSINESSES, UNIVERSITIES, AND FEDERAL LAB- ‘‘(III) which meets the requirements of tricity produced and sold after the date of ORATORIES.— clause (ii). the enactment of this Act, in taxable years ‘‘(i) IN GENERAL.—In the case of amounts ‘‘(ii) PRODUCTION PERIOD AND COST.—The re- ending after such date. paid by the taxpayer to— quirements of this clause are met if the prop- ‘‘(I) an eligible small business, erty would be subject to section 263A by rea- SA 2654. Mr. WARNER submitted an ‘‘(II) an institution of higher education (as son of clause (iii) of subsection (f)(1)(B) amendment intended to be proposed by defined in section 3304(f)), or thereof if such clause were applied— him to the bill S. 1637, to amend the In- ‘‘(III) an organization which is a Federal ‘‘(I) by substituting ‘6 months’ for ‘1 year’, laboratory, and ternal Revenue Code of 1986 to comply for qualified research which is energy re- ‘‘(II) by substituting ‘$250,000’ for with the World Trade Organization rul- search, subparagraph (A) shall be applied by ‘$1,000,000’.’’. ings on the FSC/ETI benefit in a man- substituting ‘100 percent’ for ‘65 percent’. (2) PLACED IN SERVICE DATE.—Clause (iv) of ner that preserves jobs and production ‘‘(ii) ELIGIBLE SMALL BUSINESS.—For pur- section 168(k)(2)(A) is amended by striking activities in the United States, to re- poses of this subparagraph, the term ‘eligible ‘‘subparagraph (B)’’ and inserting ‘‘subpara- form and simplify the international small business’ means a small business with graphs (B) and (C)’’. taxation rules of the United States, respect to which the taxpayer does not own (b) CONFORMING AMENDMENTS.— (within the meaning of section 318) 50 per- (1) Section 168(k)(2)(B)(iii) is amended by and for other purposes; which was or- cent or more of— inserting at the end the following: ‘‘Such dered to lie on the table; as follows: ‘‘(I) in the case of a corporation, the out- term shall not include aircraft.’’. On page 179, after line 25, add the fol- standing stock of the corporation (either by (2) Section 168(k)(4)(A)(ii) is amended by lowing: vote or value), and striking ‘‘paragraph (2)(C)’’ and inserting SEC. ll. PERMANENT DEDUCTION FOR CERTAIN ‘‘(II) in the case of a small business which ‘‘paragraph (2)(D)’’. EXPENSES OF SCHOOL TEACHERS. is not a corporation, the capital and profits (3) Section 168(k)(4)(B)(iii) is amended by (a) IN GENERAL.—Section 62(a)(2)(D) (relat- interests of the small business. inserting ‘‘and paragraph (2)(C)’’ after ‘‘of ing to certain expenses of elementary and ‘‘(iii) SMALL BUSINESS.—For purposes of this paragraph)’’. secondary school teachers) is amended by this subparagraph— (4) Section 168(k)(4)(C) is amended by strik- striking ‘‘In the case of taxable years begin- ‘‘(I) IN GENERAL.—The term ‘small busi- ing ‘‘subparagraphs (B) and (D)’’ and insert- ning during 2002 or 2003, the deductions’’ and ness’ means, with respect to any calendar ing ‘‘subparagraphs (B), (C), and (E)’’. inserting ‘‘The deductions’’. year, any person if the annual average num- (5) Section 168(k)(4)(D) is amended by (b) EFFECTIVE DATE.—The amendment ber of employees employed by such person striking ‘‘Paragraph (2)(E)’’ and inserting made by this section shall apply to expenses during either of the 2 preceding calendar ‘‘Paragraph (2)(F)’’. paid or incurred after December 31, 2003. years was 500 or fewer. For purposes of the (c) EFFECTIVE DATE.—The amendments preceding sentence, a preceding calendar made by this section shall apply to taxable year may be taken into account only if the years beginning after the date of the enact- SA 2655. Mr. BUNNING submitted an person was in existence throughout the year. ment of this Act. amendment intended to be proposed by ‘‘(II) STARTUPS, CONTROLLED GROUPS, AND him to the bill S. 1637, to amend the In- PREDECESSORS.—Rules similar to the rules of SA 2653. Mr. REID submitted an ternal Revenue Code of 1986 to comply subparagraphs (B) and (D) of section 220(c)(4) amendment intended to be proposed by with the World Trade Organization rul- shall apply for purposes of this clause. him to the bill S. 1637, to amend the In- ings on the FSC/ETI benefit in a man- ‘‘(iv) FEDERAL LABORATORY.—For purposes ternal Revenue Code of 1986 to comply ner that preserves jobs and production of this subparagraph, the term ‘Federal lab- with the World Trade Organization rul- activities in the United States, to re- oratory’ has the meaning given such term by section 4(6) of the Stevenson-Wydler Tech- ings on the FSC/ETI benefit in a man- form and simplify the international nology Innovation Act of 1980 (15 U.S.C. ner that preserves jobs and production taxation rules of the United States, 3703(6)), as in effect on the date of the enact- activities in the United States, to re- and for other purposes; which was or- ment of the Energy Tax Incentives Act of form and simplify the international dered to lie on the table; as follows: 2003.’’. taxation rules of the United States, On page 179, after line 25, insert the fol- (c) EFFECTIVE DATE.—The amendments and for other purposes; which was or- lowing: made by this section shall apply to amounts dered to lie on the table; as follows: paid or incurred after December 31, 2004. SEC. ll. REDUCTION OF HOLDING PERIOD TO 12 At the end of the amendment add the fol- MONTHS FOR PURPOSES OF DETER- lowing: MINING WHETHER HORSES ARE SEC- SA 2652. Mrs. LINCOLN submitted an TION 1231 ASSETS. SEC. ll. CREDIT FOR ELECTRICITY PRODUCED amendment intended to be proposed by (a) IN GENERAL.—Subparagraph (A) of sec- her to the bill S. 1637, to amend the In- FROM CERTAIN RENEWABLE RE- SOURCES TO INCLUDE GEO- tion 1231(b)(3) (relating to definition of prop- ternal Revenue Code of 1986 to comply THERMAL AND SOLAR ENERGY FA- erty used in the trade or business) is amend- with the World Trade Organization rul- CILITIES. ed by striking ‘‘and horses’’. ings on the FSC/ETI benefit in a man- (a) IN GENERAL.—Section 45(c)(1) (defining (b) EFFECTIVE DATE.—The amendment ner that preserves jobs and production qualified energy resources) is amended by made by this section shall apply to taxable activities in the United States, to re- striking ‘‘and’’ at the end of subparagraph years beginning after December 31, 2003. form and simplify the international (B), by striking the period at the end of subparagraph (C) and inserting a comma, and by SA 2656. Mr. BUNNING (for himself taxation rules of the United States, adding at the end the following new subpara- and for other purposes; which was or- and Mr. BOND) submitted an amend- graphs: ment intended to be proposed by him dered to lie on the table; as follows: ‘‘(D) geothermal energy, and to the bill S. 1637, to amend the Inter- On page 179, after line 25, add the fol- ‘‘(E) solar energy.’’. lowing: (b) FACILITIES DESCRIBED.—Section 45(c)(3) nal Revenue Code of 1986 to comply SEC. ll. MODIFICATION OF DEPRECIATION AL- (defining qualified facility) is amended by with the World Trade Organization rul- LOWANCE FOR AIRCRAFT. adding at the end the following new subpara- ings on the FSC/ETI benefit in a man- (a) AIRCRAFT TREATED AS QUALIFIED PROP- graph: ner that preserves jobs and production ERTY.— ‘‘(D) GEOTHERMAL ENERGY OR SOLAR ENERGY activities in the United States, to re- (1) IN GENERAL.—Paragraph (2) of section FACILITY.—In the case of a facility using geo- form and simplify the international 168(k) is amended by redesignating subpara- thermal energy or solar energy to produce taxation rules of the United States, graphs (C) through (F) as subparagraphs (D) electricity, the term ‘qualified facility’ through (G), respectively, and by inserting means any facility owned by the taxpayer and for other purposes; which was or- after subparagraph (B) the following new which is originally placed in service after dered to lie on the table; as follows: subparagraph: the date of the enactment of this subpara- On page 179, after line 25, insert the fol- ‘‘(C) CERTAIN AIRCRAFT.— graph, and before January 1, 2006.’’. lowing:

VerDate jul 14 2003 02:43 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00119 Fmt 4624 Sfmt 0634 E:\CR\FM\A03MR6.072 S03PT1 S2138 CONGRESSIONAL RECORD — SENATE March 3, 2004 SEC. ll. INCOME TAX CREDIT FOR DISTILLED which is attributable to the credit deter- (I) The table of sections for subpart B of SPIRITS WHOLESALERS AND FOR mined under section 5011(a) may be carried part IV of subchapter A of chapter 1 is DISTILLED SPIRITS IN CONTROL back to a taxable year beginning before the amended by striking the item relating to STATE BAILMENT WAREHOUSES FOR date of the enactment of section 5011.’’. section 29. COSTS OF CARRYING FEDERAL EX- CISE TAXES ON BOTTLED DISTILLED (2) The table of sections for subpart A of (J) The table of sections for subpart D of SPIRITS. part I of subchapter A of chapter 51 is part IV of subchapter A of chapter 1, as (a) IN GENERAL.—Subpart A of part I of amended by adding at the end the following amended by this Act, is amended by insert- subchapter A of chapter 51 (relating to new item: ing after the item relating to section 45F the gallonage and occupational taxes) is amend- ‘‘Sec. 5011. Income tax credit for average cost following new item: ed by adding at the end the following new of carrying excise tax.’’. ‘‘Sec. 45G. Credit for producing fuel from a section: (d) EFFECTIVE DATE.—The amendments nonconventional source.’’. ‘‘SEC. 5011. INCOME TAX CREDIT FOR AVERAGE made by this section shall apply to taxable (b) DETERMINATIONS UNDER NATURAL GAS COST OF CARRYING EXCISE TAX. years beginning after the date of the enact- POLICY ACT OF 1978.—Subparagraph (A) of ‘‘(a) IN GENERAL.—For purposes of section ment of this Act. section 45G(c)(2), as redesignated by sub- 38, the amount of the distilled spirits credit section (a)(1), is amended— for any taxable year is the amount equal to SA 2657. Mr. BUNNING (for himself, (1) by inserting ‘‘by the Secretary, after the product of— Mr. GRAHAM of Florida, and Mr. NEL- consultation with the Federal Energy Regu- ‘‘(1) in the case of— SON of Florida) submitted an amend- latory Commission,’’ after ‘‘shall be made’’, ‘‘(A) any eligible wholesaler— ment intended to be proposed by him and ‘‘(i) the number of cases of bottled distilled to the bill S. 1637, to amend the Inter- (2) by inserting ‘‘(as in effect before the re- spirits— nal Revenue Code of 1986 to comply peal of such section)’’ after ‘‘1978’’. ‘‘(I) which were bottled in the United with the World Trade Organization rul- (c) EFFECTIVE DATES.— States, and ings on the FSC/ETI benefit in a man- (1) IN GENERAL.—Except as provided in ‘‘(II) which are purchased by such whole- paragraph (2), the amendments made by this saler during the taxable year directly from ner that preserves jobs and production section shall apply to fuel produced and sold the bottler of such spirits, or activities in the United States, to re- after December 31, 2003, in taxable years end- ‘‘(B) any person which is subject to section form and simplify the international ing after such date. 5005 and which is not an eligible wholesaler, taxation rules of the United States, (2) DETERMINATIONS UNDER NATURAL GAS the number of cases of bottled distilled spir- and for other purposes; which was or- POLICY ACT OF 1978.—The amendments made its which are stored in a warehouse operated dered to lie on the table; as follows: by subsection (b) shall apply as if included in by, or on behalf of, a State, or agency or po- On page 179, after line 25, add the fol- the provisions repealing section 503 of the litical subdivision thereof, on which title has lowing: Natural Gas Policy Act of 1978. not passed on an unconditional sale basis, SEC. ll. TREATMENT OF CREDIT FOR PRO- and DUCING FUEL FROM A NONCONVEN- SA 2658. Mr. BUNNING submitted an ‘‘(2) the average tax-financing cost per case TIONAL SOURCE AS BUSINESS CRED- for the most recent calendar year ending be- IT. amendment intended to be proposed by fore the beginning of such taxable year. (a) IN GENERAL.— him to the bill S. 1637, to amend the In- ‘‘(b) ELIGIBLE WHOLESALER.—For purposes (1) CREDIT MOVED TO SUBPART RELATING TO ternal Revenue Code of 1986 to comply of this section, the term ‘eligible wholesaler’ BUSINESS RELATED CREDITS.—The Internal with the World Trade Organization rul- means any person which holds a permit Revenue Code of 1986 is amended by redesig- ings on the FSC/ETI benefit in a man- under the Federal Alcohol Administration nating section 29 as section 45G and by mov- ner that preserves jobs and production Act as a wholesaler of distilled spirits which ing section 45G (as so redesignated) from activities in the United States, to re- subpart B of part IV of subchapter A of chap- is not a State, or agency or political subdivi- form and simplify the international sion thereof. ter 1 to the end of subpart D of part IV of ‘‘(c) AVERAGE TAX-FINANCING COST.— subchapter A of chapter 1. taxation rules of the United States, ‘‘(1) IN GENERAL.—For purposes of this sec- (2) CREDIT TREATED AS BUSINESS CREDIT.— and for other purposes; which was or- tion, the average tax-financing cost per case Section 38(b) is amended by striking ‘‘plus’’ dered to lie on the table; as follows: for any calendar year is the amount of inter- at the end of paragraph (14), by striking the On page 179, after line 25, add the fol- est which would accrue at the deemed fi- period at the end of paragraph (15) and in- lowing: nancing rate during a 60-day period on an serting ‘‘, plus’’, and by adding at the end the SEC. ll. EXEMPTION OF QUALIFIED 501(c)(3) amount equal to the deemed Federal excise following: BONDS FOR NURSING HOMES FROM tax per case. ‘‘(16) the nonconventional source produc- FEDERAL GUARANTEE PROHIBI- ‘‘(2) DEEMED FINANCING RATE.—For pur- tion credit determined under section TIONS. poses of paragraph (1), the deemed financing 45G(a).’’. (a) IN GENERAL.—For purposes of section rate for any calendar year is the average of (3) CONFORMING AMENDMENTS.— 149(b)(1) of the Internal Revenue Code of 1986, the corporate overpayment rates under para- (A) Section 30(b)(3)(A) is amended by strik- any qualified 501(c)(3) bond (as defined in sec- graph (1) of section 6621(a) (determined with- ing ‘‘sections 27 and 29’’ and inserting ‘‘section 145 of such Code) shall not be treated as out regard to the last sentence of such para- tion 27’’. federally guaranteed solely because such graph) for calendar quarters of such year. (B) Sections 43(b)(2) and 613A(c)(6)(C) are bond is part of an issue supported by a letter ‘‘(3) DEEMED FEDERAL EXCISE TAX PER each amended by striking ‘‘section of credit, if such bond— CASE.—For purposes of paragraph (1), the 29(d)(2)(C)’’ and inserting ‘‘section (1) is issued after December 31, 2003, and be- deemed Federal excise tax per case is $25.68. 45G(d)(2)(C)’’. fore the date which is 1 year after the date of ‘‘(d) OTHER DEFINITIONS AND SPECIAL (C) Section 45G(a), as redesignated by para- the enactment of this Act, and RULES.—For purposes of this section— graph (1), is amended by striking ‘‘At the (2) is part of an issue 95 percent or more of ‘‘(1) CASE.—The term ‘case’ means 12 80- election of the taxpayer, there shall be al- the net proceeds of which are to be used to proof 750 milliliter bottles. lowed as a credit against the tax imposed by finance 1 or more of the following facilities ‘‘(2) NUMBER OF CASES IN LOT.—The number this chapter for the taxable year’’ and insert- primarily for the benefit of the elderly: of cases in any lot of distilled spirits shall be ing ‘‘For purposes of section 38, if the tax- (A) Licensed nursing home facility. determined by dividing the number of liters payer elects to have this section apply, the (B) Licensed or certified assisted living fa- in such lot by 9.’’. nonconventional source production credit cility. (b) CREDIT TREATED AS PART OF GENERAL determined under this section for the taxable (C) Licensed personal care facility. BUSINESS CREDIT.—Section 38(b) (relating to year is’’. (D) Continuing care retirement commu- current year business credit), as amended by (D) Section 45G(b), as so redesignated, is nity. section 5103 of this Act, is amended by strik- amended by striking paragraph (6). (b) LIMITATION ON ISSUER.—Subsection (a) ing ‘‘plus’’ at the end of paragraph (15), by (E) Section 53(d)(1)(B)(iii) is amended by shall not apply to any bond described in such striking the period at the end of paragraph striking ‘‘under section 29’’ and all that fol- subsection if the aggregate authorized face (16) and inserting ‘‘, plus’’, and by adding at lows through ‘‘or not allowed’’. amount of the issue of which such bond is a the end the following new paragraph: (F) Section 55(c)(2) is amended by striking part, when increased by the outstanding ‘‘(17) the distilled spirits credit determined ‘‘29(b)(6),’’. amount of such bonds issued by the issuer under section 5011(a).’’. (G) Subsection (a) of section 772 is amended during the period described in subsection (c) CONFORMING AMENDMENTS.— by inserting ‘‘and’’ at the end of paragraph (a)(1) exceeds $15,000,000. (1) Section 39(d), as amended by section (9), by striking paragraph (10), and by redes- (c) LIMITATION ON BENEFICIARY.—Rules 5103 of this Act, is amended by adding at the ignating paragraph (11) as paragraph (10). similar to the rules of section 144(a)(10) of end the following new paragraph: (H) Paragraph (5) of section 772(d) is the Internal Revenue Code of 1986 shall apply ‘‘(12) NO CARRYBACK OF SECTION 5011 CREDIT amended by striking ‘‘the foreign tax credit, for purposes of this section, except that— BEFORE EFFECTIVE DATE.—No portion of the and the credit allowable under section 29’’ (1) ‘‘$15,000,000’’ shall be substituted for unused business credit for any taxable year and inserting ‘‘and the foreign tax credit’’. ‘‘$40,000,000’’ in subparagraph (A) thereof, and

VerDate jul 14 2003 02:43 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00120 Fmt 4624 Sfmt 0634 E:\CR\FM\A03MR6.065 S03PT1 March 3, 2004 CONGRESSIONAL RECORD — SENATE S2139 (2) such rules shall be applied— SEC. ll. RENEWAL COMMUNITY EMPLOYERS ‘‘(ii) no property or services available by (A) only with respect to bonds described in MAY QUALIFY FOR EMPLOYMENT means of performance of the contract inside this section, and CREDIT BY EMPLOYING RESIDENTS the United States would satisfy the execu- (B) with respect to the aggregate author- OF CERTAIN OTHER RENEWAL COM- tive agency’s need. MUNITIES. ized face amount of all issues of such bonds ‘‘(3) Paragraph (1) does not apply to the (a) IN GENERAL.—Section 1400H(b)(2) (relat- performance of a contract outside the United which are allocable to the beneficiary. ing to modification) is amended by striking (d) CONTINUING CARE RETIREMENT COMMU- States under the exception provided in sub- ‘‘and’’ at the end of paragraph (1), by strik- NITY.—For purposes of this section, the term section (a). ing the period at the end of paragraph (2) and ‘‘continuing care retirement community’’ ‘‘(c) STATE CONTRACTS.—(1) Except as pro- inserting ‘‘, and’’, and by adding at the end means a community which provides, on the vided in paragraph (2), funds appropriated for the following new paragraph: same campus, a consortium of residential financial assistance for a State may not be ‘‘(3) subsection (d)(1)(B) thereof shall be ap- living options and support services to per- disbursed to or for such State during a fiscal plied by substituting ‘such renewal commu- sons at least 60 years of age under a written year unless the chief executive of that State nity, an adjacent renewal community within agreement. For purposes of the preceding has transmitted to the Administrator for the same State as such renewal community, sentence, the residential living options shall Federal Procurement Policy, not later than or a renewal community within such State include independent living units, nursing April 1 of the preceding fiscal year, a written which is within 5 miles of any border of such certification that none of such funds will be home beds, and either assisted living units or renewal community’ for ‘such empowerment expended for the performance outside the personal care beds. zone’.’’. United States of contracts entered into by SA 2659. Mr. BUNNING (for himself (b) EFFECTIVE DATE.—The amendments such State. made by subsection (a) shall take effect as if ‘‘(2) The prohibition on disbursement of and Mr. SCHUMER) submitted an included in the amendment made by section funds to or for a State under paragraph (1) amendment intended to be proposed by 101(a) of the Community Renewal Tax Relief does not apply with respect to the perform- him to the bill S. 1637, to amend the In- Act of 2000. ance of a State contract outside the United ternal Revenue Code of 1986 to comply States if— with the World Trade Organization rul- SA 2660. Mr. DODD (for himself, Mr. ‘‘(A) the chief executive of such State— ings on the FSC/ETI benefit in a man- COLEMAN, Mr. KENNEDY, Mr. CORZINE, ‘‘(i) determines that the property or serv- ner that preserves jobs and production Ms. MIKULSKI, and Mr. FEINGOLD) pro- ices needed by the State are available only posed an amendment to the bill S. 1637, by means of performance of the contract out- activities in the United States, to reside the United States and no property or form and simplify the international to amend the Internal Revenue Code of services available by means of performance taxation rules of the United States, 1986 to comply with the World Trade of the contract inside the United States and for other purposes; which was or- Organization rulings on the FSC/ETI would satisfy the State’s need; and dered to lie on the table; as follows: benefit in a manner that preserves jobs ‘‘(ii) transmits a notification of such deter- On page 179, after line 25, insert the fol- and production activities in the United mination to the head of the executive agency lowing: States, to reform and simplify the of the United States that administers the authority under which such funds are disbursed ll international taxation rules of the SEC. . EXPANSION OF DESIGNATED RENEWAL to or for the State; and COMMUNITY AREA BASED ON 2000 United States, and for other purposes; ‘‘(B) the head of the executive agency re- CENSUS DATA. as follows: (a) RENEWAL COMMUNITIES.—Section 1400E ceiving the notification of such determina- (relating to designation of renewal commu- At the end of the bill, add the following: tion— nities) is amended by adding at the end the TITLE V—PROTECTION OF UNITED ‘‘(i) confirms that the facts warrant the de- following new subsection: STATES WORKERS FROM COMPETITION termination; ‘‘(g) EXPANSION OF DESIGNATED AREAS.— OF FOREIGN WORKFORCES ‘‘(ii) approves the determination; and ‘‘(iii) transmits a notification of the ap- ‘‘(1) EXPANSION BASED ON 2000 CENSUS.—At SEC. 501. LIMITATIONS ON OFF-SHORE PERFORM- the request of the nominating entity with re- ANCE OF CONTRACTS. proval of the determination to the Director of the Office of Management and Budget. spect to a renewal community, the Secretary (a) LIMITATIONS.— ‘‘(3) In this subsection, the term ‘State’ of Housing and Urban Development may ex- (1) IN GENERAL.—The Office of Federal Pro- means each of the several States of the pand the area of a renewal community to in- curement Policy Act (41 U.S.C. 403 et seq.) is United States, the District of Columbia, the clude any census tract— amended by adding at the end the following Commonwealth of Puerto Rico, the Com- ‘‘(A) which, at the time such community new section: monwealth of the Northern Mariana Islands, was nominated, met the requirements of this ‘‘SEC. 42. LIMITATIONS ON OFF-SHORE PERFORM- the Virgin Islands, Guam, American Samoa, section for inclusion in such community but ANCE OF CONTRACTS. and the Trust Territory of the Pacific Is- for the failure of such tract to meet 1 or ‘‘(a) CONVERSIONS TO CONTRACTOR PER- lands. more of the population and poverty rate re- FORMANCE OF FEDERAL ACTIVITIES.—An ac- ‘‘(d) Subsection (b) and (c) shall not apply quirements of this section using 1990 census tivity or function of an executive agency to procurement covered by the WTO Govern- data, and that is converted to contractor performance ment Procurement Agreement. ‘‘(B) which meets all failed population and under Office of Management and Budget Cir- ‘‘(e) RESPONSIBILITIES OF OMB.—The Direc- poverty rate requirements of this section cular A–76 may not be performed by the con- tor of the Office of Management and Budget using 2000 census data. tractor or any subcontractor at a location shall— ‘‘(2) EXPANSION TO CERTAIN AREAS WHICH DO outside the United States except to the ex- ‘‘(1) maintain— NOT MEET POPULATION REQUIREMENTS.— tent that such activity or function was pre- ‘‘(A) the waivers granted under subsection ‘‘(A) IN GENERAL.—At the request of 1 or viously performed by Federal Government (b)(2), together with the determinations and more local governments and the State or employees outside the United States. certifications on which such waivers were States in which an area described in subpara- ‘‘(b) OTHER FEDERAL CONTRACTS.—(1) A based; and graph (B) is located, the Secretary of Hous- contract that is entered into by the head of ‘‘(B) the notifications received under sub- ing and Urban Development may expand a an executive agency may not be performed section (c)(2)(B)(iii); and designated area to include such area. outside the United States except to meet a ‘‘(2) submit to Congress promptly after the ‘‘(B) AREA.—An area is described in this requirement of the executive agency for the end of each quarter of each fiscal year a re- subparagraph if— contract to be performed specifically at a lo- port that sets forth— ‘‘(i) the area is adjacent to at least 1 other cation outside the United States. ‘‘(A) the waivers that were granted under area designated as a renewal community, ‘‘(2) The prohibition in paragraph (1) does subsection (b)(2) during such quarter; and ‘‘(ii) the area has a population less than not apply in the case of a contract of an ex- ‘‘(B) the notifications that were received the population required under subsection ecutive agency if— under subsection (c)(2)(B)(iii) during such (c)(2)(C), and ‘‘(A) the President determines in writing quarter. ‘‘(iii)(I) the area meets the requirements of that it is necessary in the national security ‘‘(f) ANNUAL GAO REVIEW.—The Comp- subparagraphs (A) and (B) of subsection (c)(2) interests of the United States for the controller General shall— and subparagraph (A) of subsection (c)(3), or tract to be performed outside the United ‘‘(1) review, each fiscal year, the waivers ‘‘(II) the area contains a population of less States; or granted during such fiscal year under sub- than 100 people. ‘‘(B) the head of such executive agency section (b)(2) and the disbursements of funds ‘‘(3) APPLICABILITY.—Any expansion of a re- makes a determination and reports such de- authorized pursuant to the exception in sub- newal community under this section shall termination on a timely basis to the Direc- section (c)(2); and take effect as provided in subsection (b).’’. tor of the Office of Management and Budget ‘‘(2) promptly after the end of such fiscal (b) EFFECTIVE DATE.—The amendment that— year, transmit to Congress a report con- made by this subsection shall take effect as ‘‘(i) the property or services needed by the taining a list of the contracts covered by if included in the amendments made by sec- executive agency are available only by such waivers and exception together with a tion 101 of the Community Renewal Tax Re- means of performance of the contract out- brief description of the performance of each lief Act of 2000. side the United States; and such contract outside the United States.’’.

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(2) CLERICAL AMENDMENT.—The table of ty organized under the laws of a foreign ceived under section 338B(g) of the Public sections in section 1(b) of such Act is amend- country acquires, directly or indirectly, sub- Health Service Act or under a State program ed by adding at the end the following new stantially all of the voting securities in, or described in section 338I of such Act.’’. item: substantially all of the assets of, a domestic (b) TREATMENT FOR PURPOSES OF EMPLOY- ‘‘Sec. 42. Limitations on off-shore perform- issuer, and— MENT TAXES.—Each of the following provi- ance of contracts.’’. ‘‘(i) immediately after completion of the sions of the Internal Revenue Code of 1986 is transaction, more than 80 percent of the se- amended by inserting ‘‘108(f)(4),’’ after (b) INAPPLICABILITY TO STATES DURING curities (by vote or value) of the acquiring ‘‘74(c),’’: FIRST TWO FISCAL YEARS.—Section 42(c) of (1) Section 3121(a)(20). the Office of Federal Procurement Policy foreign entity will be held by persons that were security holders of the domestic issuer (2) Section 3231(e)(5). Act (as added by subsection (a)) shall not (3) Section 3306(b)(16). apply to disbursements of funds to a State immediately prior to the transaction; or ‘‘(ii) immediately after completion of the (4) Section 3401(a)(19). during the fiscal year in which this Act is (5) Section 209(a)(17) of the Social Security enacted and the next fiscal year. transaction, more than 50 percent of the securities (by vote or value) of the acquiring Act. SEC. 502. REPEAL OF SUPERSEDED LAW. foreign entity will be held by persons that (c) EFFECTIVE DATE.—The amendments Section 647 of the Transportation, Treas- were security holders of the domestic issuer made by this section shall apply to amounts ury, and Independent Agencies Appropria- immediately prior to the transaction, and— received by an individual in taxable years tions Act, 2004 (division F of Public Law 108– ‘‘(I) such foreign entity will not have sub- beginning after December 31, 2003. 199) is amended by striking subsection (e). stantial business activities in the foreign SEC. 503. EFFECTIVE DATE AND APPLICABILITY. country in which it is organized; and SA 2664. Ms. LANDRIEU (for herself This title and the amendments made by ‘‘(II) the securities of the foreign entity and Ms. CANTWELL) submitted an this title shall take effect 30 days after the will be publicly traded, and the principal amendment intended to be proposed by date of the enactment of this Act and, sub- market for the public trading of such securi- her to the bill S. 1637, to amend the In- ject to subsection (b) of section 501, shall ties will be in the United States. ternal Revenue Code of 1986 to comply apply with respect to new contracts entered ‘‘(B) DOMESTIC ISSUER.—The term ‘domes- with the World Trade Organization rul- into on or after such date. tic issuer’ means an issuer created or orga- ings on the FSC/ETI benefit in a man- nized in the United States or under the law SA 2661. Mr. BAYH submitted an ner that preserves jobs and production of the United States or of any State.’’. activities in the United States, to re- amendment intended to be proposed by (2) EFFECTIVE DATE.—Section 14(i) of the him to the bill S. 1637, to amend the In- Securities Exchange Act of 1934 (as added by form and simplify the international ternal Revenue Code of 1986 to comply this subsection) shall apply with respect to taxation rules of the United States, with the World Trade Organization rul- corporate expatriation transactions (as de- and for other purposes; which was or- ings on the FSC/ETI benefit in a man- fined in that section 14(i)) proposed on and dered to lie on the table; as follows: ner that preserves jobs and production after the date of enactment of this Act. On page 179, after line 25, add the following: activities in the United States, to re- SA 2662. Mr. AKAKA submitted an SEC. ll. READY RESERVE-NATIONAL GUARD EM- form and simplify the international amendment intended to be proposed by PLOYEE CREDIT ADDED TO GEN- taxation rules of the United States, him to the bill S. 1637, to amend the In- ERAL BUSINESS CREDIT. and for other purposes; which was or- ternal Revenue Code of 1986 to comply (a) READY RESERVE-NATIONAL GUARD CRED- dered to lie on the table; as follows: IT.—Subpart D of part IV of subchapter A of with the World Trade Organization rul- chapter 1 (relating to business-related cred- On page 89, between lines 2 and 3 of Amend- ings on the FSC/ETI benefit in a man- its) is amended by adding at the end the fol- ment No. 2645, as agreed to, insert the fol- ner that preserves jobs and production lowing: lowing: activities in the United States, to re- ‘‘SEC. 45G. READY RESERVE-NATIONAL GUARD (e) DISCLOSURE OF CORPORATE EXPATRIA- EMPLOYEE CREDIT. TION TRANSACTIONS.— form and simplify the international ‘‘(a) GENERAL RULE.—For purposes of sec- N GENERAL.—Section 14 of the Securi- taxation rules of the United States, (1) I tion 38, the Ready Reserve-National Guard ties Exchange Act of 1934 (15 U.S.C. 78n) is and for other purposes; which was or- employee credit determined under this sec- amended by adding at the end the following dered to lie on the table; as follows: tion for any taxable year is an amount equal new subsection: At the end add the following: to 50 percent of the actual compensation ‘‘(i) PROXY SOLICITATIONS IN CONNECTION SEC. ll. TERMINATION OF THE DEBT INDI- amount for such taxable year. WITH CORPORATE EXPATRIATION TRANS- CATOR PROGRAM. ‘‘(b) DEFINITION OF ACTUAL COMPENSATION ACTIONS.— The Secretary of the Treasury shall termi- AMOUNT.—For purposes of this section, the ‘‘(1) DISCLOSURE TO SHAREHOLDERS OF EF- nate the Debt Indicator program announced term ‘actual compensation amount’ means FECTS OF CORPORATE EXPATRIATION TRANS- in Internal Revenue Service Notice 99–58. the amount of compensation paid or incurred ACTION.—The Commission shall, by rule, re- by an employer with respect to a Ready Re- quire that each domestic issuer shall promi- SA 2663. Ms. CANTWELL (for herself, serve-National Guard employee on any day nently disclose, not later than 5 business Mr. THOMAS, Mr. DURBIN, and Mr. when the employee was absent from employ- days before any shareholder vote relating to ment for the purpose of performing qualified LEAHY) submitted an amendment in- a corporate expatriation transaction, as a active duty. separate and distinct document accom- tended to be proposed by her to the bill ‘‘(c) LIMITATIONS.— panying each proxy statement relating to S. 1637, to amend the Internal Revenue ‘‘(1) MAXIMUM PERIOD FOR CREDIT PER EM- the transaction— Code of 1986 to comply with the World PLOYEE.—The maximum period with respect ‘‘(A) the number of employees of the do- Trade Organization rulings on the FSC/ to which the credit may be allowed with re- mestic issuer that would be located in the ETI benefit in a manner that preserves spect to any Ready Reserve-National Guard new foreign jurisdiction of incorporation or jobs and production activities in the employee shall not exceed the 12-month pe- organization of that issuer upon completion United States, to reform and simplify riod beginning on the first day such credit is of the corporate expatriation transaction; so allowed with respect to such employee. the international taxation rules of the ‘‘(B) how the rights of holders of the secu- ‘‘(2) DAYS OTHER THAN WORK DAYS.—No rities of the domestic issuer would be im- United States, and for other purposes; credit shall be allowed with respect to a pacted by a completed corporate expatria- which was ordered to lie on the table; Ready Reserve-National Guard employee tion transaction, and any differences in such as follows: who performs qualified active duty on any rights before and after a completed cor- At the appropriate place, insert the fol- day on which the employee was not sched- porate expatriation transaction; and lowing: uled to work (for reason other than to par- ‘‘(C) that, as a result of a completed cor- SEC. ll. EXCLUSION FOR PAYMENTS TO INDI- ticipate in qualified active duty). porate expatriation transaction, any taxable VIDUALS UNDER NATIONAL HEALTH ‘‘(d) DEFINITIONS AND SPECIAL RULES.—For holder of the securities of the domestic SERVICE CORPS LOAN REPAYMENT purposes of this section— issuer shall be subject to the taxation of any PROGRAM AND CERTAIN STATE ‘‘(1) QUALIFIED ACTIVE DUTY.—The term capital gains realized with respect to such LOAN REPAYMENT PROGRAMS. ‘qualified active duty’ means— securities, and the amount of any such cap- (a) IN GENERAL.—Section 108(f) of the In- ‘‘(A) active duty, other than the training ital gains tax that would apply as a result of ternal Revenue Code of 1986 (relating to stu- duty specified in section 10147 of title 10, the transaction. dent loans) is amended by adding at the end United States Code (relating to training re- ‘‘(2) DEFINITIONS.—In this subsection, the the following new paragraph: quirements for the Ready Reserve), or sec- following definitions shall apply: ‘‘(4) PAYMENTS UNDER NATIONAL HEALTH tion 502(a) of title 32, United States Code (re- ‘‘(A) CORPORATE EXPATRIATION TRANS- SERVICE CORPS LOAN REPAYMENT PROGRAM lating to required drills and field exercises ACTION.—The term ‘corporate expatriation AND CERTAIN STATE LOAN REPAYMENT PRO- for the National Guard), in connection with transaction’ means any transaction, or se- GRAMS.—In the case of an individual, gross which an employee is entitled to reemploy- ries of related transactions, in which an enti- income shall not include any amount re- ment rights and other benefits or to a leave

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of absence from employment under chapter (b) MEMBERSHIP. SEC. 5. COMMISSION PERSONNEL MATTERS. 43 of title 38, United States Code, and (1) COMPOSITION.—The Commission shall be (a) COMPENSATION OF MEMBERS.—Each ‘‘(B) hospitalization incident to such duty. composed of 15 members of whom— member of the Commission who is not an of- ‘‘(2) COMPENSATION.—The term ‘compensa- (A) 3 shall be appointed by the majority ficer or employee of the Federal Government tion’ means any remuneration for employ- leader of the Senate; shall be compensated at a rate equal to the ment, whether in cash or in kind, which is (B) 2 shall be appointed by the minority daily equivalent of the annual rate of basic paid or incurred by a taxpayer and which is leader of the Senate; pay prescribed for level IV of the Executive deductible from the taxpayer’s gross income (C) 3 shall be appointed by the Speaker of Schedule under section 5315 of title 5, United under section 162(a)(1). the House of Representatives; States Code, for each day (including travel ‘‘(3) READY RESERVE-NATIONAL GUARD EM- (D) 2 shall be appointed by the minority time) during which such member is engaged PLOYEE.—The term ‘Ready Reserve-National leader of the House of Representatives; and in the performance of the duties of the Com- Guard employee’ means an employee who is (E) 5 shall be appointed by the President, mission. All members of the Commission a member of the Ready Reserve or of the Na- of which— who are officers or employees of the United tional Guard. (i) no more than 3 shall be of the same States shall serve without compensation in ‘‘(4) NATIONAL GUARD.—The term ‘National party as the President. addition to that received for their services as Guard’ has the meaning given such term by (2) FEDERAL EMPLOYEES.—The members of officers or employees of the United States. section 101(c)(1) of title 10, United States the Commission may be employees or former (b) TRAVEL EXPENSES.—The members of Code. employees of the Federal Government. the Commission shall be allowed travel expenses, including per diem in lieu of subsist- ‘‘(5) READY RESERVE.—The term ‘Ready Re- (3) DATE.—The appointments of the mem- serve’ has the meaning given such term by bers of the Commission shall be made not ence, at rates authorized for employees of section 10142 of title 10, United States Code. later than 45 days subsequent to enactment agencies under subchapter I of chapter 57 of title 5, United States Code, while away from ‘‘(6) CERTAIN RULES TO APPLY.—Rules simi- of this provision. their homes or regular places of business in lar to the rules of section 52 shall apply.’’. (c) PERIOD OF APPOINTMENT; VACANCIES.— (b) CREDIT TO BE PART OF GENERAL BUSI- Members shall be appointed for the life of the performance of services for the Commis- sion. NESS CREDIT.—Subsection (b) of section 38 the Commission. Any vacancy in the Com- (c) STAFF.— (relating to general business credit) is mission shall not affect its powers, but shall (1) IN GENERAL.—The Chairman of the Com- amended by striking ‘‘plus’’ at the end of be filled in the same manner as the original mission may, without regard to the civil paragraph (14), by striking the period at the appointment. service laws and regulations, appoint and end of paragraph (15) and inserting ‘‘, plus’’, (d) INITIAL MEETING.—Not later than 30 terminate an executive director and such and by adding at the end the following: days after the date on which all members of other additional personnel as may be nec- ‘‘(16) the Ready Reserve-National Guard the Commission have been appointed, the essary to enable the Commission to perform employee credit determined under section Commission shall hold its first meeting. its duties. The employment of an executive 45G(a).’’. (e) MEETINGS.—The Commission shall meet director shall be subject to confirmation by (c) CONFORMING AMENDMENT.—The table of at the call of the Chairman. the Commission. sections for subpart D of part IV of sub- (f) QUORUM.—A majority of the members of (2) COMPENSATION.—The Chairman of the chapter A of chapter 1 is amended by insert- the Commission shall constitute a quorum, Commission may fix the compensation of the ing after the item relating to section 45F the but a lesser number of members may hold executive director and other personnel with- following: hearings. out regard to chapter 51 and subchapter III of ‘‘Sec. 45G. Ready Reserve-National Guard (g) CHAIRMAN AND VICE CHAIRMAN.—The chapter 53 of title 5, United States Code, re- employee credit.’’. President shall select a Chairman and Vice lating to classification of positions and Gen- Chairman from among its members. (d) EFFECTIVE DATE.—The amendments eral Schedule pay rates, except that the rate made by this section shall apply to amounts SEC. 3. DUTIES OF THE COMMISSION. of pay for the executive director and other paid or incurred after October 6, 2001, in tax- (a) STUDY.—The Commission shall conduct personnel may not exceed the rate payable able years ending after such date. a thorough study of all matters relating to a for level V of the Executive Schedule under comprehensive reform of the Federal tax sys- section 5316 of such title. SA 2665. Mr. LAUTENBERG sub- tem, including the reform of the Internal (d) DETAIL OF GOVERNMENT EMPLOYEES.— mitted an amendment intended to be Revenue Code of 1986 and the implementa- Any Federal Government employee, includ- proposed by him to the bill S. 1637, to tion (if appropriate) of other types of tax ing employees of the Legislative Branch, systems. may be detailed to the Commission without amend the Internal Revenue Code of reimbursement, and such detail shall be 1986 to comply with the World Trade (b) RECOMMENDATIONS.—The Commission shall develop recommendations on how to without interruption or loss of civil service Organization rulings on the FSC/ETI comprehensively reform the Federal tax sys- status or privilege. benefit in a manner that preserves jobs tem in a manner which produces a fair, sim- (e) PROCUREMENT OF TEMPORARY AND and production activities in the United ple, honest code that generates appropriate INTERMITTENT SERVICES.—The Chairman of States, to reform and simplify the revenue for the Federal Government. the Commission may procure temporary and intermittent services under section 3109(b) of international taxation rules of the (c) REPORT.—Not later than 18 months after the date on which all initial members title 5, United States Code, at rates for indi- United States, and for other purposes; viduals which do not exceed the daily equiva- which was ordered to lie on the table; of the Commission have been appointed pursuant to section 2(b), the Commission shall lent of the annual rate of basic pay pre- as follows: submit a report to the President and Con- scribed for level V of the Executive Schedule Beginning on page 85, strike line 22 and all gress which shall contain a detailed state- under section 5316 of such title. that follows through page 86, line 23. ment of the findings and conclusions of the SEC. 6. TERMINATION OF THE COMMISSION. Commission, together with its recommenda- The Commission shall terminate 90 days SA 2666. Mr. VOINOVICH submitted tions for such legislation and administrative after the date on which the Commission sub- an amendment intended to be proposed actions as it considers appropriate. mits its reports under section 3. SEC. 7. AUTHORIZATION OF APPROPRIATIONS. by him to the bill S. 1637, to amend the SEC. 4. POWERS OF THE COMMISSION. There are authorized to be appropriated Internal Revenue Code of 1986 to com- (a) HEARINGS.—The Commission may hold ply with the World Trade Organization such sums as are necessary to the Commis- such hearings, sit and act at such times and sion to carry out this Act. rulings on the FSC/ETI benefit in a places, take such testimony, and receive manner that preserves jobs and produc- such evidence as the Commission considers SA 2667. Mr. SMITH (for himself, Mr. tion activities in the United States, to advisable to carry out this Act. LAUTENBERG, and Ms. MURKOWSKI) sub- reform and simplify the international (b) INFORMATION FROM FEDERAL AGEN- mitted an amendment intended to be taxation rules of the United States, CIES.—The Commission may secure directly from any Federal department or agency such proposed by him to the bill S. 1637, to and for other purposes; which was or- information as the Commission considers amend the Internal Revenue Code of dered to lie on the table; as follows: necessary to carry out this Act. Upon re- 1986 to comply with the World Trade At the end of the bill insert the following quest of the Chairman of the Commission, Organization rulings on the FSC/ETI new title: the head of such department or agency shall benefit in a manner that preserves jobs SECTION 1. SHORT TITLE. furnish such information to the Commission. and production activities in the United This title may be cited as the ‘‘Funda- (c) POSTAL SERVICES.—The Commission States, to reform and simplify the mental Tax Reform’’ Commission Act of may use the United States mails in the same international taxation rules of the 2004’’. manner and under the same conditions as SEC. 2. ESTABLISHMENT OF COMMISSION. other departments and agencies of the Fed- United States, and for other purposes; (a) ESTABLISHMENT.—There is established eral Government. which was ordered to lie on the table; the ‘‘Blue Ribbon Commission on Com- (d) GIFTS.—The Commission may accept, as follows: prehensive Tax Reform’’ (in this Act referred use, and dispose of gifts or donations of serv- At the appropriate place, insert the fol- to as the ‘‘Commission’’). ices or property. lowing:

VerDate jul 14 2003 04:01 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00123 Fmt 4624 Sfmt 0634 E:\CR\FM\A03MR6.070 S03PT1 S2142 CONGRESSIONAL RECORD — SENATE March 3, 2004 SEC.ll. INCOME AVERAGING FOR FARMERS (B) CONFORMING AMENDMENT.—Subpara- tion activities in the United States, to AND FISHERMEN NOT TO INCREASE graph (B) of section 1301(b)(1) is amended by reform and simplify the international ALTERNATIVE MINIMUM TAX LIABIL- inserting ‘‘or fishing business’’ after ‘‘farm- taxation rules of the United States, ITY. ing business’’ both places it occurs. (a) IN GENERAL.—Section 55(c) (defining and for other purposes; which was or- (3) DEFINITION OF FISHING BUSINESS.—Sec- regular tax) is amended by redesignating tion 1301(b) is amended by adding at the end dered to lie on the table; as follows: paragraph (2) as paragraph (3) and by insert- the following new paragraph: At the end of the bill, add the following: ing after paragraph (1) the following new ‘‘(4) FISHING BUSINESS.—The term ‘fishing TITLE V—MISCELLANEOUS PROVISIONS paragraph: business’ means the conduct of commercial ‘‘(2) COORDINATION WITH INCOME AVERAGING fishing as defined in section 3 of the Magnu- SEC. 501. CERTAIN STEAM GENERATORS OR FOR FARMERS AND FISHERMEN.—Solely for son-Stevens Fishery Conservation and Man- OTHER GENERATING BOILERS USED purposes of this section, section 1301 (relat- agement Act (16 U.S.C. 1802).’’. IN NUCLEAR FACILITIES AND CER- ing to averaging of farm and fishing income) TAIN REACTOR VESSEL HEADS USED (c) EFFECTIVE DATE.—The amendments IN SUCH FACILITIES. shall not apply in computing the regular made by this section shall apply to taxable (a) IN GENERAL.— tax.’’. years beginning after December 31, 2003. (b) ALLOWING INCOME AVERAGING FOR FISH- (1) Subheading 9902.84.02 of the Harmonized ERMEN.— SA 2668. Mr. SANTORUM submitted Tariff Schedule of the United States is (1) IN GENERAL.—Section 1301(a) is amended an amendment intended to be proposed amended by striking ‘‘12/31/2006’’ and inserting ‘‘12/31/2012’’. by striking ‘‘farming business’’ and inserting by him to the bill S. 1637, to amend the ‘‘farming business or fishing business’’. (2) Subchapter II of chapter 99 of the Har- (2) DEFINITION OF ELECTED FARM INCOME.— Internal Revenue Code of 1986 to com- monized Tariff Schedule of the United States (A) IN GENERAL.—Clause (i) of section ply with the World Trade Organization is amended by inserting in numerical se- 1301(b)(1)(A) is amended by inserting ‘‘or rulings on the FSC/ETI benefit in a quence the following new heading: fishing business’’ before the semicolon. manner that preserves jobs and produc-

‘‘ 9902.84.03 Reactor vessel heads for nuclear reactors (provided for in subheading 8401.40.00) ...... Free No change No change On or before 12/31/2012 ’’.

(b) EFFECTIVE DATE.—The amendments ‘‘(2) REDUCTION FOR TAXABLE YEARS BEGIN- in subparagraph (A) that had been exported made by subsection (a)(2) shall apply to NING BEFORE 2013.—The amount otherwise de- by the taxpayer for further manufacture, the goods entered, or withdrawn from ware- termined under paragraph (1) (the ‘unreduced increase in cost or adjusted basis under sub- house, for consumption on or after January amount’) shall not exceed— paragraph (A) shall not exceed the difference 1, 2005. ‘‘(A) in the case of taxable years beginning between the value of the property when ex- before 2010, the product of the unreduced ported and the value of the property when SA 2669. Mr. HOLLINGS submitted amount and the domestic/worldwide fraction, brought back into the United States after an amendment intended to be proposed and the further manufacture. by him to the bill S. 1637, to amend the ‘‘(B) in the case of taxable years beginning ‘‘(4) MODIFIED TAXABLE INCOME.—The term Internal Revenue Code of 1986 to com- in 2010, 2011, or 2012, an amount equal to the ‘modified taxable income’ means taxable in- sum of— ply with the World Trade Organization come computed without regard to the deduc- ‘‘(i) the product of the unreduced amount tion allowable under this section. rulings on the FSC/ETI benefit in a and the domestic/worldwide fraction, plus ‘‘(e) DOMESTIC PRODUCTION GROSS RE- manner that preserves jobs and produc- ‘‘(ii) the applicable percentage of an CEIPTS.—For purposes of this section— tion activities in the United States, to amount equal to the unreduced amount ‘‘(1) IN GENERAL.—The term ‘domestic pro- reform and simplify the international minus the amount determined under clause duction gross receipts’ means the gross re- taxation rules of the United States, (i). ceipts of the taxpayer which are derived and for other purposes; which was or- For purposes of subparagraph (B)(ii), the ap- from— dered to lie on the table; as follows: plicable percentage is 25 percent for 2010, 50 ‘‘(A) any sale, exchange, or other disposi- percent for 2011, and 75 percent for 2012. tion of, or On page 71, beginning with line 12, strike ‘‘(d) DETERMINATION OF INCOME ATTRIB- ‘‘(B) any lease, rental, or license of, through line 23 on page 146 and insert the fol- UTABLE TO DOMESTIC PRODUCTION ACTIVI- qualifying production property which was lowing: TIES.—For purposes of this section— manufactured, produced, grown, or extracted ‘‘(a) ALLOWANCE OF DEDUCTION.—There ‘‘(1) IN GENERAL.—The portion of the modi- in whole or in significant part by the tax- shall be allowed as a deduction an amount fied taxable income which is attributable to payer within the United States. equal to 9 percent of the qualified production domestic production activities is so much of ‘‘(2) SPECIAL RULES FOR CERTAIN PROP- activities income of the taxpayer for the tax- the modified taxable income for the taxable ERTY.—In the case of any qualifying produc- able year. year as does not exceed— tion property described in subsection ‘‘(b) DEDUCTION LIMITED TO WAGES PAID.— ‘‘(A) the taxpayer’s domestic production (f)(1)(C)— ‘‘(1) IN GENERAL.—The amount of the de- gross receipts for such taxable year, reduced ‘‘(A) such property shall be treated for pur- duction allowable under subsection (a) for by any taxable year shall not exceed 50 percent poses of paragraph (1) as produced in signifi- ‘‘(B) the sum of— cant part by the taxpayer within the United of the W–2 wages of the employer for the tax- ‘‘(i) the costs of goods sold that are allo- States if more than 50 percent of the aggre- able year. cable to such receipts, ‘‘(2) W–2 WAGES.—For purposes of para- ‘‘(ii) other deductions, expenses, or losses gate development and production costs are graph (1), the term ‘W–2 wages’ means the directly allocable to such receipts, and incurred by the taxpayer within the United sum of the aggregate amounts the taxpayer ‘‘(iii) a proper share of other deductions, States, and is required to include on statements under expenses, and losses that are not directly al- ‘‘(B) if a taxpayer acquires such property paragraphs (3) and (8) of section 6051(a) with locable to such receipts or another class of before such property begins to generate sub- respect to employment of employees of the income. stantial gross receipts, any development or taxpayer during the taxpayer’s taxable year. ‘‘(2) ALLOCATION METHOD—The Secretary production costs incurred before the acquisi- ‘‘(3) SPECIAL RULES.— shall prescribe rules for the proper allocation shall be treated as incurred by the tax- ‘‘(A) PASS-THRU ENTITIES.—In the case of tion of items of income, deduction, expense, payer for purposes of subparagraph (A) and an S corporation, partnership, estate or and loss for purposes of determining income paragraph (1). trust, or other pass-thru entity, the limita- attributable to domestic production activi- ‘‘(f) QUALIFYING PRODUCTION PROPERTY.— tion under this subsection shall apply at the ties. For purposes of this section— entity level. ‘‘(3) SPECIAL RULES FOR DETERMINING ‘‘(1) IN GENERAL.—Except as otherwise pro- ‘‘(B) ACQUISITIONS AND DISPOSITIONS.— COSTS.— vided in this paragraph, the term ‘qualifying The Secretary shall provide for the appli- ‘‘(A) IN GENERAL.—For purposes of deter- production property’ means— cation of this subsection in cases where the mining costs under clause (1) of paragraph ‘‘(A) any tangible personal property, taxpayer acquires, or disposes of, the major (1)(B), any item or service brought into the ‘‘(B) any computer software, and portion of a trade or business or the major United States shall be treated as acquired by ‘‘(C) any property described in section portion of a separate unit of a trade or busi- purchase, and its cost shall be treated as not 168(f) (3) or (4), including any underlying ness during the taxable year. less than its fair market value immediately copyright or trademark. ‘‘(c) QUALIFIED PRODUCTION ACTIVITIES IN- after it entered the United States. A similar ‘‘(2) EXCLUSIONS FROM QUALIFYING PRODUC- COME.—For purposes of this section— rule shall apply in determining the adjusted TION PROPERTY.—The term ‘qualifying pro- ‘‘(1) IN GENERAL.—The term ‘qualified pro- basis of leased or rented property where the duction property’ shall not include— duction activities income’ means an amount lease or rental gives rise to domestic produc- ‘‘(A) consumable property that is sold, equal to the portion of the modified taxable tion gross receipts. leased, or licensed by the taxpayer as an in- income of the taxpayer which is attributable ‘‘(B) EXPORTS FOR FURTHER MANUFAC- tegral part of the provision of services, to domestic production activities. TURE.—In the case of any property described ‘‘(B) oil or gas,

VerDate jul 14 2003 02:43 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00124 Fmt 4624 Sfmt 0634 E:\CR\FM\A03MR6.077 S03PT1 March 3, 2004 CONGRESSIONAL RECORD — SENATE S2143 ‘‘(C) electricity, tion shall not be reduced under section 1382 termining the portion of the taxable income ‘‘(D) water supplied by pipeline to the con- by the portion of any such amount with re- which is attributable to domestic production sumer, spect to which an exclusion is allowable to a gross receipts.’’. ‘‘(E) utility services, or person by reason of this paragraph. (b) MINIMUM TAX.—Section 56(g)(4)(C) (re- ‘‘(F) any film, tape, recording, book, maga- ‘‘(B) SPECIAL RULES.—For purposes of ap- lating to disallowance of items not deduct- zine, newspaper, or similar property the mar- plying subparagraph (A), in determining the ible in computing earnings and profits) is ket for which is primarily topical or other- qualified production activities income of the amended by adding at the end the following wise essentially transitory in nature. organization under this section— new clause: ‘‘(g) DOMESTIC/WORLDWIDE FRACTION.—For ‘‘(i) there shall not be taken into account ‘‘(v) DEDUCTION FOR DOMESTIC PRODUC- purposes of this section— in computing the organization’s modified TION.—Clause (i) shall not apply to any ‘‘(1) IN GENERAL.—The term ‘domestic/ taxable income any deduction allowable amount allowable as a deduction under sec- worldwide fraction’ means a fraction (not under subsection (b) or (c) of section 1382 (re- tion 199.’’. greater than 1)— lating to patronage dividends, per-unit re- (c) CLERICAL AMENDMENT.—The table of ‘‘(A) the numerator of which is the value of tain allocations, and nonpatronage distribu- sections for part VI of subchapter B of chap- the domestic production of the taxpayer, and tions), and ter 1 is amended by adding at the end the fol- ‘‘(B) the denominator of which is the value ‘‘(ii) the organization shall be treated as lowing new item: of the worldwide production of the taxpayer. having manufactured, produced, grown, or ‘‘Sec. 199, Income attributable to domestic ‘‘(2) VALUE OF DOMESTIC PRODUCTION.—The extracted in whole or significant part any production activities.’’. value of domestic production is the excess (if qualifying production property marketed by (d) EFFECTIVE DATE.— the organization which its patrons have so any) of— (1) IN GENERAL.—The amendments made by manufactured, produced, grown, or ex- ‘‘(A) the domestic production gross re- this section shall apply to taxable years end- tracted. ceipts, over ing after the date of the enactment of this ‘‘(3) SPECIAL RULE FOR AFFILIATED ‘‘(B) the cost of purchased inputs allocable Act. GROUPS.— to such receipts that are deductible under (2) APPLICATION OF SECTION 15.—Section 15 ‘‘(A) IN GENERAL.—All members of an ex- this chapter for the taxable year. of the Internal Revenue Code of 1986 shall ‘‘(3) PURCHASED INPUTS.— panded affiliated group shall be treated as a single corporation for purposes of this sec- apply to the amendments made by this sec- ‘‘(A) IN GENERAL.—Purchased inputs are tion as if they were changes in a rate of tax. any of the following items acquired by pur- tion. ‘‘(B) EXPANDED AFFILIATED GROUP.—The SEC. 103. MODIFICATION TO CORPORATE ESTI- chase: MATED TAX REQUIREMENTS. ‘‘(i) Services (other than services of em- term ‘expanded affiliated group’ means an (a) REQUIREMENTS FOR 2005.—The amount ployees) used in manufacture, production, affiliated group as defined in section 1504(a), determined— of any required installment of corporate esti- growth, or extraction activities. mated income tax which is otherwise due ‘‘(ii) Items consumed in connection with ‘‘(i) by substituting ‘50 percent’ for ‘80 percent’ each place it appears, and under section 6655 of the Internal Revenue such activities. Code of 1986 after June 30, 2005, and before ‘‘(iii) Items incorporated as part of the ‘‘(ii) without regard to paragraphs (2) and (4) of section 1504(b). October 1, 2005, shall be 110 percent of such property being manufactured, produced, amount. grown, or extracted. For purposes of determining the domestic/ (b) REQUIREMENTS FOR 2009.—The amount ‘‘(B) SPECIAL RULE.—Rules similar to the worldwide fraction under subsection (g), clause (ii) shall be applied by also dis- of any required installment of corporate esti- rules of subsection (d)(3) shall apply for pur- mated income tax which is otherwise due poses of this subsection. regarding paragraphs (3) and (8) of section 1504(b). under section 6655 of the Internal Revenue ‘‘(4) VALUE OF WORLDWIDE PRODUCTION.— Code of 1986 after June 30, 2009, and before ‘‘(A) IN GENERAL.—The value of worldwide ‘‘(4) COORDINATION WITH MINIMUM TAX.—The deduction under this section shall be allowed October 1, 2009, shall be 119 percent of such production shall be determined under the amount. principles of paragraph (2), except that— for purposes of the tax imposed by section 55; except that for purposes of section 55, alter- ‘‘(i) worldwide production gross receipts SA 2670. Mr. SANTORUM (for himself shall be taken into account, and native minimum taxable income shall be and Mr. LIEBERMAN) submitted an ‘‘(ii) paragraph (3)(B) shall not apply. taken into account in determining the de- ‘‘(B) WORLDWIDE PRODUCTION GROSS RE- duction under this section. amendment intended to be proposed by CEIPTS.—The worldwide production gross re- ‘‘(5) ORDERING RULE.—The amount of any him to the bill S. 1637, to amend the In- ceipts is the amount that would be deter- other deduction allowable under this chapter ternal Revenue Code of 1986 to comply mined under subsection (e) if such subsection shall be determined as if this section had not with the World Trade Organization rul- were applied without any reference to the been enacted. ings on the FSC/ETI benefit in a man- ‘‘(6) TRADE OR BUSINESS REQUIREMENT.— United States. ner that preserves jobs and production ‘‘(h) DEFINITIONS AND SPECIAL RULES.— This section shall be applied by only taking into account items which are attributable to activities in the United States, to re- ‘‘(1) APPLICATION OF SECTION TO PASS-THRU form and simplify the international ENTITIES.—In the case of an S corporation, the actual conduct of a trade or business. partnership, estate or trust, or other pass- ‘‘(7) POSSESSIONS, ETC.— taxation rules of the United States, ‘‘(A) IN GENERAL.—For purposes of sub- thru entity— and for other purposes; which was or- section (d) and (e), the term ‘United States’ ‘‘(A) subject to the provisions of paragraph dered to lie on the table; as follows: includes the Commonwealth of Puerto Rico, (2) and subsection (b)(3)(A), this section shall At the end add the following: Guam, American Samoa, the Commonwealth be applied at the shareholder, partner, or of the Northern Mariana Islands, and the DIVISION B—CARE ACT similar level, and Virgin Islands of the United States. ‘‘(B) the Secretary shall prescribe rules for SECTION 1. SHORT TITLE; ETC. ‘‘(B) SPECIAL RULES FOR APPLYING WAGE the application of this section, including (a) SHORT TITLE.—This division may be LIMITATION.—For purposes of applying the rules relating to— cited as the ‘‘CARE Act of 2004’’. limitation under subsection (b) for any tax- ‘‘(i) restrictions on the allocation of the (b) AMENDMENT OF 1986 CODE.—Except as able year— deduction to taxpayers at the partner or otherwise expressly provided, whenever in ‘‘(i) the determination of W–2 wages of a similar level, and this division an amendment or repeal is ex- taxpayer shall be made without regard to ‘‘(ii) additional reporting requirements. pressed in terms of an amendment to, or re- any exclusion under section 3401(a)(8) for repeal of, a section or other provision, the ref- ‘‘(2) EXCLUSION FOR PATRONS OF AGRICUL- muneration paid for services performed in a erence shall be considered to be made to a TURAL AND HORTICULTURAL COOPERATIVES.— jurisdiction described in subparagraph (A), section or other provision of the Internal ‘‘(A) IN GENERAL.—If any amount described and in paragraph (1) or (3) of section 1385(a)— Revenue Code of 1986. ‘‘(ii) in determining the amount of any (c) TABLE OF CONTENTS.—The table of con- ‘‘(i) is received by a person from an organi- credit allowable under section 30A or 936 for zation to which part I of subchapter T ap- tents for this division is as follows: the taxable year, there shall not be taken Sec. 1. Short title; etc. plies which is engaged in the marketing of into account any wages which are taken into agricultural or horticultural products, and account in applying such limitation. TITLE I—CHARITABLE GIVING ‘‘(ii) is allocable to the portion of the ‘‘(8) COORDINATION WITH TRANSITION INCENTIVES qualified production activities income of the RULES.—For purposes of this section— Sec. 101. Deduction for portion of charitable organization which is deductible under sub- ‘‘(A) domestic production gross receipts contributions to be allowed to section (a) and designated as such by the or- shall not include gross receipts from any individuals who do not itemize ganization in a written notice mailed to its transaction if the binding contract transi- deductions. patrons during the payment period described tion relief of section 101(c)(2) of the Sec. 102. Tax-free distributions from indi- in section 1382(d), Jumpstart Our Business Strength (JOBS) vidual retirement accounts for then such person shall be allowed an exclu- Act applies to such transaction, and charitable purposes. sion from gross income with respect to such ‘‘(B) any deduction allowed under section Sec. 103. Charitable deduction for contribu- amount. The taxable income of the organiza- 101(e) of such Act shall be disregarded in de- tions of food inventories.

VerDate jul 14 2003 02:43 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00125 Fmt 4624 Sfmt 0655 E:\CR\FM\A03MR6.092 S03PT1 S2144 CONGRESSIONAL RECORD — SENATE March 3, 2004 Sec. 104. Charitable deduction for contribu- Sec. 311. Charitable contribution deduction Sec. 711. Understatement of taxpayer’s li- tions of book inventories. for certain expenses incurred in ability by income tax return Sec. 105. Expansion of charitable contribu- support of Native Alaskan sub- preparer. tion allowed for scientific prop- sistence whaling. Sec. 712. Penalty on failure to report inter- erty used for research and for Sec. 312. Matching grants to low-income ests in foreign financial ac- computer technology and taxpayer clinics for return counts. equipment used for educational preparation. Sec. 713. Frivolous tax submissions. purposes. Sec. 313. Exemption of qualified 501(c)(3) Sec. 714. Regulation of individuals prac- Sec. 106. Modifications to encourage con- bonds for nursing homes from ticing before the Department of tributions of capital gain real Federal guarantee prohibitions. Treasury. property made for conservation Sec. 314. Excise taxes exemption for blood Sec. 715. Penalty on promoters of tax shel- purposes. collector organizations. ters. Sec. 107. Exclusion of 25 percent of gain on Sec. 315. Pilot project for forest conserva- Sec. 716. Statute of limitations for taxable sales or exchanges of land or tion activities. years for which listed trans- Sec. 316. Clarification of treatment of John- water interests to eligible enti- actions not reported. ny Micheal Spann Patriot ties for conservation purposes. Sec. 717. Denial of deduction for interest on Trusts. Sec. 108. Tax exclusion for cost-sharing pay- underpayments attributable to ments under Partners for Fish TITLE IV—SOCIAL SERVICES BLOCK nondisclosed reportable and and Wildlife Program. GRANT noneconomic substance trans- Sec. 109. Adjustment to basis of S corpora- Sec. 401. Restoration of funds for the Social actions. Sec. 718. Authorization of appropriations for tion stock for certain chari- Services Block Grant. tax law enforcement. table contributions. Sec. 402. Restoration of authority to trans- Sec. 110. Enhanced deduction for charitable fer up to 10 percent of TANF Subtitle B—Other Provisions contribution of literary, musi- funds to the Social Services Sec. 721. Affirmation of consolidated return cal, artistic, and scholarly com- Block Grant. regulation authority. positions. Sec. 403. Requirement to submit annual re- Sec. 722. Signing of corporate tax returns by Sec. 111. Mileage reimbursements to chari- port on State activities. chief executive officer. table volunteers excluded from TITLE V—INDIVIDUAL DEVELOPMENT Sec. 723. Securities civil enforcement provi- gross income. ACCOUNTS sions. Sec. 112. Extension of enhanced deduction Sec. 501. Short title. Sec. 724. Review of State agency blindness for inventory to include public Sec. 502. Purposes. and disability determinations. schools. Sec. 503. Definitions. TITLE VIII—COMPASSION CAPITAL FUND Sec. 113. 10-year divestiture period for cer- Sec. 504. Structure and administration of Sec. 801. Support for nonprofit community- tain excess business holdings of qualified individual develop- based organizations; Depart- private foundations ment account programs. ment of Health and Human Sec. 505. Procedures for opening and main- TITLE II—PROPOSALS IMPROVING THE Services. taining an individual develop- Sec. 802. Support for nonprofit community- OVERSIGHT OF TAX-EXEMPT ORGANI- ment account and qualifying ZATIONS based organizations; Corpora- for matching funds. tion for National and Commu- Sec. 506. Deposits by qualified individual de- Sec. 201. Disclosure of written determina- nity Service. tions. velopment account programs. Sec. 803. Support for nonprofit community- Sec. 507. Withdrawal procedures. Sec. 202. Disclosure of Internet web site and based organizations; Depart- name under which organization Sec. 508. Certification and termination of qualified individual development of Justice. does business. Sec. 804. Support for nonprofit community- ment account programs. Sec. 203. Modification to reporting capital based organizations; Depart- transactions. Sec. 509. Reporting, monitoring, and evaluation. ment of Housing and Urban De- Sec. 204. Disclosure that Form 990 is pub- velopment. licly available. Sec. 510. Authorization of appropriations. Sec. 511. Matching funds for individual de- Sec. 805. Coordination. Sec. 205. Disclosure to State officials of pro- velopment accounts provided TITLE IX—MATERNITY GROUP HOMES posed actions related to section through a tax credit for quali- 501(c) organizations. Sec. 901. Maternity group homes. fied financial institutions. TITLE I—CHARITABLE GIVING Sec. 206. Expansion of penalties to preparers Sec. 512. Account funds disregarded for pur- INCENTIVES of Form 990. poses of certain means-tested Sec. 207. Notification requirement for enti- Federal programs. SEC. 101. DEDUCTION FOR PORTION OF CHARI- ties not currently required to TABLE CONTRIBUTIONS TO BE AL- TITLE VI—MANAGEMENT OF EXEMPT file. LOWED TO INDIVIDUALS WHO DO ORGANIZATIONS Sec. 208. Suspension of tax-exempt status of NOT ITEMIZE DEDUCTIONS. terrorist organizations. Sec. 601. Authorization of appropriations. (a) IN GENERAL.—Section 170 (relating to TITLE VII—REVENUE PROVISIONS charitable, etc., contributions and gifts) is TITLE III—OTHER CHARITABLE AND amended by redesignating subsection (m) as EXEMPT ORGANIZATION PROVISIONS Subtitle A—Provisions Designed To Curtail Tax Shelters subsection (n) and by inserting after sub- Sec. 301. Modification of excise tax on unre- section (l) the following new subsection: Sec. 701. Clarification of economic substance lated business taxable income ‘‘(m) DEDUCTION FOR INDIVIDUALS NOT doctrine. of charitable remainder trusts. ITEMIZING DEDUCTIONS.—In the case of an in- Sec. 702. Penalty for failing to disclose re- Sec. 302. Modifications to section 512(b)(13). dividual who does not itemize deductions for Sec. 303. Simplification of lobbying expendi- portable transaction. Sec. 703. Accuracy-related penalty for listed any taxable year, there shall be taken into ture limitation. transactions and other report- account as a direct charitable deduction Sec. 304. Expedited review process for cer- able transactions having a sig- under section 63 an amount equal to the tain tax-exemption applica- nificant tax avoidance purpose. amount allowable under subsection (a) for tions. Sec. 704. Penalty for understatements at- the taxable year for cash contributions, to Sec. 305. Clarification of definition of church tributable to transactions lack- the extent that such contributions exceed tax inquiry. ing economic substance, etc. $250 ($500 in the case of a joint return) but do Sec. 306. Expansion of declaratory judgment Sec. 705. Modifications of substantial under- not exceed $500 ($1,000 in the case of a joint remedy to tax-exempt organiza- statement penalty for non- return).’’. tions. reportable transactions. (b) DIRECT CHARITABLE DEDUCTION.— Sec. 307. Definition of convention or associa- Sec. 706. Tax shelter exception to confiden- (1) IN GENERAL.—Subsection (b) of section tion of churches. tiality privileges relating to 63 (defining taxable income) is amended by Sec. 308. Payments by charitable organiza- taxpayer communications. striking ‘‘and’’ at the end of paragraph (1), tions to victims of war on ter- Sec. 707. Disclosure of reportable trans- by striking the period at the end of para- rorism and families of astro- actions. graph (2) and inserting ‘‘, and’’, and by add- nauts killed in the line of duty. Sec. 708. Modifications to penalty for failure ing at the end the following new paragraph: Sec. 309. Modification of scholarship founda- to register tax shelters. ‘‘(3) the direct charitable deduction.’’. tion rules. Sec. 709. Modification of penalty for failure (2) DEFINITION.—Section 63 is amended by Sec. 310. Treatment of certain hospital sup- to maintain lists of investors. redesignating subsection (g) as subsection port organizations as qualified Sec. 710. Modification of actions to enjoin (h) and by inserting after subsection (f) the organizations for purposes of certain conduct related to tax following new subsection: determining acquisition indebt- shelters and reportable trans- ‘‘(g) DIRECT CHARITABLE DEDUCTION.—For edness. actions. purposes of this section, the term ‘direct

VerDate jul 14 2003 02:43 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00126 Fmt 4624 Sfmt 0634 E:\CR\FM\A03MR6.086 S03PT1 March 3, 2004 CONGRESSIONAL RECORD — SENATE S2145 charitable deduction’ means that portion of tion described in section 170(c) would be al- ‘‘(B) the amount paid out within such year the amount allowable under section 170(a) lowable under section 170 (determined with- which represents amounts for which deduc- which is taken as a direct charitable deduc- out regard to subsection (b) thereof and this tions under section 642(c) have been taken in tion for the taxable year under section paragraph). prior years, 170(m).’’. ‘‘(D) APPLICATION OF SECTION 72.—Notwith- ‘‘(C) the amount for which such deductions (3) CONFORMING AMENDMENT.—Subsection standing section 72, in determining the ex- have been taken in prior years but which has (d) of section 63 is amended by striking tent to which a distribution is a qualified not been paid out at the beginning of such ‘‘and’’ at the end of paragraph (1), by strik- charitable distribution, the entire amount of year, ing the period at the end of paragraph (2) and the distribution shall be treated as includ- ‘‘(D) the amount paid out of principal in inserting ‘‘, and’’, and by adding at the end ible in gross income without regard to sub- the current and prior years for the purposes the following new paragraph: paragraph (A) to the extent that such described in section 642(c), ‘‘(3) the direct charitable deduction.’’. amount does not exceed the aggregate ‘‘(E) the total income of the trust within (c) STUDY.— amount which would have been so includible such year and the expenses attributable (1) IN GENERAL.—The Secretary of the if all amounts were distributed from all indi- thereto, and Treasury shall study the effect of the amend- vidual retirement accounts treated as 1 con- ‘‘(F) a balance sheet showing the assets, li- ments made by this section on increased tract under paragraph (2)(A) for purposes of abilities, and net worth of the trust as of the charitable giving and taxpayer compliance, determining the inclusion on such distribu- beginning of such year. including a comparison of taxpayer compli- tion under section 72. Proper adjustments ‘‘(2) EXCEPTIONS.—Paragraph (1) shall not ance between taxpayers who itemize their shall be made in applying section 72 to other apply to a trust for any taxable year if— charitable contributions and taxpayers who distributions in such taxable year and subse- ‘‘(A) all the net income for such year, de- claim a direct charitable deduction. quent taxable years. termined under the applicable principles of (2) REPORT.—By not later than December ‘‘(E) SPECIAL RULES FOR SPLIT-INTEREST EN- the law of trusts, is required to be distrib- 31, 2004, the Secretary of the Treasury shall TITIES.— uted currently to the beneficiaries, or report on the study required under para- ‘‘(i) CHARITABLE REMAINDER TRUSTS.—Not- ‘‘(B) the trust is described in section graph (1) to the Committee on Finance of the withstanding section 664(b), distributions 4947(a)(1).’’. Senate and the Committee on Ways and made from a trust described in subparagraph (2) INCREASE IN PENALTY RELATING TO FIL- Means of the House of Representatives. (G)(i) shall be treated as ordinary income in ING OF INFORMATION RETURN BY SPLIT-INTER- (d) EFFECTIVE DATE.—The amendments the hands of the beneficiary to whom is paid EST TRUSTS.—Paragraph (2) of section 6652(c) made by this section shall apply to taxable the annuity described in section 664(d)(1)(A) (relating to returns by exempt organizations years beginning after December 31, 2002, and or the payment described in section and by certain trusts) is amended by adding before January 1, 2005. 664(d)(2)(A). at the end the following new subparagraph: SEC. 102. TAX-FREE DISTRIBUTIONS FROM INDI- ‘‘(ii) POOLED INCOME FUNDS.—No amount ‘‘(C) SPLIT-INTEREST TRUSTS.—In the case VIDUAL RETIREMENT ACCOUNTS shall be includible in the gross income of a of a trust which is required to file a return FOR CHARITABLE PURPOSES. pooled income fund (as defined in subpara- under section 6034(a), subparagraphs (A) and (a) IN GENERAL.—Subsection (d) of section graph (G)(ii)) by reason of a qualified chari- (B) of this paragraph shall not apply and 408 (relating to individual retirement ac- table distribution to such fund, and all dis- paragraph (1) shall apply in the same manner counts) is amended by adding at the end the tributions from the fund which are attrib- as if such return were required under section following new paragraph: utable to qualified charitable distributions 6033, except that— ‘‘(8) DISTRIBUTIONS FOR CHARITABLE PUR- shall be treated as ordinary income to the ‘‘(i) the 5 percent limitation in the second POSES.— beneficiary. sentence of paragraph (1)(A) shall not apply, ‘‘(A) IN GENERAL.—No amount shall be in- ‘‘(iii) CHARITABLE GIFT ANNUITIES.—Quali- ‘‘(ii) in the case of any trust with gross includible in gross income by reason of a qualified charitable distributions made for a char- come in excess of $250,000, the first sentence fied charitable distribution. itable gift annuity shall not be treated as an of paragraph (1)(A) shall be applied by sub- ‘‘(B) QUALIFIED CHARITABLE DISTRIBUTION.— investment in the contract. stituting ‘$100’ for ‘$20’, and the second sen- For purposes of this paragraph, the term ‘‘(F) DENIAL OF DEDUCTION.—Qualified char- tence thereof shall be applied by substituting ‘qualified charitable distribution’ means any itable distributions shall not be taken into ‘$50,000’ for ‘$10,000’, and distribution from an individual retirement account in determining the deduction under ‘‘(iii) the third sentence of paragraph (1)(A) account— section 170. shall be disregarded. ‘‘(i) which is made directly by the trustee— ‘‘(G) SPLIT-INTEREST ENTITY DEFINED.—For In addition to any penalty imposed on the ‘‘(I) to an organization described in section purposes of this paragraph, the term ‘split- trust pursuant to this subparagraph, if the 170(c), or interest entity’ means— person required to file such return know- ‘‘(II) to a split-interest entity, and ‘‘(i) a charitable remainder annuity trust ingly fails to file the return, such penalty ‘‘(ii) which is made on or after— or a charitable remainder unitrust (as such shall also be imposed on such person who ‘‘(I) in the case of any distribution de- terms are defined in section 664(d)) which shall be personally liable for such penalty.’’. scribed in clause (i)(I), the date that the in- must be funded exclusively by qualified char- (3) CONFIDENTIALITY OF NONCHARITABLE dividual for whose benefit the account is itable distributions, BENEFICIARIES.—Subsection (b) of section maintained has attained age 701⁄2, and ‘‘(ii) a pooled income fund (as defined in 6104 (relating to inspection of annual infor- ‘‘(II) in the case of any distribution de- section 642(c)(5)), but only if the fund ac- mation returns) is amended by adding at the scribed in clause (i)(II), the the date that counts separately for amounts attributable end the following new sentence: ‘‘In the case such individual has attained age 591⁄2. to qualified charitable distributions, and of a trust which is required to file a return A distribution shall be treated as a qualified ‘‘(iii) a charitable gift annuity (as defined under section 6034(a), this subsection shall charitable distribution only to the extent in section 501(m)(5)).’’. not apply to information regarding bene- that the distribution would be includible in (b) MODIFICATIONS RELATING TO INFORMA- ficiaries which are not organizations de- TION RETURNS BY CERTAIN TRUSTS.— gross income without regard to subpara- scribed in section 170(c).’’. (1) RETURNS.—Section 6034 (relating to re- graph (A) and, in the case of a distribution to turns by trusts described in section 4947(a)(2) (c) EFFECTIVE DATES.— a split-interest entity, only if no person or claiming charitable deductions under sec- (1) SUBSECTION (a).—The amendment made holds an income interest in the amounts in tion 642(c)) is amended to read as follows: by subsection (a) shall apply to distribu- the split-interest entity attributable to such tions— distribution other than one or more of the ‘‘SEC. 6034. RETURNS BY TRUSTS DESCRIBED IN SECTION 4947(a)(2) OR CLAIMING (A) described in section 408(d)(8)(B)(i)(I) of following: the individual for whose benefit CHARITABLE DEDUCTIONS UNDER the Internal Revenue Code of 1986, as added such account is maintained, the spouse of SECTION 642(c). by this section, made after the date of the such individual, or any organization de- ‘‘(a) TRUSTS DESCRIBED IN SECTION enactment of this Act, and scribed in section 170(c). 4947(a)(2).—Every trust described in section (B) described in section 408(d)(8)(B)(i)(II) of ‘‘(C) CONTRIBUTIONS MUST BE OTHERWISE DE- 4947(a)(2) shall furnish such information with such Code, as so added, made after December DUCTIBLE.—For purposes of this paragraph— respect to the taxable year as the Secretary 31, 2003. ‘‘(i) DIRECT CONTRIBUTIONS.—A distribution may by forms or regulations require. (2) SUBSECTION (b).—The amendments made to an organization described in section 170(c) ‘‘(b) TRUSTS CLAIMING A CHARITABLE DE- by subsection (b) shall apply to returns for shall be treated as a qualified charitable dis- DUCTION UNDER SECTION 642(c).— taxable years beginning after December 31, tribution only if a deduction for the entire ‘‘(1) IN GENERAL.—Every trust not required 2003. distribution would be allowable under sec- to file a return under subsection (a) but tion 170 (determined without regard to sub- claiming a deduction under section 642(c) for SEC. 103. CHARITABLE DEDUCTION FOR CON- section (b) thereof and this paragraph). the taxable year shall furnish such informa- TRIBUTIONS OF FOOD INVENTORIES. ‘‘(ii) SPLIT-INTEREST GIFTS.—A distribution tion with respect to such taxable year as the (a) IN GENERAL.—Subsection (e) of section to a split-interest entity shall be treated as Secretary may by forms or regulations pre- 170 (relating to certain contributions of ordi- a qualified charitable distribution only if a scribe, including— nary income and capital gain property) is deduction for the entire value of the interest ‘‘(A) the amount of the deduction taken amended by adding at the end the following in the distribution for the use of an organiza- under section 642(c) within such year, new paragraph:

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‘‘(7) APPLICATION OF PARAGRAPH (3) TO CER- ‘‘(II) the property is to be used by the (c) EFFECTIVE DATE.—The amendments TAIN CONTRIBUTIONS OF FOOD INVENTORY.—For donee solely for the care of the ill, the needy, made by this section shall apply to taxable purposes of this section— or infants. years beginning after December 31, 2002. ‘‘(A) EXTENSION TO INDIVIDUALS.—In the ‘‘(ii) AMOUNT OF REDUCTION.—Notwith- SEC. 106. MODIFICATIONS TO ENCOURAGE CON- case of a charitable contribution of appar- standing subparagraph (B), the amount of TRIBUTIONS OF CAPITAL GAIN REAL ently wholesome food— the reduction determined under paragraph PROPERTY MADE FOR CONSERVA- ‘‘(i) paragraph (3)(A) shall be applied with- (1)(A) shall not exceed the amount by which TION PURPOSES. out regard to whether the contribution is the fair market value of the contributed (a) IN GENERAL.—Section 170(h) (relating to made by a C corporation, and property (as determined by the taxpayer qualified conservation contribution) is ‘‘(ii) in the case of a taxpayer other than a using a bona fide published market price for amended by adding at the end the following C corporation, the aggregate amount of such such book) exceeds twice the basis of such new paragraph: contributions from any trade or business (or property. ‘‘(7) ADDITIONAL INCENTIVES FOR QUALIFIED interest therein) of the taxpayer for any tax- ‘‘(iii) QUALIFIED BOOK CONTRIBUTION.—For CONSERVATION CONTRIBUTIONS.— able year which may be taken into account purposes of this paragraph, the term ‘quali- ‘‘(A) IN GENERAL.—In the case of any quali- under this section shall not exceed 10 percent fied book contribution’ means a charitable fied conservation contribution (as defined in of the taxpayer’s net income from any such contribution of books, but only if the re- paragraph (1)) made by an individual— trade or business, computed without regard quirements of clauses (iv) and (v) are met. ‘‘(i) subparagraph (C) of subsection (b)(1) to this section, for such taxable year. ‘‘(iv) IDENTITY OF DONEE.—The requirement shall not apply, ‘‘(B) LIMITATION ON REDUCTION.—In the case of this clause is met if the contribution is to ‘‘(ii) except as provided in subparagraph of a charitable contribution of apparently an organization— (B)(i), subsections (b)(1)(A) and (d)(1) shall be wholesome food, notwithstanding paragraph ‘‘(I) described in subclause (I) or (III) of applied separately with respect to such con- (3)(B), the amount of the reduction deter- paragraph (6)(B)(i), or tributions by treating references to 50 per- mined under paragraph (1)(A) shall not ex- ‘‘(II) described in section 501(c)(3) and ex- cent of the taxpayer’s contribution base as ceed the amount by which the fair market empt from tax under section 501(a) (other references to the amount of such base re- value of such property exceeds twice the than a private foundation, as defined in sec- duced by the amount of other contributions basis of such property. tion 509(a), which is not an operating founda- allowable under subsection (b)(1)(A), and ‘‘(C) DETERMINATION OF BASIS.—If a tax- tion, as defined in section 4942(j)(3)), which is ‘‘(iii) subparagraph (A) of subsection (d)(1) payer— organized primarily to make books available shall be applied— ‘‘(i) does not account for inventories under to the general public at no cost or to operate ‘‘(I) by substituting ‘15 succeeding taxable section 471, and a literacy program. years’ for ‘5 succeeding taxable years’, and ‘‘(ii) is not required to capitalize indirect ‘‘(v) CERTIFICATION BY DONEE.—The require- ‘‘(II) by applying clause (ii) to each of the costs under section 263A, ment of this clause is met if, in addition to 15 succeeding taxable years. the taxpayer may elect, solely for purposes the certifications required by subparagraph ‘‘(B) SPECIAL RULES FOR ELIGIBLE FARMERS of paragraph (3)(B), to treat the basis of any (A) (as modified by this subparagraph), the AND RANCHERS.— apparently wholesome food as being equal to donee certifies in writing that— ‘‘(i) IN GENERAL.—In the case of any such 25 percent of the fair market value of such ‘‘(I) the books are suitable, in terms of cur- contributions by a taxpayer who is an eligi- food. rency, content, and quantity, for use in the ble farmer or rancher for the taxable year in ‘‘(D) DETERMINATION OF FAIR MARKET donee’s educational programs, and which such contributions are made— VALUE.—In the case of a charitable contribu- ‘‘(II) the donee will use the books in its ‘‘(I) if the taxpayer is an individual, sub- tion of apparently wholesome food which is a educational programs. sections (b)(1)(A) and (d)(1) shall be applied qualified contribution (within the meaning ‘‘(vi) BONA FIDE PUBLISHED MARKET PRICE.— separately with respect to such contribu- of paragraph (3), as modified by subpara- For purposes of this subparagraph, the term tions by substituting ‘the taxpayer’s con- graph (A) of this paragraph) and which, sole- ‘bona fide published market price’ means, tribution base reduced by the amount of ly by reason of internal standards of the tax- with respect to any book, a price— other contributions allowable under sub- payer or lack of market, cannot or will not ‘‘(I) determined using the same printing section (b)(1)(A)’ for ‘50 percent of the tax- be sold, the fair market value of such con- and edition, payer’s contribution base’ each place it ap- tribution shall be determined— ‘‘(II) determined in the usual market in pears, and ‘‘(i) without regard to such internal stand- which such a book has been customarily sold ‘‘(II) if the taxpayer is a corporation, sub- ards or such lack of market and by the taxpayer, and sections (b)(2) and (d)(2) shall be applied sep- ‘‘(ii) by taking into account the price at ‘‘(III) for which the taxpayer can dem- arately with respect to such contributions, which the same or substantially the same onstrate to the satisfaction of the Secretary subsection (b)(2) shall be applied with re- food items (as to both type and quality) are that the taxpayer customarily sold such spect to such contributions as if such sub- sold by the taxpayer at the time of the con- books in arm’s length transactions within 7 section did not contain the words ‘10 percent tribution (or, if not so sold at such time, in years preceding the contribution of such a of’ and as if subparagraph (A) thereof read the recent past). book.’’. ‘the deduction under this section for quali- ‘‘(E) APPARENTLY WHOLESOME FOOD.—For (b) EFFECTIVE DATE.—The amendments fied conservation contributions’, and rules purposes of this paragraph, the term ‘appar- made by this section shall apply to contribu- similar to the rules of subparagraph (A)(iii) ently wholesome food’ has the meaning given tions made after the date of the enactment shall apply for purposes of subsection (d)(2). such term by section 22(b)(2) of the Bill of this Act ‘‘(ii) DEFINITION.—For purposes of clause Emerson Good Samaritan Food Donation SEC. 105. EXPANSION OF CHARITABLE CON- (i), the term ‘eligible farmer or rancher’ Act (42 U.S.C. 1791(b)(2)), as in effect on the TRIBUTION ALLOWED FOR SCI- means a taxpayer whose gross income from date of the enactment of this paragraph.’’. ENTIFIC PROPERTY USED FOR RE- the trade or business of farming (within the SEARCH AND FOR COMPUTER TECH- meaning of section 2032A(e)(5)) is at least 51 (b) EFFECTIVE DATE.—The amendment NOLOGY AND EQUIPMENT USED FOR percent of the taxpayer’s gross income for EDUCATIONAL PURPOSES. made by this section shall apply to contribu- the taxable year, and, in the case of a C cor- (a) SCIENTIFIC PROPERTY USED FOR RE- tions made after the date of the enactment poration, the stock of which is not publicly SEARCH.— of this Act. traded on a recognized exchange.’’. (1) IN GENERAL.—Clause (ii) of section (b) EFFECTIVE DATE.—The amendment SEC. 104. CHARITABLE DEDUCTION FOR CON- 170(e)(4)(B) (defining qualified research con- made by this section shall apply to contribu- TRIBUTIONS OF BOOK INVEN- tributions) is amended by inserting ‘‘or as- TORIES. tions made after the date of the enactment sembled’’ after ‘‘constructed’’. of this Act. (a) IN GENERAL.—Section 170(e)(3) (relating (2) CONFORMING AMENDMENT.—Clause (iii) of to certain contributions of ordinary income section 170(e)(4)(B) is amended by inserting SEC. 107. EXCLUSION OF 25 PERCENT OF GAIN ON and capital gain property) is amended by re- SALES OR EXCHANGES OF LAND OR ‘‘or assembling’’ after ‘‘construction’’. WATER INTERESTS TO ELIGIBLE EN- designating subparagraph (C) as subpara- (b) COMPUTER TECHNOLOGY AND EQUIPMENT TITIES FOR CONSERVATION PUR- graph (D) and by inserting after subpara- FOR EDUCATIONAL PURPOSES.— POSES. graph (B) the following new subparagraph: (1) IN GENERAL.—Clause (ii) of section (a) IN GENERAL.—Part III of subchapter B ‘‘(C) SPECIAL RULE FOR CONTRIBUTIONS OF 170(e)(6)(B) is amended by inserting ‘‘or as- of chapter 1 (relating to items specifically BOOK INVENTORY FOR EDUCATIONAL PUR- sembled’’ after ‘‘constructed’’ and ‘‘or assem- excluded from gross income) is amended by POSES.— bling’’ after ‘‘construction’’. inserting after section 121 the following new ‘‘(i) CONTRIBUTIONS OF BOOK INVENTORY.—In (2) SPECIAL RULE EXTENDED.—Section section: determining whether a qualified book con- 170(e)(6)(G) is amended by striking ‘‘2003’’ ‘‘SEC. 121A. 25-PERCENT EXCLUSION OF GAIN ON tribution is a qualified contribution, sub- and inserting ‘‘2005’’. SALES OR EXCHANGES OF LAND OR paragraph (A) shall be applied without re- (3) CONFORMING AMENDMENTS.—Subpara- WATER INTERESTS TO ELIGIBLE EN- gard to whether— graph (D) of section 170(e)(6) is amended by TITIES FOR CONSERVATION PUR- ‘‘(I) the donee is an organization described inserting ‘‘or assembled’’ after ‘‘con- POSES. in the matter preceding clause (i) of subpara- structed’’ and ‘‘or assembling’’ after ‘‘con- ‘‘(a) EXCLUSION.—Gross income shall not graph (A), and struction’’. include 25 percent of the qualifying gain

VerDate jul 14 2003 02:43 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00128 Fmt 4624 Sfmt 0634 E:\CR\FM\A03MR6.086 S03PT1 March 3, 2004 CONGRESSIONAL RECORD — SENATE S2147 from a conservation sale of a long-held quali- ‘‘(iii) a qualified real property interest (as property the ownership or possession of fying land or water interest. defined in section 170(h)(2)), or which is transferred, or ‘‘(b) QUALIFYING GAIN.—For purposes of ‘‘(iv) stock in a qualifying land or water ‘‘(ii) 20 percent of the fair market value this section— corporation. (determined at the time immediately after ‘‘(1) IN GENERAL.—The term ‘qualifying ‘‘(B) ENTIRE INTEREST.—For purposes of the removal) of the property upon which the gain’ means any gain which would be recog- clause (i) or (ii) of subparagraph (A)— conservation restriction was removed, plus nized as long-term capital gain, reduced by ‘‘(i) a partial interest in land or water is ‘‘(B) the product of— the amount of any long-term capital gain at- not a taxpayer’s entire interest if an interest ‘‘(i) the highest rate of tax specified in sec- tributable to disqualified improvements. in land or water was divided in order to cretion 11, times ‘‘(2) DISQUALIFIED IMPROVEMENT.—For pur- ate such partial interest in order to avoid ‘‘(ii) any gain or income realized by the poses of paragraph (1), the term ‘disqualified the requirements of such clause or section transferor or person removing such restric- improvement’ means any building, structure, 170(f)(3)(A), and tion as a result of the transfer or removal. or other improvement, other than— ‘‘(ii) a taxpayer’s entire interest in certain ‘‘(3) LIABILITY.—The tax imposed by para- ‘‘(A) any improvement which is described land does not fail to satisfy subparagraph graph (1) shall be paid— in section 175(c)(1), determined— (A)(i) solely because the taxpayer has re- ‘‘(A) on any transfer, by the transferor, and ‘‘(i) without regard to the requirements tained an interest in other land, even if the ‘‘(B) on any removal of a conservation re- that the taxpayer be engaged in farming, and other land is contiguous with such certain striction contained in an instrument of con- ‘‘(ii) without taking into account subpara- land and was acquired by the taxpayer along veyance, by the person removing such re- graphs (A) and (B) thereof, or with such certain land in a single convey- striction. ‘‘(B) any improvement which the Secretary ance. ‘‘(4) RELIEF FROM LIABILITY.—The person determines directly furthers conservation (otherwise liable for any tax imposed by ‘‘(e) OTHER DEFINITIONS.—For purposes of purposes. this section— paragraph (1)) shall be relieved of liability ‘‘(3) SPECIAL RULE FOR SALES OF STOCK.—If for the tax imposed by paragraph (1)— ‘‘(1) ELIGIBLE ENTITY.—The term ‘eligible the long-held qualifying land or water inter- entity’ means— ‘‘(A) with respect to any transfer if— est is 1 or more shares of stock in a quali- ‘‘(A) a governmental unit referred to in ‘‘(i) the transferee is an eligible entity fying land or water corporation, the quali- section 170(c)(1), or an agency or department which provides such person, at the time of fying gain is equal to the lesser of— transfer, a qualifying letter of intent, thereof operated primarily for 1 or more of ‘‘(A) the qualifying gain determined under ‘‘(ii) in any case where the transferee is the conservation purposes specified in clause paragraph (1), or not an eligible entity, it is established to the (i), (ii), or (iii) of section 170(h)(4)(A), or ‘‘(B) the product of— satisfaction of the Secretary, that the trans- ‘‘(B) an entity which is— ‘‘(i) the percentage of such corporation’s fer of ownership or possession, as the case ‘‘(i) described in section 170(b)(1)(A)(vi) or stock which is transferred by the taxpayer, may be, will be consistent with section section 170(h)(3)(B), and times 170(h)(5), and the transferee provides such ‘‘(ii) organized and at all times operated ‘‘(ii) the amount which would have been person, at the time of transfer, a qualifying primarily for 1 or more of the conservation the qualifying gain (determined under para- letter of intent, or purposes specified in clause (i), (ii), or (iii) of graph (1)) if there had been a conservation ‘‘(iii) tax has previously been paid under section 170(h)(4)(A). sale by such corporation of all of its inter- this subsection as a result of a prior transfer ‘‘(2) QUALIFYING LETTER OF INTENT.—The ests in the land and water for a price equal of ownership or possession of the same prop- term ‘qualifying letter of intent’ means a to the product of the fair market value of erty, or written letter of intent which includes the such interests times the ratio of— ‘‘(B) with respect to any removal of a con- following statement: ‘The transferee’s intent ‘‘(I) the proceeds of the conservation sale servation restriction contained in an instru- is that this acquisition will serve 1 or more of the stock, to ment of conveyance, if it is established to of the conservation purposes specified in ‘‘(II) the fair market value of the stock the satisfaction of the Secretary that the re- clause (i), (ii), or (iii) of section 170(h)(4)(A) which was the subject of the conservation tention of the restriction was impracticable of the Internal Revenue Code of 1986, that sale. or impossible and the proceeds continue to the transferee’s use of the property so ac- ‘‘(c) CONSERVATION SALE.—For purposes of be used in a manner consistent with 1 or quired will be consistent with section this section, the term ‘conservation sale’ more of the conservation purposes specified 170(h)(5) of such Code, and that the use of the means a sale or exchange which meets the in clause (i), (ii), or (iii) of section property will continue to be consistent with following requirements: 170(h)(4)(A). such section, even if ownership or possession ‘‘(1) TRANSFEREE IS AN ELIGIBLE ENTITY.— ‘‘(5) ADMINISTRATIVE PROVISIONS.—For pur- of such property is subsequently transferred The transferee of the long-held qualifying poses of subtitle F, the taxes imposed by this to another person.’ land or water interest is an eligible entity. subsection shall be treated as excise taxes ‘‘(3) QUALIFYING LAND OR WATER CORPORA- ‘‘(2) QUALIFYING LETTER OF INTENT RE- with respect to which the deficiency proce- TION.—The term ‘qualifying land or water QUIRED.—At the time of the sale or exchange, dures of such subtitle apply. corporation’ means a C corporation (as de- such transferee provides the taxpayer with a ‘‘(6) REPORTING.—The Secretary may refined in section 1361(a)(2)) if, as of the date of qualifying letter of intent. quire such reporting as may be necessary or the conservation sale— ‘‘(3) NONAPPLICATION TO CERTAIN SALES.— appropriate to further the purpose under this ‘‘(A) the fair market value of the corpora- The sale or exchange is not made pursuant section that any conservation use be in per- tion’s interests in land or water held by the to an order of condemnation or eminent do- petuity.’’. main. corporation at all times during the preceding (b) CLERICAL AMENDMENT.—The table of ‘‘(4) CONTROLLING INTEREST IN STOCK SALE 5 years equals or exceeds 90 percent of the sections for part III of subchapter B of chap- REQUIRED.—In the case of the sale or ex- fair market value of all of such corporation’s ter 1 is amended by inserting after the item change of stock in a qualifying land or water assets, and relating to section 121 the following new corporation, at the end of the taxpayer’s tax- ‘‘(B) not more than 50 percent of the total item: fair market value of such corporation’s as- able year in which such sale or exchange oc- ‘‘Sec. 121A. 25-percent exclusion of gain on curs, the transferee’s ownership of stock in sets consists of water rights or infrastructure related to the delivery of water, or both. sales or exchanges of land or such corporation meets the requirements of water interests to eligible enti- ‘‘(f) TAX ON SUBSEQUENT TRANSFERS OR RE- section 1504(a)(2) (determined by sub- ties for conservation pur- MOVALS OF CONSERVATION RESTRICTIONS.— stituting ‘90 percent’ for ‘80 percent’ each poses.’’. place it appears). ‘‘(1) IN GENERAL.—A tax is hereby imposed (c) EFFECTIVE DATE.—The amendments ‘‘(d) LONG-HELD QUALIFYING LAND OR on any subsequent— made by this section shall apply to sales or WATER INTEREST.—For purposes of this sec- ‘‘(A) transfer by an eligible entity of own- exchanges occurring after the date of the en- tion— ership or possession, whether by sale, ex- actment of this Act. ‘‘(1) IN GENERAL.—The term ‘long-held change, or lease, of property acquired di- qualifying land or water interest’ means any rectly or indirectly in— SEC. 108. TAX EXCLUSION FOR COST-SHARING PAYMENTS UNDER PARTNERS FOR qualifying land or water interest owned by ‘‘(i) a conservation sale described in sub- FISH AND WILDLIFE PROGRAM. the taxpayer or a member of the taxpayer’s section (a), or (a) IN GENERAL.—Section 126(a) (relating to family (as defined in section 2032A(e)(2)) at ‘‘(ii) a transfer described in clause (i), (ii), certain cost-sharing payments) is amended all times during the 5-year period ending on or (iii) of paragraph (4)(A), or by redesignating paragraph (10) as paragraph the date of the sale. ‘‘(B) removal of a conservation restriction (11) and by inserting after paragraph (9) the ‘‘(2) QUALIFYING LAND OR WATER INTER- contained in an instrument of conveyance of following: EST.— such property. ‘‘(10) The Partners for Fish and Wildlife ‘‘(A) IN GENERAL.—The term ‘qualifying ‘‘(2) AMOUNT OF TAX.—The amount of tax Program authorized by the Fish and Wildlife land or water interest’ means a real property imposed by paragraph (1) on any transfer or Act of 1956 (16 U.S.C. 742a et seq.).’’. interest which constitutes— removal shall be equal to the sum of— (b) EFFECTIVE DATE.—The amendments ‘‘(i) a taxpayer’s entire interest in land, ‘‘(A) either— made by this section shall apply to payments ‘‘(ii) a taxpayer’s entire interest in water ‘‘(i) 20 percent of the fair market value (de- received after the date of the enactment of rights, termined at the time of the transfer) of the this Act.

VerDate jul 14 2003 02:43 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00129 Fmt 4624 Sfmt 0634 E:\CR\FM\A03MR6.086 S03PT1 S2148 CONGRESSIONAL RECORD — SENATE March 3, 2004 SEC. 109. ADJUSTMENT TO BASIS OF S CORPORA- ‘‘(i) shall not exceed the artistic adjusted SEC. 112. EXTENSION OF ENHANCED DEDUCTION TION STOCK FOR CERTAIN CHARI- gross income of the taxpayer for such tax- FOR INVENTORY TO INCLUDE PUB- TABLE CONTRIBUTIONS. able year, and LIC SCHOOLS. (a) IN GENERAL.—Paragraph (2) of section ‘‘(ii) shall not be taken into account in de- (a) IN GENERAL.—Subparagraph (A) of sec- 1367(a) (relating to adjustments to basis of termining the amount which may be carried tion 170(e)(3) (relating to special rule for cer- stock of shareholders, etc.) is amended by from such taxable year under subsection (d). tain contributions of inventory and other adding at the end the following new flush ‘‘(D) ARTISTIC ADJUSTED GROSS INCOME.— property) is amended by striking ‘‘to an or- sentence: For purposes of this paragraph, the term ‘ar- ganization which is described in’’ and all ‘‘The decrease under subparagraph (B) by tistic adjusted gross income’ means that por- that follows through the end of clause (i) and reason of a charitable contribution (as de- tion of the adjusted gross income of the tax- inserting ‘‘to a qualified organization, but fined in section 170(c)) of property shall be payer for the taxable year attributable to— only if— the amount equal to the shareholder’s pro ‘‘(i) income from the sale or use of prop- ‘‘(i) the property is to be used by the donee rata share of the adjusted basis of such property created by the personal efforts of the solely for the care of the ill, the needy, or in- erty.’’. taxpayer which is of the same type as the do- fants and, in the case of— (b) EFFECTIVE DATE.—The amendment nated property, and ‘‘(I) an organization described in section made by this section shall apply to contribu- ‘‘(ii) income from teaching, lecturing, per- 501(c)(3) (other than an organization de- tions made after the date of the enactment forming, or similar activity with respect to scribed in subclause (II)), the use of the prop- of this Act. property described in clause (i). erty by the donee is related to the purpose or SEC. 110. ENHANCED DEDUCTION FOR CHARI- ‘‘(E) PARAGRAPH NOT TO APPLY TO CERTAIN function constituting the basis for its ex- TABLE CONTRIBUTION OF LIT- CONTRIBUTIONS.—Subparagraph (A) shall not emption under section 501, and ERARY, MUSICAL, ARTISTIC, AND ‘‘(II) an organization described in sub- SCHOLARLY COMPOSITIONS. apply to any charitable contribution of any letter, memorandum, or similar property section (b)(1)(A)(ii), the use of the property (a) IN GENERAL.—Subsection (e) of section by the donee is related to educational pur- 170 (relating to certain contributions of ordi- which was written, prepared, or produced by or for an individual while the individual is poses and such property is not computer nary income and capital gain property), as technology or equipment (as defined in para- amended by this Act, is amended by adding an officer or employee of any person (including any government agency or instrumen- graph (6)(F)(i));’’. at the end the following new paragraph: (b) QUALIFIED ORGANIZATION.—Paragraph tality) unless such letter, memorandum, or ‘‘(8) SPECIAL RULE FOR CERTAIN CONTRIBU- (3) of section 170(e) of such Code is amended similar property is entirely personal. TIONS OF LITERARY, MUSICAL, ARTISTIC, OR by redesignating subparagraph (C) as sub- ‘‘(F) COPYRIGHT TREATED AS SEPARATE SCHOLARLY COMPOSITIONS.— paragraph (D) and by inserting after sub- PROPERTY FOR PARTIAL INTEREST RULE.—In ‘‘(A) IN GENERAL.—In the case of a qualified paragraph (B) the following new subpara- the case of a qualified artistic charitable artistic charitable contribution— graph: contribution, the tangible literary, musical, ‘‘(i) the amount of such contribution taken ‘‘(C) QUALIFIED ORGANIZATION.—For pur- artistic, or scholarly composition, or similar into account under this section shall be the poses of this paragraph, the term ‘qualified property and the copyright on such work fair market value of the property contrib- organization’ means— shall be treated as separate properties for uted (determined at the time of such con- ‘‘(i) an organization which is described in purposes of this paragraph and subsection tribution), and section 501(c)(3) and is exempt under section (f)(3).’’. ‘‘(ii) no reduction in the amount of such 501(a) (other than a private foundation, as contribution shall be made under paragraph (b) EFFECTIVE DATE.—The amendment made by this section shall apply to contribu- defined in section 509(a), which is not an op- (1). erating foundation, as defined in section ‘‘(B) QUALIFIED ARTISTIC CHARITABLE CON- tions made after the date of the enactment of this Act. 4942(j)(3)), and TRIBUTION.—For purposes of this paragraph, ‘‘(ii) an educational organization described SEC. 111. MILEAGE REIMBURSEMENTS TO CHARI- the term ‘qualified artistic charitable con- in subsection (b)(1)(A)(ii).’’. tribution’ means a charitable contribution of TABLE VOLUNTEERS EXCLUDED FROM GROSS INCOME. (c) EFFECTIVE DATE.—The amendments any literary, musical, artistic, or scholarly made by this section shall apply to contribu- (a) IN GENERAL.—Part III of subchapter B composition, or similar property, or the tions made after December 31, 2003. copyright thereon (or both), but only if— of chapter 1 is amended by inserting after section 139 the following new section: SEC. 113. 10-YEAR DIVESTITURE PERIOD FOR ‘‘(i) such property was created by the per- CERTAIN EXCESS BUSINESS HOLD- sonal efforts of the taxpayer making such ‘‘SEC. 139A. MILEAGE REIMBURSEMENTS TO INGS OF PRIVATE FOUNDATIONS. CHARITABLE VOLUNTEERS. contribution no less than 18 months prior to (a) IN GENERAL.—Section 4943(c) (relating such contribution, ‘‘(a) IN GENERAL.—Gross income of an indi- to excess business holdings) is amended by ‘‘(ii) the taxpayer— vidual does not include amounts received, redesignating paragraph (7) as paragraph (8) ‘‘(I) has received a qualified appraisal of from an organization described in section and by inserting after paragraph (6) the fol- the fair market value of such property in ac- 170(c), as reimbursement of operating ex- lowing new paragraph: penses with respect to use of a passenger cordance with the regulations under this sec- ‘‘(7) 10-YEAR PERIOD TO DISPOSE OF CERTAIN automobile for the benefit of such organization, and LARGE GIFTS AND BEQUESTS.— tion. The preceding sentence shall apply only ‘‘(II) attaches to the taxpayer’s income tax ‘‘(A) IN GENERAL.—Paragraph (6) shall be return for the taxable year in which such to the extent that the expenses which are re- applied by substituting ‘10-year period’ for contribution was made a copy of such ap- imbursed would be deductible under this ‘5-year period’ if— praisal, chapter if section 274(d) were applied— ‘‘(i) upon the election of a private founda- ‘‘(iii) the donee is an organization de- ‘‘(1) by using the standard business mileage tion, it is established to the satisfaction of scribed in subsection (b)(1)(A), rate established under such section, and the Secretary that— ‘‘(iv) the use of such property by the donee ‘‘(2) as if the individual were an employee ‘‘(I) the excess business holdings (or in- is related to the purpose or function consti- of an organization not described in section crease in excess business holdings) in a busi- tuting the basis for the donee’s exemption 170(c). ness enterprise by the private foundation in under section 501 (or, in the case of a govern- ‘‘(b) APPLICATION TO VOLUNTEER SERVICES an amount which is not less than mental unit, to any purpose or function de- ONLY.—Subsection (a) shall not apply with $1,000,000,000 is the result of a gift or bequest scribed under section 501(c)), respect to any expenses relating to the per- the fair market value of which is not less ‘‘(v) the taxpayer receives from the donee a formance of services for compensation. than $1,000,000,000, and ‘‘(c) NO DOUBLE BENEFIT.—A taxpayer may written statement representing that the ‘‘(II) after such gift or bequest, the private not claim a deduction or credit under any donee’s use of the property will be in accord- foundation does not have effective control of other provision of this title with respect to ance with the provisions of clause (iv), and such business enterprise to which such gift the expenses under subsection (a). ‘‘(vi) the written appraisal referred to in or bequest relates, ‘‘(d) EXEMPTION FROM REPORTING REQUIRE- clause (ii) includes evidence of the extent (if ‘‘(ii) subject to subparagraph (C), the pri- MENTS.—Section 6041 shall not apply with re- any) to which property created by the per- vate foundation submits to the Secretary spect to reimbursements excluded from in- sonal efforts of the taxpayer and of the same with such election a reasonable plan for dis- come under subsection (a).’’. type as the donated property is or has been— posing of all of the excess business holdings (b) CLERICAL AMENDMENT.—The table of ‘‘(I) owned, maintained, and displayed by related to such gift or bequest, and sections for part III of subchapter B of chap- organizations described in subsection ‘‘(iii) the private foundation certifies annu- ter 1 is amended by inserting after the item (b)(1)(A), and ally to the Secretary that the private foun- relating to section 139 the following new ‘‘(II) sold to or exchanged by persons other dation is complying with the plan submitted item: than the taxpayer, donee, or any related per- under this paragraph, the requirement under son (as defined in section 465(b)(3)(C)). ‘‘Sec. 139A. Mileage reimbursements to clause (i)(II), and the rules under subpara- ‘‘(C) MAXIMUM DOLLAR LIMITATION; NO CAR- charitable volunteers.’’. graph (D). RYOVER OF INCREASED DEDUCTION.—The in- (c) EFFECTIVE DATE.—The amendments ‘‘(B) ELECTION.—Any election under sub- crease in the deduction under this section by made by this section shall apply to taxable paragraph (A)(i) shall be made not later than reason of this paragraph for any taxable years beginning after the date of the enact- 6 months after the date of such gift or be- year— ment of this Act. quest and shall—

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‘‘(i) establish the fair market value of such WEB SITE.—Any organization which is sub- ‘‘(A) SPECIFIC NOTIFICATIONS.—In the case gift or bequest, and ject to the requirements of subsection (a) of an organization to which paragraph (1) ap- ‘‘(ii) include a certification that the re- shall include on the return required under plies, the Secretary may disclose to the ap- quirement of subparagraph (A)(i)(II) is met. subsection (a)— propriate State officer— ‘‘(C) REASONABLENESS OF PLAN.— ‘‘(1) any name under which such organiza- ‘‘(i) a notice of proposed refusal to recog- ‘‘(i) IN GENERAL.—Any plan submitted tion operates or does business, and nize such organization as an organization de- under subparagraph (A)(ii) shall be presumed ‘‘(2) the Internet web site address (if any) scribed in section 501(c)(3) or a notice of pro- reasonable unless the Secretary notifies the of such organization.’’. posed revocation of such organization’s rec- private foundation to the contrary not later (b) EFFECTIVE DATE.—The amendments ognition as an organization exempt from than 6 months after the submission of such made by this section shall apply to returns taxation, plan. filed after December 31, 2003. ‘‘(ii) the issuance of a letter of proposed de- ‘‘(ii) RESUBMISSION.—Upon notice by the SEC. 203. MODIFICATION TO REPORTING CAP- ficiency of tax imposed under section 507 or Secretary under clause (i), the private foun- ITAL TRANSACTIONS. chapter 41 or 42, and dation may resubmit a plan and shall have (a) REQUIREMENT OF SUMMARY REPORT.— ‘‘(iii) the names, addresses, and taxpayer the burden of establishing the reasonable- Section 6033(c) (relating to additional provi- identification numbers of organizations ness of such plan to the Secretary. sions relating to private foundations) is which have applied for recognition as organi- ‘‘(D) SPECIAL RULES.—During any period in amended by adding at the end the following zations described in section 501(c)(3). which an election under this paragraph is in new sentence: ‘‘Any information included in ‘‘(B) ADDITIONAL DISCLOSURES.—Returns effect— an annual return regarding the gain or loss and return information of organizations with ‘‘(i) section 4941(d)(2) (other than subpara- from the sale or other disposition of stock or respect to which information is disclosed graph (A) thereof) shall apply only with re- securities which are listed on an established under subparagraph (A) may be made avail- spect to any disqualified person described in securities market which is required to be able for inspection by or disclosed to an ap- section 4941(a)(1)(B), furnished in order to calculate the tax on net propriate State officer. ‘‘(ii) section 4942(a) shall be applied by sub- investment income shall also be reported in ‘‘(C) PROCEDURES FOR DISCLOSURE.—Infor- stituting ‘third’ for ‘second’ both places it summary form with a notice that detailed mation may be inspected or disclosed under appears, information is available upon request by the subparagraph (A) or (B) only— ‘‘(iii) section 4942(e)(1) shall be applied by public.’’. ‘‘(i) upon written request by an appropriate substituting ‘12 percent’ for ‘5 percent’, and (b) DISCLOSURE REQUIREMENT.—Section State officer, and ‘‘(iv) section 4942(g)(1)(A) shall be applied 6104(b) (relating to inspection of annual in- ‘‘(ii) for the purpose of, and only to the ex- without regard to any portion of reasonable formation returns), as amended by this Act, tent necessary in, the administration of and necessary administrative expenses. is amended by adding at the end the fol- State laws regulating such organizations. lowing new sentence: ‘‘With respect to any ‘‘(E) INFLATION ADJUSTMENT.—In the case Such information may only be inspected by private foundation (as defined in section of any taxable year beginning in a calendar or disclosed to representatives of the appro- 509(a)), any information regarding the gain year after 2003, the $1,000,000,000 amount priate State officer designated as the indi- or loss from the sale or other disposition of under subparagraph (A)(i)(I) shall be in- viduals who are to inspect or to receive the stock or securities which are listed on an es- creased by an amount equal to such dollar returns or return information under this tablished securities market which is re- amount, multiplied by the cost-of-living ad- paragraph on behalf of such officer. Such quired to be furnished in order to calculate justment determined under section 1(f)(3) for representatives shall not include any con- the tax on net investment income but which such calendar year, determined by sub- tractor or agent. is not in summary form is not required to be stituting ‘2002’ for ‘1992’ in subparagraph (B) ‘‘(D) DISCLOSURES OTHER THAN BY RE- made available to the public under this sub- thereof. If the $1,000,000,000 amount as in- QUEST.—The Secretary may make available section except upon the explicit request by a creased under this subparagraph is not a for inspection or disclose returns and return member of the public to the Secretary.’’. multiple of $100,000,000, such amount shall be information of an organization to which rounded to the next lowest multiple of (c) PUBLIC INSPECTION REQUIREMENT.—Sec- tion 6104(d) (relating to public inspection of paragraph (1) applies to an appropriate State $100,000,000.’’. officer of any State if the Secretary deter- (b) EFFECTIVE DATE.—The amendments certain annual returns, applications for exemptions, and notices of status) is amended mines that such inspection or disclosure may made by this section shall apply to gifts and facilitate the resolution of Federal or State bequests made after the date of the enact- by adding at the end the following new paragraph: issues relating to the tax-exempt status of ment of this Act. such organization. ‘‘(9) APPLICATION TO PRIVATE FOUNDATION TITLE II—PROPOSALS IMPROVING THE ‘‘(3) DISCLOSURE WITH RESPECT TO CERTAIN CAPITAL TRANSACTION INFORMATION.—With re- OVERSIGHT OF TAX-EXEMPT ORGANIZA- spect to any private foundation (as defined OTHER EXEMPT ORGANIZATIONS.—Upon written TIONS in section 509(a)), any information regarding request by an appropriate State officer, the SEC. 201. DISCLOSURE OF WRITTEN DETERMINA- the gain or loss from the sale or other dis- Secretary may make available for inspection TIONS. position of stock or securities which are list- or disclosure returns and return information (a) IN GENERAL.—Section 6110(l) (relating ed on an established securities market which of an organization described in paragraph (2), to section not to apply) is amended by strik- is required to be furnished in order to cal- (4), (6), (7), (8), (10), or (13) of section 501(c) for ing all matter before subparagraph (A) of culate the tax on net investment income but the purpose of, and to the extent necessary paragraph (2) and inserting the following: which is not in summary form is not rein, the administration of State laws regu- ‘‘(l) SECTION NOT TO APPLY.— quired to be made available to the public lating the solicitation or administration of ‘‘(1) IN GENERAL.—This section shall not under this subsection except upon the ex- the charitable funds or charitable assets of apply to any matter to which section 6104 or plicit request by a member of the public to such organizations. Such information may 6105 applies, except that this section shall the private foundation in the form and man- be inspected only by or disclosed only to rep- apply to any written determination and re- ner of a request described in paragraph resentatives of the appropriate State officer lated background file document relating to (1)(B).’’. designated as the individuals who are to in- an organization described under subsection (d) EFFECTIVE DATE.—The amendments spect or to receive the returns or return in- (c) or (d) of section 501 (including any writ- made by this section shall apply to returns formation under this paragraph on behalf of ten determination denying an organization filed after December 31, 2003. such officer. Such representatives shall not tax-exempt status under such subsection) or SEC. 204. DISCLOSURE THAT FORM 990 IS PUB- include any contractor or agent. a political organization described in section LICLY AVAILABLE. ‘‘(4) USE IN CIVIL JUDICIAL AND ADMINISTRA- 527 which is not required to be disclosed by (a) IN GENERAL.—The Commissioner of the TIVE PROCEEDINGS.—Returns and return in- section 6104(a)(1)(A). Internal Revenue shall notify the public in formation disclosed pursuant to this sub- ‘‘(2) ADDITIONAL MATTERS.—This section appropriate publications or other materials section may be disclosed in civil administra- shall not apply to any—’’. of the extent to which an exempt organiza- tive and civil judicial proceedings pertaining (b) EFFECTIVE DATE.—The amendment tion’s Form 990, Form 990–EZ, or Form 990– to the enforcement of State laws regulating made by this section shall apply to written PF is publicly available. such organizations in a manner prescribed by determinations issued after the date of the (b) EFFECTIVE DATE.—The amendments the Secretary similar to that for tax admin- enactment of this Act. made by this section shall apply to publica- istration proceedings under section SEC. 202. DISCLOSURE OF INTERNET WEB SITE tions or other materials issued or revised 6103(h)(4). AND NAME UNDER WHICH ORGANI- after the date of the enactment of this Act. ‘‘(5) NO DISCLOSURE IF IMPAIRMENT.—Re- ZATION DOES BUSINESS. SEC. 205. DISCLOSURE TO STATE OFFICIALS OF turns and return information shall not be (a) IN GENERAL.—Section 6033 (relating to PROPOSED ACTIONS RELATED TO disclosed under this subsection, or in any returns by exempt organizations) is amended SECTION 501(c) ORGANIZATIONS. proceeding described in paragraph (4), to the by redesignating subsection (h) as subsection (a) IN GENERAL.—Subsection (c) of section extent that the Secretary determines that (i) and by inserting after subsection (g) the 6104 is amended by striking paragraph (2) and such disclosure would seriously impair Fed- following new subsection: inserting the following new paragraphs: eral tax administration. ‘‘(h) DISCLOSURE OF NAME UNDER WHICH OR- ‘‘(2) DISCLOSURE OF PROPOSED ACTIONS RE- ‘‘(6) DEFINITIONS.—For purposes of this sub- GANIZATION DOES BUSINESS AND ITS INTERNET LATED TO CHARITABLE ORGANIZATIONS.— section—

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‘‘(A) RETURN AND RETURN INFORMATION.— ‘‘(1) IN GENERAL.—Any person who prepares organization exempt from tax under section The terms ‘return’ and ‘return information’ for compensation any return under section 501(a), an organization described in para- have the respective meanings given to such 6033 who recklessly or intentionally mis- graph (1) can show to the satisfaction of the terms by section 6103(b). represents any information or recklessly or Secretary evidence of reasonable cause for ‘‘(B) APPROPRIATE STATE OFFICER.—The intentionally disregards any rule or regula- the failure described in such paragraph, the term ‘appropriate State officer’ means— tion with respect to such return shall pay a organization’s exempt status may, in the dis- ‘‘(i) the State attorney general, penalty of $1,000 with respect to such return. cretion of the Secretary, be reinstated effec- ‘‘(ii) in the case of an organization to ‘‘(2) COORDINATION WITH OTHER PENALTIES.— tive from the date of the revocation under which paragraph (1) applies, any other State With respect to any return, the amount of such paragraph.’’. official charged with overseeing organiza- the penalty payable by any person by reason (c) NO DECLARATORY JUDGMENT RELIEF.— tions of the type described in section of paragraph (1) shall be reduced by the Section 7428(b) (relating to limitations) is 501(c)(3), and amount of the penalty paid by such person amended by adding at the end the following ‘‘(iii) in the case of an organization to by reason of subsection (h) or section 6694.’’. new paragraph: which paragraph (3) applies, the head of an (b) CONFORMING AMENDMENTS.— ‘‘(4) NONAPPLICATION FOR CERTAIN REVOCA- agency designated by the State attorney (1) The heading for section 6695 is amended TIONS.—No action may be brought under this general as having primary responsibility for by inserting ‘‘AND OTHER’’ after ‘‘INCOME section with respect to any revocation of overseeing the solicitation of funds for chari- TAX’’. status described in section 6033(j)(1).’’. table purposes.’’. (2) The item relating to section 6695 in the (d) NO INSPECTION REQUIREMENT.—Section (b) CONFORMING AMENDMENTS.— table of sections for part I of subchapter B of 6104(b) (relating to inspection of annual in- (1) Subsection (a) of section 6103 is amend- chapter 68 is amended by inserting ‘‘and formation returns) is amended by inserting ed— other’’ after ‘‘income tax’’. ‘‘(other than subsection (i) thereof)’’ after (A) by inserting ‘‘or any appropriate State (c) EFFECTIVE DATE.—The amendments ‘‘6033’’. officer who has or had access to returns or made by this section shall apply with respect (e) NO DISCLOSURE REQUIREMENT.—Section return information under section 6104(c)’’ to documents prepared after the date of the 6104(d)(3) (relating to exceptions from disclo- after ‘‘this section’’ in paragraph (2), and enactment of this Act. sure requirements) is amended by redesig- (B) by striking ‘‘or subsection (n)’’ in para- SEC. 207. NOTIFICATION REQUIREMENT FOR EN- nating subparagraph (B) as subparagraph (C) graph (3) and inserting ‘‘subsection (n), or TITIES NOT CURRENTLY REQUIRED and by inserting after subparagraph (A) the section 6104(c)’’. TO FILE. following new subparagraph: (2) Subparagraph (A) of section 6103(p)(3) is (a) IN GENERAL.—Section 6033 (relating to ‘‘(B) NONDISCLOSURE OF ANNUAL NOTICES.— amended by inserting ‘‘and section 6104(c)’’ returns by exempt organizations), as amend- Paragraph (1) shall not require the disclosure after ‘‘section’’ in the first sentence. ed by this Act, is amended by redesignating of any notice required under section 6033(i).’’. (3) Paragraph (4) of section 6103(p), as subsection (i) as subsection (j) and by insert- (f) NO MONETARY PENALTY FOR FAILURE TO amended by section 202(b)(2)(B) of the Trade ing after subsection (h) the following new NOTIFY.—Section 6652(c)(1) (relating to an- Act of 2002 (Public Law 107–210; 116 Stat. 961), subsection: nual returns under section 6033 or 6012(a)(6)) is amended by striking ‘‘or (17)’’ after ‘‘any ‘‘(i) ADDITIONAL NOTIFICATION REQUIRE- is amended by adding at the end the fol- other person described in subsection (l)(16)’’ MENTS.—Any organization the gross receipts lowing new subparagraph: each place it appears and inserting ‘‘or (18) of which in any taxable year result in such ‘‘(E) NO PENALTY FOR CERTAIN ANNUAL NO- or any appropriate State officer (as defined organization being referred to in subsection TICES.—This paragraph shall not apply with in section 6104(c))’’. (a)(2)(A)(ii) or (a)(2)(B)— respect to any notice required under section (4) The heading for paragraph (1) of section ‘‘(1) shall furnish annually, at such time 6033(i).’’. and in such manner as the Secretary may by 6104(c) is amended by inserting ‘‘FOR CHARI- (g) SECRETARIAL OUTREACH REQUIRE- forms or regulations prescribe, information TABLE ORGANIZATIONS’’. MENTS.— (5) Paragraph (2) of section 7213(a) is setting forth— (1) NOTICE REQUIREMENT.—The Secretary of amended by inserting ‘‘or under section ‘‘(A) the legal name of the organization, the Treasury shall notify in a timely manner 6104(c)’’ after ‘‘6103’’. ‘‘(B) any name under which such organiza- every organization described in section (6) Paragraph (2) of section 7213A(a) is tion operates or does business, 6033(i) of the Internal Revenue Code of 1986 amended by inserting ‘‘or 6104(c)’’ after ‘‘(C) the organization’s mailing address and (as added by this section) of the requirement ‘‘6103’’. Internet web site address (if any), under such section 6033(i) and of the penalty (7) Paragraph (2) of section 7431(a) is ‘‘(D) the organization’s taxpayer identi- established under section 6033(j)— amended by inserting ‘‘(including any disclo- fication number, (A) by mail, in the case of any organization sure in violation of section 6104(c))’’ after ‘‘(E) the name and address of a principal the identity and address of which is included ‘‘6103’’. officer, and in the list of exempt organizations main- (c) EFFECTIVE DATE.—The amendments ‘‘(F) evidence of the continuing basis for tained by the Secretary, and made by this section shall take effect on the the organization’s exemption from the filing (B) by Internet or other means of outreach, date of the enactment of this Act but shall requirements under subsection (a)(1), and in the case of any other organization. not apply to requests made before such date. ‘‘(2) upon the termination of the existence (2) LOSS OF STATUS PENALTY FOR FAILURE SEC. 206. EXPANSION OF PENALTIES TO PRE- of the organization, shall furnish notice of TO FILE RETURN.—The Secretary of the Treas- PARERS OF FORM 990. such termination.’’. ury shall publicize in a timely manner in ap- (a) IN GENERAL.—Section 6695 (relating to (b) LOSS OF EXEMPT STATUS FOR FAILURE propriate forms and instructions and other assessable penalties with respect to TO FILE RETURN OR NOTICE.—Section 6033 (re- through other appropriate means, the pen- the preparation of income tax returns for lating to returns by exempt organizations), alty established under section 6033(j) of such other persons) is amended by adding at the as amended by subsection (a), is amended by Code for the failure to file a return under end the following new subsections: redesignating subsection (j) as subsection (k) section 6033(a)(1) of such Code. ‘‘(h) CERTAIN OMISSIONS AND MISREPRESEN- and by inserting after subsection (i) the fol- (h) EFFECTIVE DATE.—The amendments TATIONS.— lowing new subsection: made by this section shall apply to notices ‘‘(1) IN GENERAL.—Any person who prepares ‘‘(j) LOSS OF EXEMPT STATUS FOR FAILURE and returns with respect to annual periods for compensation any return under section TO FILE RETURN OR NOTICE.— beginning after 2003. 6033 who omits or misrepresents any infor- ‘‘(1) IN GENERAL.—If an organization de- SEC. 208. SUSPENSION OF TAX-EXEMPT STATUS mation with respect to such return which scribed in subsection (a)(1) or (i) fails to file OF TERRORIST ORGANIZATIONS. was known or should have been known by an annual return or notice required under ei- (a) IN GENERAL.—Section 501 of the Inter- such person shall pay a penalty of $250 with ther subsection for 3 consecutive years, such nal Revenue Code of 1986 (relating to exemp- respect to such return. organization’s status as an organization ex- tion from tax on corporations, certain ‘‘(2) EXCEPTION FOR MINOR, INADVERTENT empt from tax under section 501(a) shall be trusts, etc.) is amended by redesignating OMISSIONS.—Paragraph (1) shall not apply to considered revoked on and after the date set subsection (p) as subsection (q) and by in- minor, inadvertent omissions. by the Secretary for the filing of the third serting after subsection (o) the following new ‘‘(3) RULES FOR DETERMINING RETURN PRE- annual return or notice. The Secretary shall subsection: PARER.—For purposes of this subsection and publish and maintain a list of any organiza- ‘‘(p) SUSPENSION OF TAX-EXEMPT STATUS OF subsection (i), any reference to a person who tion the status of which is so revoked. TERRORIST ORGANIZATIONS.— prepares for compensation a return under ‘‘(2) APPLICATION NECESSARY FOR REIN- ‘‘(1) IN GENERAL.—The exemption from tax section 6033— STATEMENT.—Any organization the tax-ex- under subsection (a) with respect to any or- ‘‘(A) shall include any person who employs empt status of which is revoked under para- ganization described in paragraph (2), and 1 or more persons to prepare for compensa- graph (1) must apply in order to obtain rein- the eligibility of any organization described tion a return under section 6033, and statement of such status regardless of in paragraph (2) to apply for recognition of ‘‘(B) shall not include any person who whether such organization was originally re- exemption under subsection (a), shall be sus- would be described in clause (i), (ii), (iii), or quired to make such an application. pended during the period described in para- (iv) of section 7701(a)(36)(B) if such section ‘‘(3) RETROACTIVE REINSTATEMENT IF REA- graph (3). referred to a return under section 6033. SONABLE CAUSE SHOWN FOR FAILURE.—If upon ‘‘(2) TERRORIST ORGANIZATIONS.—An organi- ‘‘(i) WILLFUL OR RECKLESS CONDUCT.— application for reinstatement of status as an zation is described in this paragraph if such

VerDate jul 14 2003 02:43 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00132 Fmt 4624 Sfmt 0634 E:\CR\FM\A03MR6.087 S03PT1 March 3, 2004 CONGRESSIONAL RECORD — SENATE S2151 organization is designated or otherwise indi- the date of the last determination described accrued in the first 2 taxable years beginning vidually identified— in subparagraph (A)(ii). on or after the date of the enactment of the ‘‘(A) under section 212(a)(3)(B)(vi)(II) or 219 ‘‘(7) NOTICE OF SUSPENSIONS.—If the tax ex- Taxpayer Relief Act of 1997 under any con- of the Immigration and Nationality Act as a emption of any organization is suspended tract described in subsection (b)(2) of such terrorist organization or foreign terrorist or- under this subsection, the Internal Revenue section, such amendments also shall not ganization, Service shall update the listings of tax-ex- apply to amounts received or accrued under ‘‘(B) in or pursuant to an Executive order empt organizations and shall publish appro- such contract before January 1, 2001. which is related to terrorism and issued priate notice to taxpayers of such suspension SEC. 303. SIMPLIFICATION OF LOBBYING EX- under the authority of the International and of the fact that contributions to such or- PENDITURE LIMITATION. Emergency Economic Powers Act or section ganization are not deductible during the pe- (a) REPEAL OF GRASSROOTS EXPENDITURE 5 of the United Nations Participation Act of riod of such suspension.’’. LIMIT.—Paragraph (1) of section 501(h) (relat- 1945 for the purpose of imposing on such or- (b) EFFECTIVE DATE.—The amendments ing to expenditures by public charities to in- ganization an economic or other sanction, or made by this section shall apply to designa- fluence legislation) is amended to read as ‘‘(C) in or pursuant to an Executive order tions made before, on, or after the date of follows: issued under the authority of any Federal the enactment of this Act. ‘‘(1) GENERAL RULE.—In the case of an orga- law if— TITLE III—OTHER CHARITABLE AND nization to which this subsection applies, ex- ‘‘(i) the organization is designated or oth- EXEMPT ORGANIZATION PROVISIONS emption from taxation under subsection (a) erwise individually identified in or pursuant SEC. 301. MODIFICATION OF EXCISE TAX ON UN- shall be denied because a substantial part of to such Executive order as supporting or en- RELATED BUSINESS TAXABLE IN- the activities of such organization consists gaging in terrorist activity (as defined in COME OF CHARITABLE REMAINDER of carrying on propaganda, or otherwise at- section 212(a)(3)(B) of the Immigration and TRUSTS. tempting, to influence legislation, but only Nationality Act) or supporting terrorism (as (a) IN GENERAL.—Subsection (c) of section if such organization normally makes lob- defined in section 140(d)(2) of the Foreign Re- 664 (relating to exemption from income bying expenditures in excess of the lobbying lations Authorization Act, Fiscal Years 1988 taxes) is amended to read as follows: ceiling amount for such organization for and 1989); and ‘‘(c) TAXATION OF TRUSTS.— each taxable year.’’. ‘‘(ii) such Executive order refers to this ‘‘(1) INCOME TAX.—A charitable remainder (b) EXCESS LOBBYING EXPENDITURES.—Sec- subsection. annuity trust and a charitable remainder tion 4911(b) is amended to read as follows: ‘‘(3) PERIOD OF SUSPENSION.—With respect unitrust shall, for any taxable year, not be ‘‘(b) EXCESS LOBBYING EXPENDITURES.—For to any organization described in paragraph subject to any tax imposed by this subtitle. purposes of this section, the term ‘excess (2), the period of suspension— ‘‘(2) EXCISE TAX.— lobbying expenditures’ means, for a taxable ‘‘(A) begins on the later of— ‘‘(A) IN GENERAL.—In the case of a chari- year, the amount by which the lobbying ex- ‘‘(i) the date of the first publication of a table remainder annuity trust or a chari- penditures made by the organization during designation or identification described in table remainder unitrust which has unre- the taxable year exceed the lobbying non- paragraph (2) with respect to such organiza- lated business taxable income (within the taxable amount for such organization for tion, or meaning of section 512, determined as if part such taxable year.’’. ‘‘(ii) the date of the enactment of this sub- III of subchapter F applied to such trust) for (c) CONFORMING AMENDMENTS.— section, and a taxable year, there is hereby imposed on (1) Section 501(h)(2) is amended by striking ‘‘(B) ends on the first date that all designa- such trust or unitrust an excise tax equal to subparagraphs (C) and (D). tions and identifications described in para- the amount of such unrelated business tax- (2) Section 4911(c) is amended by striking graph (2) with respect to such organization able income. paragraphs (3) and (4). are rescinded pursuant to the law or Execu- ‘‘(B) CERTAIN RULES TO APPLY.—The tax (3) Paragraph (1)(A) of section 4911(f) is tive order under which such designation or imposed by subparagraph (A) shall be treated amended by striking ‘‘limits of section identification was made. as imposed by chapter 42 for purposes of this 501(h)(1) have’’ and inserting ‘‘limit of sec- ‘‘(4) DENIAL OF DEDUCTION.—No deduction title other than subchapter E of chapter 42. tion 501(h)(1) has’’. shall be allowed under any provision of this ‘‘(C) TAX COURT PROCEEDINGS.—For pur- (4) Paragraph (1)(C) of section 4911(f) is title, including sections 170, 545(b)(2), poses of this paragraph, the references in amended by striking ‘‘limits of section 556(b)(2), 642(c), 2055, 2106(a)(2), and 2522, with section 6212(c)(1) to section 4940 shall be 501(h)(1) are’’ and inserting ‘‘limit of section respect to any contribution to an organiza- deemed to include references to this para- 501(h)(1) is’’. tion described in paragraph (2) during the pe- graph.’’. (5) Paragraphs (4)(A) and (4)(B) of section riod described in paragraph (3). (b) EFFECTIVE DATE.—The amendment 4911(f) are each amended by striking ‘‘limits ‘‘(5) DENIAL OF ADMINISTRATIVE OR JUDICIAL made by this section shall apply to taxable of section 501(h)(1)’’ and inserting ‘‘limit of CHALLENGE OF SUSPENSION OR DENIAL OF DE- years beginning after December 31, 2002. section 501(h)(1)’’. DUCTION.—Notwithstanding section 7428 or SEC. 302. MODIFICATIONS TO SECTION 512(b)(13). (6) Paragraph (8) of section 6033(b) (relating any other provision of law, no organization (a) IN GENERAL.—Paragraph (13) of section to certain organizations described in section or other person may challenge a suspension 512(b) (relating to special rules for certain 501(c)(3)) is amended by inserting ‘‘and’’ at under paragraph (1), a designation or identi- amounts received from controlled entities) is the end of subparagraph (A) and by striking fication described in paragraph (2), the pe- amended by redesignating subparagraph (E) subparagraphs (C) and (D). riod of suspension described in paragraph (3), as subparagraph (F) and by inserting after (d) EFFECTIVE DATE.—The amendments or a denial of a deduction under paragraph subparagraph (D) the following new subpara- made by this section shall apply to taxable (4) in any administrative or judicial pro- graph: years beginning after December 31, 2002. ceeding relating to the Federal tax liability ‘‘(E) PARAGRAPH TO APPLY ONLY TO EXCESS SEC. 304. EXPEDITED REVIEW PROCESS FOR CER- of such organization or other person. PAYMENTS.— TAIN TAX-EXEMPTION APPLICA- ‘‘(6) ERRONEOUS DESIGNATION.— ‘‘(i) IN GENERAL.—Subparagraph (A) shall TIONS. ‘‘(A) IN GENERAL.—If— apply only to the portion of a specified pay- (a) IN GENERAL.—The Secretary of the ‘‘(i) the tax exemption of any organization ment received or accrued by the controlling Treasury or the Secretary’s delegate (in this described in paragraph (2) is suspended under organization that exceeds the amount which section, referred to as the ‘‘Secretary’’) shall paragraph (1), would have been paid or accrued if such pay- adopt procedures to expedite the consider- ‘‘(ii) each designation and identification ment met the requirements prescribed under ation of applications for exempt status under described in paragraph (2) which has been section 482. section 501(c)(3) of the Internal Revenue Code made with respect to such organization is de- ‘‘(ii) ADDITION TO TAX FOR VALUATION of 1986 filed after December 31, 2003, by any termined to be erroneous pursuant to the MISSTATEMENTS.—The tax imposed by this organization that— law or Executive order under which such des- chapter on the controlling organization shall (1) is organized and operated for the pri- ignation or identification was made, and be increased by an amount equal to 20 per- mary purpose of providing social services; ‘‘(iii) the erroneous designations and iden- cent of the larger of— (2) is seeking a contract or grant under a tifications result in an overpayment of in- ‘‘(I) such excess determined without regard Federal, State, or local program that pro- come tax for any taxable year by such orga- to any amendment or supplement to a return vides funding for social services programs; nization, of tax, or (3) establishes that, under the terms and credit or refund (with interest) with respect ‘‘(II) such excess determined with regard to conditions of the contract or grant program, to such overpayment shall be made. all such amendments and supplements.’’. an organization is required to obtain such ‘‘(B) WAIVER OF LIMITATIONS.—If the credit (b) EFFECTIVE DATE.— exempt status before the organization is eli- or refund of any overpayment of tax de- (1) IN GENERAL.—The amendment made by gible to apply for a contract or grant; scribed in subparagraph (A)(iii) is prevented this section shall apply to payments received (4) includes with its exemption application at any time by the operation of any law or or accrued after December 31, 2000. a copy of its completed Federal, State, or rule of law (including res judicata), such (2) PAYMENTS SUBJECT TO BINDING CONTRACT local contract or grant application; and credit or refund may nevertheless be allowed TRANSITION RULE.—If the amendments made (5) meets such other criteria as the Sec- or made if the claim therefor is filed before by section 1041 of the Taxpayer Relief Act of retary deems appropriate for expedited con- the close of the 1-year period beginning on 1997 did not apply to any amount received or sideration.

VerDate jul 14 2003 02:43 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00133 Fmt 4624 Sfmt 0634 E:\CR\FM\A03MR6.087 S03PT1 S2152 CONGRESSIONAL RECORD — SENATE March 3, 2004 The Secretary may prescribe other similar zation as an organization described in sec- ered by the selection committee and to 20 circumstances in which such organizations tion 501(c) (other than paragraph (3)) or percent of individuals eligible for the grants, may be entitled to expedited consideration. 501(d) which is exempt from tax under sec- but only if the foundation awarding the (b) WAIVER OF APPLICATION FEE FOR EX- tion 501(a), or’’. grants demonstrates that, in addition to EMPT STATUS.—Any organization that meets (b) COURT JURISDICTION.—Subsection (a) of meeting the other requirements of Revenue the conditions described in subsection (a) section 7428 is amended in the material fol- Procedure 76–47, it provides a comparable (without regard to paragraph (3) of that sub- lowing paragraph (2) by striking ‘‘United number and aggregate amount of grants dur- section) is entitled to a waiver of any fee for States Tax Court, the United States Claims ing the same program year to individuals an application for exempt status under sec- Court, or the district court of the United who are not such employees, children or de- tion 501(c)(3) of the Internal Revenue Code of States for the District of Columbia’’ and in- pendents of such employees, or affiliated 1986 if the organization certifies that the or- serting the following: ‘‘United States Tax with the employer of such employees. ganization has had (or expects to have) aver- Court (in the case of any such determination age annual gross receipts of not more than SEC. 310. TREATMENT OF CERTAIN HOSPITAL or failure) or the United States Claims Court SUPPORT ORGANIZATIONS AS $50,000 during the preceding 4 years (or, in or the district court of the United States for QUALIFIED ORGANIZATIONS FOR the case of an organization not in existence the District of Columbia (in the case of a de- PURPOSES OF DETERMINING ACQUI- throughout the preceding 4 years, during termination or failure with respect to an SITION INDEBTEDNESS. such organization’s first 4 years). issue referred to in subparagraph (A) or (B) (a) IN GENERAL.—Subparagraph (C) of sec- (c) SOCIAL SERVICES DEFINED.—For pur- of paragraph (1)),’’. tion 514(c)(9) (relating to real property ac- poses of this section— (c) EFFECTIVE DATE.—The amendments quired by a qualified organization) is amend- (1) IN GENERAL.—The term ‘‘social serv- made by this section shall apply to pleadings ed by striking ‘‘or’’ at the end of clause (ii), ices’’ means services directed at helping peo- filed with respect to determinations (or re- by striking the period at the end of clause ple in need, reducing poverty, improving out- quests for determinations) made after De- (iii) and inserting ‘‘; or’’, and by adding at comes of low-income children, revitalizing cember 31, 2002. the end the following new clause: low-income communities, and empowering SEC. 307. DEFINITION OF CONVENTION OR ASSO- ‘‘(iv) a qualified hospital support organiza- low-income families and low-income individ- CIATION OF CHURCHES. tion (as defined in subparagraph (I)).’’. uals to become self-sufficient, including— Section 7701 (relating to definitions) is (A) child care services, protective services (b) QUALIFIED HOSPITAL SUPPORT ORGANI- amended by redesignating subsection (n) as for children and adults, services for children ZATIONS.—Paragraph (9) of section 514(c) is subsection (o) and by inserting after sub- and adults in foster care, adoption services, amended by adding at the end the following section (m) the following new subsection: services related to the management and new subparagraph: ‘‘(n) CONVENTION OR ASSOCIATION OF maintenance of the home, day care services ‘‘(I) QUALIFIED HOSPITAL SUPPORT ORGANI- CHURCHES.—For purposes of this title, any for adults, and services to meet the special ZATIONS.—For purposes of subparagraph organization which is otherwise a convention needs of children, older individuals, and indi- (C)(iv), the term ‘qualified hospital support or association of churches shall not fail to so viduals with disabilities (including physical, organization’ means, with respect to any eli- qualify merely because the membership of mental, or emotional disabilities); gible indebtedness (including any qualified such organization includes individuals as (B) transportation services; refinancing of such eligible indebtedness), a well as churches or because individuals have (C) job training and related services, and support organization (as defined in section voting rights in such organization.’’. employment services; 509(a)(3)) which supports a hospital described (D) information, referral, and counseling SEC. 308. PAYMENTS BY CHARITABLE ORGANIZA- in section 119(d)(4)(B) and with respect to services; TIONS TO VICTIMS OF WAR ON TER- which— RORISM AND FAMILIES OF ASTRO- (E) the preparation and delivery of meals, ‘‘(i) more than half of the organization’s NAUTS KILLED IN THE LINE OF assets (by value) at any time since its orga- and services related to soup kitchens or food DUTY. nization— banks; (a) IN GENERAL.—For purposes of the Inter- ‘‘(I) were acquired, directly or indirectly, (F) health support services; nal Revenue Code of 1986— by testamentary gift or devise, and (G) literacy and mentoring programs; (1) any payment made by an organization ‘‘(II) consisted of real property, and (H) services for the prevention and treat- described in section 501(c)(3) of such Code ‘‘(ii) the fair market value of the organiza- ment of juvenile delinquency and substance to— tion’s real estate acquired, directly or indi- abuse, services for the prevention of crime (A) a member of the Armed Forces of the rectly, by gift or devise, exceeded 25 percent and the provision of assistance to the vic- United States, or to an individual of such of the fair market value of all investment as- tims and the families of criminal offenders, member’s immediate family, by reason of sets held by the organization immediately and services related to the intervention in, the death, injury, wounding, or illness of prior to the time that the eligible indebted- and prevention of, domestic violence; and such member incurred as the result of the ness was incurred. (I) services related to the provision of as- military response of the United States to the sistance for housing under Federal law. terrorist attacks against the United States For purposes of this subparagraph, the term (2) EXCLUSIONS.—The term does not include on September 11, 2001, or ‘eligible indebtedness’ means indebtedness a program having the purpose of delivering (B) an individual of an astronaut’s imme- secured by real property acquired by the or- educational assistance under the Elementary diate family by reason of the death of such ganization, directly or indirectly, by gift or and Secondary Education Act of 1965 (20 astronaut occurring in the line of duty after devise, the proceeds of which are used exclu- U.S.C. 6301 et seq.) or under the Higher Edu- December 31, 2002, sively to acquire any leasehold interest in cation Act of 1965 (20 U.S.C. 1001 et seq.). such real property or for improvements on, shall be treated as related to the purpose or or repairs to, such real property. A deter- SEC. 305. CLARIFICATION OF DEFINITION OF function constituting the basis for such or- CHURCH TAX INQUIRY. mination under clauses (i) and (ii) of this ganization’s exemption under section 501 of Subsection (i) of section 7611 (relating to subparagraph shall be made each time such such Code if such payment is made using an section not to apply to criminal investiga- an eligible indebtedness (or the qualified re- objective formula which is consistently ap- tions, etc.) is amended by striking ‘‘or’’ at financing of such an eligible indebtedness) is plied, and the end of paragraph (4), by striking the pe- incurred. For purposes of this subparagraph, (2) in the case of a private foundation (as riod at the end of paragraph (5) and inserting a refinancing of such an eligible indebted- defined in section 509 of such Code), any pay- ‘‘, or’’, and by inserting after paragraph (5) ness shall be considered qualified if such refi- ment described in paragraph (1) shall not be the following: nancing does not exceed the amount of the treated as made to a disqualified person for ‘‘(6) information provided by the Secretary refinanced eligible indebtedness immediately purposes of section 4941 of such Code. related to the standards for exemption from before the refinancing.’’. (b) EFFECTIVE DATES.—This section shall tax under this title and the requirements (c) EFFECTIVE DATE.—The amendments under this title relating to unrelated busi- apply to— (1) payments described in subsection made by this section shall apply to indebtedness taxable income.’’. ness incurred after December 31, 2003. SEC. 306. EXPANSION OF DECLARATORY JUDG- (a)(1)(A) made after the date of the enact- MENT REMEDY TO TAX-EXEMPT OR- ment of this Act and before September 11, SEC. 311. CHARITABLE CONTRIBUTION DEDUC- GANIZATIONS. 2004, and TION FOR CERTAIN EXPENSES IN- (a) IN GENERAL.—Paragraph (1) of section (2) payments described in subsection CURRED IN SUPPORT OF NATIVE 7428(a) (relating to creation of remedy) is (a)(1)(B) made after December 31, 2002. ALASKAN SUBSISTENCE WHALING. amended— SEC. 309. MODIFICATION OF SCHOLARSHIP (a) IN GENERAL.—Section 170 (relating to (1) in subparagraph (B) by inserting after FOUNDATION RULES. charitable, etc., contributions and gifts), as ‘‘509(a))’’ the following: ‘‘or as a private oper- In applying the limitations on the percent- amended by this Act, is amended by redesig- ating foundation (as defined in section age of scholarship grants which may be nating subsection (n) as subsection (o) and 4942(j)(3))’’; and awarded after the date of the enactment of by inserting after subsection (m) the fol- (2) by amending subparagraph (C) to read this Act, to children of current or former lowing new subsection: as follows: employees under Revenue Procedure 76–47, ‘‘(n) EXPENSES PAID BY CERTAIN WHALING ‘‘(C) with respect to the initial qualifica- such percentage shall be increased to 35 per- CAPTAINS IN SUPPORT OF NATIVE ALASKAN tion or continuing qualification of an organi- cent of the eligible applicants to be consid- SUBSISTENCE WHALING.—

VerDate jul 14 2003 02:43 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00134 Fmt 4624 Sfmt 0634 E:\CR\FM\A03MR6.087 S03PT1 March 3, 2004 CONGRESSIONAL RECORD — SENATE S2153

‘‘(1) IN GENERAL.—In the case of an indi- ‘‘(1) AGGREGATE LIMITATION.—Unless other- striking ‘‘or’’ at the end of paragraph (4), by vidual who is recognized by the Alaska Es- wise provided by specific appropriation, the adding ‘‘or’’ at the end of paragraph (5), and kimo Whaling Commission as a whaling cap- Secretary shall not allocate more than by inserting after paragraph (5) the following tain charged with the responsibility of main- $10,000,000 per year (exclusive of costs of ad- new paragraph: taining and carrying out sanctioned whaling ministering the program) to grants under ‘‘(6) to a qualified blood collector organiza- activities and who engages in such activities this section. tion (as defined in section 7701(a)(48)) for during the taxable year, the amount de- ‘‘(2) OTHER APPLICABLE RULES.—Rules simi- such organization’s exclusive use,’’. scribed in paragraph (2) (to the extent such lar to the rules under paragraphs (2) through (2) CONFORMING AMENDMENTS.— amount does not exceed $10,000 for the tax- (5) of section 7526(c) shall apply with respect (A) The second sentence of section 4221(a) able year) shall be treated for purposes of to the awarding of grants to qualified return is amended by striking ‘‘Paragraphs (4) and this section as a charitable contribution. preparation clinics.’’. (5)’’ and inserting ‘‘Paragraphs (4), (5), and ‘‘(2) AMOUNT DESCRIBED.— (b) CLERICAL AMENDMENT.—The table of (6)’’. ‘‘(A) IN GENERAL.—The amount described in sections for chapter 77 is amended by insert- (B) Section 6421(c) is amended by striking this paragraph is the aggregate of the rea- ing after the item relating to section 7526 the ‘‘or (5)’’ and inserting ‘‘(5), or (6)’’. following new item: sonable and necessary whaling expenses paid (c) EXEMPTION FROM COMMUNICATION EXCISE by the taxpayer during the taxable year in ‘‘Sec. 7526A. Return preparation clinics for TAX.— carrying out sanctioned whaling activities. low-income taxpayers.’’. (1) IN GENERAL.—Section 4253 (relating to ‘‘(B) WHALING EXPENSES.—For purposes of (c) EFFECTIVE DATE.—The amendments exemptions) is amended by redesignating subparagraph (A), the term ‘whaling ex- made by this section shall apply to grants subsection (k) as subsection (l) and inserting penses’ includes expenses for— made after the date of the enactment of this after subsection (j) the following new sub- ‘‘(i) the acquisition and maintenance of Act. section: whaling boats, weapons, and gear used in SEC. 313. EXEMPTION OF QUALIFIED 501(c)(3) ‘‘(k) EXEMPTION FOR QUALIFIED BLOOD COL- sanctioned whaling activities, BONDS FOR NURSING HOMES FROM LECTOR ORGANIZATIONS.—Under regulations ‘‘(ii) the supplying of food for the crew and FEDERAL GUARANTEE PROHIBI- provided by the Secretary, no tax shall be other provisions for carrying out such activi- TIONS. imposed under section 4251 on any amount ties, and (a) IN GENERAL.—Section 149(b)(3) (relating paid by a qualified blood collector organiza- ‘‘(iii) storage and distribution of the catch to exceptions) is amended by adding at the tion (as defined in section 7701(a)) for serv- from such activities. end the following new subparagraph: ices or facilities furnished to such organiza- ‘‘(3) SANCTIONED WHALING ACTIVITIES.—For ‘‘(E) EXCEPTION FOR QUALIFIED 501(c)(3) tion.’’. purposes of this subsection, the term ‘sanc- BONDS FOR NURSING HOMES.— (2) CONFORMING AMENDMENT.—Section tioned whaling activities’ means subsistence ‘‘(i) IN GENERAL.—Paragraph (1) shall not 4253(l), as redesignated by paragraph (1), is bowhead whale hunting activities conducted apply to any qualified 501(c)(3) bond issued amended by striking ‘‘or (j)’’ and inserting pursuant to the management plan of the before the date which is 1 year after the date ‘‘(j), or (k)’’. Alaska Eskimo Whaling Commission.’’. of the enactment of this subparagraph for (b) EFFECTIVE DATE.—The amendments the benefit of an organization described in (d) CREDIT FOR REFUND FOR CERTAIN TAXES made by subsection (a) shall apply to con- section 501(c)(3), if such bond is part of an ON SALES AND SERVICES.— tributions made after December 31, 2003. issue the proceeds of which are used to fi- (1) DEEMED OVERPAYMENT.— SEC. 312. MATCHING GRANTS TO LOW-INCOME nance 1 or more of the following facilities (A) IN GENERAL.—Section 6416(b)(2) is TAXPAYER CLINICS FOR RETURN primarily for the benefit of the elderly: amended by redesignating subparagraphs (E) PREPARATION. ‘‘(I) Licensed nursing home facility. and (F) as subparagraphs (F) and (G), respec- (a) IN GENERAL.—Chapter 77 (relating to ‘‘(II) Licensed or certified assisted living tively, and by inserting after subparagraph miscellaneous provisions) is amended by in- facility. (D) the following new subparagraph: serting after section 7526 the following new ‘‘(III) Licensed personal care facility. ‘‘(E) sold to a qualified blood collector or- section: ‘‘(IV) Continuing care retirement commu- ganization’s (as defined in section 7701(a)(48)) ‘‘SEC. 7526A. RETURN PREPARATION CLINICS nity. for such organization’s exclusive use;’’. FOR LOW-INCOME TAXPAYERS. ‘‘(ii) LIMITATION.—With respect to any cal- (B) CONFORMING AMENDMENTS.—Section ‘‘(a) IN GENERAL.—The Secretary may, sub- endar year, clause (i) shall not apply to any 6416(b)(2) is amended— ject to the availability of appropriated bond described in such clause if the aggre- (i) by striking ‘‘Subparagraphs (C) and (D)’’ funds, make grants to provide matching gate authorized face amount of the issue of and inserting ‘‘Subparagraphs (C), (D), and funds for the development, expansion, or which such bond is a part when increased by (E)’’, and continuation of qualified return preparation the outstanding amount of such bonds issued (ii) by striking ‘‘(C), and (D)’’ and inserting clinics. by the issuer for such calendar year exceeds ‘‘(C), (D), and (E)’’. ‘‘(b) DEFINITIONS.—For purposes of this sec- $15,000,000. (2) SALES OF TIRES.—Clause (ii) of section tion— ‘‘(iii) CONTINUING CARE RETIREMENT COMMU- 6416(b)(4)(B) is amended by inserting ‘‘sold to ‘‘(1) QUALIFIED RETURN PREPARATION CLIN- NITY.—For purposes of this subparagraph, a qualified blood collector organization (as IC.— the term ‘continuing care retirement com- defined in section 7701(a)(48)),’’ after ‘‘for its ‘‘(A) IN GENERAL.—The term ‘qualified re- munity’ means a community which provides, exclusive use,’’. turn preparation clinic’ means a clinic on the same campus, a continuum of residen- which— (e) DEFINITION OF QUALIFIED BLOOD COL- tial living options and support services to LECTOR ORGANIZATION.—Section 7701(a) is ‘‘(i) does not charge more than a nominal persons at least 60 years of age under a writ- fee for its services (except for reimbursement amended by inserting at the end the fol- ten agreement. For purposes of the preceding lowing new paragraph: of actual costs incurred), and sentence, the residential living options shall ‘‘(ii) operates programs which assist low- ‘‘(48) QUALIFIED BLOOD COLLECTOR ORGANI- include independent living units, nursing ZATION.—For purposes of this title, the term income taxpayers in preparing and filing home beds, and either assisted living units or their Federal income tax returns, including ‘qualified blood collector organization’ personal care beds.’’. means an organization which is— schedules reporting sole proprietorship or (b) EFFECTIVE DATE.—The amendment farm income. ‘‘(A) described in section 501(c)(3) and ex- made by this section shall apply to bonds empt from tax under section 501(a), ‘‘(B) ASSISTANCE TO LOW-INCOME TAX- issued after the date of the enactment of this PAYERS.—A clinic is treated as assisting low- ‘‘(B) registered by the Food and Drug Ad- Act. ministration to collect blood, and income taxpayers under subparagraph (A)(ii) SEC. 314. EXCISE TAXES EXEMPTION FOR BLOOD if at least 90 percent of the taxpayers as- ‘‘(C) primarily engaged in the activity of COLLECTOR ORGANIZATIONS. the collection of blood.’’. sisted by the clinic have incomes which do (a) EXEMPTION FROM IMPOSITION OF SPECIAL not exceed 250 percent of the poverty level, FUELS TAX.—Section 4041(g) (relating to (f) EFFECTIVE DATE.— as determined in accordance with criteria es- other exemptions) is amended by striking (1) IN GENERAL.—Except as provided in tablished by the Director of the Office of ‘‘and’’ at the end of paragraph (3), by strik- paragraph (2), the amendments made by this Management and Budget. ing the period in paragraph (4) and inserting section shall apply with respect to excise ‘‘(2) CLINIC.—The term ‘clinic’ includes— ‘‘; and’’, and by inserting after paragraph (4) taxes imposed on sales or uses occurring on ‘‘(A) a clinical program at an eligible edu- the following new paragraph: or after October 1, 2003. cational institution (as defined in section ‘‘(5) with respect to the sale of any liquid (2) REFUND OF GASOLINE TAX.—For purposes 529(e)(5)) which satisfies the requirements of to a qualified blood collector organization of section 6421(c) of the Internal Revenue paragraph (1) through student assistance of (as defined in section 7701(a)(48)) for such or- Code of 1986 and any other provision that al- taxpayers in return preparation and filing, ganization’s exclusive use, or with respect to lows for a refund or a payment in respect of and the use by a qualified blood collector organi- an excise tax payable at a level before the ‘‘(B) an organization described in section zation of any liquid as a fuel.’’. sale to a qualified blood collector organiza- 501(c) and exempt from tax under section (b) EXEMPTION FROM MANUFACTURERS EX- tion, the amendments made by this section 501(a) which satisfies the requirements of CISE TAX.— shall apply with respect to sales to a quali- paragraph (1). (1) IN GENERAL.—Section 4221(a) (relating fied collector organization on or after Octo- ‘‘(c) SPECIAL RULES AND LIMITATIONS.— to certain tax-free sales) is amended by ber 1, 2003.

VerDate jul 14 2003 02:43 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00135 Fmt 4624 Sfmt 0634 E:\CR\FM\A03MR6.087 S03PT1 S2154 CONGRESSIONAL RECORD — SENATE March 3, 2004 SEC. 315. PILOT PROJECT FOR FOREST CON- For purposes of subparagraph (A), average underpayment rate under section 6621 of SERVATION ACTIVITIES. maturity shall be determined in accordance such Code for the period of the under- (a) TAX-EXEMPT BOND FINANCING.— with section 147(b)(2)(A) of such Code. payment. (1) IN GENERAL.—For purposes of the Inter- (7) EFFECTIVE DATE.—This subsection shall (c) DEFINITIONS.—For purposes of this sec- nal Revenue Code of 1986, any qualified forest apply to obligations issued on or after the tion— conservation bond shall be treated as an ex- date which is 180 days after the enactment of (1) QUALIFIED CONSERVATION PLAN.—The empt facility bond under section 142 of such this Act. term ‘‘qualified conservation plan’’ means a Code. (b) ITEMS FROM QUALIFIED HARVESTING AC- multiple land use program or plan which— TIVITIES OT UBJECT TO AX OR AKEN NTO (2) QUALIFIED FOREST CONSERVATION BOND.— N S T T I (A) is designed and administered primarily For purposes of this section, the term ACCOUNT.— for the purposes of protecting and enhancing ‘‘qualified forest conservation bond’’ means (1) IN GENERAL.—Income, gains, deductions, wildlife and fish, timber, scenic attributes, any bond issued as part of an issue if— losses, or credits from a qualified harvesting recreation, and soil and water quality of the (A) 95 percent or more of the net proceeds activity conducted by a qualified organiza- forest and forest land, (as defined in section 150(a)(3) of such Code) tion shall not be subject to tax or taken into (B) mandates that conservation of forest of such issue are to be used for qualified account under subtitle A of the Internal Rev- and forest land is the single-most significant enue Code of 1986. project costs, use of the forest and forest land, and (2) LIMITATION.—The amount of income ex- (B) such bond is issued for a qualified orga- (C) requires that timber harvesting be concluded from gross income under paragraph nization, and sistent with— (1) for any taxable year shall not exceed the (C) such bond is issued before December 31, (i) restoring and maintaining reference amount used by the qualified organization to 2006. conditions for the region’s ecotype, make debt service payments during such tax- (3) LIMITATION ON AGGREGATE AMOUNT (ii) restoring and maintaining a represent- able year for qualified forest conservation ISSUED.— ative sample of young, mid, and late succes- bonds. (A) IN GENERAL.—The maximum aggregate sional forest age classes, (3) QUALIFIED HARVESTING ACTIVITY.—For face amount of bonds which may be issued (iii) maintaining or restoring the re- purposes of paragraph (1)— under this subsection shall not exceed sources’ ecological health for purposes of (A) IN GENERAL.—The term ‘‘qualified har- preventing damage from fire, insect, or dis- $2,000,000,000 for all projects (excluding re- vesting activity’’ means the sale, lease, or funding bonds). ease, harvesting, of standing timber— (iv) maintaining or enhancing wildlife or (B) ALLOCATION OF LIMITATION.—The limi- (i) on land owned by a qualified organiza- tation described in subparagraph (A) shall be fish habitat, or tion which was acquired with proceeds of (v) enhancing research opportunities in allocated by the Secretary of the Treasury qualified forest conservation bonds, among qualified organizations based on cri- sustainable renewable resource uses. (ii) with respect to which a written ac- (2) CONSERVATION RESTRICTION.—The con- teria established by the Secretary not later knowledgement has been obtained by the than 180 days after the date of the enactment servation restriction described in this para- qualified organization from the State or graph is a restriction which— of this section, after consultation with the local governments with jurisdiction over Chief of the Forest Service. (A) is granted in perpetuity to an unre- such land that the acquisition lessens the lated person which is described in section (4) QUALIFIED PROJECT COSTS.—For pur- burdens of such government with respect to 170(h)(3) of such Code and which, in the case poses of this subsection, the term ‘‘qualified such land, and of a nongovernmental unit, is organized and project costs’’ means the sum of— (iii) pursuant to a qualified conservation operated for conservation purposes, (A) the cost of acquisition by the qualified plan adopted by the qualified organization. (B) meets the requirements of clause (ii) or organization from an unrelated person of for- (B) EXCEPTIONS.— (iii)(II) of section 170(h)(4)(A) of such Code, ests and forest land which at the time of ac- (i) CESSATION AS QUALIFIED ORGANIZATION.— (C) obligates the qualified organization to quisition or immediately thereafter are sub- The term ‘‘qualified harvesting activity’’ pay the costs incurred by the holder of the ject to a conservation restriction described shall not include any sale, lease, or har- conservation restriction in monitoring com- in subsection (c)(2), vesting for any period during which the orga- pliance with such restriction, and (B) capitalized interest on the qualified nization ceases to qualify as a qualified orga- (D) requires an increasing level of con- forest conservation bonds for the 3-year pe- nization. servation benefits to be provided whenever riod beginning on the date of issuance of (ii) EXCEEDING LIMITS ON HARVESTING.—The circumstances allow it. such bonds, and term ‘‘qualified harvesting activity’’ shall (3) QUALIFIED ORGANIZATION.—The term (C) credit enhancement fees which con- not include any sale, lease, or harvesting of ‘‘qualified organization’’ means an organiza- stitute qualified guarantee fees (within the standing timber on land acquired with pro- tion— meaning of section 148 of such Code). ceeds of qualified forest conservation bonds (A) which is a nonprofit organization sub- (5) SPECIAL RULES.—In applying the Inter- to the extent that— stantially all the activities of which are nal Revenue Code of 1986 to any qualified for- (I) the average annual area of timber har- charitable, scientific, or educational, includ- est conservation bond, the following modi- vested from such land exceeds 2.5 percent of ing acquiring, protecting, restoring, man- fications shall apply: the total area of such land or, aging, and developing forest lands and other (A) Section 146 of such Code (relating to (II) the quantity of timber removed from renewable resources for the long-term chari- volume cap) shall not apply. such land exceeds the quantity which can be table, educational, scientific and public ben- (B) For purposes of section 147(b) of such removed from such land annually in per- efit, Code (relating to maturity may not exceed petuity on a sustained-yield basis with re- (B) more than half of the value of the prop- 120 percent of economic life), the land and spect to such land. erty of which consists of forests and forest standing timber acquired with proceeds of The limitations under subclauses (I) and (II) land acquired with the proceeds from quali- qualified forest conservation bonds shall shall not apply to post-fire restoration and fied forest conservation bonds, have an economic life of 35 years. rehabilitation or sanitation harvesting of (C) which periodically conducts edu- (C) Subsections (c) and (d) of section 147 of timber stands which are substantially dam- cational programs designed to inform the such Code (relating to limitations on acqui- aged by fire, windthrow, or other catas- public of environmentally sensitive forestry sition of land and existing property) shall trophes, or which are in imminent danger management and conservation techniques, not apply. from insect or disease attack. (D) which has at all times a board of direc- (D) Section 57(a)(5) of such Code (relating (4) TERMINATION.—This subsection shall tors— to tax-exempt interest) shall not apply to in- not apply to any qualified harvesting activ- (i) at least 20 percent of the members of terest on qualified forest conservation bonds. ity of a qualified organization occurring which represent the holders of the conserva- (6) TREATMENT OF CURRENT REFUNDING after the date on which there is no out- tion restriction described in paragraph (2), BONDS.—Paragraphs (2)(C) and (3) shall not standing qualified forest conservation bond (ii) at least 20 percent of the members of apply to any bond (or series of bonds) issued with respect to such qualified organization which are public officials, and to refund a qualified forest conservation or any such bond ceases to be a tax-exempt (iii) not more than one-third of the mem- bond issued before December 31, 2006, if— bond. bers of which are individuals who are or were (A) the average maturity date of the issue (5) PARTIAL RECAPTURE OF BENEFITS IF HAR- at any time within 5 years before the begin- of which the refunding bond is a part is not VESTING LIMIT EXCEEDED.—If, as of the date ning of a term of membership on the board, later than the average maturity date of the that this subsection ceases to apply under an employee of, independent contractor with bonds to be refunded by such issue, paragraph (3), the average annual area of respect to, officer of, director of, or held a (B) the amount of the refunding bond does timber harvested from the land exceeds the material financial interest in, a commercial not exceed the outstanding amount of the re- requirement of paragraph (3)(B)(ii)(I), the forest products enterprise with which the funded bond, and tax imposed by chapter 1 of the Internal Rev- qualified organization has a contractual or (C) the net proceeds of the refunding bond enue Code of 1986 shall be increased, under other financial arrangement, are used to redeem the refunded bond not rules prescribed by the Secretary of the (E) the bylaws of which require at least later than 90 days after the date of the Treasury, by the sum of the tax benefits at- two-thirds of the members of the board of di- issuance of the refunding bond. tributable to such excess and interest at the rectors to vote affirmatively to approve the

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qualified conservation plan and any change (f) EFFECTIVE DATE.—The amendments (ii) is a citizen or lawful permanent resi- thereto, and made by this section shall take effect as if dent (within the meaning of section 7701(b)(6) (F) upon dissolution, is required to dedi- included in the enactment of section 601 of of the Internal Revenue Code of 1986) of the cate its assets to— the Homeland Security Act of 2002. United States as of the last day of such tax- (i) an organization described in section TITLE IV—SOCIAL SERVICES BLOCK able year, 501(c)(3) of such Code which is organized and GRANT (iii) was not a student (as defined in sec- operated for conservation purposes, or SEC. 401. RESTORATION OF FUNDS FOR THE SO- tion 151(c)(4) of such Code) for the imme- (ii) a governmental unit described in sec- CIAL SERVICES BLOCK GRANT. diately preceding taxable year, tion 170(c)(1) of such Code. (a) FINDINGS.—Congress makes the fol- (iv) is not an individual with respect to (4) UNRELATED PERSON.—The term ‘‘unre- lowing findings: whom a deduction under section 151 of such lated person’’ means a person who is not a (1) On August 22, 1996, the Personal Re- Code is allowable to another taxpayer for a related person. sponsibility and Work Opportunity Rec- taxable year of the other taxpayer ending (5) RELATED PERSON.—A person shall be onciliation Act of 1996 (Public Law 104–193; during the immediately preceding taxable treated as related to another person if— 110 Stat. 2105) was signed into law. year of the individual, (A) such person bears a relationship to (2) In enacting that law, Congress author- (v) is not a taxpayer described in sub- such other person described in section 267(b) ized $2,800,000,000 for fiscal year 2003 and each section (c), (d), or (e) of section 6402 of such (determined without regard to paragraph (9) fiscal year thereafter to carry out the Social Code for the immediately preceding taxable thereof), or 707(b)(1), of such Code, deter- Services Block Grant program established year, mined by substituting ‘‘25 percent’’ for ‘‘50 under title XX of the Social Security Act (42 (vi) is not a taxpayer described in section percent’’ each place it appears therein, and U.S.C. 1397 et seq.). 1(d) of such Code for the immediately pre- (B) in the case such other person is a non- (b) RESTORATION OF FUNDS.—Section ceding taxable year, and profit organization, if such person controls 2003(c)(11) of the Social Security Act (42 (vii) is a taxpayer the modified adjusted directly or indirectly more than 25 percent of U.S.C. 1397b(c)(11)) is amended by inserting gross income of whom for the immediately the governing body of such organization. ‘‘, except that, with respect to fiscal year preceding taxable year does not exceed— SEC. 316. CLARIFICATION OF TREATMENT OF 2004, the amount shall be $1,975,000,000, and (I) $18,000, in the case of a taxpayer de- JOHNNY MICHEAL SPANN PATRIOT with respect to fiscal year 2005, the amount scribed in section 1(c) of such Code, TRUSTS. shall be $2,800,000,000’’ after ‘‘thereafter.’’. (a) CLARIFICATION OF TAX-EXEMPT STATUS (II) $30,000, in the case of a taxpayer de- SEC. 402. RESTORATION OF AUTHORITY TO OF TRUSTS.— scribed in section 1(b) of such Code, and TRANSFER UP TO 10 PERCENT OF (III) $38,000, in the case of a taxpayer de- (1) IN GENERAL.—Subsection (b) of section TANF FUNDS TO THE SOCIAL SERV- 601 of the Homeland Security Act of 2002 is ICES BLOCK GRANT. scribed in section 1(a) of such Code. amended to read as follows: (a) IN GENERAL.—Section 404(d)(2) of the (B) INFLATION ADJUSTMENT.— ‘‘(b) DESIGNATION OF JOHNNY MICHEAL Social Security Act (42 U.S.C. 604(d)(2)) is (i) IN GENERAL.—In the case of any taxable SPANN PATRIOT TRUSTS.—Any charitable cor- amended to read as follows: year beginning after 2004, each dollar poration, fund, foundation, or trust (or sepa- ‘‘(2) LIMITATION ON AMOUNT TRANSFERABLE amount referred to in subparagraph (A)(vii) rate fund or account thereof) which is de- TO TITLE XX PROGRAMS.—A State may use not shall be increased by an amount equal to— scribed in section 501(c)(3) of the Internal more than 10 percent of the amount of any (I) such dollar amount, multiplied by Revenue Code of 1986 and exempt from tax grant made to the State under section 403(a) (II) the cost-of-living adjustment deter- under section 501(a) of such Code and meets for a fiscal year to carry out State programs mined under section (1)(f)(3) of the Internal the requirements described in subsection (c) pursuant to title XX.’’. Revenue Code of 1986 for the calendar year in shall be eligible to designate itself as a (b) EFFECTIVE DATE.—The amendment which the taxable year begins, by sub- ‘Johnny Micheal Spann Patriot trust’.’’. made by subsection (a) applies to amounts stituting ‘‘2003’’ for ‘‘1992’’. (2) CONFORMING AMENDMENT.—Section made available for fiscal year 2004 and each (ii) ROUNDING.—If any amount as adjusted 601(c)(3) of such Act is amended by striking fiscal year thereafter. under clause (i) is not a multiple of $50, such ‘‘based’’ and all that follows through SEC. 403. REQUIREMENT TO SUBMIT ANNUAL RE- amount shall be rounded to the nearest mul- ‘‘Trust’’. PORT ON STATE ACTIVITIES. tiple of $50. (b) PUBLICLY AVAILABLE AUDITS.—Section (a) IN GENERAL.—Section 2006(c) of the So- (C) MODIFIED ADJUSTED GROSS INCOME.—For 601(c)(7) of the Homeland Security Act of 2002 cial Security Act (42 U.S.C. 1397e(c)) is purposes of subparagraph (A)(v), the term is amended by striking ‘‘shall be filed with amended by adding at the end the following: ‘‘modified adjusted gross income’’ means ad- the Internal Revenue Service, and shall be ‘‘The Secretary shall compile the informa- justed gross income— open to public inspection’’ and inserting tion submitted by the States and submit (i) determined without regard to sections ‘‘shall be open to public inspection con- that information to Congress on an annual 86, 893, 911, 931, and 933 of the Internal Rev- sistent with section 6104(d)(1) of the Internal basis.’’. enue Code of 1986, and Revenue Code of 1986’’. (b) EFFECTIVE DATE.—The amendment (ii) increased by the amount of interest re- (c) CLARIFICATION OF REQUIRED DISTRIBU- made by subsection (a) applies to informa- ceived or accrued by the taxpayer during the TIONS TO PRIVATE FOUNDATION.— tion submitted by States under section 2006 taxable year which is exempt from tax. (1) IN GENERAL.—Section 601(c)(8) of the of the Social Security Act (42 U.S.C. 1397e) (2) INDIVIDUAL DEVELOPMENT ACCOUNT.—The Homeland Security Act of 2002 is amended by with respect to fiscal year 2003 and each fis- term ‘‘Individual Development Account’’ striking ‘‘not placed’’ and all that follows cal year thereafter. means an account established for an eligible and inserting ‘‘not so distributed shall be TITLE V—INDIVIDUAL DEVELOPMENT individual as part of a qualified individual contributed to a private foundation which is ACCOUNTS development account program, but only if described in section 509(a) of the Internal the written governing instrument creating Revenue Code of 1986 and exempt from tax SEC. 501. SHORT TITLE. the account meets the following require- under section 501(a) of such Code and which This title may be cited as the ‘‘Savings for ments: is dedicated to such beneficiaries not later Working Families Act of 2004’’. (A) The owner of the account is the indi- than 36 months after the end of the fiscal SEC. 502. PURPOSES. vidual for whom the account was estab- year in which such funds, donations, or earn- The purposes of this title are to provide for lished. ings are received.’’. the establishment of individual development (B) No contribution will be accepted unless (2) CONFORMING AMENDMENTS.—Section account programs that will— 601(c) of such Act is amended— (1) provide individuals and families with it is in cash, and, except in the case of any (A) by striking ‘‘(or, if placed in a private limited means an opportunity to accumulate qualified rollover, contributions will not be foundation, held in trust for)’’ in paragraph assets and to enter the financial main- accepted for the taxable year in excess of (1) and inserting ‘‘(or contributed to a pri- stream, $1,500 on behalf of any individual. vate foundation described in paragraph (8) (2) promote education, homeownership, and (C) The trustee of the account is a quali- for the benefit of)’’, and the development of small businesses, fied financial institution. (B) by striking ‘‘invested in a private foun- (3) stabilize families and build commu- (D) The assets of the account will not be dation’’ in paragraph (2) and inserting ‘‘con- nities, and commingled with other property except in a tributed to a private foundation described in (4) support continued United States eco- common trust fund or common investment paragraph (8)’’. nomic expansion. fund. (d) REQUIREMENTS FOR DISTRIBUTIONS FROM SEC. 503. DEFINITIONS. (E) Except as provided in section 507(b), TRUSTS.—Section 601(c)(9)(A) of the Home- As used in this title: any amount in the account may be paid out land Security Act of 2002 is amended by (1) ELIGIBLE INDIVIDUAL.— only for the purpose of paying the qualified striking ‘‘should’’ and inserting ‘‘shall’’. (A) IN GENERAL.—The term ‘‘eligible indi- expenses of the account owner. (e) REGULATIONS REGARDING NOTIFICATION vidual’’ means, with respect to any taxable (3) PARALLEL ACCOUNT.—The term ‘‘parallel OF TRUST BENEFICIARIES.—Section 601(f) of year, an individual who— account’’ means a separate, parallel indi- the Homeland Security Act of 2002 is amend- (i) has attained the age of 18 but not the vidual or pooled account for all matching ed by striking ‘‘this section’’ and inserting age of 61 as of the last day of such taxable funds and earnings dedicated to an Indi- ‘‘subsection (e)’’. year, vidual Development Account owner as part

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of a qualified individual development ac- first-time homebuyer (as defined in section (1) IN GENERAL.—Chapter 77 (relating to count program, the trustee of which is a 72(t)(8)(D)(i) of such Code). miscellaneous provisions) is amended by add- qualified financial institution. (iv) QUALIFIED BUSINESS CAPITALIZATION OR ing at the end the following new section: (4) QUALIFIED FINANCIAL INSTITUTION.—The EXPANSION COSTS.— ‘‘SEC. 7528. TAX INCENTIVES FOR INDIVIDUAL DE- term ‘‘qualified financial institution’’ means (I) IN GENERAL.—The term ‘‘qualified busi- VELOPMENT PARALLEL ACCOUNTS. any person authorized to be a trustee of any ness capitalization or expansion costs’’ ‘‘For purposes of this title— individual retirement account under section means qualified expenditures for the capital- ‘‘(1) any account described in section 408(a)(2) of the Internal Revenue Code of 1986. ization or expansion of a qualified business 504(b)(1)(B) of the Savings for Working Fami- (5) QUALIFIED INDIVIDUAL DEVELOPMENT AC- pursuant to a qualified business plan. lies Act of 2004 shall be exempt from tax- COUNT PROGRAM.—The term ‘‘qualified indi- (II) QUALIFIED EXPENDITURES.—The term ation, vidual development account program’’ ‘‘qualified expenditures’’ means expenditures ‘‘(2) except as provided in section 45G, no means a program established upon approval normally associated with starting or expand- item of income, expense, basis, gain, or loss of the Secretary under section 504 after De- ing a business and included in a qualified with respect to such an account may be cember 31, 2002, under which— business plan, including costs for capital, taken into account, and (A) Individual Development Accounts and plant, and equipment, inventory expenses, ‘‘(3) any amount withdrawn from such an parallel accounts are held in trust by a and attorney and accounting fees. account shall not be includible in gross in- qualified financial institution, and (III) QUALIFIED BUSINESS.—The term come.’’. (B) additional activities determined by the ‘‘qualified business’’ means any business (2) CONFORMING AMENDMENT.—The table of Secretary, in consultation with the Sec- that does not contravene any law. sections for chapter 77 is amended by adding retary of Health and Human Services, as nec- (IV) QUALIFIED BUSINESS PLAN.—The term at the end the following new item: essary to responsibly develop and administer ‘‘qualified business plan’’ means a business accounts, including recruiting, providing fi- plan which has been approved by the quali- ‘‘Sec. 7528. Tax incentives for individual de- nancial education and other training to Ac- fied financial institution and which meets velopment parallel accounts.’’. count owners, and regular program moni- such requirements as the Secretary may (e) COORDINATION OF CERTAIN EXPENSES.— toring, are carried out by the qualified finan- specify. Section 25A(g)(2) is amended by striking cial institution. (v) QUALIFIED ROLLOVERS.—The term ‘‘and’’ at the end of subparagraph (C), by (6) QUALIFIED EXPENSE DISTRIBUTION.— ‘‘qualified rollover’’ means the complete dis- striking the period at the end of subpara- (A) IN GENERAL.—The term ‘‘qualified ex- tribution of the amounts in an Individual graph (D) and inserting ‘‘, and’’, and by add- pense distribution’’ means any amount paid Development Account and parallel account ing at the end the following new subpara- (including through electronic payments) or to another Individual Development Account distributed out of an Individual Development and parallel account established in another graph: Account or a parallel account established for qualified financial institution for the benefit ‘‘(D) a qualified expense distribution with an eligible individual if such amount— of the Account owner. respect to qualified higher education expenses from an Individual Development Ac- (i) is used exclusively to pay the qualified (vi) QUALIFIED FINAL DISTRIBUTION.—The expenses of the Individual Development Ac- term ‘‘qualified final distribution’’ means, in count or a parallel account under section count owner or such owner’s spouse or de- the case of a deceased Account owner, the 507(a) of the Savings for Working Families pendents, complete distribution of the amounts in the Act of 2004.’’. (ii) is paid by the qualified financial insti- Individual Development Account and par- SEC. 505. PROCEDURES FOR OPENING AND MAIN- tution— allel account directly to the spouse, any de- TAINING AN INDIVIDUAL DEVELOP- (I) except as otherwise provided in this pendent, or other named beneficiary of the MENT ACCOUNT AND QUALIFYING FOR MATCHING FUNDS. clause, directly to the unrelated third party deceased. to whom the amount is due, (7) SECRETARY.—The term ‘‘Secretary’’ (a) OPENING AN ACCOUNT.—An eligible indi- (II) in the case of any qualified rollover, di- means the Secretary of the Treasury. vidual may open an Individual Development Account with a qualified financial institu- rectly to another Individual Development SEC. 504. STRUCTURE AND ADMINISTRATION OF Account and parallel account, or QUALIFIED INDIVIDUAL DEVELOP- tion upon certification that such individual (III) in the case of a qualified final dis- MENT ACCOUNT PROGRAMS. has never maintained any other Individual tribution, directly to the spouse, dependent, (a) ESTABLISHMENT OF QUALIFIED INDI- Development Account (other than an Indi- or other named beneficiary of the deceased VIDUAL DEVELOPMENT ACCOUNT PROGRAMS.— vidual Development Account to be termi- Account owner, and Any qualified financial institution may nated by a qualified rollover). (iii) is paid after the Account owner has apply to the Secretary for approval to estab- (b) REQUIRED COMPLETION OF FINANCIAL completed a financial education course if re- lish 1 or more qualified individual develop- EDUCATION COURSE.— quired under section 505(b). ment account programs which meet the re- (1) IN GENERAL.—Before becoming eligible (B) QUALIFIED EXPENSES.— quirements of this title and for an allocation to withdraw funds to pay for qualified ex- (i) IN GENERAL.—The term ‘‘qualified ex- of the Individual Development Account limi- penses, owners of Individual Development penses’’ means any of the following expenses tation under section 45G(i)(3) of the Internal Accounts must complete 1 or more financial approved by the qualified financial institu- Revenue Code of 1986 with respect to such education courses specified in the qualified tion: programs. individual development account program. (I) Qualified higher education expenses. (b) BASIC PROGRAM STRUCTURE.— (2) STANDARD AND APPLICABILITY OF (II) Qualified first-time homebuyer costs. (1) IN GENERAL.—All qualified individual COURSE.—The Secretary, in consultation (III) Qualified business capitalization or development account programs shall consist with representatives of qualified individual expansion costs. of the following 2 components for each par- development account programs and financial (IV) Qualified rollovers. ticipant: educators, shall not later than January 1, (V) Qualified final distribution. (A) An Individual Development Account to 2004, establish minimum quality standards which an eligible individual may contribute (ii) QUALIFIED HIGHER EDUCATION EX- for the contents of financial education cash in accordance with section 505. PENSES.— courses and providers of such courses de- (B) A parallel account to which all match- (I) IN GENERAL.—The term ‘‘qualified high- scribed in paragraph (1) and a protocol to ex- ing funds shall be deposited in accordance er education expenses’’ has the meaning empt individuals from the requirement with section 506. given such term by section 529(e)(3) of the In- under paragraph (1) in the case of hardship, (2) TAILORED IDA PROGRAMS.—A qualified fi- ternal Revenue Code of 1986, determined by lack of need, the attainment of age 65, or a nancial institution may tailor its qualified treating the Account owner, the owner’s qualified final distribution. individual development account program to spouse, or one or more of the owner’s depend- (c) PROOF OF STATUS AS AN ELIGIBLE INDI- allow matching funds to be spent on 1 or ents as a designated beneficiary, and reduced VIDUAL.—Federal income tax forms for the more of the categories of qualified expenses. as provided in section 25A(g)(2) of such Code. immediately preceding taxable year and any (3) NO FEES MAY BE CHARGED TO IDAS.—A OORDINATION WITH OTHER BENEFITS.— other evidence of eligibility which may be (II) C qualified financial institution may not required by a qualified financial institution The amount of expenses which may be taken charge any fees to any Individual Develop- shall be presented to such institution at the into account for purposes of section 135, 529, ment Account or parallel account under a or 530 of such Code for any taxable year shall qualified individual development account time of the establishment of the Individual be reduced by the amount of any qualified program. Development Account and in any taxable higher education expenses taken into ac- (c) COORDINATION WITH PUBLIC HOUSING year in which contributions are made to the count as qualified expense distributions dur- AGENCY INDIVIDUAL SAVINGS ACCOUNTS.—Sec- Account to qualify for matching funds under ing such taxable year. tion 3(e)(2) of the United States Housing Act section 506(b)(1)(A). (iii) QUALIFIED FIRST-TIME HOMEBUYER of 1937 (42 U.S.C. 1437a(e)(2)) is amended by (d) SPECIAL RULE IN THE CASE OF MARRIED COSTS.—The term ‘‘qualified first-time home- inserting ‘‘or in any Individual Development INDIVIDUALS.—For purposes of this title, if, buyer costs’’ means qualified acquisition Account established under the Savings for with respect to any taxable year, 2 married costs (as defined in section 72(t)(8)(C) of the Working Families Act of 2004’’ after ‘‘sub- individuals file a Federal joint income tax Internal Revenue Code of 1986) with respect section’’. return, then not more than 1 of such individ- to a principal residence (within the meaning (d) TAX TREATMENT OF PARALLEL AC- uals may be treated as an eligible individual of section 121 of such Code) for a qualified COUNTS.— with respect to the succeeding taxable year.

VerDate jul 14 2003 02:43 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00138 Fmt 4624 Sfmt 0634 E:\CR\FM\A03MR6.088 S03PT1 March 3, 2004 CONGRESSIONAL RECORD — SENATE S2157 SEC. 506. DEPOSITS BY QUALIFIED INDIVIDUAL allel account which is less than the remain- SEC. 509. REPORTING, MONITORING, AND EVAL- DEVELOPMENT ACCOUNT PRO- ing balance in the Individual Development UATION. GRAMS. Account after such withdrawal. (a) RESPONSIBILITIES OF QUALIFIED FINAN- (a) PARALLEL ACCOUNTS.—The qualified fi- (2) PROCEDURE.—Upon receipt of a with- CIAL INSTITUTIONS.— nancial institution shall deposit all match- drawal request which meets the require- (1) IN GENERAL.—Each qualified financial ing funds for each Individual Development ments of paragraph (1), the qualified finan- institution that operates a qualified indi- Account into a parallel account at a quali- cial institution shall directly transfer the vidual development account program under fied financial institution. funds electronically to the distributees de- section 504 shall report annually to the Sec- (b) REGULAR DEPOSITS OF MATCHING scribed in section 503(6)(A)(ii). If a dis- retary within 90 days after the end of each FUNDS.— tributee is not equipped to receive funds calendar year on— (1) IN GENERAL.—Subject to paragraph (2), electronically, the qualified financial insti- (A) the number of individuals making con- the qualified financial institution shall de- tution may issue such funds by paper check tributions into Individual Development Ac- posit into the parallel account with respect to the distributee. counts and the amounts contributed, to each eligible individual the following (B) the amounts contributed into Indi- (b) WITHDRAWALS FOR NONQUALIFIED EX- amounts: vidual Development Accounts by eligible in- PENSES.—An Individual Development Ac- (A) A dollar-for-dollar match for the first dividuals and the amounts deposited into count owner may withdraw any amount of $500 contributed by the eligible individual parallel accounts for matching funds, funds from the Individual Development Ac- into an Individual Development Account (C) the amounts withdrawn from Indi- count for purposes other than to pay quali- with respect to any taxable year of such in- vidual Development Accounts and parallel fied expense distributions, but if, after such dividual. accounts, and the purposes for which such withdrawal, the amount in the parallel ac- (B) Any matching funds provided by State, amounts were withdrawn, count of such owner (excluding earnings on local, or private sources in accordance with (D) the balances remaining in Individual matching funds) exceeds the amount remain- the matching ratio set by those sources. Development Accounts and parallel ac- ing in such Individual Development Account, (2) TIMING OF DEPOSITS.—A deposit of the counts, and then such owner shall forfeit from the par- amounts described in paragraph (1) shall be (E) such other information needed to help allel account the lesser of such excess or the made into a parallel account— the Secretary monitor the effectiveness of amount withdrawn. (A) in the case of amounts described in the qualified individual development account paragraph (1)(A), not later than 30 days after (c) WITHDRAWALS FROM ACCOUNTS OF NON- program (provided in a non-individually- the end of the calendar quarter during which ELIGIBLE INDIVIDUALS.—If the individual for identifiable manner). the contribution described in such paragraph whose benefit an Individual Development Ac- (2) ADDITIONAL REPORTING REQUIREMENTS.— was made, and count is established ceases to be an eligible Each qualified financial institution that op- (B) in the case of amounts described in individual, such account shall remain an In- erates a qualified individual development ac- paragraph (1)(B), not later than 2 business dividual Development Account, but such in- count program under section 504 shall report days after such amounts were provided. dividual shall not be eligible for any further at such time and in such manner as the Sec- retary may prescribe any additional infor- (3) CROSS REFERENCE.— matching funds under section 506(b)(1)(A) for contributions which are made to the Ac- mation that the Secretary requires to be For allowance of tax credit for Individual count during any taxable year when such in- provided for purposes of administering and Development Account subsidies, including dividual is not an eligible individual. supervising the qualified individual develop- matching funds, see section 45G of the Inter- ment account program. This additional data nal Revenue Code of 1986. (d) EFFECT OF PLEDGING ACCOUNT AS SECU- RITY may include, without limitation, identifying (c) DEPOSIT OF MATCHING FUNDS INTO INDI- .—If, during any taxable year of the individual for whose benefit an Individual Devel- information about Individual Development VIDUAL DEVELOPMENT ACCOUNT OF INDIVIDUAL Account owners, their Accounts, additions to WHO HAS ATTAINED AGE 65.—In the case of an opment Account is established, that individual uses the Account, the individual’s the Accounts, and withdrawals from the Ac- Individual Development Account owner who counts. attains the age of 65, the qualified financial parallel account, or any portion thereof as security for a loan, the portion so used shall (b) RESPONSIBILITIES OF THE SECRETARY.— institution shall deposit the funds in the par- (1) MONITORING PROTOCOL.—Not later than allel account with respect to such individual be treated as a withdrawal of such portion from the Individual Development Account 12 months after the date of the enactment of into the Individual Development Account of this Act, the Secretary, in consultation with such individual on the later of— for purposes other than to pay qualified expenses. the Secretary of Health and Human Services, (1) the day which is the 1-year anniversary shall develop and implement a protocol and of the deposit of such funds in the parallel SEC. 508. CERTIFICATION AND TERMINATION OF process to monitor the cost and outcomes of account, or QUALIFIED INDIVIDUAL DEVELOP- the qualified individual development account MENT ACCOUNT PROGRAMS. (2) the first business day of the taxable programs established under section 504. year of such individual following the taxable (a) CERTIFICATION PROCEDURES.—Upon es- (2) ANNUAL REPORTS.—For each year after year in which such individual attained age tablishing a qualified individual develop- 2004, the Secretary shall submit a progress 65. ment account program under section 504, a report to Congress on the status of such (d) UNIFORM ACCOUNTING REGULATIONS.—To qualified financial institution shall certify qualified individual development account ensure proper recordkeeping and determina- to the Secretary at such time and in such programs. Such report shall, to the extent tion of the tax credit under section 45G of manner as may be prescribed by the Sec- data are available, include from a represent- the Internal Revenue Code of 1986, the Sec- retary and accompanied by any documenta- ative sample of qualified individual develop- retary shall prescribe regulations with re- tion required by the Secretary, that— ment account programs information on— spect to accounting for matching funds in (1) the accounts described in subparagraphs (A) the characteristics of participants, in- the parallel accounts. (A) and (B) of section 504(b)(1) are operating cluding age, gender, race or ethnicity, mar- (e) REGULAR REPORTING OF ACCOUNTS.— pursuant to all the provisions of this title, ital status, number of children, employment Any qualified financial institution shall re- and status, and monthly income, port the balances in any Individual Develop- (2) the qualified financial institution (B) deposits, withdrawals, balances, uses of ment Account and parallel account of an in- agrees to implement an information system Individual Development Accounts, and par- dividual on not less than an annual basis to necessary to monitor the cost and outcomes ticipant characteristics, such individual. of the qualified individual development ac- (C) the characteristics of qualified indi- SEC. 507. WITHDRAWAL PROCEDURES. count program. vidual development account programs, in- (a) WITHDRAWALS FOR QUALIFIED EX- (b) AUTHORITY TO TERMINATE QUALIFIED cluding match rate, economic education re- PENSES.— IDA PROGRAM.—If the Secretary determines quirements, permissible uses of accounts, (1) IN GENERAL.—An Individual Develop- that a qualified financial institution under staffing of programs in full time employees, ment Account owner may withdraw funds in this title is not operating a qualified indi- and the total costs of programs, and order to pay qualified expense distributions vidual development account program in ac- (D) process information on program imple- from such individual’s— cordance with the requirements of this title mentation and administration, especially on (A) Individual Development Account, but (and has not implemented any corrective problems encountered and how problems only from funds which have been on deposit recommendations directed by the Secretary), were solved. in such Account for at least 1 year, and the Secretary shall terminate such institu- (3) REAUTHORIZATION REPORT ON COST AND (B) parallel account, but only— tion’s authority to conduct the program. If OUTCOMES OF IDAS.— (i) from matching funds which have been the Secretary is unable to identify a quali- (A) IN GENERAL.—Not later than July 1, on deposit in such parallel account for at fied financial institution to assume the au- 2008, the Secretary of the Treasury shall sub- least 1 year, thority to conduct such program, then any mit a report to Congress and the chairmen (ii) from earnings in such parallel account, funds in a parallel account established for and ranking members of the Committee on after all matching funds described in clause the benefit of any individual under such pro- Finance, the Committee on Banking, Hous- (i) have been withdrawn, and gram shall be deposited into the Individual ing, and Urban Affairs, and the Committee (iii) to the extent such withdrawal does not Development Account of such individual as on Health, Education, Labor, and Pensions of result in a remaining balance in such par- of the first day of such termination. the Senate and the Committee on Ways and

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Means, the Committee on Banking and Fi- ‘‘(b) APPLICABLE TAX.—For the purposes of ‘‘(i) APPLICATION OF SECTION.— nancial Services, and the Committee on Edu- this section, the term ‘applicable tax’ means ‘‘(1) IN GENERAL.—This section shall apply cation and the Workforce of the House of the excess (if any) of— to any expenditure made in any taxable year Representatives, in which the Secretary ‘‘(1) the tax imposed under this chapter ending after December 31, 2004, and begin- shall— (other than the taxes imposed under the pro- ning on or before January 1, 2012, with re- (i) summarize the previously submitted an- visions described in subparagraphs (C) spect to any Individual Development Ac- nual reports required under paragraph (2), through (Q) of section 26(b)(2)), over count which— (ii) from a representative sample of quali- ‘‘(2) the credits allowable under subpart B ‘‘(A) is opened before January 1, 2012, and fied individual development account pro- (other than this section) and subpart D of ‘‘(B) as determined by the Secretary, when grams, include an analysis of— this part. added to all of the previously opened Indi- (I) the economic, social, and behavioral ‘‘(c) INDIVIDUAL DEVELOPMENT ACCOUNT IN- vidual Development Accounts, does not ex- outcomes, VESTMENT.—For purposes of this section, the ceed— (II) the changes in savings rates, asset term ‘individual development account in- ‘‘(i) 100,000 Accounts if opened after Decem- holdings, and household debt, and overall vestment’ means, with respect to an indi- ber 31, 2004, and before January 1, 2007, changes in economic stability, vidual development account program in any ‘‘(ii) an additional 100,000 Accounts if (III) the changes in outlooks, attitudes, taxable year, an amount equal to the sum opened after December 31, 2006, and before and behavior regarding savings strategies, of— January 1, 2009, but only if, except as pro- investment, education, and family, ‘‘(1) the aggregate amount of dollar-for- vided in paragraph (4), the total number of (IV) the integration into the financial dollar matches under such program under Accounts described in clause (i) are opened mainstream, including decreased reliance on section 506(b)(1)(A) of the Savings for Work- and the Secretary determines that such Ac- ing Families Act of 2004 for such taxable alternative financial services, and increase counts are being reasonably and responsibly year, plus in acquisition of mainstream financial prod- administered, and ‘‘(2) $50 with respect to each Individual De- ucts, and ‘‘(iii) an additional 100,000 Accounts if velopment Account maintained— (V) the involvement in civic affairs, includ- opened after December 31, 2008, and before ‘‘(A) as of the end of such taxable year, but ing neighborhood schools and associations, January 1, 2012, but only if the total number only if such taxable year is within the 7-tax- associated with participation in qualified in- of Accounts described in clauses (i) and (ii) able-year period beginning with the taxable dividual development account programs, are opened and the Secretary makes a deter- year in which such Account is opened, and (iii) from a representative sample of quali- mination described in paragraph (2). fied individual development account pro- ‘‘(B) with a balance of not less than $100 grams, include a comparison of outcomes as- (other than the taxable year in which such Notwithstanding the preceding sentence, sociated with such programs with outcomes Account is opened). this section shall apply to amounts which associated with other Federal Government ‘‘(d) ELIGIBLE ENTITY.—For purposes of this are described in subsection (c)(1)(A) and social and economic development programs, section, except as provided in regulations, which are timely deposited into a parallel including asset building programs, and the term ‘eligible entity’ means a qualified account during the 30-day period following (iv) make recommendations regarding the financial institution. the end of last taxable year beginning before ‘‘(e) OTHER DEFINITIONS.—For purposes of reauthorization of the qualified individual January 1, 2012. this section, any term used in this section development account programs, including— ‘‘(2) DETERMINATION WITH RESPECT TO THIRD and also in the Savings for Working Families (I) recommendations regarding reforms GROUP OF ACCOUNTS.—A determination is de- Act of 2004 shall have the meaning given that will improve the cost and outcomes of scribed in this paragraph if the Secretary de- such term by such Act. the such programs, including the ability to termines that— ‘‘(f) DENIAL OF DOUBLE BENEFIT.— help low income families save and accumu- ‘‘(A) substantially all of the previously ‘‘(1) IN GENERAL.—No deduction or credit late productive assets, opened Accounts have been reasonably and (other than under this section) shall be al- (II) recommendations regarding the appro- responsibly administered prior to the date of lowed under this chapter with respect to any priate levels of subsidies to provide effective the determination, expense which— incentives to financial institutions and Ac- ‘‘(B) the individual development account ‘‘(A) is taken into account under sub- count owners under such programs, and programs have increased net savings of par- section (c)(1)(A) in determining the credit (III) recommendations regarding how such ticipants in the programs, under this section, or programs should be integrated into other ‘‘(C) participants in the individual develop- ‘‘(B) is attributable to the maintenance of Federal poverty reduction, asset building, ment account programs have increased Fed- an Individual Development Account. and community development policies and eral income tax liability and decreased utili- ‘‘(2) DETERMINATION OF AMOUNT.—Solely for programs. zation of Federal assistance programs rel- purposes of paragraph (1)(B), the amount at- (B) AUTHORIZATION.—There is authorized to ative to similarly situated individuals that tributable to the maintenance of an Indi- be appropriated $2,500,000, for carrying out did not participate in the individual develop- vidual Development Account shall be deemed the purposes of this paragraph. ment account programs, and to be the dollar amount of the credit allowed (4) USE OF ACCOUNTS IN RURAL AREAS EN- ‘‘(D) the sum of the estimated increased under subsection (c)(l)(B) for each taxable COURAGED.—The Secretary shall develop Federal tax liability and reduction of Fed- year such Individual Development Account methods to encourage the use of Individual eral assistance program benefits to partici- is maintained. Development Accounts in rural areas. pants in the individual development account ‘‘(g) CREDIT MAY BE TRANSFERRED.— programs is greater than the cost of the indi- SEC. 510. AUTHORIZATION OF APPROPRIATIONS. ‘‘(1) IN GENERAL.—An eligible entity may vidual development account programs to the There is authorized to be appropriated to transfer any credit allowable to the eligible the Secretary $1,000,000 for fiscal year 2004 Federal government. entity under subsection (a) to any person ‘‘(3) DETERMINATION OF LIMITATION.—The and for each fiscal year through 2012, for the other than to another eligible entity which purposes of implementing this title, includ- limitation on the number of Individual De- is exempt from tax under this title. The development Accounts under paragraph (1)(B) ing the reporting, monitoring, and evalua- termination as to whether a credit is allow- tion required under section 509, to remain shall be allocated by the Secretary among able shall be made without regard to the tax- qualified individual development account available until expended. exempt status of the eligible entity. SEC. 511. MATCHING FUNDS FOR INDIVIDUAL DE- programs selected by the Secretary and, in ‘‘(2) CONSENT REQUIRED FOR REVOCATION.— the case of the limitation under clause (iii) VELOPMENT ACCOUNTS PROVIDED Any transfer under paragraph (1) may be re- THROUGH A TAX CREDIT FOR of such paragraph, shall be equally divided QUALIFIED FINANCIAL INSTITU- voked only with the consent of the Sec- among the States. TIONS. retary. ‘‘(4) SPECIAL RULE IF SMALLER NUMBER OF ‘‘(h) REGULATIONS.—The Secretary may (a) IN GENERAL.—Subpart D of part IV of ACCOUNTS ARE OPENED.—For purposes of para- subchapter A of chapter 1 (relating to busi- prescribe such regulations as may be nec- graph (1)(B)(ii)— essary or appropriate to carry out this sec- ness related credits) is amended by adding at ‘‘(i) IN GENERAL.—If less than 100,000 Ac- the end the following new section: tion, including counts are opened before January 1, 2007, ‘‘SEC. 45G. INDIVIDUAL DEVELOPMENT ACCOUNT ‘‘(1) such regulations as necessary to in- such paragraph shall be applied by sub- INVESTMENT CREDIT. sure that any credit described in subsection stituting ‘‘applicable number of Accounts’ ‘‘(a) DETERMINATION OF AMOUNT.—For pur- (g)(1) is claimed once and not retransferred for ‘100,000 Accounts’. by a transferee, and poses of section 38, the individual develop- ‘‘(ii) APPLICABLE NUMBER.—For purposes of ment account investment credit determined ‘‘(2) regulations providing for a recapture clause (i), the applicable number equals the under this section with respect to any eligi- of the credit allowed under this section (not- lesser of— ble entity for any taxable year is an amount withstanding any termination date described ‘‘(I) 75,000, or equal to the individual development account in subsection (i)) in cases where there is a ‘‘(II) 3 times the number of Accounts investment provided by such eligible entity forfeiture under section 507(b) of the Savings opened before January 1, 2007.’’. during the taxable year under an individual for Working Families Act of 2004 in a subse- development account program established quent taxable year of any amount which was (b) CREDIT TREATED AS BUSINESS CREDIT.— under section 504 of the Savings for Working taken into account in determining the Section 38(b) (relating to current year busi- Families Act of 2004. amount of such credit. ness credit) is amended by striking ‘‘plus’’ at

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the end of paragraph (14), by striking the pe- of whether a transaction has economic sub- ‘‘(D) TREATMENT OF LESSORS.—In applying riod at the end of paragraph (15) and insert- stance shall be made as provided in this subclause (I) of paragraph (1)(B)(ii) to the ing ‘‘, plus’’, and by adding at the end the paragraph. lessor of tangible property subject to a lease, following new paragraph: ‘‘(B) DEFINITION OF ECONOMIC SUBSTANCE.— the expected net tax benefits shall not in- ‘‘(16) the individual development account For purposes of subparagraph (A)— clude the benefits of depreciation, or any tax investment credit determined under section ‘‘(i) IN GENERAL.—A transaction has eco- credit, with respect to the leased property 45G(a).’’. nomic substance only if— and subclause (II) of paragraph (1)(B)(ii) (c) NO CARRYBACKS.—Subsection (d) of sec- ‘‘(I) the transaction changes in a meaning- shall be disregarded in determining whether tion 39 (relating to carryback and ful way (apart from Federal tax effects and, any of such benefits are allowable. carryforward of unused credits) is amended if there is any Federal tax effects, also apart ‘‘(4) OTHER COMMON LAW DOCTRINES NOT AF- by adding at the end the following: from any foreign, State, or local tax effects) FECTED.—Except as specifically provided in ‘‘(11) NO CARRYBACK OF SECTION 45G CREDIT the taxpayer’s economic position, and this subsection, the provisions of this sub- BEFORE EFFECTIVE DATE.—No portion of the ‘‘(II) the taxpayer has a substantial nontax section shall not be construed as altering or unused business credit for any taxable year purpose for entering into such transaction supplanting any other rule of law, and the which is attributable to the individual devel- and the transaction is a reasonable means of requirements of this subsection shall be con- opment account investment credit deter- accomplishing such purpose. strued as being in addition to any such other mined under section 45G may be carried back ‘‘(ii) SPECIAL RULE WHERE TAXPAYER RELIES rule of law. to a taxable year ending before January 1, ON PROFIT POTENTIAL.—A transaction shall ‘‘(5) REGULATIONS.—The Secretary shall 2004.’’. not be treated as having economic substance prescribe such regulations as may be nec- (d) CONFORMING AMENDMENT.—The table of by reason of having a potential for profit un- essary or appropriate to carry out the pur- sections for subpart C of part IV of sub- less— poses of this subsection. Such regulations chapter A of chapter 1 is amended by adding ‘‘(I) the present value of the reasonably ex- may include exemptions from the applica- at the end the following new item: pected pre-tax profit from the transaction is tion of this subsection.’’. ‘‘Sec. 45G. Individual development account substantial in relation to the present value (b) EFFECTIVE DATE.—The amendments investment credit.’’. of the expected net tax benefits that would made by this section shall apply to trans- be allowed if the transaction were respected, actions entered into after February 15, 2004. (e) REPORT REGARDING ACCOUNT MAINTE- and NANCE FEES.—The Secretary of the Treasury SEC. 702. PENALTY FOR FAILING TO DISCLOSE shall study the adequacy of the amount spec- ‘‘(II) the reasonably expected pre-tax profit REPORTABLE TRANSACTION. ified in section 45G(c)(2) of the Internal Rev- from the transaction exceeds a risk-free rate (a) IN GENERAL.—Part I of subchapter B of enue Code of 1986 (as added by this section). of return. chapter 68 (relating to assessable penalties) Not later than December 31, 2009, the Sec- ‘‘(C) TREATMENT OF FEES AND FOREIGN is amended by inserting after section 6707 retary of the Treasury shall report the find- TAXES.—Fees and other transaction expenses the following new section: ings of the study described in the preceding and foreign taxes shall be taken into account as expenses in determining pre-tax profit ‘‘SEC. 6707A. PENALTY FOR FAILURE TO INCLUDE sentence to Congress. REPORTABLE TRANSACTION INFOR- (f) EFFECTIVE DATE.—The amendments under subparagraph (B)(ii). MATION WITH RETURN OR STATE- made by this section shall apply to taxable ‘‘(2) SPECIAL RULES FOR TRANSACTIONS WITH MENT. TAX-INDIFFERENT PARTIES.— years ending after December 31, 2004. ‘‘(a) IMPOSITION OF PENALTY.—Any person ‘‘(A) SPECIAL RULES FOR FINANCING TRANS- SEC. 512. ACCOUNT FUNDS DISREGARDED FOR who fails to include on any return or state- ACTIONS.—The form of a transaction which is PURPOSES OF CERTAIN MEANS- ment any information with respect to a rein substance the borrowing of money or the TESTED FEDERAL PROGRAMS. portable transaction which is required under acquisition of financial capital directly or Notwithstanding any other provision of section 6011 to be included with such return indirectly from a tax-indifferent party shall Federal law (other than the Internal Rev- or statement shall pay a penalty in the not be respected if the present value of the enue Code of 1986) that requires consider- amount determined under subsection (b). ation of 1 or more financial circumstances of deductions to be claimed with respect to the ‘‘(b) AMOUNT OF PENALTY.— an individual, for the purpose of determining transaction is substantially in excess of the ‘‘(1) IN GENERAL.—Except as provided in eligibility to receive, or the amount of, any present value of the anticipated economic returns of the person lending the money or paragraphs (2) and (3), the amount of the assistance or benefit authorized by such pro- penalty under subsection (a) shall be $50,000. vision to be provided to or for the benefit of providing the financial capital. A public of- ‘‘(2) LISTED TRANSACTION.—The amount of such individual, any amount (including earn- fering shall be treated as a borrowing, or an acquisition of financial capital, from a tax- the penalty under subsection (a) with respect ings thereon) in any Individual Development to a listed transaction shall be $100,000. Account of such individual and any match- indifferent party if it is reasonably expected ‘‘(3) INCREASE IN PENALTY FOR LARGE ENTI- ing deposit made on behalf of such individual that at least 50 percent of the offering will be TIES AND HIGH NET WORTH INDIVIDUALS.— (including earnings thereon) in any parallel placed with tax-indifferent parties. ‘‘(A) IN GENERAL.—In the case of a failure ‘‘(B) ARTIFICIAL INCOME SHIFTING AND BASIS account shall be disregarded for such purpose under subsection (a) by— with respect to any period during which such ADJUSTMENTS.—The form of a transaction with a tax-indifferent party shall not be re- ‘‘(i) a large entity, or individual maintains or makes contributions ‘‘(ii) a high net worth individual, into such Individual Development Account. spected if— the penalty under paragraph (1) or (2) shall TITLE VI—MANAGEMENT OF EXEMPT ‘‘(i) it results in an allocation of income or be twice the amount determined without re- ORGANIZATIONS gain to the tax-indifferent party in excess of such party’s economic income or gain, or gard to this paragraph. SEC. 601. AUTHORIZATION OF APPROPRIATIONS. ‘‘(ii) it results in a basis adjustment or ‘‘(B) LARGE ENTITY.—For purposes of sub- (a) IN GENERAL.—There is authorized to be shifting of basis on account of overstating paragraph (A), the term ‘large entity’ means, appropriated to the Secretary of the Treas- the income or gain of the tax-indifferent with respect to any taxable year, a person ury $80,000,000 for each fiscal year to carry party. (other than a natural person) with gross re- out the administration of exempt organiza- ‘‘(3) DEFINITIONS AND SPECIAL RULES.—For ceipts in excess of $10,000,000 for the taxable tions by the Internal Revenue Service. purposes of this subsection— year in which the reportable transaction oc- (b) IMPLEMENTATION OF SECTION 527.—There ‘‘(A) ECONOMIC SUBSTANCE DOCTRINE.—The curs or the preceding taxable year. Rules is authorized to be appropriated to the Sec- term ‘economic substance doctrine’ means similar to the rules of paragraph (2) and sub- retary of the Treasury $3,000,000 to carry out the common law doctrine under which tax paragraphs (B), (C), and (D) of paragraph (3) the provisions of Public Laws 106–230 and 107– benefits under subtitle A with respect to a of section 448(c) shall apply for purposes of 276 relating to section 527 of the Internal transaction are not allowable if the trans- this subparagraph. Revenue Code of 1986. action does not have economic substance or ‘‘(C) HIGH NET WORTH INDIVIDUAL.—The TITLE VII—REVENUE PROVISIONS lacks a business purpose. term ‘high net worth individual’ means, with Subtitle A—Provisions Designed To Curtail ‘‘(B) TAX-INDIFFERENT PARTY.—The term respect to a transaction, a natural person Tax Shelters ‘tax-indifferent party’ means any person or whose net worth exceeds $2,000,000 imme- SEC. 701. CLARIFICATION OF ECONOMIC SUB- entity not subject to tax imposed by subtitle diately before the transaction. STANCE DOCTRINE. A. A person shall be treated as a tax-indif- ‘‘(c) DEFINITIONS.—For purposes of this sec- (a) IN GENERAL.—Section 7701, as amended ferent party with respect to a transaction if tion— by this Act, is amended by redesignating the items taken into account with respect to ‘‘(1) REPORTABLE TRANSACTION.—The term subsection (o) as subsection (p) and by in- the transaction have no substantial impact ‘reportable transaction’ means any trans- serting after subsection (n) the following on such person’s liability under subtitle A. action with respect to which information is new subsection: ‘‘(C) EXCEPTION FOR PERSONAL TRANS- required to be included with a return or ‘‘(o) CLARIFICATION OF ECONOMIC SUBSTANCE ACTIONS OF INDIVIDUALS.—In the case of an statement because, as determined under reg- DOCTRINE; ETC.— individual, this subsection shall apply only ulations prescribed under section 6011, such ‘‘(1) GENERAL RULES.— to transactions entered into in connection transaction is of a type which the Secretary ‘‘(A) IN GENERAL.—In applying the eco- with a trade or business or an activity en- determines as having a potential for tax nomic substance doctrine, the determination gaged in for the production of income. avoidance or evasion.

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‘‘(2) LISTED TRANSACTION.—Except as pro- is in addition to any penalty imposed under ‘‘(B) APPLICABLE RULES.—The rules of para- vided in regulations, the term ‘listed trans- this title.’’. graphs (2), (3), (4), and (5) of section 6707A(d) action’ means a reportable transaction (b) CONFORMING AMENDMENT.—The table of shall apply for purposes of subparagraph (A). which is the same as, or substantially simi- sections for part I of subchapter B of chapter ‘‘(d) DEFINITIONS OF REPORTABLE AND LIST- lar to, a transaction specifically identified 68 is amended by inserting after the item re- ED TRANSACTIONS.—For purposes of this sec- by the Secretary as a tax avoidance trans- lating to section 6707 the following: tion, the terms ‘reportable transaction’ and action for purposes of section 6011. ‘‘Sec. 6707A. Penalty for failure to include re- ‘listed transaction’ have the respective ‘‘(d) AUTHORITY TO RESCIND PENALTY.— portable transaction informa- meanings given to such terms by section ‘‘(1) IN GENERAL.—The Commissioner of In- tion with return or state- 6707A(c). ternal Revenue may rescind all or any por- ment.’’. ‘‘(e) SPECIAL RULES.— tion of any penalty imposed by this section (c) EFFECTIVE DATE.—The amendments ‘‘(1) COORDINATION WITH PENALTIES, ETC., ON with respect to any violation if— made by this section shall apply to returns OTHER UNDERSTATEMENTS.—In the case of an ‘‘(A) the violation is with respect to a re- and statements the due date for which is understatement (as defined in section portable transaction other than a listed after the date of the enactment of this Act. 6662(d)(2))— transaction, SEC. 703. ACCURACY-RELATED PENALTY FOR ‘‘(A) the amount of such understatement ‘‘(B) the person on whom the penalty is im- LISTED TRANSACTIONS AND OTHER (determined without regard to this para- posed has a history of complying with the re- REPORTABLE TRANSACTIONS HAV- graph) shall be increased by the aggregate quirements of this title, ING A SIGNIFICANT TAX AVOIDANCE amount of reportable transaction under- ‘‘(C) it is shown that the violation is due to PURPOSE. statements and noneconomic substance an unintentional mistake of fact; (a) IN GENERAL.—Subchapter A of chapter transaction understatements for purposes of ‘‘(D) imposing the penalty would be 68 is amended by inserting after section 6662 determining whether such understatement is against equity and good conscience, and the following new section: a substantial understatement under section ‘‘(E) rescinding the penalty would promote ‘‘SEC. 6662A. IMPOSITION OF ACCURACY-RE- 6662(d)(1), and compliance with the requirements of this LATED PENALTY ON UNDERSTATE- ‘‘(B) the addition to tax under section title and effective tax administration. MENTS WITH RESPECT TO REPORT- ABLE TRANSACTIONS. 6662(a) shall apply only to the excess of the ‘‘(2) DISCRETION.—The exercise of authority ‘‘(a) IMPOSITION OF PENALTY.—If a taxpayer amount of the substantial understatement under paragraph (1) shall be at the sole dis- has a reportable transaction understatement (if any) after the application of subparagraph cretion of the Commissioner and may be del- for any taxable year, there shall be added to (A) over the aggregate amount of reportable egated only to the head of the Office of Tax the tax an amount equal to 20 percent of the transaction understatements and non- Shelter Analysis. The Commissioner, in the amount of such understatement. economic substance transaction understate- Commissioner’s sole discretion, may estab- ‘‘(b) REPORTABLE TRANSACTION UNDER- ments. lish a procedure to determine if a penalty STATEMENT.—For purposes of this section— ‘‘(2) COORDINATION WITH OTHER PENALTIES.— should be referred to the Commissioner or ‘‘(1) IN GENERAL.—The term ‘reportable ‘‘(A) APPLICATION OF FRAUD PENALTY.—Ref- the head of such Office for a determination transaction understatement’ means the sum erences to an underpayment in section 6663 under paragraph (1). of— shall be treated as including references to a ‘‘(3) NO APPEAL.—Notwithstanding any ‘‘(A) the product of— reportable transaction understatement and a other provision of law, any determination ‘‘(i) the amount of the increase (if any) in noneconomic substance transaction under- under this subsection may not be reviewed in taxable income which results from a dif- statement. any administrative or judicial proceeding. ference between the proper tax treatment of ‘‘(B) NO DOUBLE PENALTY.—This section ‘‘(4) RECORDS.—If a penalty is rescinded an item to which this section applies and the shall not apply to any portion of an under- under paragraph (1), the Commissioner shall taxpayer’s treatment of such item (as shown statement on which a penalty is imposed place in the file in the Office of the Commis- on the taxpayer’s return of tax), and under section 6662B or 6663. sioner the opinion of the Commissioner or ‘‘(ii) the highest rate of tax imposed by ‘‘(3) SPECIAL RULE FOR AMENDED RETURNS.— the head of the Office of Tax Shelter Anal- section 1 (section 11 in the case of a taxpayer Except as provided in regulations, in no ysis with respect to the determination, in- which is a corporation), and event shall any tax treatment included with cluding— ‘‘(B) the amount of the decrease (if any) in an amendment or supplement to a return of ‘‘(A) the facts and circumstances of the the aggregate amount of credits determined tax be taken into account in determining the transaction, under subtitle A which results from a dif- amount of any reportable transaction under- ‘‘(B) the reasons for the rescission, and ference between the taxpayer’s treatment of statement or noneconomic substance trans- ‘‘(C) the amount of the penalty rescinded. an item to which this section applies (as action understatement if the amendment or ‘‘(5) REPORT.—The Commissioner shall shown on the taxpayer’s return of tax) and supplement is filed after the earlier of the each year report to the Committee on Ways the proper tax treatment of such item. date the taxpayer is first contacted by the and Means of the House of Representatives For purposes of subparagraph (A), any reduc- Secretary regarding the examination of the and the Committee on Finance of the Sen- tion of the excess of deductions allowed for return or such other date as is specified by ate— the taxable year over gross income for such the Secretary. ‘‘(A) a summary of the total number and year, and any reduction in the amount of ‘‘(4) NONECONOMIC SUBSTANCE TRANSACTION aggregate amount of penalties imposed, and capital losses which would (without regard UNDERSTATEMENT.—For purposes of this sub- rescinded, under this section, and to section 1211) be allowed for such year, section, the term ‘noneconomic substance ‘‘(B) a description of each penalty re- shall be treated as an increase in taxable in- transaction understatement’ has the mean- scinded under this subsection and the rea- come. ing given such term by section 6662B(c). sons therefor. ‘‘(2) ITEMS TO WHICH SECTION APPLIES.—This ‘‘(5) CROSS REFERENCE.— ‘‘(e) PENALTY REPORTED TO SEC.—In the section shall apply to any item which is at- ‘‘For reporting of section 6662A(c) penalty case of a person— tributable to— ‘‘(1) which is required to file periodic re- to the Securities and Exchange Commission, ‘‘(A) any listed transaction, and see section 6707A(e).’’. ports under section 13 or 15(d) of the Securi- ‘‘(B) any reportable transaction (other ties Exchange Act of 1934 or is required to be (b) DETERMINATION OF OTHER UNDERSTATE- than a listed transaction) if a significant MENTS.—Subparagraph (A) of section consolidated with another person for pur- purpose of such transaction is the avoidance poses of such reports, and 6662(d)(2) is amended by adding at the end or evasion of Federal income tax. the following flush sentence: ‘‘(2) which— ‘‘(c) HIGHER PENALTY FOR NONDISCLOSED ‘‘(A) is required to pay a penalty under this LISTED AND OTHER AVOIDANCE TRANS- ‘‘The excess under the preceding sentence section with respect to a listed transaction, ACTIONS.— shall be determined without regard to items ‘‘(B) is required to pay a penalty under sec- ‘‘(1) IN GENERAL.—Subsection (a) shall be to which section 6662A applies and without tion 6662A with respect to any reportable applied by substituting ‘30 percent’ for ‘20 regard to items with respect to which a pen- transaction at a rate prescribed under sec- percent’ with respect to the portion of any alty is imposed by section 6662B.’’. tion 6662A(c), or reportable transaction understatement with (c) REASONABLE CAUSE EXCEPTION.— ‘‘(C) is required to pay a penalty under sec- respect to which the requirement of section (1) IN GENERAL.—Section 6664 is amended tion 6662B with respect to any noneconomic 6664(d)(2)(A) is not met. by adding at the end the following new sub- substance transaction, ‘‘(2) RULES APPLICABLE TO COMPROMISE OF section: the requirement to pay such penalty shall be PENALTY.— ‘‘(d) REASONABLE CAUSE EXCEPTION FOR RE- disclosed in such reports filed by such person ‘‘(A) IN GENERAL.—If the 1st letter of pro- PORTABLE TRANSACTION UNDERSTATEMENTS.— for such periods as the Secretary shall speci- posed deficiency which allows the taxpayer ‘‘(1) IN GENERAL.—No penalty shall be im- fy. Failure to make a disclosure in accord- an opportunity for administrative review in posed under section 6662A with respect to ance with the preceding sentence shall be the Internal Revenue Service Office of Ap- any portion of a reportable transaction un- treated as a failure to which the penalty peals has been sent with respect to a penalty derstatement if it is shown that there was a under subsection (b)(2) applies. to which paragraph (1) applies, only the reasonable cause for such portion and that ‘‘(f) COORDINATION WITH OTHER PEN- Commissioner of Internal Revenue may com- the taxpayer acted in good faith with respect ALTIES.—The penalty imposed by this section promise all or any portion of such penalty. to such portion.

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‘‘(2) SPECIAL RULES.—Paragraph (1) shall (B) by adding at the end the following new ‘‘(1) IN GENERAL.—If the 1st letter of pro- not apply to any reportable transaction un- subparagraph: posed deficiency which allows the taxpayer derstatement unless— ‘‘(C) TAX SHELTER.—For purposes of sub- an opportunity for administrative review in ‘‘(A) the relevant facts affecting the tax paragraph (B), the term ‘tax shelter’ means— the Internal Revenue Service Office of Ap- treatment of the item are adequately dis- ‘‘(i) a partnership or other entity, peals has been sent with respect to a penalty closed in accordance with the regulations ‘‘(ii) any investment plan or arrangement, to which this section applies, only the Com- prescribed under section 6011, or missioner of Internal Revenue may com- ‘‘(B) there is or was substantial authority ‘‘(iii) any other plan or arrangement, promise all or any portion of such penalty. for such treatment, and if a significant purpose of such partnership, ‘‘(2) APPLICABLE RULES.—The rules of para- ‘‘(C) the taxpayer reasonably believed that entity, plan, or arrangement is the avoid- graphs (2), (3), (4), and (5) of section 6707A(d) such treatment was more likely than not the ance or evasion of Federal income tax.’’. shall apply for purposes of paragraph (1). proper treatment. (3) Section 6662(d)(2) is amended by strik- ‘‘(e) COORDINATION WITH OTHER PEN- A taxpayer failing to adequately disclose in ing subparagraphs (C) and (D). ALTIES.—Except as otherwise provided in this accordance with section 6011 shall be treated (4) Section 6664(c)(1) is amended by strik- part, the penalty imposed by this section as meeting the requirements of subparagraph ing ‘‘this part’’ and inserting ‘‘section 6662 or shall be in addition to any other penalty im- (A) if the penalty for such failure was re- 6663’’. posed by this title. scinded under section 6707A(d). (5) Subsection (b) of section 7525 is amend- ‘‘(f) CROSS REFERENCES.— ‘‘(3) RULES RELATING TO REASONABLE BE- ed by striking ‘‘section 6662(d)(2)(C)(iii)’’ and ‘‘(1) For coordination of penalty with un- LIEF.—For purposes of paragraph (2)(C)— inserting ‘‘section 1274(b)(3)(C)’’. derstatements under section 6662 and other ‘‘(A) IN GENERAL.—A taxpayer shall be (6)(A) The heading for section 6662 is special rules, see section 6662A(e). treated as having a reasonable belief with re- amended to read as follows: ‘‘(2) For reporting of penalty imposed spect to the tax treatment of an item only if ‘‘SEC. 6662. IMPOSITION OF ACCURACY-RELATED under this section to the Securities and Ex- such belief— PENALTY ON UNDERPAYMENTS.’’. change Commission, see section 6707A(e).’’. ‘‘(i) is based on the facts and law that exist (B) The table of sections for part II of sub- (b) CLERICAL AMENDMENT.—The table of at the time the return of tax which includes chapter A of chapter 68 is amended by strik- sections for part II of subchapter A of chap- such tax treatment is filed, and ing the item relating to section 6662 and inter 68 is amended by inserting after the item ‘‘(ii) relates solely to the taxpayer’s serting the following new items: relating to section 6662A the following new chances of success on the merits of such item: treatment and does not take into account ‘‘Sec. 6662. Imposition of accuracy-related the possibility that a return will not be au- penalty on underpayments. ‘‘Sec. 6662B. Penalty for understatements at- dited, such treatment will not be raised on ‘‘Sec. 6662A. Imposition of accuracy-related tributable to transactions lack- audit, or such treatment will be resolved penalty on understatements ing economic substance, etc.’’. through settlement if it is raised. with respect to reportable (c) EFFECTIVE DATE.—The amendments ‘‘(B) CERTAIN OPINIONS MAY NOT BE RELIED transactions.’’. made by this section shall apply to trans- UPON.— (e) EFFECTIVE DATE.—The amendments actions entered into after February 15, 2004. ‘‘(i) IN GENERAL.—An opinion of a tax advi- made by this section shall apply to taxable SEC. 705. MODIFICATIONS OF SUBSTANTIAL UN- sor may not be relied upon to establish the years ending after the date of the enactment DERSTATEMENT PENALTY FOR NON- reasonable belief of a taxpayer if— of this Act. REPORTABLE TRANSACTIONS. ‘‘(I) the tax advisor is described in clause SEC. 704. PENALTY FOR UNDERSTATEMENTS AT- (a) SUBSTANTIAL UNDERSTATEMENT OF COR- (ii), or TRIBUTABLE TO TRANSACTIONS PORATIONS.—Section 6662(d)(1)(B) (relating to ‘‘(II) the opinion is described in clause (iii). LACKING ECONOMIC SUBSTANCE, special rule for corporations) is amended to ‘‘(ii) DISQUALIFIED TAX ADVISORS.—A tax ETC. read as follows: advisor is described in this clause if the tax (a) IN GENERAL.—Subchapter A of chapter ‘‘(B) SPECIAL RULE FOR CORPORATIONS.—In advisor— 68 is amended by inserting after section the case of a corporation other than an S ‘‘(I) is a material advisor (within the mean- 6662A the following new section: corporation or a personal holding company ing of section 6111(b)(1)) who participates in ‘‘SEC. 6662B. PENALTY FOR UNDERSTATEMENTS (as defined in section 542), there is a substan- the organization, management, promotion, ATTRIBUTABLE TO TRANSACTIONS tial understatement of income tax for any or sale of the transaction or who is related LACKING ECONOMIC SUBSTANCE, taxable year if the amount of the understate- (within the meaning of section 267(b) or ETC. ment for the taxable year exceeds the lesser 707(b)(1)) to any person who so participates, ‘‘(a) IMPOSITION OF PENALTY.—If a taxpayer of— ‘‘(II) is compensated directly or indirectly has an noneconomic substance transaction ‘‘(i) 10 percent of the tax required to be by a material advisor with respect to the understatement for any taxable year, there shown on the return for the taxable year (or, transaction, shall be added to the tax an amount equal to if greater, $10,000), or ‘‘(III) has a fee arrangement with respect 40 percent of the amount of such understate- ‘‘(ii) $10,000,000.’’. to the transaction which is contingent on all ment. (b) REDUCTION FOR UNDERSTATEMENT OF or part of the intended tax benefits from the ‘‘(b) REDUCTION OF PENALTY FOR DISCLOSED TAXPAYER DUE TO POSITION OF TAXPAYER OR transaction being sustained, or TRANSACTIONS.—Subsection (a) shall be ap- DISCLOSED ITEM.— ‘‘(IV) as determined under regulations pre- plied by substituting ‘20 percent’ for ‘40 per- (1) IN GENERAL.—Section 6662(d)(2)(B)(i) (re- scribed by the Secretary, has a continuing fi- cent’ with respect to the portion of any non- lating to substantial authority) is amended nancial interest with respect to the trans- economic substance transaction understate- to read as follows: action. ment with respect to which the relevant ‘‘(i) the tax treatment of any item by the ‘‘(iii) DISQUALIFIED OPINIONS.—For purposes facts affecting the tax treatment of the item taxpayer if the taxpayer had reasonable be- of clause (i), an opinion is disqualified if the are adequately disclosed in the return or a lief that the tax treatment was more likely opinion— statement attached to the return. than not the proper treatment, or’’. ‘‘(I) is based on unreasonable factual or ‘‘(c) NONECONOMIC SUBSTANCE TRANSACTION (2) CONFORMING AMENDMENT.—Section legal assumptions (including assumptions as UNDERSTATEMENT.—For purposes of this sec- 6662(d) is amended by adding at the end the to future events), tion— following new paragraph: ‘‘(II) unreasonably relies on representa- ‘‘(1) IN GENERAL.—The term ‘noneconomic ‘‘(3) SECRETARIAL LIST.—For purposes of tions, statements, findings, or agreements of substance transaction understatement’ this subsection, section 6664(d)(2), and sec- the taxpayer or any other person, means any amount which would be an under- tion 6694(a)(1), the Secretary may prescribe a ‘‘(III) does not identify and consider all rel- statement under section 6662A(b)(1) if section list of positions for which the Secretary be- evant facts, or 6662A were applied by taking into account lieves there is not substantial authority or ‘‘(IV) fails to meet any other requirement items attributable to noneconomic sub- there is no reasonable belief that the tax as the Secretary may prescribe.’’. stance transactions rather than items to treatment is more likely than not the proper (2) CONFORMING AMENDMENT.—The heading which section 6662A applies. tax treatment. Such list (and any revisions for subsection (c) of section 6664 is amended ‘‘(2) NONECONOMIC SUBSTANCE TRANS- thereof) shall be published in the Federal by inserting ‘‘FOR UNDERPAYMENTS’’ after ACTION.—The term ‘noneconomic substance Register or the Internal Revenue Bulletin.’’. ‘‘EXCEPTION’’. transaction’ means any transaction if— (c) EFFECTIVE DATE.—The amendments (d) CONFORMING AMENDMENTS.— ‘‘(A) there is a lack of economic substance made by this section shall apply to taxable (1) Subparagraph (C) of section 461(i)(3) is (within the meaning of section 7701(o)(1)) for years beginning after the date of the enact- amended by striking ‘‘section the transaction giving rise to the claimed ment of this Act. 6662(d)(2)(C)(iii)’’ and inserting ‘‘section benefit or the transaction was not respected SEC. 706. TAX SHELTER EXCEPTION TO CON- 1274(b)(3)(C)’’. under section 7701(o)(2), or FIDENTIALITY PRIVILEGES RELAT- (2) Paragraph (3) of section 1274(b) is ‘‘(B) the transaction fails to meet the re- ING TO TAXPAYER COMMUNICA- amended— quirements of any similar rule of law. TIONS. (A) by striking ‘‘(as defined in section ‘‘(d) RULES APPLICABLE TO COMPROMISE OF (a) IN GENERAL.—Section 7525(b) (relating 6662(d)(2)(C)(iii))’’ in subparagraph (B)(i), and PENALTY.— to section not to apply to communications

VerDate jul 14 2003 02:43 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00143 Fmt 4624 Sfmt 0634 E:\CR\FM\A03MR6.089 S03PT1 S2162 CONGRESSIONAL RECORD — SENATE March 3, 2004 regarding corporate tax shelters) is amended ‘‘SEC. 6112. MATERIAL ADVISORS OF REPORT- case of an intentional failure or act de- to read as follows: ABLE TRANSACTIONS MUST KEEP scribed in subsection (a). LISTS OF ADVISEES. ‘‘(b) SECTION NOT TO APPLY TO COMMUNICA- ‘‘(c) RESCISSION AUTHORITY.—The provi- ‘‘(a) IN GENERAL.—Each material advisor sions of section 6707A(d) (relating to author- TIONS REGARDING TAX SHELTERS.—The privi- (as defined in section 6111) with respect to lege under subsection (a) shall not apply to ity of Commissioner to rescind penalty) shall any reportable transaction (as defined in sec- apply to any penalty imposed under this sec- any written communication which is— tion 6707A(c)) shall maintain, in such manner ‘‘(1) between a federally authorized tax tion. as the Secretary may by regulations pre- ‘‘(d) REPORTABLE AND LISTED TRANS- practitioner and— scribe, a list— ACTIONS.—The terms ‘reportable transaction’ ‘‘(A) any person, ‘‘(1) identifying each person with respect to and ‘listed transaction’ have the respective ‘‘(B) any director, officer, employee, agent, whom such advisor acted as such a material meanings given to such terms by section or representative of the person, or advisor with respect to such transaction, and 6707A(c).’’. ‘‘(C) any other person holding a capital or ‘‘(2) containing such other information as (b) CLERICAL AMENDMENT.—The item relat- profits interest in the person, and the Secretary may by regulations require. ing to section 6707 in the table of sections for ‘‘(2) in connection with the promotion of This section shall apply without regard to part I of subchapter B of chapter 68 is the direct or indirect participation of the whether a material advisor is required to file amended by striking ‘‘tax shelters’’ and in- person in any tax shelter (as defined in sec- a return under section 6111 with respect to serting ‘‘reportable transactions’’. tion 1274(b)(3)(C)).’’. such transaction.’’. (c) EFFECTIVE DATE.—The amendments (b) EFFECTIVE DATE.—The amendment (B) Section 6112 is amended by redesig- made by this section shall apply to returns made by this section shall apply to commu- nating subsection (c) as subsection (b). the due date for which is after the date of nications made on or after the date of the (C) Section 6112(b), as redesignated by sub- the enactment of this Act. enactment of this Act. paragraph (B), is amended— SEC. 709. MODIFICATION OF PENALTY FOR FAIL- (i) by inserting ‘‘written’’ before ‘‘request’’ URE TO MAINTAIN LISTS OF INVES- SEC. 707. DISCLOSURE OF REPORTABLE TRANS- TORS. ACTIONS. in paragraph (1)(A), and (ii) by striking ‘‘shall prescribe’’ in para- (a) IN GENERAL.—Subsection (a) of section (a) IN GENERAL.—Section 6111 (relating to graph (2) and inserting ‘‘may prescribe’’. 6708 is amended to read as follows: registration of tax shelters) is amended to (D) The item relating to section 6112 in the ‘‘(a) IMPOSITION OF PENALTY.— read as follows: table of sections for subchapter B of chapter ‘‘(1) IN GENERAL.—If any person who is re- ‘‘SEC. 6111. DISCLOSURE OF REPORTABLE TRANS- 61 is amended to read as follows: quired to maintain a list under section ACTIONS. 6112(a) fails to make such list available upon ‘‘Sec. 6112. Material advisors of reportable written request to the Secretary in accord- ‘‘(a) IN GENERAL.—Each material advisor transactions must keep lists of ance with section 6112(b)(1)(A) within 20 busi- with respect to any reportable transaction advisees.’’. ness days after the date of the Secretary’s shall make a return (in such form as the Sec- request, such person shall pay a penalty of retary may prescribe) setting forth— (3)(A) The heading for section 6708 is $10,000 for each day of such failure after such ‘‘(1) information identifying and describing amended to read as follows: 20th day. the transaction, ‘‘SEC. 6708. FAILURE TO MAINTAIN LISTS OF ‘‘(2) REASONABLE CAUSE EXCEPTION.—No ‘‘(2) information describing any potential ADVISEES WITH RESPECT TO RE- PORTABLE TRANSACTIONS.’’. penalty shall be imposed by paragraph (1) tax benefits expected to result from the (B) The item relating to section 6708 in the with respect to the failure on any day if such transaction, and table of sections for part I of subchapter B of failure is due to reasonable cause.’’. ‘‘(3) such other information as the Sec- chapter 68 is amended to read as follows: (b) EFFECTIVE DATE.—The amendment retary may prescribe. made by this section shall apply to requests ‘‘Sec. 6708. Failure to maintain lists of Such return shall be filed not later than the made after the date of the enactment of this advisees with respect to report- date specified by the Secretary. Act. able transactions.’’. ‘‘(b) DEFINITIONS.—For purposes of this sec- SEC. 710. MODIFICATION OF ACTIONS TO ENJOIN tion— (c) EFFECTIVE DATE.—The amendments CERTAIN CONDUCT RELATED TO made by this section shall apply to trans- TAX SHELTERS AND REPORTABLE ‘‘(1) MATERIAL ADVISOR.— actions with respect to which material aid, TRANSACTIONS. ‘‘(A) IN GENERAL.—The term ‘material ad- (a) IN GENERAL.—Section 7408 (relating to visor’ means any person— assistance, or advice referred to in section 6111(b)(1)(A)(i) of the Internal Revenue Code action to enjoin promoters of abusive tax ‘‘(i) who provides any material aid, assist- of 1986 (as added by this section) is provided shelters, etc.) is amended by redesignating ance, or advice with respect to organizing, after the date of the enactment of this Act. subsection (c) as subsection (d) and by strik- promoting, selling, implementing, or caring subsections (a) and (b) and inserting the rying out any reportable transaction, and SEC. 708. MODIFICATIONS TO PENALTY FOR FAIL- URE TO REGISTER TAX SHELTERS. following new subsections: ‘‘(ii) who directly or indirectly derives (a) IN GENERAL.—Section 6707 (relating to ‘‘(a) AUTHORITY TO SEEK INJUNCTION.—A gross income in excess of the threshold failure to furnish information regarding tax civil action in the name of the United States amount for such aid, assistance, or advice. shelters) is amended to read as follows: to enjoin any person from further engaging ‘‘(B) THRESHOLD AMOUNT.—For purposes of ‘‘SEC. 6707. FAILURE TO FURNISH INFORMATION in specified conduct may be commenced at subparagraph (A), the threshold amount is— REGARDING REPORTABLE TRANS- the request of the Secretary. Any action ‘‘(i) $50,000 in the case of a reportable ACTIONS. under this section shall be brought in the transaction substantially all of the tax bene- ‘‘(a) IN GENERAL.—If a person who is re- district court of the United States for the fits from which are provided to natural per- quired to file a return under section 6111(a) district in which such person resides, has his sons, and with respect to any reportable transaction— principal place of business, or has engaged in ‘‘(ii) $250,000 in any other case. ‘‘(1) fails to file such return on or before specified conduct. The court may exercise its ‘‘(2) REPORTABLE TRANSACTION.—The term the date prescribed therefor, or jurisdiction over such action (as provided in ‘reportable transaction’ has the meaning ‘‘(2) files false or incomplete information section 7402(a)) separate and apart from any given to such term by section 6707A(c). with the Secretary with respect to such other action brought by the United States against such person. ‘‘(c) REGULATIONS.—The Secretary may transaction, ‘‘(b) ADJUDICATION AND DECREE.—In any ac- prescribe regulations which provide— such person shall pay a penalty with respect tion under subsection (a), if the court finds— ‘‘(1) that only 1 person shall be required to to such return in the amount determined ‘‘(1) that the person has engaged in any meet the requirements of subsection (a) in under subsection (b). specified conduct, and cases in which 2 or more persons would oth- ‘‘(b) AMOUNT OF PENALTY.— ‘‘(2) that injunctive relief is appropriate to erwise be required to meet such require- ‘‘(1) IN GENERAL.—Except as provided in prevent recurrence of such conduct, ments, paragraph (2), the penalty imposed under ‘‘(2) exemptions from the requirements of subsection (a) with respect to any failure the court may enjoin such person from en- this section, and shall be $50,000. gaging in such conduct or in any other activity subject to penalty under this title. ‘‘(3) such rules as may be necessary or ap- ‘‘(2) LISTED TRANSACTIONS.—The penalty ‘‘(c) SPECIFIED CONDUCT.—For purposes of propriate to carry out the purposes of this imposed under subsection (a) with respect to this section, the term ‘specified conduct’ section.’’. any listed transaction shall be an amount means any action, or failure to take action, equal to the greater of— (b) CONFORMING AMENDMENTS.— subject to penalty under section 6700, 6701, ‘‘(A) $200,000, or (1) The item relating to section 6111 in the 6707, or 6708.’’. table of sections for subchapter B of chapter ‘‘(B) 50 percent of the gross income derived (b) CONFORMING AMENDMENTS.— 61 is amended to read as follows: by such person with respect to aid, assist- (1) The heading for section 7408 is amended ance, or advice which is provided with re- to read as follows: ‘‘Sec. 6111. Disclosure of reportable trans- spect to the reportable transaction before actions.’’. ‘‘SEC. 7408. ACTIONS TO ENJOIN SPECIFIED CON- the date the return including the transaction DUCT RELATED TO TAX SHELTERS (2)(A) So much of section 6112 as precedes is filed under section 6111. AND REPORTABLE TRANSACTIONS.’’. subsection (c) thereof is amended to read as Subparagraph (B) shall be applied by sub- (2) The table of sections for subchapter A follows: stituting ‘75 percent’ for ‘50 percent’ in the of chapter 67 is amended by striking the item

VerDate jul 14 2003 02:43 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00144 Fmt 4624 Sfmt 0634 E:\CR\FM\A03MR6.089 S03PT1 March 3, 2004 CONGRESSIONAL RECORD — SENATE S2163 relating to section 7408 and inserting the fol- tions occurring after the date of the enact- tunity for hearing before levy) is amended by lowing new item: ment of this Act. adding at the end the following new sub- ‘‘Sec. 7408. Actions to enjoin specified SEC. 713. FRIVOLOUS TAX SUBMISSIONS. section: conduct related to tax shelters (a) CIVIL PENALTIES.—Section 6702 is ‘‘(g) FRIVOLOUS REQUESTS FOR HEARING, and reportable transactions.’’. amended to read as follows: ETC.—Notwithstanding any other provision of this section, if the Secretary determines (c) EFFECTIVE DATE.—The amendment ‘‘SEC. 6702. FRIVOLOUS TAX SUBMISSIONS. that any portion of a request for a hearing made by this section shall take effect on the ‘‘(a) CIVIL PENALTY FOR FRIVOLOUS TAX RE- under this section or section 6320 meets the day after the date of the enactment of this TURNS.—A person shall pay a penalty of requirement of clause (i) or (ii) of section Act. $5,000 if— 6702(b)(2)(A), then the Secretary may treat ‘‘(1) such person files what purports to be a SEC. 711. UNDERSTATEMENT OF TAXPAYER’S LI- such portion as if it were never submitted return of a tax imposed by this title but ABILITY BY INCOME TAX RETURN and such portion shall not be subject to any PREPARER. which— further administrative or judicial review.’’. (a) STANDARDS CONFORMED TO TAXPAYER ‘‘(A) does not contain information on (2) PRECLUSION FROM RAISING FRIVOLOUS STANDARDS.—Section 6694(a) (relating to un- which the substantial correctness of the self- ISSUES AT HEARING.—Section 6330(c)(4) is derstatements due to unrealistic positions) assessment may be judged, or amended— is amended— ‘‘(B) contains information that on its face (A) by striking ‘‘(A)’’ and inserting (1) by striking ‘‘realistic possibility of indicates that the self-assessment is substan- ‘‘(A)(i)’’; being sustained on its merits’’ in paragraph tially incorrect; and (B) by striking ‘‘(B)’’ and inserting ‘‘(ii)’’; (1) and inserting ‘‘reasonable belief that the ‘‘(2) the conduct referred to in paragraph (C) by striking the period at the end of the tax treatment in such position was more (1)— first sentence and inserting ‘‘; or’’; and likely than not the proper treatment’’, ‘‘(A) is based on a position which the Sec- (D) by inserting after subparagraph (A)(ii) (2) by striking ‘‘or was frivolous’’ in para- retary has identified as frivolous under sub- (as so redesignated) the following: graph (3) and inserting ‘‘or there was no rea- section (c), or ‘‘(B) the issue meets the requirement of sonable basis for the tax treatment of such ‘‘(B) reflects a desire to delay or impede clause (i) or (ii) of section 6702(b)(2)(A).’’. position’’, and the administration of Federal tax laws. (3) STATEMENT OF GROUNDS.—Section (3) by striking ‘‘UNREALISTIC’’ in the head- ‘‘(b) CIVIL PENALTY FOR SPECIFIED FRIVO- 6330(b)(1) is amended by striking ‘‘under sub- ing and inserting ‘‘IMPROPER’’. LOUS SUBMISSIONS.— section (a)(3)(B)’’ and inserting ‘‘in writing (b) AMOUNT OF PENALTY.—Section 6694 is ‘‘(1) IMPOSITION OF PENALTY.—Except as under subsection (a)(3)(B) and states the amended— provided in paragraph (3), any person who grounds for the requested hearing’’. (1) by striking ‘‘$250’’ in subsection (a) and submits a specified frivolous submission (c) TREATMENT OF FRIVOLOUS REQUESTS inserting ‘‘$1,000’’, and shall pay a penalty of $5,000. FOR HEARINGS UPON FILING OF NOTICE OF (2) by striking ‘‘$1,000’’ in subsection (b) ‘‘(2) SPECIFIED FRIVOLOUS SUBMISSION.—For LIEN.—Section 6320 is amended— and inserting ‘‘$5,000’’. purposes of this section— (1) in subsection (b)(1), by striking ‘‘under (c) EFFECTIVE DATE.—The amendments ‘‘(A) SPECIFIED FRIVOLOUS SUBMISSION.— subsection (a)(3)(B)’’ and inserting ‘‘in writ- made by this section shall apply to docu- The term ‘specified frivolous submission’ ing under subsection (a)(3)(B) and states the ments prepared after the date of the enact- means a specified submission if any portion grounds for the requested hearing’’, and ment of this Act. of such submission— (2) in subsection (c), by striking ‘‘and (e)’’ ‘‘(i) is based on a position which the Sec- SEC. 712. PENALTY ON FAILURE TO REPORT IN- and inserting ‘‘(e), and (g)’’. TERESTS IN FOREIGN FINANCIAL retary has identified as frivolous under sub- (d) TREATMENT OF FRIVOLOUS APPLICATIONS ACCOUNTS. section (c), or FOR OFFERS-IN-COMPROMISE AND INSTALL- (a) IN GENERAL.—Section 5321(a)(5) of title ‘‘(ii) reflects a desire to delay or impede MENT AGREEMENTS.—Section 7122 is amended 31, United States Code, is amended to read as the administration of Federal tax laws. by adding at the end the following new sub- follows: ‘‘(B) SPECIFIED SUBMISSION.—The term section: ‘‘(5) FOREIGN FINANCIAL AGENCY TRANS- ‘specified submission’ means— ‘‘(e) FRIVOLOUS SUBMISSIONS, ETC.—Not- ACTION VIOLATION.— ‘‘(i) a request for a hearing under— withstanding any other provision of this sec- ‘‘(A) PENALTY AUTHORIZED.—The Secretary ‘‘(I) section 6320 (relating to notice and option, if the Secretary determines that any of the Treasury may impose a civil money portunity for hearing upon filing of notice of portion of an application for an offer-in-com- penalty on any person who violates, or lien), or promise or installment agreement submitted causes any violation of, any provision of sec- ‘‘(II) section 6330 (relating to notice and under this section or section 6159 meets the tion 5314. opportunity for hearing before levy), and requirement of clause (i) or (ii) of section ‘‘(B) AMOUNT OF PENALTY.— ‘‘(ii) an application under— 6702(b)(2)(A), then the Secretary may treat ‘‘(i) IN GENERAL.—Except as provided in ‘‘(I) section 6159 (relating to agreements such portion as if it were never submitted subparagraph (C), the amount of any civil for payment of tax liability in installments), and such portion shall not be subject to any penalty imposed under subparagraph (A) ‘‘(II) section 7122 (relating to com- further administrative or judicial review.’’. shall not exceed $5,000. promises), or (e) CLERICAL AMENDMENT.—The table of ‘‘(ii) REASONABLE CAUSE EXCEPTION.—No ‘‘(III) section 7811 (relating to taxpayer as- sections for part I of subchapter B of chapter penalty shall be imposed under subparagraph sistance orders). 68 is amended by striking the item relating (A) with respect to any violation if— ‘‘(3) OPPORTUNITY TO WITHDRAW SUBMIS- to section 6702 and inserting the following ‘‘(I) such violation was due to reasonable SION.—If the Secretary provides a person new item: cause, and with notice that a submission is a specified ‘‘(II) the amount of the transaction or the frivolous submission and such person with- ‘‘Sec. 6702. Frivolous tax submissions.’’. balance in the account at the time of the draws such submission within 30 days after (f) EFFECTIVE DATE.—The amendments transaction was properly reported. such notice, the penalty imposed under para- made by this section shall apply to submis- ‘‘(C) WILLFUL VIOLATIONS.—In the case of graph (1) shall not apply with respect to such sions made and issues raised after the date any person willfully violating, or willfully submission. on which the Secretary first prescribes a list causing any violation of, any provision of ‘‘(c) LISTING OF FRIVOLOUS POSITIONS.—The under section 6702(c) of the Internal Revenue section 5314— Secretary shall prescribe (and periodically Code of 1986, as amended by subsection (a). ‘‘(i) the maximum penalty under subpara- revise) a list of positions which the Sec- SEC. 714. REGULATION OF INDIVIDUALS PRAC- graph (B)(i) shall be increased to the greater retary has identified as being frivolous for TICING BEFORE THE DEPARTMENT of— purposes of this subsection. The Secretary OF TREASURY. ‘‘(I) $25,000, or shall not include in such list any position (a) CENSURE; IMPOSITION OF PENALTY.— ‘‘(II) the amount (not exceeding $100,000) that the Secretary determines meets the re- (1) IN GENERAL.—Section 330(b) of title 31, determined under subparagraph (D), and quirement of section 6662(d)(2)(B)(ii)(II). United States Code, is amended— ‘‘(ii) subparagraph (B)(ii) shall not apply. ‘‘(d) REDUCTION OF PENALTY.—The Sec- (A) by inserting ‘‘, or censure,’’ after ‘‘De- ‘‘(D) AMOUNT.—The amount determined retary may reduce the amount of any pen- partment’’, and under this subparagraph is— alty imposed under this section if the Sec- (B) by adding at the end the following new ‘‘(i) in the case of a violation involving a retary determines that such reduction would flush sentence: transaction, the amount of the transaction, promote compliance with and administra- ‘‘The Secretary may impose a monetary pen- or tion of the Federal tax laws. alty on any representative described in the ‘‘(ii) in the case of a violation involving a ‘‘(e) PENALTIES IN ADDITION TO OTHER PEN- preceding sentence. If the representative was failure to report the existence of an account ALTIES.—The penalties imposed by this sec- acting on behalf of an employer or any firm or any identifying information required to be tion shall be in addition to any other penalty or other entity in connection with the con- provided with respect to an account, the bal- provided by law.’’. duct giving rise to such penalty, the Sec- ance in the account at the time of the viola- (b) TREATMENT OF FRIVOLOUS REQUESTS retary may impose a monetary penalty on tion.’’. FOR HEARINGS BEFORE LEVY.— such employer, firm, or entity if it knew, or (b) EFFECTIVE DATE.—The amendment (1) FRIVOLOUS REQUESTS DISREGARDED.— reasonably should have known, of such con- made by this section shall apply to viola- Section 6330 (relating to notice and oppor- duct. Such penalty shall not exceed the gross

VerDate jul 14 2003 02:43 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00145 Fmt 4624 Sfmt 0634 E:\CR\FM\A03MR6.089 S03PT1 S2164 CONGRESSIONAL RECORD — SENATE March 3, 2004

income derived (or to be derived) from the (b) EFFECTIVE DATE.—The amendments regard of a statutory or regulatory require- conduct giving rise to the penalty and may made by this section shall apply to trans- ment. be in addition to, or in lieu of, any suspen- actions in taxable years beginning after the ‘‘(C) THIRD TIER.—Notwithstanding sub- sion, disbarment, or censure.’’. date of the enactment of this Act. paragraphs (A) and (B), the maximum (2) EFFECTIVE DATE.—The amendments SEC. 718. AUTHORIZATION OF APPROPRIATIONS amount of penalty for each act or omission made by this subsection shall apply to ac- FOR TAX LAW ENFORCEMENT. described in paragraph (1) shall be $1,000,000 tions taken after the date of the enactment There is authorized to be appropriated for a natural person or $2,000,000 for any of this Act. $300,000,000 for each fiscal year beginning other person, if— (b) TAX SHELTER OPINIONS, ETC.—Section after September 30, 2002, for the purpose of ‘‘(i) the act or omission involved fraud, de- 330 of such title 31 is amended by adding at carrying out tax law enforcement to combat ceit, manipulation, or deliberate or reckless the end the following new subsection: tax avoidance transactions and other tax disregard of a statutory or regulatory re- ‘‘(d) Nothing in this section or in any other shelters, including the use of offshore finan- quirement; and provision of law shall be construed to limit cial accounts to conceal taxable income. ‘‘(ii) such act or omission directly or indi- the authority of the Secretary of the Treas- Subtitle B—Other Provisions rectly resulted in substantial losses or cre- ury to impose standards applicable to the ated a significant risk of substantial losses rendering of written advice with respect to SEC. 721. AFFIRMATION OF CONSOLIDATED RE- TURN REGULATION AUTHORITY. to other persons or resulted in substantial any entity, transaction plan or arrangement, (a) IN GENERAL.—Section 1502 (relating to pecuniary gain to the person who committed or other plan or arrangement, which is of a consolidated return regulations) is amended the act or omission. type which the Secretary determines as hav- by adding at the end the following new sen- ‘‘(3) EVIDENCE CONCERNING ABILITY TO ing a potential for tax avoidance or eva- tence: ‘‘In prescribing such regulations, the PAY.—In any proceeding in which the Com- sion.’’. Secretary may prescribe rules applicable to mission or the appropriate regulatory agen- SEC. 715. PENALTY ON PROMOTERS OF TAX corporations filing consolidated returns cy may impose a penalty under this section, SHELTERS. under section 1501 that are different from a respondent may present evidence of the (a) PENALTY ON PROMOTING ABUSIVE TAX other provisions of this title that would ability of the respondent to pay such pen- SHELTERS.—Section 6700(a) is amended by apply if such corporations filed separate re- adding at the end the following new sen- alty. The Commission or the appropriate reg- turns.’’. tence: ‘‘Notwithstanding the first sentence, ulatory agency may, in its discretion, con- (b) RESULT NOT OVERTURNED.—Notwith- if an activity with respect to which a pen- sider such evidence in determining whether standing subsection (a), the Internal Rev- alty imposed under this subsection involves the penalty is in the public interest. Such enue Code of 1986 shall be construed by treat- a statement described in paragraph (2)(A), evidence may relate to the extent of the per- ing Treasury regulation § 1.1502–20(c)(1)(iii) the amount of the penalty shall be equal to son’s ability to continue in business and the (as in effect on January 1, 2001) as being in- 50 percent of the gross income derived (or to collectability of a penalty, taking into ac- applicable to the type of factual situation in be derived) from such activity by the person count any other claims of the United States 255 F.3d 1357 (Fed. Cir. 2001). on which the penalty is imposed.’’. or third parties upon the assets of that per- (c) EFFECTIVE DATE.—The provisions of (b) EFFECTIVE DATE.—The amendment son and the amount of the assets of that per- this section shall apply to taxable years be- made by this section shall apply to activities son.’’. ginning before, on, or after the date of the after the date of the enactment of this Act. (2) SECURITIES EXCHANGE ACT OF 1934.—Sec- enactment of this Act. SEC. 716. STATUTE OF LIMITATIONS FOR TAX- tion 21B(a) of the Securities Exchange Act of SEC. 722. SIGNING OF CORPORATE TAX RETURNS ABLE YEARS FOR WHICH LISTED 1934 (15 U.S.C. 78u–2(a)) is amended— BY CHIEF EXECUTIVE OFFICER. TRANSACTIONS NOT REPORTED. (A) in paragraph (4), by striking ‘‘super- (a) IN GENERAL.—Section 6062 (relating to (a) IN GENERAL.—Section 6501(e)(1) (relat- vision;’’ and all that follows through the end ing to substantial omission of items for in- signing of corporation returns) is amended of the subsection and inserting ‘‘super- come taxes) is amended by adding at the end by striking the first sentence and inserting vision.’’; the following new subparagraph: the following new sentence: ‘‘The return of a (B) by redesignating paragraphs (1) corporation with respect to income shall be ‘‘(C) LISTED TRANSACTIONS.—If a taxpayer through (4) as subparagraphs (A) through fails to include on any return or statement signed by the chief executive officer of such (D), respectively, and moving the margins 2 corporation (or other such officer of the cor- for any taxable year any information with ems to the right; poration as the Secretary may designate if respect to a listed transaction (as defined in (C) by inserting ‘‘that such penalty is in the corporation does not have a chief execu- section 6707A(c)(2)) which is required under the public interest and’’ after ‘‘hearing,’’; tive officer). The preceding sentence shall section 6011 to be included with such return (D) by striking ‘‘In any proceeding’’ and in- not apply to any return of a regulated in- or statement, the tax for such taxable year serting the following: vestment company (within the meaning of may be assessed, or a proceeding in court for ‘‘(1) IN GENERAL.—In any proceeding’’; and section 851).’’. collection of such tax may be begun without (E) by adding at the end the following: (b) EFFECTIVE DATE.—The amendment assessment, at any time within 6 years after made by this section shall apply to returns ‘‘(2) OTHER MONEY PENALTIES.—In any pro- the time the return is filed. This subpara- filed after the date of the enactment of this ceeding under section 21C against any per- graph shall not apply to any taxable year if Act. son, the Commission may impose a civil the time for assessment or beginning the monetary penalty if it finds, on the record proceeding in court has expired before the SEC. 723. SECURITIES CIVIL ENFORCEMENT PRO- VISIONS. after notice and opportunity for hearing, time a transaction is treated as a listed that such person is violating, has violated, (a) AUTHORITY TO ASSESS CIVIL MONEY transaction under section 6011.’’. or is or was a cause of the violation of, any PENALTIES.— (b) EFFECTIVE DATE.—The amendment provision of this title or any rule or regula- made by this section shall apply to trans- (1) SECURITIES ACT OF 1933.—Section 8A of the Securities Act of 1933 (15 U.S.C. 77h–1) is tion thereunder, and that such penalty is in actions in taxable years beginning after the the public interest.’’. date of the enactment of this Act. amended by adding at the end the following new subsection: (3) INVESTMENT COMPANY ACT OF 1940.—Sec- SEC. 717. DENIAL OF DEDUCTION FOR INTEREST ‘‘(g) AUTHORITY OF THE COMMISSION TO AS- tion 9(d)(1) of the Investment Company Act ON UNDERPAYMENTS ATTRIB- of 1940 (15 U.S.C. 80a–9(d)(1)) is amended— UTABLE TO NONDISCLOSED RE- SESS MONEY PENALTY.— PORTABLE AND NONECONOMIC SUB- ‘‘(1) IN GENERAL.—In any cease-and-desist (A) in subparagraph (C), by striking STANCE TRANSACTIONS. proceeding under subsection (a), the Com- ‘‘therein;’’ and all that follows through the (a) IN GENERAL.—Section 163 (relating to mission may impose a civil monetary pen- end of the paragraph and inserting ‘‘super- deduction for interest) is amended by redes- alty if it finds, on the record after notice and vision.’’; ignating subsection (m) as subsection (n) and opportunity for hearing, that a person is vio- (B) by redesignating subparagraphs (A) by inserting after subsection (l) the fol- lating, has violated, or is or was a cause of through (C) as clauses (i) through (iii), re- lowing new subsection: the violation of, any provision of this title or spectively, and moving the margins 2 ems to ‘‘(m) INTEREST ON UNPAID TAXES ATTRIB- any rule or regulation thereunder, and that the right; UTABLE TO NONDISCLOSED REPORTABLE such penalty is in the public interest. (C) by inserting ‘‘that such penalty is in TRANSACTIONS AND NONECONOMIC SUBSTANCE ‘‘(2) MAXIMUM AMOUNT OF PENALTY.— the public interest and’’ after ‘‘hearing,’’; TRANSACTIONS.—No deduction shall be al- ‘‘(A) FIRST TIER.—The maximum amount of (D) by striking ‘‘In any proceeding’’ and in- lowed under this chapter for any interest penalty for each act or omission described in serting the following: paid or accrued under section 6601 on any un- paragraph (1) shall be $100,000 for a natural ‘‘(A) IN GENERAL.—In any proceeding’’; and derpayment of tax which is attributable to— person or $250,000 for any other person. (E) by adding at the end the following: ‘‘(1) the portion of any reportable trans- ‘‘(B) SECOND TIER.—Notwithstanding sub- ‘‘(B) OTHER MONEY PENALTIES.—In any pro- action understatement (as defined in section paragraph (A), the maximum amount of pen- ceeding under subsection (f) against any per- 6662A(b)) with respect to which the require- alty for such act or omission described in son, the Commission may impose a civil ment of section 6664(d)(2)(A) is not met, or paragraph (1) shall be $500,000 for a natural monetary penalty if it finds, on the record ‘‘(2) any noneconomic substance trans- person or $1,000,000 for any other person, if after notice and opportunity for hearing, action understatement (as defined in section the act or omission involved fraud, deceit, that such person is violating, has violated, 6662B(c)).’’. manipulation, or deliberate or reckless dis- or is or was a cause of the violation of, any

VerDate jul 14 2003 02:43 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00146 Fmt 4624 Sfmt 0634 E:\CR\FM\A03MR6.090 S03PT1 March 3, 2004 CONGRESSIONAL RECORD — SENATE S2165 provision of this title or any rule or regula- (I) by striking ‘‘$5,000’’ and inserting (II) by striking ‘‘$500,000’’ and inserting tion thereunder, and that such penalty is in ‘‘$100,000’’; and ‘‘$2,000,000’’. the public interest.’’. (II) by striking ‘‘$50,000’’ and inserting (c) AUTHORITY TO OBTAIN FINANCIAL (4) INVESTMENT ADVISERS ACT OF 1940.—Sec- ‘‘$250,000’’; RECORDS.—Section 21(h) of the Securities Ex- tion 203(i)(1) of the Investment Advisers Act (ii) in clause (ii)— change Act of 1934 (15 U.S.C. 78u(h)) is of 1940 (15 U.S.C. 80b–3(i)(1)) is amended— (I) by striking ‘‘$50,000’’ and inserting amended— (A) in subparagraph (D), by striking ‘‘su- ‘‘$500,000’’; and (1) by striking paragraphs (2) through (8); pervision;’’ and all that follows through the (II) by striking ‘‘$250,000’’ and inserting (2) in paragraph (9), by striking ‘‘(9)(A)’’ end of the paragraph and inserting ‘‘super- ‘‘$1,000,000’’; and and all that follows through ‘‘(B) The’’ and vision.’’; (iii) in clause (iii)— inserting ‘‘(3) The’’; (B) by redesignating subparagraphs (A) (I) by striking ‘‘$100,000’’ and inserting (3) by inserting after paragraph (1), the fol- through (D) as clauses (i) through (iv), re- ‘‘$1,000,000’’; and lowing: (II) by striking ‘‘$500,000’’ and inserting spectively, and moving the margins 2 ems to ‘‘(2) ACCESS TO FINANCIAL RECORDS.— ‘‘$2,000,000’’. the right; ‘‘(A) IN GENERAL.—Notwithstanding section (3) INVESTMENT COMPANY ACT OF 1940.— (C) by inserting ‘‘that such penalty is in 1105 or 1107 of the Right to Financial Privacy (A) INELIGIBILITY.—Section 9(d)(2) of the the public interest and’’ after ‘‘hearing,’’; Act of 1978, the Commission may obtain ac- Investment Company Act of 1940 (15 U.S.C. (D) by striking ‘‘In any proceeding’’ and in- cess to and copies of, or the information con- 80a–9(d)(2)) is amended— serting the following: tained in, financial records of any person (i) in subparagraph (A)— ‘‘(A) IN GENERAL.—In any proceeding’’; and held by a financial institution, including the (I) by striking ‘‘$5,000’’ and inserting (E) by adding at the end the following: financial records of a customer, without no- ‘‘$100,000’’; and ‘‘(B) OTHER MONEY PENALTIES.—In any pro- tice to that person, when it acts pursuant to ceeding under subsection (k) against any per- (II) by striking ‘‘$50,000’’ and inserting ‘‘$250,000’’; a subpoena authorized by a formal order of son, the Commission may impose a civil investigation of the Commission and issued monetary penalty if it finds, on the record (ii) in subparagraph (B)— (I) by striking ‘‘$50,000’’ and inserting under the securities laws or pursuant to an after notice and opportunity for hearing, administrative or judicial subpoena issued in that such person is violating, has violated, ‘‘$500,000’’; and (II) by striking ‘‘$250,000’’ and inserting a proceeding or action to enforce the securi- or is or was a cause of the violation of, any ties laws. provision of this title or any rule or regula- ‘‘$1,000,000’’; and (iii) in subparagraph (C)— ‘‘(B) NONDISCLOSURE OF REQUESTS.—If the tion thereunder, and that such penalty is in Commission so directs in its subpoena, no fi- the public interest.’’. (I) by striking ‘‘$100,000’’ and inserting ‘‘$1,000,000’’; and nancial institution, or officer, director, part- (b) INCREASED MAXIMUM CIVIL MONEY PEN- (II) by striking ‘‘$500,000’’ and inserting ner, employee, shareholder, representative ALTIES.— ‘‘$2,000,000’’. or agent of such financial institution, shall, (1) SECURITIES ACT OF 1933.—Section 20(d)(2) (B) ENFORCEMENT OF INVESTMENT COMPANY directly or indirectly, disclose that records of the Securities Act of 1933 (15 U.S.C. ACT.—Section 42(e)(2) of the Investment have been requested or provided in accord- 77t(d)(2)) is amended— Company Act of 1940 (15 U.S.C. 80a–41(e)(2)) is ance with subparagraph (A), if the Commis- (A) in subparagraph (A)(i)— amended— sion finds reason to believe that such disclo- (i) by striking ‘‘$5,000’’ and inserting (i) in subparagraph (A)— sure may— ‘‘$100,000’’; and (I) by striking ‘‘$5,000’’ and inserting ‘‘(i) result in the transfer of assets or (ii) by striking ‘‘$50,000’’ and inserting ‘‘$100,000’’; and records outside the territorial limits of the ‘‘$250,000’’; (II) by striking ‘‘$50,000’’ and inserting United States; (B) in subparagraph (B)(i)— ‘‘$250,000’’; ‘‘(ii) result in improper conversion of in- (i) by striking ‘‘$50,000’’ and inserting (ii) in subparagraph (B)— vestor assets; ‘‘$500,000’’; and (I) by striking ‘‘$50,000’’ and inserting ‘‘(iii) impede the ability of the Commission (ii) by striking ‘‘$250,000’’ and inserting ‘‘$500,000’’; and to identify, trace, or freeze funds involved in ‘‘$1,000,000’’; and (II) by striking ‘‘$250,000’’ and inserting any securities transaction; (C) in subparagraph (C)(i)— ‘‘$1,000,000’’; and ‘‘(iv) endanger the life or physical safety of (i) by striking ‘‘$100,000’’ and inserting (iii) in subparagraph (C)— an individual; ‘‘$1,000,000’’; and (I) by striking ‘‘$100,000’’ and inserting ‘‘(v) result in flight from prosecution; (ii) by striking ‘‘$500,000’’ and inserting ‘‘$1,000,000’’; and ‘‘(vi) result in destruction of or tampering ‘‘$2,000,000’’. (II) by striking ‘‘$500,000’’ and inserting with evidence; (2) SECURITIES EXCHANGE ACT OF 1934.— ‘‘$2,000,000’’. ‘‘(vii) result in intimidation of potential (A) PENALTIES.—Section 32 of the Securi- (4) INVESTMENT ADVISERS ACT OF 1940.— witnesses; or ties Exchange Act of 1934 (15 U.S.C. 78ff) is (A) REGISTRATION.—Section 203(i)(2) of the ‘‘(viii) otherwise seriously jeopardize an in- amended— Investment advisers Act of 1940 (15 U.S.C. vestigation or unduly delay a trial. (i) in subsection (b), by striking ‘‘$100’’ and 80b–3(i)(2)) is amended— ‘‘(C) TRANSFER OF RECORDS TO GOVERNMENT inserting ‘‘$10,000’’; and (i) in subparagraph (A)— AUTHORITIES.—The Commission may transfer (ii) in subsection (c)— (I) by striking ‘‘$5,000’’ and inserting financial records or the information con- (I) in paragraph (1)(B), by striking ‘‘$100,000’’; and tained therein to any government authority, ‘‘$10,000’’ and inserting ‘‘$500,000’’; and (II) by striking ‘‘$50,000’’ and inserting if the Commission proceeds as a transferring (II) in paragraph (2)(B), by striking ‘‘$250,000’’; agency in accordance with section 1112 of the ‘‘$10,000’’ and inserting ‘‘$500,000’’. (ii) in subparagraph (B)— Right to Financial Privacy Act of 1978 (12 (B) INSIDER TRADING.—Section 21A(a)(3) of (I) by striking ‘‘$50,000’’ and inserting U.S.C. 3412), except that a customer notice the Securities Exchange Act of 1934 (15 ‘‘$500,000’’; and shall not be required under subsection (b) or U.S.C. 78u–1(a)(3)) is amended by striking (II) by striking ‘‘$250,000’’ and inserting (c) of that section 1112, if the Commission de- ‘‘$1,000,000’’ and inserting ‘‘$2,000,000’’. ‘‘$1,000,000’’; and termines that there is reason to believe that (C) ADMINISTRATIVE PROCEEDINGS.—Section (iii) in subparagraph (C)— such notification may result in or lead to 21B(b) of the Securities Exchange Act of 1934 (I) by striking ‘‘$100,000’’ and inserting any of the factors identified under clauses (i) (15 U.S.C. 78u–2(b)) is amended— ‘‘$1,000,000’’; and through (viii) of subparagraph (B) of this (i) in paragraph (1)— (II) by striking ‘‘$500,000’’ and inserting paragraph.’’; (I) by striking ‘‘$5,000’’ and inserting ‘‘$2,000,000’’. (4) by striking paragraph (10); and ‘‘$100,000’’; and (B) ENFORCEMENT OF INVESTMENT ADVISERS (5) by redesignating paragraphs (11), (12), (II) by striking ‘‘$50,000’’ and inserting ACT.—Section 209(e)(2) of the Investment ad- and (13) as paragraphs (4), (5), and (6), respec- ‘‘$250,000’’; visers Act of 1940 (15 U.S.C. 80b–9(e)(2)) is tively. (ii) in paragraph (2)— amended— SEC. 724. REVIEW OF STATE AGENCY BLINDNESS (I) by striking ‘‘$50,000’’ and inserting (i) in subparagraph (A)— AND DISABILITY DETERMINATIONS. ‘‘$500,000’’; and (I) by striking ‘‘$5,000’’ and inserting (II) by striking ‘‘$250,000’’ and inserting ‘‘$100,000’’; and Section 1633 of the Social Security Act (42 ‘‘$1,000,000’’; and (II) by striking ‘‘$50,000’’ and inserting U.S.C. 1383b) is amended by adding at the end (iii) in paragraph (3)— ‘‘$250,000’’; the following: (I) by striking ‘‘$100,000’’ and inserting (ii) in subparagraph (B)— ‘‘(e)(1) The Commissioner of Social Secu- ‘‘$1,000,000’’; and (I) by striking ‘‘$50,000’’ and inserting rity shall review determinations, made by (II) by striking ‘‘$500,000’’ and inserting ‘‘$500,000’’; and State agencies pursuant to subsection (a) in ‘‘$2,000,000’’. (II) by striking ‘‘$250,000’’ and inserting connection with applications for benefits (D) CIVIL ACTIONS.—Section 21(d)(3)(B) of ‘‘$1,000,000’’; and under this title on the basis of blindness or the Securities Exchange Act of 1934 (15 (iii) in subparagraph (C)— disability, that individuals who have at- U.S.C. 78u(d)(3)(B)) is amended— (I) by striking ‘‘$100,000’’ and inserting tained 18 years of age are blind or disabled as (i) in clause (i)— ‘‘$1,000,000’’; and of a specified onset date. The Commissioner

VerDate jul 14 2003 02:43 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00147 Fmt 4624 Sfmt 0634 E:\CR\FM\A03MR6.090 S03PT1 S2166 CONGRESSIONAL RECORD — SENATE March 3, 2004 of Social Security shall review such a deter- carry out this section $85,000,000 for fiscal (2) a current annual budget (current as of mination before any action is taken to im- year 2003, and such sums as may be necessary the date the entity seeks assistance under plement the determination. for each of fiscal years 2004 through 2007. this section) for the provision of social serv- ‘‘(2)(A) In carrying out paragraph (1), the (f) DEFINITION.—In this section, the term ices, compiled and adopted in good faith, of Commissioner of Social Security shall re- ‘‘community-based organization’’ means a less than $450,000. view— nonprofit corporation or association that SEC. 803. SUPPORT FOR NONPROFIT COMMU- ‘‘(i) at least 25 percent of all determina- has— NITY-BASED ORGANIZATIONS; DE- tions referred to in paragraph (1) that are (1) not more than 6 full-time equivalent PARTMENT OF JUSTICE. made in fiscal year 2004; and employees who are engaged in the provision (a) SUPPORT FOR NONGOVERNMENTAL ORGA- ‘‘(ii) at least 50 percent of all such deter- of social services; or NIZATIONS.—The Attorney General may minations that are made in fiscal year 2005 (2) a current annual budget (current as of award grants to and enter into cooperative or thereafter. the date the entity seeks assistance under agreements with nongovernmental organiza- ‘‘(B) In carrying out subparagraph (A), the this section) for the provision of social serv- tions, to— Commissioner of Social Security shall, to ices, compiled and adopted in good faith, of (1) provide technical assistance for commu- the extent feasible, select for review the de- less than $450,000. nity-based organizations, which may in- terminations which the Commissioner of So- SEC. 802. SUPPORT FOR NONPROFIT COMMU- clude— cial Security identifies as being the most NITY-BASED ORGANIZATIONS; COR- (A) grant writing and grant management likely to be incorrect.’’. PORATION FOR NATIONAL AND COM- assistance, which may include assistance TITLE VIII—COMPASSION CAPITAL FUND MUNITY SERVICE. provided through workshops and other guid- (a) SUPPORT FOR NONGOVERNMENTAL ORGA- SEC. 801. SUPPORT FOR NONPROFIT COMMU- ance; NITY-BASED ORGANIZATIONS; DE- NIZATIONS.—The Corporation for National (B) legal assistance with incorporation; PARTMENT OF HEALTH AND HUMAN and Community Service (referred to in this (C) legal assistance to obtain tax-exempt SERVICES. section as ‘‘the Corporation’’) may award status; and (a) SUPPORT FOR NONGOVERNMENTAL ORGA- grants to and enter into cooperative agree- (D) information on, and referrals to, other NIZATIONS.—The Secretary of Health and ments with nongovernmental organizations nongovernmental organizations that provide Human Services (referred to in this section and State Commissions on National and expertise in accounting, on legal issues, on as ‘‘the Secretary’’) may award grants to and Community Service established under sec- tax issues, in program development, and on a enter into cooperative agreements with non- tion 178 of the National and Community variety of other organizational topics; governmental organizations, to— Service Act of 1990 (42 U.S.C. 12638), to— (2) provide information and assistance for (1) provide technical assistance for commu- (1) provide technical assistance for commu- community-based organizations on capacity nity-based organizations, which may in- nity-based organizations, which may in- building; clude— clude— (3) provide for community-based organiza- (A) grant writing and grant management (A) grant writing and grant management tions information on and assistance in iden- assistance, which may include assistance assistance, which may include assistance tifying and using best practices for deliv- provided through workshops and other guid- provided through workshops and other guid- ering assistance to persons, families, and ance; ance; communities in need; (B) legal assistance with incorporation; (B) legal assistance with incorporation; (4) provide information on and assistance (C) legal assistance to obtain tax-exempt (C) legal assistance to obtain tax-exempt in utilizing regional intermediary organiza- status; and status; and tions to increase and strengthen the capa- (D) information on, and referrals to, other (D) information on, and referrals to, other bilities of nonprofit community-based orga- nongovernmental organizations that provide nongovernmental organizations that provide nizations; expertise in accounting, on legal issues, on expertise in accounting, on legal issues, on (5) assist community-based organizations tax issues, in program development, and on a tax issues, in program development, and on a in replicating social service programs of variety of other organizational topics; variety of other organizational topics; demonstrated effectiveness; and (2) provide information and assistance for (2) provide information and assistance for (6) encourage research on the best prac- community-based organizations on capacity community-based organizations on capacity tices of social service organizations. building; building; (b) APPLICATIONS.—To be eligible to receive (3) provide for community-based organiza- (3) provide for community-based organiza- a grant or enter into a cooperative agree- tions information on and assistance in iden- tions information on and assistance in iden- ment under this section, a nongovernmental tifying and using best practices for deliv- tifying and using best practices for deliv- organization, State, or political subdivision ering assistance to persons, families, and ering assistance to persons, families, and shall submit an application to the Attorney communities in need; communities in need; General at such time, in such manner, and (4) provide information on and assistance (4) provide information on and assistance containing such information as the Attorney in utilizing regional intermediary organiza- in utilizing regional intermediary organiza- General may require. tions to increase and strengthen the capa- tions to increase and strengthen the capa- (c) LIMITATION.—In order to widely dis- bilities of nonprofit community-based orga- bilities of community-based organizations; burse limited resources, no community- nizations; (5) assist community-based organizations based organization (other than a direct re- (5) assist community-based organizations in replicating social service programs of cipient of a grant or cooperative agreement in replicating social service programs of demonstrated effectiveness; and from the Attorney General) may receive demonstrated effectiveness; and (6) encourage research on the best prac- more than 1 grant or cooperative agreement (6) encourage research on the best practices of social service organizations. under this section for the same purpose. tices of social service organizations. (b) APPLICATIONS.—To be eligible to receive (d) AUTHORIZATION OF APPROPRIATIONS.— (b) SUPPORT FOR STATES.—The Secretary— a grant or enter into a cooperative agree- There are authorized to be appropriated to (1) may award grants to and enter into co- ment under this section, a nongovernmental carry out this section $35,000,000 for fiscal operative agreements with States and polit- organization, State Commission, State, or year 2003, and such sums as may be necessary ical subdivisions of States to provide seed political subdivision shall submit an applica- for each of fiscal years 2004 through 2007. money to establish State and local offices of tion to the Corporation at such time, in such (e) DEFINITION.—In this section, the term faith-based and community initiatives; and manner, and containing such information as ‘‘community-based organization’’ means a (2) shall provide technical assistance to the Corporation may require. nonprofit corporation or association that States and political subdivisions of States in (c) LIMITATION.—In order to widely dis- has— administering the provisions of this Act. burse limited resources, no community- (1) not more than 6 full-time equivalent (c) APPLICATIONS.—To be eligible to receive based organization (other than a direct re- employees who are engaged in the provision a grant or enter into a cooperative agree- cipient of a grant or cooperative agreement of social services; or ment under this section, a nongovernmental from the Secretary) may receive more than 1 (2) a current annual budget (current as of organization, State, or political subdivision grant or cooperative agreement under this the date the entity seeks assistance under shall submit an application to the Secretary section for the same purpose. this section) for the provision of social serv- at such time, in such manner, and con- (d) AUTHORIZATION OF APPROPRIATIONS.— ices, compiled and adopted in good faith, of taining such information as the Secretary There are authorized to be appropriated to less than $450,000. may require. carry out this section $15,000,000 for fiscal SEC. 804. SUPPORT FOR NONPROFIT COMMU- (d) LIMITATION.—In order to widely dis- year 2003, and such sums as may be necessary NITY-BASED ORGANIZATIONS; DE- burse limited resources, no community- for each of fiscal years 2004 through 2007. PARTMENT OF HOUSING AND URBAN based organization (other than a direct re- (e) DEFINITION.—In this section, the term DEVELOPMENT. cipient of a grant or cooperative agreement ‘‘community-based organization’’ means a (a) SUPPORT FOR NONGOVERNMENTAL ORGA- from the Secretary) may receive more than 1 nonprofit corporation or association that NIZATIONS.—The Secretary of Housing and grant or cooperative agreement under this has— Urban Development (referred to in this sec- section for the same purpose. (1) not more than 6 full-time equivalent tion ‘‘the Secretary’’) may award grants to (e) AUTHORIZATION OF APPROPRIATIONS.— employees who are engaged in the provision and enter into cooperative agreements with There are authorized to be appropriated to of social services; or nongovernmental organizations, to—

VerDate jul 14 2003 02:43 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00148 Fmt 4624 Sfmt 0634 E:\CR\FM\A03MR6.090 S03PT1 March 3, 2004 CONGRESSIONAL RECORD — SENATE S2167 (1) provide technical assistance for commu- home that provides young mothers and their transition percentage determined under the nity-based organizations, which may in- children with a supportive and supervised following table: clude— living arrangement in which such mothers ‘‘Taxable years begin- The transition (A) grant writing and grant management are required to learn parenting skills, in- ning in: percentage is: assistance, which may include assistance cluding child development, family budgeting, 2003 or 2004 ...... 1 provided through workshops and other guid- health and nutrition, and other skills to pro- 2005 ...... 2 ance; mote their long-term economic independence 2006 ...... 3 (B) legal assistance with incorporation; and the well-being of their children.’’. 2007 or 2008 ...... 6. (C) legal assistance to obtain tax-exempt (b) CONTRACT FOR EVALUATION.—Part B of ‘‘(b) DEDUCTION LIMITED TO WAGES PAID.— status; and the Runaway and Homeless Youth Act (42 ‘‘(1) IN GENERAL.—The amount of the de- (D) information on, and referrals to, other U.S.C. 5701 et seq.) is amended by adding at duction allowable under subsection (a) for nongovernmental organizations that provide the end the following: any taxable year shall not exceed 50 percent expertise in accounting, on legal issues, on ‘‘SEC. 323. CONTRACT FOR EVALUATION. of the W–2 wages of the employer for the tax- tax issues, in program development, and on a ‘‘(a) IN GENERAL.—The Secretary shall able year. variety of other organizational topics; enter into a contract with a public or private ‘‘(2) W–2 WAGES.—For purposes of para- (2) provide information and assistance for entity for an evaluation of the maternity graph (1), the term ‘W–2 wages’ means the community-based organizations on capacity group homes that are supported by grant sum of the aggregate amounts the taxpayer building; funds under this Act. is required to include on statements under (3) provide for community-based organiza- ‘‘(b) INFORMATION.—The evaluation de- paragraphs (3) and (8) of section 6051(a) with tions information on and assistance in iden- scribed in subsection (a) shall include the respect to employment of employees of the tifying and using best practices for deliv- collection of information about the relevant taxpayer during the taxpayer’s taxable year. ering assistance to persons, families, and characteristics of individuals who benefit ‘‘(3) SPECIAL RULES.— communities in need; from maternity group homes such as those ‘‘(A) PASS-THRU ENTITIES.—In the case of (4) provide information on and assistance that are supported by grant funds under this an S corporation, partnership, estate or in utilizing regional intermediary organiza- Act and what services provided by those ma- trust, or other pass-thru entity, the limitations to increase and strengthen the capa- ternity group homes are most beneficial to tion under this subsection shall apply at the bilities of community-based organizations; such individuals. entity level. (5) assist community-based organizations ‘‘(c) REPORT.—Not later than 2 years after ‘‘(B) ACQUISITIONS AND DISPOSITIONS.—The in replicating social service programs of the date on which the Secretary enters into Secretary shall provide for the application of demonstrated effectiveness; and a contract for an evaluation under sub- this subsection in cases where the taxpayer (6) encourage research on the best prac- section (a), and biennially thereafter, the en- acquires, or disposes of, the major portion of tices of social service organizations. tity conducting the evaluation under this a trade or business or the major portion of a (b) APPLICATIONS.—To be eligible to receive section shall submit to Congress a report on separate unit of a trade or business during a grant or enter into a cooperative agree- the status, activities, and accomplishments the taxable year. ment under this section, a nongovernmental of maternity group homes that are supported ‘‘(c) QUALIFIED PRODUCTION ACTIVITIES IN- organization, State, or political subdivision by grant funds under this Act.’’. COME.—For purposes of this section, the term ‘qualified production activities income’ shall submit an application to the Secretary (c) AUTHORIZATION OF APPROPRIATIONS.— means an amount equal to the portion of the at such time, in such manner, and con- Section 388 of the Runaway and Homeless modified taxable income of the taxpayer taining such information as the Secretary Youth Act (42 U.S.C. 5751) is amended— which is attributable to domestic production may require. (1) in subsection (a)(1)— activities. (c) LIMITATION.—In order to widely dis- (A) by striking ‘‘There’’ and inserting the ‘‘(d) DETERMINATION OF INCOME ATTRIB- burse limited resources, no community- following: UTABLE TO DOMESTIC PRODUCTION ACTIVI- based organization (other than a direct re- ‘‘(A) IN GENERAL.—There’’; TIES.—For purposes of this section— cipient of a grant or cooperative agreement (B) in subparagraph (A), as redesignated, ‘‘(1) IN GENERAL.—The portion of the modi- by inserting ‘‘and the purpose described in from the Secretary) may receive more than 1 fied taxable income which is attributable to subparagraph (B)’’ after ‘‘other than part E’’; grant or cooperative agreement under this domestic production activities is so much of and section for the same purpose. the modified taxable income for the taxable UTHORIZATION OF APPROPRIATIONS.— (C) by adding at the end the following: (d) A year as does not exceed— There are authorized to be appropriated to ‘‘(B) MATERNITY GROUP HOMES.—There is ‘‘(A) the taxpayer’s domestic production carry out this section $15,000,000 for fiscal authorized to be appropriated, for maternity gross receipts for such taxable year, reduced year 2003, and such sums as may be necessary group homes eligible for assistance under by for each of fiscal years 2004 through 2007. section 322(a)(1)— ‘‘(B) the sum of— (e) DEFINITION.—In this section, the term ‘‘(i) $33,000,000 for fiscal year 2003; and ‘‘(i) the costs of goods sold that are allo- ‘‘community-based organization’’ means a ‘‘(ii) such sums as may be necessary for fis- cable to such receipts, nonprofit corporation or association that cal year 2004.’’; and ‘‘(ii) other deductions, expenses, or losses has— (2) in subsection (a)(2)(A), by striking directly allocable to such receipts, and (1) not more than 6 full-time equivalent ‘‘paragraph (1)’’ and inserting ‘‘paragraph ‘‘(iii) a proper share of other deductions, employees who are engaged in the provision (1)(A)’’. expenses, and losses that are not directly al- of social services; or locable to such receipts or another class of (2) a current annual budget (current as of SA 2671. Mr. SMITH (for himself and income. the date the entity seeks assistance under Mr. BREAUX) submitted an amendment ‘‘(2) ALLOCATION METHOD.—The Secretary this section) for the provision of social serv- intended to be proposed by him to the shall prescribe rules for the proper alloca- ices, compiled and adopted in good faith, of bill S. 1637, to amend the Internal Rev- tion of items of income, deduction, expense, less than $450,000. enue Code of 1986 to comply with the and loss for purposes of determining income SEC. 805. COORDINATION. World Trade Organization rulings on attributable to domestic production activi- The Secretary of Health and Human Serv- the FSC/ETI benefit in a manner that ties. ices, the Corporation for National and Com- ‘‘(3) SPECIAL RULES FOR DETERMINING munity Service, the Attorney General, and preserves jobs and production activi- COSTS.— the Secretary of Housing and Urban Develop- ties in the United States, to reform and simplify the international taxation ‘‘(A) IN GENERAL.—For purposes of deter- ment shall coordinate their activities under mining costs under clause (i) of paragraph this title to ensure— rules of the United States, and for (1)(B), any item or service brought into the (1) nonduplication of activities under this other purposes; which was ordered to United States shall be treated as acquired by title; and lie on the table; as follows: purchase, and its cost shall be treated as not (2) an equitable distribution of resources Beginning on page 71, strike line 10 less than its fair market value immediately under this title. through page 84, line 22, and insert the fol- after it entered the United States. A similar TITLE IX—MATERNITY GROUP HOMES lowing: rule shall apply in determining the adjusted SEC. 901. MATERNITY GROUP HOMES. ‘‘SEC. 199. INCOME ATTRIBUTABLE TO DOMESTIC basis of leased or rented property where the (a) PERMISSIBLE USE OF FUNDS.—Section PRODUCTION ACTIVITIES. lease or rental gives rise to domestic produc- 322 of the Runaway and Homeless Youth Act ‘‘(a) ALLOWANCE OF DEDUCTION.— tion gross receipts. (42 U.S.C. 5714–2) is amended— ‘‘(1) IN GENERAL.—There shall be allowed as ‘‘(B) EXPORTS FOR FURTHER MANUFAC- (1) in subsection (a)(1), by inserting ‘‘(in- a deduction an amount equal to 9 percent of TURE.—In the case of any property described cluding maternity group homes)’’ after the qualified production activities income of in subparagraph (A) that had been exported ‘‘group homes’’; and the taxpayer for the taxable year. by the taxpayer for further manufacture, the (2) by adding at the end the following: ‘‘(2) PHASEIN.—In the case of taxable years increase in cost or adjusted basis under sub- ‘‘(c) MATERNITY GROUP HOME.—In this part, beginning in 2003, 2004, 2005, 2006, 2007, or 2008, paragraph (A) shall not exceed the difference the term ‘maternity group home’ means a paragraph (1) shall be applied by substituting between the value of the property when ex- community-based, adult-supervised group for the percentage contained therein the ported and the value of the property when

VerDate jul 14 2003 02:43 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00149 Fmt 4624 Sfmt 0634 E:\CR\FM\A03MR6.090 S03PT1 S2168 CONGRESSIONAL RECORD — SENATE March 3, 2004 brought back into the United States after organization which is deductible under sub- Jumpstart Our Business Strength (JOBS) the further manufacture. section (a) and designated as such by the or- Act applies to such transaction, and ‘‘(4) MODIFIED TAXABLE INCOME.—The term ganization in a written notice mailed to its ‘‘(B) any deduction allowed under section ‘modified taxable income’ means taxable in- patrons during the payment period described 101(e) of such Act shall be disregarded in de- come computed without regard to the deduc- in section 1382(d), termining the portion of the taxable income tion allowable under this section. then such person shall be allowed an exclu- which is attributable to domestic production ‘‘(e) DOMESTIC PRODUCTION GROSS RE- sion from gross income with respect to such gross receipts.’’. CEIPTS.—For purposes of this section— amount. The taxable income of the organiza- ‘‘(1) IN GENERAL.—The term ‘domestic pro- tion shall not be reduced under section 1382 SA 2649. Mr. SANTORUM submitted duction gross receipts’ means the gross re- by the portion of any such amount with re- an amendment intended to be proposed ceipts of the taxpayer which are derived spect to which an exclusion is allowable to a by him to the bill S. 1637, to amend the from— person by reason of this paragraph. Internal Revenue Code of 1986 to com- ‘‘(A) any sale, exchange, or other disposi- ‘‘(B) SPECIAL RULES.—For purposes of ap- tion of, or ply with the World Trade Organization plying subparagraph (A), in determining the ‘‘(B) any lease, rental, or license of, rulings on the FSC/ETI benefit in a qualified production activities income of the qualifying production property which was manner that preserves jobs and produc- organization under this section— manufactured, produced, grown, or extracted tion activities in the United States, to ‘‘(i) there shall not be taken into account in whole or in significant part by the tax- reform and simplify the international payer within the United States. in computing the organization’s modified taxable income any deduction allowable taxation rules of the United States, ‘‘(2) SPECIAL RULES FOR CERTAIN PROP- under subsection (b) or (c) of section 1382 (re- and for other purposes; which was or- ERTY.—In the case of any qualifying production property described in subsection lating to patronage dividends, per-unit re- dered to lie on the table; as follows: (f)(1)(C)— tain allocations, and nonpatronage distribu- At the appropriate place insert the fol- ‘‘(A) such property shall be treated for pur- tions), and lowing: poses of paragraph (1) as produced in signifi- ‘‘(ii) the organization shall be treated as SEC. ll. WAIVER OF 10 PERCENT EARLY WITH- cant part by the taxpayer within the United having manufactured, produced, grown, or DRAWAL PENALTY TAX ON CERTAIN States if more than 50 percent of the aggre- extracted in whole or significant part any DISTRIBUTIONS OF PENSION PLANS gate development and production costs are qualifying production property marketed by FOR PUBLIC SAFETY EMPLOYEES. (a) IN GENERAL.—Section 72(t) (relating to incurred by the taxpayer within the United the organization which its patrons have so States, and manufactured, produced, grown, or ex- subsection not to apply to certain distribu- ‘‘(B) if a taxpayer acquires such property tracted. tions) is amended by adding at the end the before such property begins to generate sub- ‘‘(3) SPECIAL RULE FOR AFFILIATED following new paragraph: stantial gross receipts, any development or GROUPS.— ‘‘(10) DISTRIBUTIONS TO QUALIFIED PUBLIC production costs incurred before the acquisi- ‘‘(A) IN GENERAL.—All members of an ex- SAFETY EMPLOYEES IN GOVERNMENTAL tion shall be treated as incurred by the tax- panded affiliated group shall be treated as a PLANS.— payer for purposes of subparagraph (A) and single corporation for purposes of this sec- ‘‘(A) IN GENERAL.—In the case of a distribu- paragraph (1). tion. tion to a qualified public safety employee ‘‘(f) QUALIFYING PRODUCTION PROPERTY.— ‘‘(B) EXPANDED AFFILIATED GROUP.—The from a governmental plan (within the mean- For purposes of this section— term ‘expanded affiliated group’ means an ing of section 414(d)) which is a defined ben- ‘‘(1) IN GENERAL.—Except as otherwise pro- affiliated group as defined in section 1504(a), efit plan, paragraph (2)(A)(v) shall be applied vided in this paragraph, the term ‘qualifying determined— by substituting ‘age 50’ for ‘age 55’. production property’ means— ‘‘(i) by substituting ‘50 percent’ for ‘80 per- ‘‘(B) QUALIFIED PUBLIC SAFETY EMPLOYEE.— ‘‘(A) any tangible personal property, cent’ each place it appears, and For purposes of this paragraph, the term ‘‘(B) any computer software, and ‘‘(ii) without regard to paragraphs (2) and ‘qualified public safety employee’ means any ‘‘(C) any property described in section (4) of section 1504(b). employee of any police department or fire 168(f) (3) or (4), including any underlying ‘‘(4) COORDINATION WITH MINIMUM TAX.—The department organized and operated by a copyright or trademark. deduction under this section shall be allowed State or political subdivision of a State who ‘‘(2) EXCLUSIONS FROM QUALIFYING PRODUC- for purposes of the tax imposed by section 55; provides police protection, firefighting serv- TION PROPERTY.—The term ‘qualifying pro- except that for purposes of section 55, alter- ices, or emergency medical services for any duction property’ shall not include— native minimum taxable income shall be area within the jurisdiction of such State or ‘‘(A) consumable property that is sold, taken into account in determining the de- political subdivision.’’. leased, or licensed by the taxpayer as an in- duction under this section. (b) EFFECTIVE DATE.—The amendments tegral part of the provision of services, ‘‘(5) ORDERING RULE.—The amount of any made by this section shall apply to distribu- ‘‘(B) oil or gas, other deduction allowable under this chapter tions after the date of the enactment of this ‘‘(C) electricity, shall be determined as if this section had not Act. ‘‘(D) water supplied by pipeline to the con- been enacted. sumer, ‘‘(6) TRADE OR BUSINESS REQUIREMENT.— SA 2673. Mr. BINGAMAN submitted ‘‘(E) utility services, or This section shall be applied by only taking an amendment intended to be proposed ‘‘(F) any film, tape, recording, book, maga- into account items which are attributable to by him to the bill S. 1637, to amend the zine, newspaper, or similar property the mar- the actual conduct of a trade or business. Internal Revenue Code of 1986 to com- ket for which is primarily topical or other- ‘‘(7) POSSESSIONS, ETC.— ply with the World Trade Organization wise essentially transitory in nature. ‘‘(A) IN GENERAL.—For purposes of sub- rulings on the FSC/ETI benefit in a ‘‘(g) DEFINITIONS AND SPECIAL RULES.— sections (d) and (e), the term ‘United States’ manner that preserves jobs and produc- ‘‘(1) APPLICATION OF SECTION TO PASS-THRU includes the Commonwealth of Puerto Rico, tion activities in the United States, to ENTITIES.—In the case of an S corporation, Guam, American Samoa, the Commonwealth partnership, estate or trust, or other pass- of the Northern Mariana Islands, and the reform and simplify the international thru entity— Virgin Islands of the United States. taxation rules of the United States, ‘‘(A) subject to the provisions of paragraph ‘‘(B) SPECIAL RULES FOR APPLYING WAGE and for other purposes; which was or- (2) and subsection (b)(3)(A), this section shall LIMITATION.—For purposes of applying the dered to lie on the table; as follows: be applied at the shareholder, partner, or limitation under subsection (b) for any tax- On page 378, after line 12, add the fol- similar level, and able year— lowing: ‘‘(B) the Secretary shall prescribe rules for ‘‘(i) the determination of W–2 wages of a SEC. ll. DEDUCTION FOR HEALTH INSURANCE the application of this section, including taxpayer shall be made without regard to COSTS IN COMPUTING SELF-EM- rules relating to— any exclusion under section 3401(a)(8) for re- PLOYMENT TAXES. ‘‘(i) restrictions on the allocation of the muneration paid for services performed in a (a) IN GENERAL.—Section 162(l) of the In- deduction to taxpayers at the partner or jurisdiction described in subparagraph (A), ternal Revenue Code of 1986 (relating to spe- similar level, and and cial rules for health insurance costs of self- ‘‘(ii) additional reporting requirements. ‘‘(ii) in determining the amount of any employed individuals) is amended by strik- ‘‘(2) EXCLUSION FOR PATRONS OF AGRICUL- credit allowable under section 30A or 936 for ing paragraph (4) and by redesignating para- TURAL AND HORTICULTURAL COOPERATIVES.— the taxable year, there shall not be taken graph (5) as paragraph (4). ‘‘(A) IN GENERAL.—If any amount described into account any wages which are taken into (b) MAINTENANCE OF TRUST FUNDS.—There in paragraph (1) or (3) of section 1385(a)— account in applying such limitation. are hereby appropriated to the Federal Old- ‘‘(i) is received by a person from an organi- ‘‘(8) COORDINATION WITH TRANSITION Age and Survivors Insurance Trust Fund and zation to which part I of subchapter T ap- RULES.—For purposes of this section— the Federal Disability Insurance Trust Fund plies which is engaged in the marketing of ‘‘(A) domestic production gross receipts established under section 201 of the Social agricultural or horticultural products, and shall not include gross receipts from any Security Act (42 U.S.C. 401) and the Federal ‘‘(ii) is allocable to the portion of the transaction if the binding contract transi- Hospital Insurance Trust Fund established qualified production activities income of the tion relief of section 101(c)(2) of the under section 1817 of such Act (42 U.S.C.

VerDate jul 14 2003 02:43 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00150 Fmt 4624 Sfmt 0634 E:\CR\FM\A03MR6.074 S03PT1 March 3, 2004 CONGRESSIONAL RECORD — SENATE S2169 1395i) amounts equal to the reduction in rev- ‘‘(ii) a corporation described in section 581 ‘‘(2) in the case of an eligible person de- enues to the Treasury by reason of the enact- or 591 (relating to banks and other savings scribed in subsection (c)(2)(B), 10 percent, ment of this Act. Amounts appropriated by institutions), or and the preceding sentence shall be transferred ‘‘(iii) an insurance company subject to tax ‘‘(3) in the case of an eligible person de- from the general fund at such times and in under subchapter L or which would be sub- scribed in subsection (c)(2)(C), 15 percent. such manner as to replicate to the extent ject to tax under subchapter L if it were a ‘‘(c) DEFINITIONS.—In this section: possible the transfers which would have oc- domestic corporation. ‘‘(1) COVERED YEAR.—The term ‘covered curred to such Trust Funds had this Act not ‘‘(H) PUBLICLY ISSUED DEBT.—The term year’ means taxable years beginning in 2004 been enacted. ‘publicly issued debt’ means— and 2005. (c) EFFECTIVE DATE.—The amendments ‘‘(i) commercial paper described in section ‘‘(2) ELIGIBLE PERSON.—The term ‘eligible made by this section shall apply to taxable 3(a)(3) or 4(2) of the Securities Act of 1933, person’ means— years beginning after the date of the enact- ‘‘(ii) a debt instrument which is— ‘‘(A) any physician (as defined in section ment of this Act. ‘‘(I) part of an issue of debt instruments 213(d)(4)) who practices in any surgical spe- meeting the requirements of section 871(h) or Mr. BINGAMAN (for himself cialty or subspecialty, emergency medicine, SA 2674. 881(c) (relating to the exemptions from with- obstetrics, anesthesiology or who does inter- and Mr. ALLEN) submitted an amend- holding tax for certain portfolio debt invest- vention work which is reflected in medical ment intended to be proposed by him ments) without regard to section malpractice insurance expenditures, to the bill S. 1637, to amend the Inter- 871(h)(2)(B)(ii) and section 881(c)(2)(B)(ii), and ‘‘(B) any physician (as so defined) who nal Revenue Code of 1986 to comply ‘‘(II) readily tradable on an established se- practices in general medicine, allergy, der- with the World Trade Organization rul- curities market, or matology, pathology, or any other specialty ‘‘(iii) a debt instrument which is part of an ings on the FSC/ETI benefit in a man- not otherwise described in this section, and issue of debt instruments the initial offering ‘‘(C) any hospital or clinic, ner that preserves jobs and production of which is registered with the Securities activities in the United States, to re- which meets applicable legal requirements and Exchange Commission or would be re- to provide the health care services involved. form and simplify the international quired to be registered under the Securities ‘‘(3) QUALIFIED MEDICAL MALPRACTICE IN- taxation rules of the United States, Act of 1933 but for an exemption from reg- SURANCE EXPENDITURE.—The term ‘qualified and for other purposes; which was or- istration— medical malpractice insurance expenditure’ dered to lie on the table; as follows: ‘‘(I) under section 3 of the Securities Act of means so much of any professional insurance 1933, On page 146, after line 23, insert the fol- premium, surcharge, payment or other cost ‘‘(II) under any law (other than the Securi- lowing: or expense required as a condition of State ties Act of 1933) because of the identity of licensure which is incurred by an eligible SECTION ll. INTEREST PAYMENTS DEDUCT- the issuer or the nature of the security, IBLE WHERE DISQUALIFIED GUAR- person in a covered year for the sole purpose ANTEE HAS NO ECONOMIC EFFECT. ‘‘(III) because the issue is intended for dis- of providing or furnishing general medical tribution to persons who are not United (a) IN GENERAL.—Section 163(j)(6)(D)(ii) (re- malpractice liability insurance for such eli- lating to exceptions to disqualified guar- States persons, or gible person as does not exceed twice the antee) is amended— ‘‘(IV) pursuant to section 230.144A of title Statewide average of such costs for similarly (1) by striking ‘‘or’’ at the end of subclause 17, Code of Federal Regulations (relating to situated eligible persons. securities placed with qualified institutional (I), ‘‘(d) SPECIAL RULES.— (2) by striking the period at the end of sub- buyers) or any successor rule or regulation.’’. ‘‘(1) IN GENERAL.—Except as provided in clause (II) and inserting ‘‘, or’’, paragraph (2), the credit determined under (3) by inserting after subclause (II) the fol- (c) EFFECTIVE DATE.—The amendments made by this section shall apply to debt this section shall be claimed by the eligible lowing new subclause: person incurring the qualified medical mal- ‘‘(III) in the case of a guarantee by a for- issued on or after the date of the enactment of this Act. practice insurance expenditure. eign person, to the extent of the amount that ‘‘(2) CERTIFICATION.—Each State, through the taxpayer establishes to the satisfaction Mr. DURBIN (for himself, its board of medical licensure and State of the Secretary that the taxpayer could SA 2675. board (or agency) regulating insurance, an- have borrowed from an unrelated person Mr. GRAHAM of South Carolina, Mr. nually shall provide such information to the without the guarantee.’’. REID, and Mrs. MURRAY) submitted an Secretary of Health and Human Services as (b) EFFECTIVE DATE.—The amendments amendment intended to be proposed by is necessary to permit the Secretary to cal- made by this section shall apply to guaran- him to the bill S. 1637, to amend the In- culate average costs for purposes of sub- tees issued on and after the date of the en- ternal Revenue Code of 1986 to comply section (c)(3) and to certify such average actment of this Act. with the World Trade Organization rul- costs (rounded to the nearest whole dollar) SEC. ll. INTEREST PAID TO CERTAIN LENDERS ings on the FSC/ETI benefit in a man- to the Secretary of the Treasury on or before NOT DISQUALIFIED INTEREST. the 15th day of November of each year. (a) IN GENERAL.—Section 163(j)(3)(B) (defin- ner that preserves jobs and production ing disqualified interest) is amended by activities in the United States, to re- ‘‘(e) EFFECTIVE DATE.—This section shall striking ‘‘and’’ at the end of clause (i) and by form and simplify the international apply to qualified medical malpractice ex- inserting after clause (ii) the following new penditures incurred after December 31, taxation rules of the United States, 2003.’’. clause: and for other purposes; which was or- ‘‘(iii) the interest is not paid or accrued to dered to lie on the table; as follows: (b) CREDIT MADE PART OF GENERAL BUSI- a qualified lender, and’’. NESS CREDIT.—Section 38(b) (relating to cur- (b) QUALIFIED LENDER.—Section 163(j)(6) On page 179, after line 25, insert the fol- rent year business credit) is amended by (relating to other definitions and special lowing: striking ‘‘plus’’ at the end of paragraph (14), rules) is amended by adding at the end the SEC. ll. CREDIT FOR QUALIFIED EXPENDI- by striking the period at the end of para- following new subparagraphs: TURES FOR MEDICAL PROFES- graph (15) and inserting ‘‘, plus’’, and by add- ‘‘(F) QUALIFIED LENDER.—A holder of debt SIONAL MALPRACTICE INSURANCE. ing at the end the following new paragraph: shall be a qualified lender with respect to (a) IN GENERAL.—Subpart D of part IV of ‘‘(16) the medical malpractice insurance such debt if such person is— subchapter A of chapter 1 (relating to busi- expenditure tax credit determined under sec- ‘‘(i) a United States person subject to the ness tax credits) is amended by adding at the tion 45G(a).’’. income tax imposed by this chapter (deter- end the following: (c) LIMITATION ON CARRYBACK.—Section mined without regard to section 511) and— ‘‘SEC. 45G. CREDIT FOR EXPENDITURES FOR 39(d) (relating to transition rules) is amend- ‘‘(I) such person is a financial institution, MEDICAL PROFESSIONAL MAL- ed by adding at the end the following new PRACTICE INSURANCE. or paragraph: ‘‘(II) such debt is publicly issued debt, or ‘‘(a) GENERAL RULE.—For purposes of sec- ‘‘(11) NO CARRYBACK OF MEDICAL MAL- ‘‘(ii) a foreign person which is subject to ei- tion 38, in the case of a taxpayer which is an PRACTICE INSURANCE EXPENDITURE TAX CREDIT ther net basis or gross basis taxation and— eligible person, the medical malpractice in- BEFORE EFFECTIVE DATE.—No portion of the ‘‘(I) such person is a financial institution surance expenditure tax credit determined unused business credit for any taxable year required to include the interest on such debt under this section for a covered year shall which is attributable to the credit deter- in taxable income under section 882, or equal the applicable percentage of the quali- mined under section 45G may be carried back ‘‘(II) such debt is publicly issued debt. fied medical malpractice insurance expendi- to any taxable year beginning before 2004.’’. ‘‘(G) FINANCIAL INSTITUTION.—The term ‘fi- tures incurred by an eligible person during nancial institution’ means a person which the covered year. (d) DENIAL OF DOUBLE BENEFIT.—Section is— ‘‘(b) APPLICABLE PERCENTAGE.—For pur- 280C (relating to certain expenses for which ‘‘(i) predominantly engaged in the active poses of subsection (a), the applicable per- credits are allowable) is amended by adding conduct of a banking, financing, or similar centage is— at the end the following new subsection: business within the meaning of section ‘‘(1) in the case of an eligible person de- ‘‘(d) CREDIT FOR MEDICAL MALPRACTICE LI- 954(h), scribed in subsection (c)(2)(A), 20 percent, ABILITY INSURANCE PREMIUMS.—

VerDate jul 14 2003 02:43 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00151 Fmt 4624 Sfmt 0634 E:\CR\FM\A03MR6.078 S03PT1 S2170 CONGRESSIONAL RECORD — SENATE March 3, 2004 ‘‘(1) IN GENERAL.—No deduction shall be al- Transportation be authorized to meet Evange´licos Nacionales (AMEN), Pas- lowed for that portion of the qualified med- on Wednesday, March 3, 2004, at 9:30 tor, Templo Calvario, General Pres- ical malpractice insurance expenditures oth- a.m. on Impact of Climate Change, in byter, Assemblies of God, Santa Ana, erwise allowable as a deduction for the tax- SR–253. CA; the Hon. Jon Bruning, Attorney able year which is equal to the amount of the credit allowable for the taxable year The PRESIDING OFFICER. Without General of Nebraska, Lincoln, NE; and under section 45G (determined without re- objection, it is so ordered. Mrs. Maggie Gallagher, President, In- gard to section 38(c)). COMMITTEE ON ENVIRONMENT AND PUBLIC stitute for Marriage and Public Policy, ‘‘(2) CONTROLLED GROUPS.—In the case of a WORKS New York, NY. corporation which is a member of a con- Mr. HATCH. Mr. President, I ask The PRESIDING OFFICER. Without trolled group of corporations (within the unanimous consent that the Com- objection, it is so ordered. meaning of section 41(f)(5)) or a trade or mittee on Environment and Public SUBCOMMITTEE ON EMERGING THREATS AND business which is treated as being under Works be authorized to meet on CAPABILITIES common control with other trades or business (within the meaning of section Wednesday, March 3, 2004, at 9:30 a.m. Mr. HATCH. Mr. President, I ask 41(f)(1)(B)), this subsection shall be applied to conduct an oversight hearing re- unanimous consent that the Sub- under rules prescribed by the Secretary simi- garding grants management within the committee on Emerging Threats and lar to the rules applicable under subpara- U.S. Environmental Protection Agen- Capabilities of the Committee on graphs (A) and (B) of section 41(f)(1).’’. cy. The hearing will be held in SD–406. Armed Services be authorized to meet (e) GRANTS TO NON-PROFIT HOSPITALS AND The PRESIDING OFFICER. Without during the session of the Senate on CLINICS.— objection, it is so ordered. March 3, 2004, at 9:30 a.m., in open ses- (1) IN GENERAL.—The Secretary of Health and Human Services, acting through the Ad- COMMITTEE ON FINANCE sion to receive testimony on the role of ministrator of the Health Resources and Mr. HATCH. Mr. President, I ask defense science and technology in the Services Administration, shall award grants unanimous consent that the Com- global war on terrorism and in pre- to eligible non-profit hospitals and clinics to mittee on Finance be authorized to paring for emerging threats in review assist such hospitals and clinics in defraying meet during the session on Wednesday, of the Defense authorization request qualified medical malpractice insurance ex- March 3, 2004, at 9:30 a.m., to hear tes- for fiscal year 2005. penditures. timony on Health Insurance Chal- The PRESIDING OFFICER. Without (2) ELIGIBLE NON-PROFIT HOSPITAL OR CLIN- objection, it is so ordered. IC.—To be eligible to receive a grant under lenges: ‘‘Buyer Beware.’’ paragraph (1) an entity shall— The PRESIDING OFFICER. Without SUBCOMMITTEE ON FORESTS AND PUBLIC LANDS (A) be a non-profit hospital or clinic; objection, it is so ordered. Mr. HATCH. Mr. President, I ask (B) be unable to claim the tax credit de- COMMITTEE ON FOREIGN RELATIONS unanimous consent that the Sub- scribed in section 45G for the year for which Mr. HATCH. Mr. President, I ask committee on Forests and Public an application is submitted under subpara- unanimous consent that the Com- Lands of the Committee on Energy and graph (C); and mittee on Foreign Relations be author- (C) prepare and submit to the Secretary of Natural Resources be authorized to Health and Human Services an application ized to meet during the session of the meet during the session of the Senate at such time, in such manner, and con- Senate on Wednesday, March 3, 2004, at on Wednesday, March 3, at 2:30 p.m. taining such information as the Secretary 9:30 a.m. to hold a Hearing on Building The purpose of the hearing is to receive may require. Operational Readiness in Foreign Af- testimony on S. 1420, a bill to establish (3) AMOUNT OF GRANT.—The amount of a fairs Agencies. terms and conditions for use of certain grant to a non-profit hospital or clinic under The PRESIDING OFFICER. Without Federal land by outfitters and to facili- paragraph (1) shall equal 15 percent of the objection, it is so ordered. tate public opportunities for the rec- amount of the qualified medical malpractice insurance expenditures of the hospital or COMMITTEE ON INDIAN AFFAIRS reational use and enjoyment of such clinic for the year involved. Mr. HATCH. Mr. President, I ask land. (4) QUALIFIED MEDICAL MALPRACTICE INSUR- unanimous consent that the Com- The PRESIDING OFFICER. Without ANCE EXPENDITURE.—In this subsection, the mittee on Indian Affairs be authorized objection, it is so ordered. term ‘‘qualified medical malpractice insur- to meet on Wednesday, March 3, 2004, SUBCOMMITTEE ON SCIENCE, TECHNOLOGY, AND ance expenditure’’ means so much of any at 10 a.m. in Room 485 of the Russell SPACE professional insurance premium, surcharge, Senate Office Building to conduct a Mr. HATCH. Mr. President, I ask payment or other cost or expense required as a condition of State licensure which is in- business meeting on the Committees unanimous consent that the Sub- curred by a non-profit hospital or clinic in a Views and Estimate Letter on the committee on Science, Technology, year for the sole purpose of providing or fur- President’s FY/05 Budget Request for and Space be authorized to meet on nishing general medical malpractice liabil- Indian Programs, to be followed imme- Wednesday, March 3, 2004, at 2:30 p.m., ity insurance for such hospital or clinic as diately by an oversight hearing on the on impact on abortion on women in does not exceed twice the Statewide average Status of the Completion of the Na- SR–253. of such costs for similarly situated hospitals tional Museum of the American Indian. The PRESIDING OFFICER. Without or clinics. The PRESIDING OFFICER. Without objection, it is so ordered. (5) AUTHORIZATION OF APPROPRIATIONS.— There are authorized to be appropriated to objection, it is so ordered. SUBCOMMITTEE ON SEAPOWER carry out this subsection, such sums as may SUBCOMMITTEE ON THE CONSTITUTION Mr. HATCH. Mr. President, I ask be necessary for each of fiscal years 2005 and Mr. HATCH. Mr. President, I ask unanimous consent that the Sub- 2006. unanimous consent that the Com- committee on Seapower of the Com- (f) CLERICAL AMENDMENT.—The table of mittee on the Judiciary Subcommittee mittee on Armed Services be author- sections for subpart D of part IV of sub- on the Constitution, Civil Rights and chapter A of chapter 1 is amended by adding ized to meet during the session of the at the end the following new item: Property Rights be authorized to meet Senate on March 3, 2004, at 2 p.m., in to conduct a hearing on ‘‘Judicial Ac- open session to receive testimony on ‘‘Sec. 45G. Credit for expenditures for med- tivism vs. Democracy: What are the ical professional malpractice future Navy and Marine Corps capabili- insurance.’’. National Implications of the Massachu- ties and requirements, in review of the setts Goodridge Decision and the Judi- Defense authorization request for fiscal (g) EFFECTIVE DATE.—The amendments made by this section shall apply to expendi- cial Invalidation of Traditional Mar- year 2005 and the future years Defense tures incurred after December 31, 2003. riage Laws?,’’ on Wednesday, March 3, program. 2004, at 10 a.m., in SD226. f The PRESIDING OFFICER. Without Panel I: Reverend Richard Richard- objection, it is so ordered. AUTHORITY FOR COMMITTEES TO son, Assistant Pastor, St. Paul African f MEET Methodist Episcopal (AME) Church, Di- PRIVILEGES OF THE FLOOR COMMITTEE ON COMMERCE, SCIENCE, AND rector of Political Affairs, The Black TRANSPORTATION Ministerial Alliance of Greater Boston, Mr. BAUCUS. Mr. President, I ask Mr. HATCH. Mr. President. I ask President/CEO, Children’s Services of unanimous consent that the following unanimous consent that the Com- Roxbury, Boston, MA; Pastor Daniel de interns and fellows of the Finance mittee on Commerce, Science, and Leon, Sr., Alianza de Ministerios Committee be granted the privileges of

VerDate jul 14 2003 04:01 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00152 Fmt 4624 Sfmt 0634 E:\CR\FM\A03MR6.078 S03PT1 March 3, 2004 CONGRESSIONAL RECORD — SENATE S2171 the floor for the remainder of the de- sent that following the prayer and figure out how to defeat it, and I regret bate on S. 1637, the JOBS Act: Shannon pledge, the morning hour be deemed that because I do not think it is com- Augare, Jane Bergeson, Simon Chabel, expired, the Journal of proceedings be plicated. I think it is straightforward. I Tyson Hill, Jeremy Seidlitz, Trace approved to date, the time for the two think it makes sense. Thaxton, Steve Beasley, Justin leaders be reserved for their use later I would not be offering this if this Bonsey, Jodi George, Scott Landes, in the day, and the Senate then begin a was not a problem sweeping across the Pascal Niedermann, Matt Stokes, and period for the transaction of morning country. Concerns are being expressed Chris Knopes. business until 10:30 a.m., with the time everywhere by Americans of varying The PRESIDING OFFICER. Without equally divided in the usual form, with incomes and positions. I know in my objection, it is so ordered. the first half of the time under the con- own State I have had meetings with Mrs. MURRAY. Mr. President, I ask trol of the Democratic leader or his people I could not put in the same town unanimous consent Sara Hagigh of designee and the second half of the or county together a year ago who are Senator LIEBERMAN’s staff have privi- time under the control of the majority coming to us now and saying, would lege of the floor during debate of S. leader or his designee; provided, that at you please do something here. I am 1637. 10:30 a.m., the Senate resume consider- talking about my chambers of com- The PRESIDING OFFICER. Without ation of S. 1637, the FSC/ETI bill. merce. objection, it is so ordered. The PRESIDING OFFICER. Without I had a meeting last week at a Team- f objection, it is so ordered. sters Local that included the chambers f of commerce, the Manufacturers Asso- TROOP TRAVEL REIMBURSEMENT ciation, the International Association PROGRAM Mr. MCCONNELL. Mr. President, I of Machinists and Teamsters. I do not ask unanimous consent that the Armed Mr. MCCONNELL. Mr. President, fol- need to remind the Chair what a Services Committee be discharged from lowing morning business, the Senate unique circumstance that is when a further consideration of S. 2057 and will resume consideration of S. 1637. crowd like that gets together—by the that the Senate proceed to its imme- When the Senate resumes the bill in way, all asking me to do the same diate consideration. the morning, the Dodd amendment on thing. The PRESIDING OFFICER. Without outsourcing will be the pending busi- They were not just asking me but objection, it is so ordered. The clerk ness. It is my expectation that a sec- asking us what we were going to do, be- will report the bill by title. ond-degree amendment will be offered cause they have watched the alarming The assistant journal clerk read as to the Dodd amendment tomorrow decline of manufacturing jobs in the follows: morning. country, and it seems to be accel- A bill (S. 2057) to require the Secretary of For the remainder of the day, we will erating at a dramatic pace. Defense to reimburse members of the United continue to work through amendments Also the problem they foresee, and I States Armed Forces for certain transpor- to the bill. Under the previous order, agree with them on this outsourcing of tation expenses incurred by the members in following the disposition of the Dodd jobs, which is very appealing, and I un- connection with leave under the Central amendment, the Senate will take up an derstand it from a corporate stand- Command Rest and Recuperation Leave Pro- amendment by Senator BUNNING which point, when one sees their competitors, gram before the program was expanded to in- would accelerate manufacturing sector neighbors, and businesses are clude domestic travel. tax cuts. Senators will be notified outsourcing and cutting their budgets There being no objection, the Senate when the first vote is scheduled. by huge amounts because they can hire proceeded to consider the bill. f someone for $7 a day or $2 an hour, as Mr. MCCONNELL. Mr. President, I opposed to paying them $40,000, $50,000 ask unanimous consent that the bill be ORDER FOR ADJOURNMENT or $60,000 a year, then the lure is re- read the third time and passed; that Mr. MCCONNELL. Mr. President, if markable. the motion to reconsider be laid upon there is no further business to come be- As we know, in fact, the Indian gov- the table; and that any statements re- fore the Senate, I ask unanimous con- ernment is providing tremendous in- lating to the bill be printed in the sent that the Senate stand in adjourn- centives to lure call centers, providing RECORD. ment under the previous order fol- corporations with tax exemptions and The PRESIDING OFFICER. Without lowing the remarks of Senator DODD building western-style technology objection, it is so ordered. for up to 20 minutes and Senator HATCH parks fitted with telecom infrastruc- The bill (S. 2057) was read the third for up to 15 minutes. tures. time and passed, as follows: The PRESIDING OFFICER. Without What are we doing? Are we doing S. 2057 objection, it is so ordered. anything to try and compete with that Be it enacted by the Senate and House of Rep- Mr. MCCONNELL. I yield the floor. or are we just saying that is the way resentatives of the United States of America in The PRESIDING OFFICER. The Sen- the world is and we better get used to Congress assembled, ator from Connecticut. it because that is what is going to hap- SECTION 1. REIMBURSEMENT OF CERTAIN Mr. DODD. I express my gratitude to pen for the foreseeable future, and TRANSPORTATION COSTS INCURRED my friend from Kentucky for his elo- maybe something will come along that BY MEMBERS OF THE UNITED STATES ARMED FORCES ON REST quent description of my less than elo- will all of a sudden fill this vacuum, AND RECUPERATION LEAVE. quent remarks. I appreciate that. that will restore these manufacturing The Secretary of Defense shall reimburse a The PRESIDING OFFICER. The Sen- jobs or information technology and the member of the United States Armed Forces ator from Connecticut. like? for transportation expenses incurred by such f I can only hope that would be the member for one round trip by such member case because in the absence of doing between two locations within the United OUTSOURCING OF AMERICAN JOBS anything else, we are going to find a States in connection with leave taken under the Central Command Rest and Recuperation Mr. DODD. Mr. President, I may not continuing decline in this area. Leave Program during the period beginning use all of my 20 minutes. I have been I worry about this from the stand- on September 25, 2003, and ending on Decem- talking at some length this afternoon, point of national security. In my State, ber 18, 2003. although it is my custom to do so. I I have over 5,000 small manufacturers. f might point out, for those who are in- I have major corporations as well. I terested, this is not a filibuster. I am probably have more large Fortune 500 ORDERS FOR THURSDAY, MARCH prepared to vote on this amendment corporations in my State than any 4, 2004 right now. I was prepared to vote on it other State in the country on a per- Mr. MCCONNELL. Mr. President, I an hour and a half ago, but there are capita basis, given the size of my ask unanimous consent that when the those who want to analyze what I am State. My State is the home of major Senate completes its business today, it proposing. corporations. Many of them are major adjourn until 9:30 a.m. Thursday, I suppose it is more than analysis defense contractors, and those 5,000 March 4. I further ask unanimous con- that is occurring. They are trying to small manufacturers in many cases are

VerDate jul 14 2003 02:43 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00153 Fmt 4624 Sfmt 0634 E:\CR\FM\G03MR6.110 S03PT1 S2172 CONGRESSIONAL RECORD — SENATE March 3, 2004 suppliers of very sophisticated tech- about it every day. Did you offer any tive and how appealing they may be to nologies for my defense contractors ideas and suggestions on how we might someone who has to explain to a group and others who produce sophisticated compete in a global marketplace—be- of shareholders why it is that they products. cause we should, we must—while si- have or have not exceeded last quar- I do not need to tell the Presiding Of- multaneously not losing the human inter’s profit margins—bottom line. ficer, we have lost 35,000 jobs now in 36 vestments, the human capital, that are Certainly outsourcing will help do months in this area. When those are critical for any successful society to that on any given day. If you can hire lost, they are not reconstituted. Once succeed? What did you do? someone for a couple of bucks and lay they are gone offshore, the idea that I am afraid if we go back and she off that person in Connecticut, Ten- you are going to rebuild that, my expe- looks at what we are doing at the out- nessee, California, Ohio, Pennsylvania, rience is—and I am prepared to listen set of this century, then she would be you are going to save money, I promise to others who want to contradict me— startled to learn we are cutting back in you. Quarterly reports are going to I think it is unlikely. the areas that might provide some edu- look great. So the question I have to ask, as we cational opportunity for people in vo- But my question is, What does Amer- stand here and receive this news al- cational areas, that we had nothing ica look like? What does our Nation most on a daily basis, is there not some really to say to a hemorrhaging of jobs look like in the coming generation? In danger in losing this manufacturing ca- going out of the country, and that we fact, if we lose these jobs, which are pability for a time in the 21st century were basically silent except to bemoan critical to our own well-being and suc- when we may find ourselves confronted the fact that 2.8 million manufacturing cess, if we lose manufacturing that we with the fact these jobs we gave away jobs in 36 months disappeared in the cannot replace, if we squander the abil- are now being held by people in coun- country. And there is every indication ity to produce vital components and tries that do not agree with us on cer- those numbers are going to increase, parts that are essential to contribute tain matters, and all of a sudden they and the impact on other sectors of our to our national defense structure, what do not want to supply us with certain economy will be very profoundly af- does my country look like in 5 years, 10 component parts that may be nec- fected. years, 20 years down the line? essary to build jet engines, submarines, I mentioned already we are now That is the question I am asking. Black Hawk helicopters or something being told the outsourcing of American That is why I am offering this amendment, to see if we cannot at least step else my State or the State of Ten- jobs will probably exceed 3 million, up and say when it comes to the tax- nessee or some other part of the coun- close to 4 million over the next decade, payer’s dime, that we should not be try produces? unabated. That is a loss of $136 billion taking your tax dollar and subsidizing We are watching this tremendous to $140 billion in salaries and wages in this outsourcing of jobs. If a private outflow occurring. The Presiding Offi- the United States, not to mention the company, with its own money, wants cer was the former Secretary of Edu- human and societal impact. to do it, that is their business. I regret cation, as I pointed out earlier, and So I do not apologize to my col- it, but if they want to do it they have again I understand the budget con- leagues for feeling as strongly as I do a right to do it. I think we ought to straints. This is a very difficult time. about this. I am a free trader. I voted have tax incentives to discourage them Putting aside whether one agrees or for NAFTA. I thought it was the right one way or the other, but at the end of disagrees on how we got to this situa- thing to do. I voted to give fast track the day if they want to do it, they tion, we have a terrible fiscal situation authority. I voted for the Jordanian ought to be given the right to do it. I on our hands and yet even in the area agreements and others. I have opposed can’t stop that. That is their dime. of job training and assistance we are some as well. I have not been exclu- But on the taxpayer’s dime, I think wiping out the manufacturing exten- sively for them, but I believe in free we ought to say something else. What sion partnerships; we are cutting the and fair trade. I also believe a self-re- my amendment does is say you cannot SBA by millions of dollars; we are cut- specting nation cannot allow its use that dime. You cannot use that ting vocational education by $316 mil- human capital intelligence to be lost dime to lay off somebody and hire lion; we are cutting the Workforce In- without standing up and trying to do someone 14 time zones away to do a job vestment Act by $448 million. something about it. that a hard-working American ought We are not only not trying to com- The subject matter of this amend- to be able to hold and do in order to pete with what India is doing on its ment very simply says at this juncture, provide for their family. creation of call centers, by offering tax look, let’s stop. At least when it comes I don’t think that is outrageous. I incentives for businesses to stay here, to the expenditure of Federal taxpayer don’t think that is isolationist or pro- we are even cutting back in the area money, those dollars ought not to be tectionist. I think that is standing up that might offer some hope to someone used to pay for outsourcing jobs until for the people of this country who ex- in this area who is losing their job be- we figure out a better way to answer pect nothing less from those of us who cause it has been outsourced some this problem. I do not think that is represent them in this Chamber. That place. complicated. is why I am offering this amendment. On every front, we seem to have Now, I gather K Street in town is My hope is tomorrow morning we can nothing to say to this issue right now, going ballistic at this very hour be- get to it and vote on it and dispose of except this is the way life is; get over cause obviously major corporations, 400 it one way or the other. If you want to it, America. You just have to live with out of 1,000 top ones in the country, are vote against it, vote against it. But I this. This is the way the world is going doing it. Forty of fifty States are doing ask you to join with my colleague from to be. it right now. So they want to continue Minnesota, Senator COLEMAN, and oth- I do not think it has to be that way. doing it because it is a great saver of ers who have been a part of this effort, I think we can do better. I think that money if you are focused on quarterly to say this is our way of saying to peo- is what the American people ask us reports. ple out there we hear you. when we come here—try to do better. That is their job on K Street and that We are not suggesting this amend- I have to look in the eyes of my own is their job in the corporate board ment is perfect. I would be the last per- child, an infant, and I wonder what rooms, to worry quarter by quarter by son to say that. I am sure it is not per- kind of a century she is going to grow quarter. I don’t think that is right, but fect. But at least it says to voters and up in. She will look back someday and that is what they do. Thank the Lord to constituents out there who are wor- ask herself, or hopefully me, what did there are many corporations who do rying every day whether they are going you do back at the turn of this century think longer than that. to become one of those statistics, that when you knew this was going on, Our job is not to think in quarters, we are going to try to do something when you saw thousands of jobs leaving not to be unmindful that corporations about this, so you need to know your our country, when you saw manufac- should and must. But our obligation is Government, your Congress is doing turing declining, what did you do? This to have a broader, deeper vision; to what it can to stop this. was not some sneak attack. You were think about longer term effects of deci- Our obligation is not exclusively to all aware of it. Your local papers wrote sions we make, no matter how attrac- them. We have obligations to others as

VerDate jul 14 2003 02:43 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00154 Fmt 4624 Sfmt 0634 E:\CR\FM\G03MR6.114 S03PT1 March 3, 2004 CONGRESSIONAL RECORD — SENATE S2173 well, including those who serve and help us to increase the number of jobs lieve in the free market system. We be- work in these corporations. I am not in this country by huge dimensions. It lieve in competition. We believe in against them at all, but they are mak- also is a smart thing to do. It also high productivity. ing their decisions in what they deter- saves us $4 billion in assessed costs My feeling is that this country can- mine is in their best interests and the with the E.U. in international trade, if not be beat in productivity. If we really best interests of their shareholders. I we get this done. That is very impor- work hard and we continue to do the respect that. tant. best we can, we are always going to be But I have a higher obligation. I have Some of the comments I have heard able to compete. an obligation, not only to that share- today, not those of the distinguished But where we cannot compete be- holder but to the people who work for Senator from Connecticut—in fact, I cause of low wages and government them as well. I respect those who only exclude his comments—some of the subsidization and violations of inter- have to worry about the narrow con- comments I have heard today would national trade laws, then, my gosh, stituency, but I wasn’t elected by the have you believe the only way you are let’s not quit. Let’s go and find new people of Connecticut to come here and going to get jobs is more of the same: jobs. merely worry about that narrow con- More Government, more Government This administration inherited some stituency. I have another obligation. I support, more and more controls, more terrifically bad times. The whole last serve in the Senate, not just a State and more approaches towards union- year of the Clinton administration was legislature. When I am here and I vote izing America. headed into recession, and everybody and I cast ballots, they don’t just af- I am one of the few Members of this knows it. Anybody who says otherwise fect the people who live in my State, body who ever held a union journey- is not telling the truth. Everybody that I represent; they are part of the man’s card. I worked 10 years in the knows that. So this President inherited 280 or 290 million people across this building construction trade unions and that. country. earned my journeyman lather’s card. I don’t particularly blame the Clin- I look at the 2.8 million who have The laths trade was one of the most in- ton administration. We do have cycles. lost their jobs in manufacturing, the teresting trades. In the early days it But I have to say I think they could close to 3 million who will lose their was wood lathing, little partitions of have done some things to have pre- jobs to outsourcing in the coming days, woods that you put on partitions and vented it. But that is probably true of maybe as many as 14 million, we are ceilings that you would plaster over. In everything. He then inherited this re- being told, over the next couple of my day it was metal lath, which was a cession, and on top of that comes Sep- years. I didn’t dwell on this particular much more high-tech approach towards tember 11, which created magnificent chart at this moment, but 14 million putting up partitions and ceilings and problems for all of us. It was very cost- additional jobs are in danger of being elliptical arches and Gothic arches, and ly and expensive and put pressure on shipped overseas. Those people want to it was a very skilled trade and I was the budget. It cost us in so many ways, know whether or not we have anything fortunate that I was able to do that even from a productivity and jobs to say to them. and I am proud I was able to do that. standpoint. So I urge my colleagues to support Today, the lathing trade is no longer But economic growth for the third this amendment. I don’t know of an- in existence because we priced our- quarter of last year was up over 8 per- other issue that is more important to selves out of the marketplace. Today, cent. In the fourth quarter, it was 4.1 the American public at this hour than all of the lathers who used to work in percent. I know years here when we this one. We have seen it all across the this very skilled trade had to transi- would have killed for 4.1 percent. country in the last number of days. Na- tion into the carpenters’ union because Frankly, I believe the first quarter of tional news programs talk about it their trade no longer could pay for this year is going to be all right too, every single night and report nightly itself. even though normally it is a slow quar- about corporations that are As a matter of fact, you don’t see ter. outsourcing more and more jobs. many buildings plastered today. The I think all we have to do is do our The American people want to know reason you don’t, it is just too expen- best to work together as Democrats what we have to say to them. So I re- sive. So drywall has become the norm. and Republicans without all the gret we have not been able to vote on I am not criticizing anybody. What I screaming and shouting like one side this earlier. I didn’t intend to take this am saying is, we can price ourselves has all the answers and the other side time. I was prepared to vote 2 hours out of the marketplace. doesn’t, which I have heard a lot of ago, 3 hours ago, but there are those I can remember time after time, my today, and put aside the politics and do who do not want to vote on this amend- fellow union lathers would say: Hey, what is best for our country. Unfortu- ment right now. My hope is we will be kid, slow down. We are not going to nately, some just can’t seem to do able to do so first thing in the morning have any work if you keep working so that. and say with a very loud, clear, and my fast. I believe the President is doing a hope is a unanimous voice that we My father was one of the best lathers great job. I believe his various Cabinet- stand with those who worry about in the world and taught me the trade. level officials are doing great work. In whether America is squandering its He said: Look, you give an honest fact, I have never seen better in my 28 wealth and its treasury, not just the day’s work for an honest day’s dollar years in the Senate. I believe it is time treasury of dollars and cents but a far and you work as hard as you can. to be fair, decent, and honorable. more important treasury, the human It was anathema to me to slow down f capital that is the American work- so we could have more work. That is THE FAIRNESS IN ASBESTOS force. what happened. They slowed down and Mr. President, I yield the floor. the work dissipated and, of course, the INJURY RESOLUTION ACT The PRESIDING OFFICER. The Sen- trade no longer exists. Mr. HATCH. Mr. President, I rise ator from Utah. I think we are worse off because we today to support the comments from Mr. HATCH. Mr. President, I respect don’t have lath and plaster in a lot of the distinguished majority leader of the distinguished Senator from Con- our buildings today. I am not blaming last Friday with respect to the asbes- necticut, as he knows. I will certainly my fellow union members, but some- tos legislation. This is an absolutely look at this amendment. But through- times we have to acknowledge that vital issue for this country’s civil jus- out this day I have seen others on the there are gives and takes in the busi- tice system and, most importantly, to other side continually talk about jobs ness world. The fact that some busi- our economy. and loss of jobs like we are not doing nesses do their business offshore is not If you want to have jobs, then let us anything about it. Nothing could be necessarily bad because in many cases get this asbestos reform bill through farther from the truth. This very bill, we get even more jobs onshore. Some- and we will get hundreds of thousands, FSC/ETI, is a very important bill. We times we don’t. Sometimes it is bad. if not millions, of jobs back, and per- call it the Jumpstart Our Business But by and large, business in this coun- haps the 70 large companies which have Strength on Jobs bill because it will try has always worked because we be- gone into bankruptcy will be able to

VerDate jul 14 2003 02:43 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00155 Fmt 4624 Sfmt 0634 E:\CR\FM\G03MR6.117 S03PT1 S2174 CONGRESSIONAL RECORD — SENATE March 3, 2004 resurrect themselves and be able to injury lawyers who are thinking only CHAMBLISS, and CHUCK HAGEL. This bill employ more people. of themselves and the huge fees they creates a trust fund which provides ex- We now have the opportunity with S. make, with the approximately 50 to 60 pedited no-fault compensation to vic- 1125, the Fairness In Asbestos Injury percent of the moneys that go to attor- tims while reducing the wasteful trans- Resolution Act, to correct what has be- neys. They are embarrassed by it. They action costs. Attorney’s fees and trans- come a gross injustice against asbestos won’t say that because they don’t want actions costs have been as high as 60 victims and the defendants who are re- to cut up their fellow personal injury percent of the amounts recovered. lentlessly hauled into court despite lawyers. But that is what is going on After weeks of marking up the bill, having never manufactured or ever sold here. we passed this legislation favorably a shred of asbestos fiber. In up to 90 percent of the cases that from the committee with bipartisan It has been a long road for this legis- have been filed, the person has never support last July. No one can accuse us lation so far. But I concur with Sen- had a sick day in his life with regard to of being unwilling to compromise. ator FRIST, our distinguished majority asbestos. In most of those cases, they When I look at where our bill started— leader, that we are finally in a position have been sent to doctors who will find and it was a good start—and where it is where we can enact this legislation. injury no matter what. It borders on now, our willingness to compromise is We went through a grueling markup fraud and in some cases it is fraudu- abundantly clear. of this bill last year, and since then lent. It is wrecking the country. Sev- Let me show you this chart. In total, have engaged in focused discussions enty major companies are now in bank- we have made 53 changes to this bill to over remaining differences under the ruptcy, and there are over 8,400 or accommodate concerns raised by our stewardship of my friend from Pennsyl- more, going up to 15,000, that possibly friends on the other side, the Demo- vania, Senator SPECTER, and Judge will be thrown into bankruptcy that crats. Becker of the third circuit court of ap- never had anything to do with asbestos Let me review a brief history of these peals. The stakeholders and Members or made anybody ill from asbestos. changes. In May, we circulated a bipar- involved in these discussions all agree At the same time, scores of compa- tisan draft measure, and my staff met that this process has proved to be quite nies with almost no connection to the then with Democratic staff to listen to successful, not only in clarifying areas problem have had to file for bank- their concerns. As a result of these dis- of disagreement but in proposing work- ruptcy, as I have said, and hundreds of cussions, we incorporated many of able solutions to these areas. As a re- others live under the constant threat their requests even before introduc- sult, there now remains a mere handful of insolvency from this litigation. tion. of issues left to consider. But given the What this translates into is lost jobs, We then embarked on several weeks timeframe set forth by the leader last depleted pensions, and weaker finan- of markups that saw dozens of Demo- Friday, I believe more needs to be done cial markets. cratic-initiated amendments adopted to help bridge the gap on the remaining If my friends on the other side of the into this legislation. I didn’t agree issues. Therefore, I propose that we get aisle want to do something about jobs, with all of these amendments, but it the primary stakeholders and inter- let us get serious about asbestos re- can’t be said that there hasn’t been ested Members together for a 2-day- form. Let us get serious about doing strong participation with Democrats long negotiating session sometime in what is right for those who are truly ill on this bill. mid- to late-March with this type of and who won’t get very much at all. By the way, I met for a couple of focus on the last handful of these Those who were employed by 70 compa- hours with the head of the AFL–CIO to issues. I believe we can resolve the re- nies are getting 5 cents on the dollar. explain this bill to him. I know deep in maining differences in this bill. There We take care of them with this trust my soul that he knows I am doing ev- is nothing we can’t solve, if we will fund. erything in my power to do what is work together. This issue is too impor- We have heard the statistics but they right. I know he knows that we have tant, and we are too close not to give bear repeating. The RAND Institute for done what is right. I respect and appre- this one last effort through an ex- Civil Justice tells us, to date, 70 com- ciate the fact that he sat down with me tended 2-day-long meeting. I know panies have been forced into bank- and talked with me about it. Judge Becker and the stakeholders and ruptcy—at least 3 with operations in This chart behind me summarizes the key Republican Members have all my home State of Utah. some of the major changes we made at expressed their desire to participate in The number of claims continues to the behest of the Democrats. this 2-day meeting. I hope my Demo- rise as does the number of companies Raising the level of mandatory con- cratic colleagues who have been work- pulled into the web of this abusive liti- tributions to well over $100 billion; 111 ing on this issue will join us in the gation, often with little, if any, culpa- different changes to increase the value final push toward reaching consensus. bility. More than 600,000 people have of awards to victims; 22 changes to Let me give some background for filed claims, and more than 8,400 com- make it easier for asbestos victims to those who have not been as steeped in panies have been named as defendants be eligible for compensation; a his- this legislation over the past year or in asbestos litigation. toric, bipartisan agreement on eligi- so. For more than 20 years, compensa- This has become such a gravy train bility criteria where the unions and ev- tion to legitimate victims of asbestos for some abusive personal injury law- eryone came together; reimbursement exposure has been unacceptably dimin- yers that over 2,400 additional compa- for medical monitoring—now they will ished and delayed. It has become quite nies were named in the last year alone. pay for medical monitoring of people evident to the committee that tens of RAND, this great research institution, who are not sick and especially those thousands of true asbestos victims are also notes in its bipartisan research who are; five additional provisions to faced with agonizing pain and suffering that about ‘‘two-thirds of the claims guarantee payment of mandatory con- with uncertain prospects of a meaning- are now filed by the unimpaired, while tributions; relief for asbestos victims ful recovery in our existing tort sys- in the past they were filed only by the in Libby, MT, where asbestos was tem. These victims are left with little manifestly ill.’’ mined; a Federal ban on asbestos and to nothing because precious resources That is a low number. It is really up ‘‘bad actor’’ protections. are being diverted to unimpaired plain- to 90 percent. But let us take their Look at this chart. ‘‘To build bipar- tiffs and a handful of creative trial law- number. Two-thirds of them are filed tisan support, more than 53 changes to yers who are looking to make a quick by people who really are not impaired. S. 1125 have already been made at the buck. Former Attorney General Griffin urging of the Democrats. These oc- I am a member of the American Trial Bell, amongst many others, has de- curred prior to the bill’s introduction, Lawyers Association, having been a nounced this type of ‘‘jackpot justice.’’ during negotiations between introduc- trial lawyer in my former non-Senate To address this national problem, I tion and committee consideration, and life, since we Mormons believe in a introduced a bipartisan bill with my throughout the four committee mark- premortal existence. I have to say that friends, Senators BEN NELSON, MIKE ups devoted to the legislation.’’ my fellow ATLA members are embar- DEWINE, ZELL MILLER, GEORGE I ask unanimous consent all of these rassed by this small cadre of personal VOINOVICH, GEORGE ALLEN, SAXBY changes be printed in the RECORD.

VerDate jul 14 2003 02:43 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00156 Fmt 4624 Sfmt 0634 E:\CR\FM\G03MR6.119 S03PT1 March 3, 2004 CONGRESSIONAL RECORD — SENATE S2175 There being no objection, the mate- Raising the compensation value for eligi- Providing for inequity adjustments where rial was ordered to be printed in the ble asbestos claims (Level III) to $75,000; the amount of contribution is exceptionally RECORD, as follows: Adding bilateral pleural calcification to inequitable when compared with the defend- the definition of bilateral asbestos-related ant’s likely future liability and with the li- BUILDING A CONSENSUS ON ASBESTOS nonmalignant disease; ability of the other defendant participants in To build bipartisan support, more than 53 Removing the requirement of a grade B2 or the same tier; changes to S. 1125 have already been made at greater for pleural conditions, including Establishing that a successor in-interest of the urging of the Democrats. These occurred thickening and plagues, to show underlying any participant would be liable under the prior to the bill’s introduction, during nego- bilateral asbestos-related non-malignant dis- Act; tiations between introduction and Com- ease; Revising federal sentencing guidelines for mittee consideration, and throughout the Replacing the definition of ‘‘significant oc- environment crimes to prevent ‘‘bad actors’’ four Committee mark-ups devoted to the leg- cupational exposure’’ with a definition of from recklessly exposing individuals to as- islation. The changes include: ‘‘substantial occupational exposure,’’ includ- bestos health risks; Raising the Level of Mandatory Contribu- ing the clarification that ‘‘on a regular Requiring an annual report by the Admin- tions to well over $100 Billion; basis’’ means ‘‘on a frequent or recurring istrator as to the status of the Fund; 11 Different Changes to Increase the Value basis’’; Making the Freedom of Information Act applicable to the Asbestos Insurers Commis- of Awards to Victims; Providing an exception to the year and in- sion; and 22 Changes to Make It Easier for Asbestos dustry weighting of the occupational expo- Increasing the compensation levels avail- Victims to be Eligible for Compensation; sure requirements for claimants whose expo- able for eligible lung cancer claims with un- An Historic, Bipartisan Agreement on Eli- sures were above applicable OSHA standards; derlying asbestosis a maximum of $1,000,000 gibility Criteria; Establishing a scheduled value of com- (depending on smoking history). Reimbursement for Medical Monitoring; pensation for Level II claims (mixed disease 5 Additional Provisions to Guarantee Pay- with impairment) at $20,000; Mr. HATCH. That chart is amazing. I ment of Mandatory Contributions; Expanding the class of claimants eligible don’t agree with all those changes, but Relief for Asbestos Victims in Libby, Mon- for compensation under Level III to include we made them to accommodate our tana; anyone showing a 20% reduction in pul- friends on the other side. Just look at A Federal Ban on Asbestos and ‘‘Bad monary function, even if their overall pul- all these changes. No one can tell us we Actor’’ Protections; monary function is still within normal lim- are not doing everything we can to Raising the compensation value for eligi- its; make this bill a consensus bill and to ble mesothelioma claims to $1,000,000; Creating an additional category of non-ma- be fair to everybody. Limiting the offset of collateral sources to lignant disease to reflect an intermiate level We know there are a lot of people of impairment (Level IV); judgments and settlements, thus increasing who will be compensated under this bill the value of awards to claimants; Reducing the ILO requirement from 2/1 to who have never suffered a bit from as- Indexing the scheduled award values for fu- 1/1 for severe asbestosis; ture inflation; Creating standards for moderate and se- bestos, but we have given the benefit of Specifying that awards should be paid over vere asbestosis categories based on the AMA the doubt. Many of them are union 3 years, but in no event over more than 4 Guide to the Evaluation of Permanent Im- workers who have smoked all their years; pairment; lives and got cancer from smoking but Moving the Asbestos Court established Allowing alternative tests to show impair- have had something to do with asbes- under S. 1125 to the United States Court of ment based on DLCO and PO2 for Level V; tos at one time or another in their ca- Federal Claims; Increasing the compensation level for in- reer but probably have shown no fea- Changing the two-year statute of limita- termediate (Level IV) asbestosis claims to sible asbestos. tions to four years; $300,000; Literally thousands and thousands, Eliminating the rule of construction on Providing eligibility for compensation for hundreds of thousands, will be com- the statute of limitations in favor of the colorectal cancer claims; pensated. There comes a point where Fund; Providing three scheduled value ranges for Striking language requiring a claimant to smokers, former smokers and non-smokers you have to say, Let’s do what is right submit evidence of product identification as for each of the lung cancer categories; here. Let’s not just keep loading this a factor in proving asbestos exposure; Creating a separate category of eligible bill up so you can beat your breast and Reducing the latency period to 10 years for lung cancer claims for current smokers with claim you get more money, more blood all disease categories; no evidence of underlying asbestos-related out of these companies. Eliminating the requirement that the diag- non-malignant disease; Moreover, even though our original nosing physician be the ‘‘treating’’ physi- Establishing a compensation range for eli- claim values would have on average cian; gible lung cancer claims without underlying provided more money to legitimate Increasing the compensation level for the asbestos-related non-malignant disease to a claimants, we increased the values most severe asbestosis claims to $750,000; maximum of $600,000 (depending on smoking history); even more and we removed most collat- Providing alternatives to the physical ex- eral source offsets to ensure more of amination diagnostic requirement for claim- Creating an exceptional medical claims ants who are decreased; panel to address those claims that might not the award goes directly to the claim- Eliminating language requiring that the meet the medical criteria in the bill (e.g. no ant. That means even though they re- diagnosing physician independently verify pulmonary function test); ceived moneys, we removed those as the claimant’s exposure; Providing that CT scans may be submitted offsets. Dropping language that would have stipu- (with an x-ray) to review exceptional med- These changes listed on the chart be- lated that an attorney retention agreement ical claims; hind me do not even include other not be required as a prerequisite to a medical Strengthening the enforcement authority changes we have offered since the bill examination or medical screening for pur- of the Administrator with respect to pay- was reported out of committee. poses of obtaining a medical diagnosis or ment of mandatory contributions; Through the leadership of the majority other medical information; Amending Title 18 of the United States leader, we got contributors to add an Raising the compensation level available Code to prohibit fraud on the Asbestos Insur- for eligible lung cancer claims with under- ers Commission and Office of Asbestos Injury additional $6 billion in overall funding lying pleural disease (Level VIII) to a max- Claims Resolution; along with significant increases in imum of $1,000,000 (depending on smoking Limiting the time period in which an in- claims values in many categories. We history); equity adjustment will be in effect; started at $94 billion in mandatory Expending eligibility to include U.S. citi- Providing that the adjustments may be refunding because this amount would zens exposed while serving on U.S. flagships instated in the event there is a material give more money to claimants on aver- and U.S. citizens exposed while employed change in the defendant participant’s condi- age than they received in the current overseas by a U.S. company; tions; tort system. Nonetheless, through the Allowing take-home exposures to meet the Doubling the amount of the hardship and markup in the Frist financing agree- exposure requirements under the Act; inequity adjustments available under the ment, we increased the fund to have Eliminating a requirement of at least 6 Act; the capacity to pay out $114 billion to months of occupational exposure to asbestos Providing for inequity adjustments when prior to December 31, 1982; the defendant’s prior asbestos expenditures claimants. It is not just money, either. Creating an entirely new eligibility cat- primarily consist of defense costs where set- The Frist financing deal adds more egory to compensate claimants who fail the tlements were entered into or where no ad- flexible borrowing authority as yet an- test for restrictive disease; verse judgments were found; other safeguard for solvency. Senator

VerDate jul 14 2003 04:14 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00157 Fmt 4624 Sfmt 0634 E:\CR\FM\A03MR6.056 S03PT1 S2176 CONGRESSIONAL RECORD — SENATE March 3, 2004 FRIST has my cooperation and support we could not do it—and they said we floor to challenge all of our colleagues in doing this. have to have more and more and more. to work together in good faith, put our Our willingness to resolve the Demo- We are giving them more, even. differences aside and let’s get this bill cratic concerns speaks for itself by vir- I also appreciate the willingness of done in the best interests of our coun- tue of where this bill stands today. I Senator SPECTER and Judge Becker to try and the best interests of jobs. If again thank Senators FRIST and SPEC- help finally resolve these issues in a 2- that is not done, I would not listen to TER for their willingness to help re- day session. My friends, Senators one ‘‘mouthing’’ word from people on solve some of the difficult issues on LEAHY, DODD, and DASCHLE, have been jobs because they are playing politics this legislation and, of course, the co- graciously willing to sit down with us rather than doing the art of the doable, sponsors as well. at a staff level to narrow the dif- doing what needs to be done, what Let me talk about the final issues. ferences and I am confident they will must be done in the interests of the Even though we made all of these be willing to join in this 2-day meeting sick people, the truly sick people and, changes that show up here, I under- as well. We are willing to accommodate I might add, many others who did not stand some want to make further schedules to get full participation in get their sickness from asbestos, but changes, including streamlining the this meeting within a reasonable fash- we give them the benefit of the doubt. claims process even more. I have said I ion. This bill really will work even am willing to look at such proposals, We simply cannot delay any longer. though I have to admit it is very tough but the time has come and the time is We need to ensure the truly sick get on the companies that have to come up past to wrap up this process. It passed paid and paid in a timely manner. We with this $114 billion. out of the committee last summer and need to provide stability to our econ- I yield the floor. we need to stop talking and do some- omy by stemming the rampant litiga- thing. With all of this whining about tion that resulted in a tidal wave of f jobs that all of us want to get in this bankruptcies and stop endangering jobs country, this bill would do more to cre- and pensions through the current bro- ADJOURNMENT UNTIL 9:30 A.M. ate jobs and solidify our economy than ken system. This crisis reaches far and TOMORROW any other bill we can pass this year. wide and it hurts everyone. The PRESIDING OFFICER. Under This bill makes sense except for how What is happening with these bad the previous order, the Senate stands costly it is, but even then we are will- acting personal injury lawyers who adjourned until 9:30 a.m. tomorrow. ing to do that. This is why we need to have been handling some of these continue working for the next several cases, they forum-shop the cases into Thereupon, the Senate, at 6:36 p.m., weeks on the issues and sit down in a 2- jurisdictions where juries go wild and adjourned until Thursday, March 4, day meeting sometime in the last half judges support them and judges are in 2004, at 9:30 a.m. of March to see if we can finally get the pocket of the plaintiffs’ lawyers. In f agreement on all of the issues. one case, if I recall it correctly, five I thank Senator SPECTER and Judge people, not one of whom experienced a NOMINATIONS Becker for their valuable assistance. I sick day up to that time, got $125 mil- was not really happy because we had lion, while thousands and thousands of Executive nomination received by gone through so much and I had com- very sick people get nothing. That is the Senate March 3, 2004: mitments from so many people if we wrong. ENVIRONMENTAL PROTECTION AGENCY got to $108 billion, this bill would go For anybody to keep supporting that BENJAMIN GRUMBLES, OF VIRGINIA, TO BE AN ASSIST- and they would support it. I got it to ANT ADMINISTRATOR OF THE ENVIRONMENTAL PROTEC- process the way some have done is TION AGENCY, VICE GEORGE TRACY MEHAN, III, RE- $108 billion—and I think they thought wrong. That is why I am here on the SIGNED.

VerDate jul 14 2003 02:43 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00158 Fmt 4624 Sfmt 9801 E:\CR\FM\G03MR6.123 S03PT1 March 3, 2004 CONGRESSIONAL RECORD — Extensions of Remarks E283 EXTENSIONS OF REMARKS

ANNOUNCEMENT OF THE 2004 CON- Participants are selected by a committee Body President at Greenville-Weston High GRESS–BUNDESTAG/BUNDESRAT composed of personnel from the Bureau of School in Greenville, MS, at a No Child Left EXCHANGE Educational and Cultural Affairs of the Depart- Behind Forum. ment of State and past participants of the ex- The No Child Left Behind Act is a land- HON. J. DENNIS HASTERT change. mark in education reform, ‘‘designed’’ to improve student achievement and change the OF ILLINOIS Senators and Representatives who would culture of America’s schools. The name IN THE HOUSE OF REPRESENTATIVES like a member of their staff to apply for participation in this year’s program should direct alone has we uninformed students thinking Wednesday, March 3, 2004 that test scores would fly up and there would them to submit a resume and cover letter in really be ‘‘no child left behind’’. When this Mr. HASTERT. Mr. Speaker, since 1983, which they state their qualifications, the con- legislation first appeared, I was just an in- the U.S. Congress and the German Bundes- tributions they can make to a successful pro- coming sophomore. Our school individually tag and Bundesrat have conducted an annual gram and some assurances of their ability to had a lot of concerns. At the same time exchange program for staff members from participate during the time stated. NCLB was introduced, our students were try- both countries. The program gives profes- Applications may be sent to the Office of ing to adopt an unneeded merger. It was like sional staff the opportunity to observe and Interparliamentary Affairs, HB–28, the Capitol, a ‘‘double improvement’’ for us. Our school learn about each other’s political institutions by 5 p.m. on Wednesday, March 31. administration had us under the impression that we would no longer be ‘‘trapped in the and interact on issues of mutual interest. f dead end of low performing schools’’. In addi- A staff delegation from the U.S. Congress TRIBUTE TO THE SLOVENE tion to strong accountability, NCLB puts a will be selected to visit Germany from May special emphasis on implementing edu- 16–29 of this year. During this two-week ex- NATIONAL BENEFIT SOCIETY cational programs. The whole idea was so change, the delegation will attend meetings parents would know their children’s with Bundestag/Bundesrat Members, Bundes- HON. MELISSA A. HART strengths and weaknesses, parents would know how well schools were performing, and tag and Bundesrat party staff members, and OF PENNSYLVANIA representatives of numerous political, busi- parents would know the schools have quality IN THE HOUSE OF REPRESENTATIVES teacher training and resources. This is a ness, academic, and media agencies. Partici- Wednesday, March 3, 2004 good plan. I as a student leader just don’t pants also will be hosted by a Bundestag feel it was carried out as it should have been. Member during a district visit. Ms. HART. Mr. Speaker, I would like to take Everything that seems good is not good for A comparable delegation of German staff this opportunity to congratulate the Slovene you. We must be able to admit when we’ve members will visit the United States for two National Benefit Society (SNPJ) in honor of made a mistake and move on. ‘‘When dreams weeks in July. They will attend similar meet- their 100th anniversary celebration on April 6, turn into dust, you should vacuum.’’ Like ings here in Washington and visit the districts 2004. As a U.S. Representative of Western Thomas Jefferson, ‘‘I too like the dreams of of Members of Congress. The U.S. delegation Pennsylvania, I am proud of its rich Slovenian the future better than the history of the is expected to facilitate these meetings. heritage and SNPJ’s efforts to preserve it. past.’’ The Congress-Bundestag/Bundesrat Ex- The Slovene National Benefit Society was I admire Joyia for her attentiveness and the change is highly regarded in Germany and the founded on April 6, 1904 to provide affordable detail in which she expresses her analysis of United States, and is one of several exchange life protection to immigrant Slovenian families. federal legislation. Her comments truly speak programs sponsored by public and private in- Today the Slovene National Benefit Society bounds. Her outstanding scholarship is a posi- stitutions in the United States and Germany to still provides affordable life insurance to Slove- tive reflection on her personal dedication, fam- foster better understanding of the politics and nian immigrants; however, it has grown to in- ily, and school district. May Joyia Smith con- policies of both countries. This exchange is clude members from all ethnic backgrounds tinue to excel in her endeavors. funded by the U.S. Department of State’s Bu- and has developed into a diverse fraternal so- f reau of Educational and Cultural Affairs. ciety which today can boast $100 million in as- The U.S. delegation should consist of expe- sets. SNPJ also continues to offer a full pack- RECOGNIZING AND HONORING THE rienced and accomplished Hill staff who can age of social, athletic and cultural opportuni- WORK OF THE LEAGUE OF contribute to the success of the exchange on ties, along with college scholarships and com- UNITED LATIN AMERICAN CITI- both sides of the Atlantic. The Bundestag re- munity service projects. SPNJ’s social and fra- ZENS ON THEIR 75TH ANNIVER- ciprocates by sending senior staff profes- ternal events provide a way for people from all SARY sionals to the United States. backgrounds to preserve a culture of a home- Applicants should have a demonstrable inland while building new long lasting friend- HON. LORETTA SANCHEZ terest in events in Europe. Applicants need ships in America. OF CALIFORNIA not be working in the field of foreign affairs, al- I ask my colleagues to join with me in com- IN THE HOUSE OF REPRESENTATIVES though such a background can be helpful. The memorating this fine organization and the composite U.S. delegation should exhibit a members that maintain its excellence. It is my Wednesday, March 3, 2004 range of expertise in issues of mutual concern pleasure to recognize that efforts of the Ms. LORETTA SANCHEZ of California. Mr. to the United States and Germany such as, Slovene National Benefit Society to preserve Speaker, I am very pleased to join my col- but not limited to, trade, security, the environ- the rich Slovenian heritage and foster new leagues in recognizing and honoring the work ment, economic development, health care, friendships in America. of the League of United Latin American Citi- and other social policy issues. This year’s del- f zens, LULAC, on their 75th anniversary. egation should be familiar with transatlantic re- Serving as the nation’s oldest and largest lations within the context of recent world LEAVE NO MISSISSIPPI CHILD Hispanic organization, LULAC has improved events. BEHIND the lives of millions of Latinos across our na- In addition, U.S. participants are expected to tion, by never wavering from its commitment help plan and implement the program for the HON. BENNIE G. THOMPSON to advance ‘‘the economic condition, edu- Bundestag/Bundesrat staff members when OF MISSISSIPPI cational attainment, political influence, health they visit the United States. Participants are IN THE HOUSE OF REPRESENTATIVES and civil rights’’ of our country’s Hispanic pop- expected to assist in planning topical meetings ulation. in Washington, and are encouraged to host Wednesday, March 3, 2004 During LULAC’s early years, they faced one or two staffers in their Member’s district in Mr. THOMPSON of Mississippi. Mr. Speak- great opposition from those who did not wish July, or to arrange for such a visit to another er, I submit the following speech, dated Janu- to see the status and well-being of Hispanics Member’s district. ary 7, 2004, given by Joyia Smith, Student improve. Many members were harassed and

∑ This ‘‘bullet’’ symbol identifies statements or insertions which are not spoken by a Member of the Senate on the floor. Matter set in this typeface indicates words inserted or appended, rather than spoken, by a Member of the House on the floor.

VerDate jul 14 2003 04:33 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00001 Fmt 0626 Sfmt 9920 E:\CR\FM\A03MR8.001 E03PT1 E284 CONGRESSIONAL RECORD — Extensions of Remarks March 3, 2004 threatened. yet the dedication and determina- maximum sensory awareness for the user. through Alabama. The first group was met tion of LULAC’s founding members per- Further, it allows for night-vision devices to be by a mob of about 200 angry people in Annis- severed. integrated with respiratory protective equip- ton. The mob stoned the bus and slashed the tires. The bus managed to get away, but Today, this organization has become one of ment. According to Mine Safety Appliance Co., when it stopped about six miles out of town the greatest Hispanic civil rights organizations the helmet provides maximum balance, sta- to change the tires, it was firebombed. The in America, with an all-volunteer membership bility and comfort, while providing the proper other group did not fare any better. It was and a glowing list of accomplishments. size, fit and ventilation. greeted by a mob in Birmingham, and the Representing Latinos from all over the na- I ask my colleagues in the House of Rep- Riders were severely beaten. Birmingham’s tion including, Guam and Puerto Rico, LULAC resentatives to join me in commemorating this Public Safety Commissioner, Bull Conner, has taken the lead toward groundbreaking ac- valuable invention. Mine Safety Appliance Co. claimed he posted no officers at the bus complishments for the Hispanic community. and their helmet have not only improved the depot because of the holiday; however, it was later discovered that the FBI knew of the One of these is particularly dear to me. lives of soldiers on the battle front but also the planned attack and that the city police In 1945, LULAC took an active role in the lives of the men and women on the home stayed away on purpose. Alabama governor fight against segregation in my home County front in Western Pennsylvania. John Patterson offered no apologies, explain- of Orange in California. The Orange County f ing, ‘‘When you go somewhere looking for School System kept its schools segregated on trouble, you usually find it .... You just the grounds that Mexican children were ‘‘poor- HONORING FREEDOM RIDES can’t guarantee the safety of a fool and ly clothed and mentally inferior to white chil- that’s what these folks are, just fools.’’ HON. BENNIE G. THOMPSON Despite the violence, the Freedom Riders dren.’’ were determined to continue. Jim Peck, a OF MISSISSIPPI Eventually, LULAC was successful in their white who had fifty stitches from the beat- lawsuit to integrate this school system. IN THE HOUSE OF REPRESENTATIVES ings he received, insisted, ‘‘I think it is par- The following year, LULAC, along with Wednesday, March 3, 2004 ticularly important at this time when it has Gonzalo and Felicitas Mendez, filed the become national news that we continue and Mr. THOMPSON of Mississippi. Mr. Speak- show that nonviolence can prevail over vio- Mendez v. Westminister lawsuit that ended er, I would like to honor the Freedom Ride ef- 100 years of segregation in the California pub- lence.’’ The bus company, however, did not forts sought to accelerate changes in the want to risk losing another bus to a bomb- lic school system. South, which had been so inadequately ing, and its drivers, who were all white, did Thanks to this suit, I, the child of Mexican brought about in the courts. As a 13-year-old not want to risk their lives. After two days immigrants, was able to benefit from a great boy in Bolton, MS, I can recall the surmounted of unsuccessful negotiations, the Freedom public education in Orange County. tension in the State of Mississippi in 1961. In Riders, fearing for their safety, flew to New Many don’t realize that the Mendez case Orleans. It appeared that the Freedom Ride tribute to the freedom riders, I would like to was over. laid the foundation for the watershed case of submit the following excerpt from Juan Wil- Brown vs. Board of Education eight years At that point, however, a group of Nash- liams’ Eyes on the Prize. ville sit-in students decided to go to Bir- later. In 1947, the Congress of Racial Equality mingham and continue the Freedom Ride. Mr. Speaker, one cannot deny the great im- (CORE) planned a ‘‘Journey of Reconcili- Diane Nash, who helped organize the group, pact this lawsuit had on bringing greater edu- ation,’’ designed to test the Supreme Court’s later explained, ‘‘If the Freedom Riders had cational opportunities not just to Hispanic chil- 1946 decision in the Irene Morgan case, which been stopped as a result of violence, I strong- dren, but to all children across the nation. declared segregated seating of interstate ly felt that the future of the movement was Yet, this is just one example of the great passengers unconstitutional. An interracial going to be cut short. The impression would work LULAC has done since their founding in group of passengers met with heavy resist- have been that whenever a movement starts, 1929! ance in the upper South. Some members of all [you have to do] is attack it with massive violence and the blacks [will] stop.’’ The This organization has fought for voting rights the group served on a chain gang after their arrest in North Carolina. The Journey of Nashville students traveled to Birmingham and the inclusion of Hispanics in the political Reconciliation quickly broke down. Clearly and asked the bus company to let them use process. the South, even the more moderate upper their buses. Attorney general Kennedy also It has provided access to educational men- South, was not ready for integration. leaned on the bus company and the Bir- toring and tutoring, and has helped fund mil- Nearly a decade and a half later, John F. mingham police. He was determined to en- lions of dollars in scholarships. Kennedy was elected president, in large part force the Supreme Court’s decision that And LULAC continues to fight for the better- due to widespread support among blacks who called for integration of interstate travel, ment of Hispanic workers, especially in the believed that Kennedy was more sympa- and he worried that if the Nashville students thetic to the civil rights movement than his remained in Birmingham much longer, vio- area of Hispanic health issues. opponent, Richard Nixon. Once in office, lence might erupt. On May 17, the Bir- I am very honored to be standing here however, Kennedy proved less committed to mingham police arrested the Nashville Free- today to express my appreciation for all of the movement than he had appeared during dom Riders and placed them in protective LULAC’s accomplishments. the campaign. To test the president’s com- custody. At 2 AM on Friday, the police drove I wish them continued success in the future mitment to civil rights, CORE proposed a the Riders back to Tennessee, dumping them as they continue their work for improving the new Journey of Reconciliation, dubbed the by the side of the highway at the state line. lives of Americans in the Hispanic community. ‘‘Freedom Ride.’’ The strategy was the same: After they got a ride back to Nashville, 100 an interracial group would board buses des- miles away, they went right back to Bir- f tined for the South. The whites would sit in mingham. TRIBUTE TO MINE SAFETY the back and the blacks in the front. At rest Meanwhile, Governor Patterson agreed to APPLIANCES CO. stops, the whites would go into blacks-only meet with John Seigenthaler, a Justice De- areas and vice versa. ‘‘This was not civil dis- partment aide and a native of Tennessee. In obedience, really,’’ explained CORE director the meeting, Floyd Mann, head of the state HON. MELISSA A. HART James Farmer, ‘‘because we [were] merely highway patrol, agreed to protect the Free- OF PENNSYLVANIA doing what the Supreme Court said we had a dom Riders in between Birmingham. Attor- ney General Robert Kennedy then pressured IN THE HOUSE OF REPRESENTATIVES right to do.’’ But the Freedom Riders expected to meet resistance. ‘‘We felt we could the Greyhound bus company, which finally Wednesday, March 3, 2004 count on the racists of the South to create a agreed to carry the Riders. The Freedom crisis so that the federal government would Riders left Birmingham on Saturday, May Ms. HART. Mr. Speaker, I would like to take 20. State police promised ‘‘that a private this opportunity to congratulate Mine Safety be compelled to enforce the law,’’ said Farm- er. ‘‘When we began the ride I think all of us plane would fly over the bus, and there Appliances Co. and their Modular Integrated were prepared for as much violence as could would be a state patrol car every fifteen or Communications Helmet/Advanced Combat be thrown at us. We were prepared for the twenty miles along the highway between Helmet for being recognized by the U.S. possibility of death.’’ Birmingham and Montgomery—about ninety Army’s Materiel Command Unit for ‘‘one of the The Freedom Ride left Washington DC on miles,’’ recalled Freedom Rider John Lewis. Greatest Inventions of 2002.’’ May 4, 1961. It was scheduled to arrive in Police protection, however, disappeared as The Modular Integrated Communications New Orleans on May 17, the seventh anniver- the Freedom Riders entered the Montgomery city limits. The bus terminal was quiet. Helmet/Advanced Combat Helmet has been sary of the Brown decision. Unlike the original Journey of Reconciliation, the Freedom ‘‘And then, all of a sudden, just like magic, credited with saving the lives of many soldiers Ride met little resistance in the upper white people everywhere,’’ said Freedom in Afghanistan and Iraq. It provides the soldier South. Rider Frederick Leonard. The Riders consid- with protection from 9mm handgun rounds and On Mother’s Day, May 14, the Freedom ered leaving by the back of the bus in hopes fragmentation in any environment and allows Riders split up into two groups to travel that the mob would not be quite as vicious.

VerDate jul 14 2003 04:33 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00002 Fmt 0626 Sfmt 0634 E:\CR\FM\A03MR8.005 E03PT1 March 3, 2004 CONGRESSIONAL RECORD — Extensions of Remarks E285 But Jim Zwerg, a white rider, bravely time when ordinary people did extraordinary HONORING PGA PLAYER KIRK marched off the bus first. The other riders things, and the number of heroes was too TRIPLETT, ADOPTION ADVOCATE slipped off while the mob focused on pum- great to be counted! meling Zwerg. Floyd Mann tried to stop the mob, but it continued to beat the Riders and HON. DEBORAH PRYCE those who came to their aid, such as Justice f OF OHIO Department official John Seigenthaler, who IN THE HOUSE OF REPRESENTATIVES was beaten unconscious and left in the street TRIBUTE IN HONOR OF ORVIL for nearly a half an hour after he stopped to JONES’ RETIREMENT FROM Wednesday, March 3, 2004 help two Freedom Riders. Mann finally or- HIGHLAND PARK HIGH SCHOOL Ms. PRYCE of Ohio. Mr. Speaker, I rise dered in state troopers, but the damage was today to honor pro golfer Kirk Triplett for intro- already done. When news of the Montgomery ducing a winning cause to his professional golf attack reached Washington, Robert Kennedy game: helping find permanent homes for fos- was not happy. He decided to send federal HON. PETE SESSIONS ter children as he competes on the 2004 PGA marshals to the city. OF TEXAS Martin Luther King, Jr., flew to Mont- Tour. gomery and held a mass meeting, surrounded IN THE HOUSE OF REPRESENTATIVES Working with the Dave Thomas Foundation by federal marshals, in support of the Free- for Adoption, Triplett, at each tournament, will dom Riders. As night fell, a mob of several Wednesday, March 3, 2004 prominently display a photo of a local child on thousand whites surrounded the church. The his golf bag. The public stage provided by the blacks could not leave safely. At 3 AM, King Mr. SESSIONS. Mr. Speaker, I rise to make my tribute to Orvil Jones of Highland Park Tour will enable Triplett to portray each child’s called Robert Kennedy and Kennedy called story to the media, spectators, and viewers at Governor Patterson. Patterson declared mar- High School on the occasion of his retirement. home. tial law and sent in state police and the Na- I have the pleasure of representing Highland In addition to his support for the Dave tional Guard. The mob dispersed and the Park High School in Congress, and I am blacks left safely. Thomas Foundation for Adoption, Kirk and his After the violence at the church, Robert proud to have four alums from Highland Park wife, Cathi, have organized their own founda- Kennedy asked for a cooling-off period. The High School on my staff, and two of them that tion, known as Fore Adoption, which provides Freedom Riders, however, were intent on played football under Coach Jones. funding for financially challenged parents continuing. James Farmer explained, seeking to adopt. Kirk will also host the Dave ‘‘[W]e’d been cooling off for 350 years, and Coach Jones has been a fixture at Highland . . . if we cooled off any more, we’d be in a Park High School for 36 years, and he will be Thomas Desert Classic this month, an event deep freeze.’’ The Riders decided to continue leaving behind a great legacy of service to his which will help to raise money to support the on to Mississippi. They were given good pro- students and players. Jones started his career Dave Thomas Foundation for Adoption. tection as they entered the state, and no with the Highland Park Independent School Having adopted two children themselves, mob greeted them at the Jackson bus ter- District (HPISD) in 1968 as a mathematics Kirk and Cathi take a personal interest in help- minal. ‘‘As we walked through, the police ing to connect foster children with quality par- just said, ‘Keep moving’ and let us go teacher and coach at Highland Park Junior High. When ninth grade was moved into the ents across America. No experience is more through the white side,’’ recalled Frederick rewarding than providing a child with a set of Leonard. ‘‘We never got stopped. They just high school within the HPISD, Coach Jones loving arms and giving them the opportunity to said ‘Keep moving,’ and they passed us right joined the faculty of Highland Park High fulfill their dreams. I commend Kirk for his on through the white terminal into the School in 1970 and has been coaching and dedication and commitment to foster children paddy wagon and into jail.’’ Robert Kennedy teaching there ever since. and Mississippi Senator James O. Eastland in this country, and wish him the best of luck had reached a compromise. Kennedy prom- During his tenure with Highland Park High this year on the PGA Tour. ised not to use federal troops if there was no School, Coach Jones worked under seven f mob violence. Both men kept up their end of head coaches, eleven principals, and four the bargain. Unfortunately, the Freedom A TRIBUTE TO BISHOP VINTON school superintendents. His day in and day Riders were now at the mercy of the local RANDOLPH ANDERSON courts. On May 25, they were tried. As their out work ethic will be greatly missed by his fel- attorney defended them, the judge turned his low coaches and the players that he instructs. HON. WM. LACY CLAY back. Once the attorney finished, he turned Highland Park’s football team has histori- around and sentenced them to 60 days in the OF MISSOURI cally been one of the best programs in the state penitentiary. IN THE HOUSE OF REPRESENTATIVES More Freedom Riders arrived in Jackson State. Highland Park ranks fourth in the State to continue the Freedom Ride, and they were for all-time victories with 637 and is fifth in all- Wednesday, March 3, 2004 arrested too. Freedom Riders continued to time playoff victories with 62. Mr. CLAY. Mr. Speaker, I rise today to pay arrive in the South, and by the end of the Most recently, Coach Jones coached the tribute to the Honorable Bishop Vinton Ran- summer, more than 300 had been arrested. dolph Anderson. Bishop Anderson’s devotion The Freedom Riders never made it to New defensive secondary for Highland Park’s var- to the ministry is exhibited by his history of Orleans. Many spent their summer in jail. sity football team, and his players considered preaching and lecturing internationally, includ- Some were scarred for life from the beatings him to be the hardest working coach on the ing the Caribbean, Canada, Taiwan, India and they received. But their efforts were not in staff. Coach Jones taught his players that, vain. They forced the Kennedy administra- Australia. In addition to his commitment to tion to take a stand on civil rights, which whether or not they are blessed with the most ministering, Bishop Anderson has been an ef- was the intent of the Freedom Ride in the natural talent, they can succeed by working fective and vocal advocate of civil rights and first place. In addition, the Interstate Com- harder than their competition. Coach Jones ecumenical issues. merce Commission, at the request of Robert provided the perfect example of hard work by Bishop Anderson was born in 1947 in Som- Kennedy, outlawed segregation in interstate always being the first coach to have his play- erset, Bermuda. He graduated with honors bus travel in a ruling, more specific than the ers in the film room or on the field and by original Supreme Court mandate, that took from Wilberforce University and earned his effect in September, 1961. The Freedom Rid- working with his players on the field even after Master of Divinity Degree from Payne Theo- ers may not have finished their trip, but the other coaches and players had retired to logical Seminary. Later he earned his Master they made an important and lasting con- the locker room. of Arts Degree in philosophy from Kansas Uni- tribution to the civil rights movement. While Coach Jones has made a lasting im- versity. Bishop Anderson has also received The Freedom Rides mark one of the most pact on thousands of students and players, his honorary doctorate degrees from Paul Quinn despicable chapters in our history on the part family has been the center of his attention. I College, Wilberforce University, Payne Theo- of the Democratic administration at every level congratulate the Jones family, his loving wife logical Seminary, Temple Bible College, Morris Brown College, Interdenominational Theo- of government. They mark one of the most Elaine and their three children and two grand- courageous and uplifting periods of time, as logical Center and Eden Theological Semi- children, on this momentous occasion. evidenced by the courage and determination nary. Bishop Anderson’s pastoral experience of those who put their bodies and their lives I commend Coach Jones on his proud ca- encompasses Kansas and Missouri. on the line to end racial segregation and win reer of service that spans five decades within Bishop Anderson has demonstrated his un- social justice in this country. HPISD, and I wish him and his family all the wavering dedication to community develop- The Freedom Rides and sit-ins showed the best for a nice start to a well-deserved retirement by creating adult education programs, potential that human beings have. It was a ment. summer youth programs, promoting the first

VerDate jul 14 2003 04:33 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00003 Fmt 0626 Sfmt 9920 E:\CR\FM\A03MR8.009 E03PT1 E286 CONGRESSIONAL RECORD — Extensions of Remarks March 3, 2004 black owned supermarket in St. Louis, and de- in the Eighth Congressional District of Missouri ple of Cass County in the sheriff’s department, veloping 162 units of low income housing in for their outstanding efforts in gathering items supervising night operations. St. Louis County. Bishop Anderson’s extraor- to donate to U.S. troops serving overseas. From 1979 to 1988, Jimmy served as chief dinary leadership is exemplified through his As a school project in cooperation with the of police for the town of Belton, Missouri. Dur- participation as chairman of several boards of Leadington VFW Post No. 5741, students in ing his time there, he proved instrumental in directors, membership with many committees the West County and Central school districts getting a new state-of-the-art police facility and by the numerous honors that have been have collected personal hygiene products, built. bestowed upon him. writing supplies, games, food, and magazines Since 1992, the people of El Dorado Mr. Speaker, it is with great privilege that I for the men and women of National Guard Springs have had the good fortune to have recognize Bishop Anderson today before Con- Unit 1140 Company A, serving right now in Jimmy as their chief of police. His retirement gress. He is well-deserved of our respect, and Iraq. Many students have also added personal brings to a close the career of a graduate of I urge my colleagues to join me in honoring cards to their contributions. the FBI National Academy, the president of Bishop Vinton Randolph Anderson. The patriotism of these young students is the Southwest Missouri Major Case Squad, a f very moving. I am extremely proud of their member of the International Association of PERSONAL EXPLANATION selfless efforts. They are providing an example Chiefs of Police and a fine and dedicated to our communities and our Nation that we man. HON. LORETTA SANCHEZ must unite behind our men and women in uni- Mr. Speaker, I am sure the Members of the form to give our support to their mission and House will join me in honoring Chief Luster for OF CALIFORNIA to show our appreciation for their hard work. his years of service and in wishing him all the IN THE HOUSE OF REPRESENTATIVES It is especially heartening to find that spirit in best in the days ahead. Wednesday, March 3, 2004 our youngest fellow Americans. f Ms. LORETTA SANCHEZ of California. Mr. At an early age, these students have Speaker, on Tuesday, March 2, 2004, I was learned the value of standing with their fellow HONORING HATFIELD VOLUNTEER unavoidably detained due to a prior obligation. Americans for a noble and just cause. They FIRE COMPANY I request that the CONGRESSIONAL RECORD re- are taking the first steps in good citizenship flect that had I been present and voting, I and community service. Their goodwill is cir- HON. JOSEPH M. HOEFFEL would have voted as follows: cling the globe and brightening the day of our OF PENNSYLVANIA Rollcall No. 32, ‘‘yes’’ (on H.R. 3796). brave soldiers of the 1140th who have taken IN THE HOUSE OF REPRESENTATIVES Rollcall No. 33, ‘‘yes’’ (on H. Res. 526). on a great task in Iraq. Wednesday, March 3, 2004 f The 1140th is a combat engineering bat- HONORING THE 50TH ANNIVER- talion, but its mission is symbolic for our Na- Mr. HOEFFEL. Mr. Speaker, I rise today to SARY OF THE BELLE AIRE BAP- tion as well. These men and women from recognize and honor the Hatfield Volunteer TIST CHURCH southern Missouri are not going to Iraq with Fire Company and two of its outstanding vol- the sword in hand. They are going with the unteer fire fighters, who have each contributed HON. BART GORDON plowshare and the builder’s square. Others in excess of 50 years of dedicated service to before them have liberated the Iraqi people the community. OF TENNESSEE from Saddam Hussein, from terror, and from The Hatfield Volunteer Fire Company was IN THE HOUSE OF REPRESENTATIVES oppression. Their work in Iraq serves a new founded on March 10, 1910 after a fire de- Wednesday, March 3, 2004 mission: to liberate the same people from pov- stroyed a local business. The Hatfield Volun- Mr. GORDON. Mr. Speaker, I rise to recog- erty, from fear, and from hopelessness. teer Fire Company had modest beginnings nize the 50th year of existence of the Belle Back home, the children in the West County with 24 charter members and equipment that Aire Baptist Church of Murfreesboro, Ten- and Central school districts are learning the included a single horse drawn chemical truck. nessee. The congregation will celebrate the value of their sacrifices. They are an important Presently the company has 68 active mem- church’s 50th anniversary on Sunday, March link in the supply chain for the 1140th in Iraq. bers and a ladies auxiliary. The current fleet 7, 2004, with a special homecoming and The efforts of these students is connecting our consists of two fully equipped 1,500 gallon per luncheon. loved ones with their homes in Missouri, and minute engines, a Rescue/Cascade truck, and Belle Aire Baptist Church has grown from its that is a very important mission all of us a 2,000 GPM pump with a special service six original 27 members to more than 2,000 mem- should undertake. wheel pickup truck. The company serves the bers today. The church has served the com- I would also like to express my appreciation Hatfield Borough and Hatfield Township and munity and its congregation well for half a for the sponsors and coordinators from the provides mutual assistance across Mont- century, a time of tremendous growth and Veterans of Foreign Wars and the community gomery and Bucks Counties in Pennsylvania. prosperity in the Murfreesboro area. for their help in this project. Robert Nolen is a lifetime member of the The church has worked hard to foster rela- f Hatfield Volunteer Fire Company, who at age tionships with Middle Tennessee State Univer- 70 still drives trucks to active fire calls. Isaac sity students. Currently, Belle Aire Baptist TRIBUTE TO RETIRING CHIEF Feusner, another lifetime member now 93, has Church is helping to start a church near Rut- JIMMY LUSTER devoted countless hours to his duties as a fire gers University to continue its ministry to stu- fighter. The dedicated volunteers of the Hat- dents on that campus. Belle Aire Baptist HON. IKE SKELTON field Volunteer Fire Company have provided Church also supports missions around the OF MISSOURI critical services to citizens in need, oftentimes world. IN THE HOUSE OF REPRESENTATIVES endangering their own lives in the process. Murfreesboro is a better place because of I congratulate the Hatfield Volunteer Fire Wednesday, March 3, 2004 the work of Belle Aire Baptist Church and its Company, specifically Robert Nolen and Isaac congregation. I am sure the church will con- Mr. SKELTON. Mr. Speaker, it has come to Feusner, for embodying the spirit of vol- tinue to make a positive difference in the com- my attention that my good friend, Jimmy Lus- unteerism in America through proactive serv- munity for the next 50 years and congratulate ter, will retire as chief of police of El Dorado ice in the community. the congregation and Pastor Dean Sisk for all Springs, Missouri, after a lifetime of service to f the good they have done. the various communities in which he has lived. f In 1970, Jimmy accepted the position of HONORING CHARLES L. HORN HONORING THE STUDENTS OF ST. chief of police for Fairview Height, Illinois, FRANCOIS COUNTY, MISSOURI where he established a completely operational HON. MARK R. KENNEDY police department for the newly incorporated OF MINNESOTA city. By writing the rules, regulations and oper- IN THE HOUSE OF REPRESENTATIVES HON. JO ANN EMERSON ational procedures, he laid a solid foundation OF MISSOURI for the department. Wednesday, March 3, 2004 IN THE HOUSE OF REPRESENTATIVES In 1976, Chief Luster left Illinois for Rogers, Mr. KENNEDY of Minnesota. Mr. Speaker, Wednesday, March 3, 2004 Arkansas, taking the position of chief of police rise today to call attention to the accomplish- Mrs. EMERSON. Mr. Speaker, I rise today in that community. He remained until 1978, ments of a great man and a great Minnesotan, to honor the students of St. Francois County when he moved to Missouri to serve the peo- Charles L. Horn.

VerDate jul 14 2003 04:33 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00004 Fmt 0626 Sfmt 9920 E:\CR\FM\K03MR8.003 E03PT1 March 3, 2004 CONGRESSIONAL RECORD — Extensions of Remarks E287 As a businessman, he set standards. As a lenic Cypriot culture and provide opportunities sary. Since 1961, over 170,000 Peace Corps philanthropist, he transformed a community. for future generations of Cyprian women. The volunteers in 137 countries have taught Indeed, it is safe to say rarely has one man organization sponsors health lectures, health English as a second language in dimly lit made himself so singularly important and par- fairs, cultural events and breast and cervical classrooms, planted rice seedlings in water- ticularly indispensable as Charles L. Horn cancer screening for women with no health in- covered fields, shared accounting practices made himself to the city of Anoka, and the surance. Additionally, WIN has worked against with women cooperatives of local markets, state of Minnesota as a whole. the Turkish occupation of Cyprus since 1974. conducted workshops under palm trees on the In 1922, despite the fact that he ‘‘knew Thelma Pieri was born in Galata, Cyprus on benefits of long-term nursing, and successfully nothing of ammunition,’’ Charles Horn had September 28, 1936; she is the daughter of accomplished many other worthy development built up such an impressive record as the Emilio and Theophanis Michalides. Thelma projects. young President of the American Ball Com- was educated in Cyprus and graduated from Among this legion of volunteers are seven- pany that he was asked to come to Anoka to high school in 1954. As a young adult, she fell teen residents of my district in San Mateo run the defunct Federal Cartridge Corporation. in love with and married Andreas Pieri. Mr. County, California. They are Corrine Basanez, He accepted this opportunity with char- and Ms. Pieri have three children and nine Qamrul Bhuiyan, Martha Cheng, Sonya Chi, acteristic eagerness. grandchildren. James Choy, Emily Doan, Joann Gaasland, Through his innovative marketing and dis- In 1967, Andreas and Thelma immigrated to Michael Henley, Jonathan Kahn, Angela Lee, tribution techniques, ambitious agenda for the United States and made their home in Celina Lee, Andrew Lind, Eileen McCarthy, growth, and his revolutionary ‘‘dealership net- Queens, New York. For the Pieri family, the Michelle Pena, Doreen Peterson, Peter work,’’ Horn guided F.C. Corp from a startup United States has truly been a land of oppor- Rabover, and Shona Simpson. I applaud all of straining for market-share among such goli- tunity: with her husband, Thelma owned and them for the dedication and commitment. aths as Remington and Winchester, to a lead- operated two successful beauty salons. Mr. Speaker, Peace Corps volunteers pro- ership role in the industry. In doing so, he Thelma’s dedication to community service mote American values and world under- helped bring hundreds of jobs and stimulate and the liberation of Cyprus is amply dem- standing, and, thus, are our country’s best am- the economic growth of an entire community. onstrated by her tireless work for the Amer- bassadors in the villages and towns in which Perhaps more impressive than his storied ican Hellenic Educational Progressive Asso- they live and work. Upon their return to the successes in business are his wonderfully ciation (AHEPA) and the Pancyprian Organi- United States, Peace Corps volunteers share generous philanthropic efforts through which zation. She served as the chairperson of the their experiences with family, friends, and the he established himself as a pillar of the com- Pancyprian Organization’s Cultural Division community at large, thereby exposing Main munity in the city of Anoka and beyond. As and president of its athletic committee. Fur- Streets across America to foreign cultures and the chairman of the Olin Foundation, Horn di- thermore, she has received awards for her customs. As a result, the Peace Corps experi- rected donations in excess of $425,000 for community service efforts from, among others, ence enriches not only foreign countries, but college scholarships and educational build- AHEPA, the Queens Borough President, the also the volunteers and our nation. In fact, the ings, a feat impressive enough to lead 12 dif- Pancyprian Organization and the Panhellenic State Department, USAID, and Congress have ferent colleges and universities to award him Federation. She has truly given selflessly of benefitted from the experiences of Returned with honorary doctorates. In 1951, Horn began her time and talent so as to improve the qual- Peace Corps volunteers within their ranks. a long relationship establishing himself as one ity of life in her community. She is one of Mr. Speaker, in the last session, Chairman of the most important benefactors in commu- those rare individuals who can always find the HYDE and I, in collaboration with other Mem- nity history by donating funds on the behalf of time and energy to do more and give more. bers, crafted the Peace Corps Expansion Act F.C. Corp to help pay for lighting a rec- In 1986, Mr. and Ms. Pieri moved to New- of 2003 to better equip the Peace Corps to re- reational field. Thereafter he established the port Ritchie, Florida, where Thelma founded cruit, train, and support current and future vol- George Green Scholarship award for deserv- the Pancyprian Association of Florida and the unteers during the next four years. The Act ing seniors from Anoka High, created two Greek School at the St. George Church of also facilitates the work of Returned Peace Charles L. Horn Math Scholarships at St Newport Ritchie. Corps volunteers as they carry out the mission Cloud University, donated $50,000 to the Thelma continues to be a passionate of the Peace Corps—helping people in devel- Mercy Hospital fund drive, and sponsored a spokesperson for the liberation of Cyprus. ‘‘I oping countries meet basic needs, promoting yearly Christmas party for the children of the wish to return to Greece, where my children understanding abroad of U.S. values and community. Finally, further cementing his in- live, and participate in their lives and that of ideals, and promoting a better understanding valuable role in community life, Horn author- my grandchildren,’’ Thelma recently remarked. by our citizens of other cultures and societies. ized $635,000 to complete a new City Hall for ‘‘I work for the freedom of Cyprus and my Significantly, the Act also encourages greater Anoka. heart is bleeding when I see my beautiful is- diversity within the Peace Corps and among Mr. Speaker, Charles L. Horn was a true land under Turkish occupation. I will continue volunteers to ensure better that all the faces of American icon. A successful businessman to work and fight until I see the sun set on a America are reflected in the faces of Peace who gave generously to his community, Horn free, united Cyprus.’’ Corps volunteers and staff, as the agency will long be remembered in Anoka and Thelma Pieri truly exemplifies the tradition of seeks to double the number of volunteers by throughout our state as an innovator and a community involvement that makes America 2007. I am pleased to say that this House dedicated philanthropist who truly embodied the greatest nation in the world. On behalf of passed the Peace Corps Expansion Act of the values Minnesota holds so dear. the residents of the Fourteenth Congressional 2003 with overwhelming bipartisan support. f District of New York, I would like to extend to Mr. Speaker, in closing, I want again to sa- Ms. Pieri and the Women’s Issues Network lute the many thousands of Peace Corps vol- IN RECOGNITION OF THE my continuing respect, admiration and sup- unteers across the globe who are currently PANCYPRIAN ASSOCIATION WOM- port. serving their country and the many more who EN’S ISSUES NETWORK AND Mr. Speaker, I request that my colleagues have returned home to continue contributing to THELMA PIERI WOMAN OF THE join me in paying tribute to this wonderful or- their communities. They are the reason for YEAR HONOREE ganization and its honoree, Thelma Pieri. National Peace Corps Week. HON. CAROLYN B. MALONEY f f OF NEW YORK COMMEMORATING PEACE CORPS INTRODUCTION OF LEGISLATION 43RD ANNIVERSARY AND THE REGARDING TRADE LAW EN- IN THE HOUSE OF REPRESENTATIVES CONTRIBUTION OF SAN MATEO FORCEMENT Wednesday, March 3, 2004 VOLUNTEERS Mrs. MALONEY. Mr. Speaker, I rise to HON. FRANK R. WOLF honor the Pancyprian Association Women’s HON. TOM LANTOS OF VIRGINIA Issues Network (WIN) on the evening of its OF CALIFORNIA IN THE HOUSE OF REPRESENTATIVES annual Dinner Dance, and to recognize WIN’s IN THE HOUSE OF REPRESENTATIVES 2004 Woman of the Year Award honoree, Ms. Wednesday, March 3, 2004 Thelma Pieri. Wednesday, March 3, 2004 Mr. WOLF. Mr. Speaker, I am introducing WIN was founded in 1997 to serve the Cyp- Mr. LANTOS. Mr. Speaker, I rise today in legislation today to change the process for en- rian-American community, promote the Hel- celebration of the Peace Corps’ 43rd anniver- forcing U.S. trade laws. This bill will shift the

VerDate jul 14 2003 04:33 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00005 Fmt 0626 Sfmt 9920 E:\CR\FM\A03MR8.011 E03PT1 E288 CONGRESSIONAL RECORD — Extensions of Remarks March 3, 2004 authority to bring cases of unfair trade prac- copyright piracy and other intellectual property Astonishingly, the FY 2005 USTR budget tices before the World Trade Organization rights violations. We have heard that they request released in early February includes (WTO) from the Office of the United States have even copied an entire car! less money than was provided this year. Less Trade Representative (USTR) to the Depart- Estimates are that 93 percent of the busi- money. Yet the office says it will begin seven ment of Commerce. ness software applications in China are pirat- more free trade agreements. And they hope to I believe this change is critical in the face of ed and 88 percent of the motion pictures and accomplish this extra work with less money the new world trade dynamic of the 21st cen- the music seen or heard in the country are than the year before? It is preposterous that tury. In 2003, the U.S. registered a record stolen. Pirated copies of new software being such a level of work would require less $484.9 billion trade deficit, of more than 17 released in America often ends up for sale on money. And what happens to the mounting al- percent above the previous record shortfall of the streets of Beijing before we can buy the legations of unfair trade practices under trade $418 billion in 2002. Some analysts predict real thing in northern Virginia. agreements already signed while the USTR that the trade deficit could soon top $600 bil- But the United States has not brought an in- negotiates new deals—with fewer resources lion. Since 1991, our trade deficit has grown tellectual property rights case against China than the year before when no unfair trade nearly 620 percent—620 percent! Some say since Beijing’s entry into the WTO. Not one cases were brought before the WTO? such a trade imbalance is not a bad thing. case. I have not yet touched on what I believe is Others aren’t so sure. I, for one, am deeply How can U.S. manufacturers, especially the the overriding issue involving trade with concerned that there has not been a sufficient small and medium-sized businesses, compete China—China’s egregious human rights amount of attention focused on the long-term with Chinese-based factories operating with record. For the record, I did not support grant- impacts of the trade imbalance to our country. the most advanced technologies, the most ing China permanent normal trade relations Just as important, I believe this change is modern equipment, and virtually free Chinese (PNTR), a term recently changed from what I necessary because of the entry of the Peo- labor? believe was a more appropriate ‘‘most-fa- ple’s Republic of China into the WTO in De- We have had many debates on the impor- vored-nation trade status’’ designation. I know cember 2001 and the growing allegations from tance of intellectual property rights on this there were good and reasonable people on U.S. businesses that China, now our fourth floor and later on in the week, we may have both sides of this issue, but for me, trade largest trading partner, is not living up to its another. Innovation is the cornerstone of the agreements must come with a price and that trade agreements. That concern multiplies American economic engine. We cannot con- price is respect for the universal declaration of when you consider that the U.S. trade deficit tinue to trust the Chinese when they promise human rights. with China in 2003 was $124 billion—almost a to enforce their intellectual property laws. As we have seen with its trade obligations, quarter of the entire U.S. trade deficit last I ask one question: when has the People’s China also has a long list of broken promises year. Republic of China closed down a market with when it comes to improving the rights of its Last year I started to hear from a number of the most egregious cases of counterfeit people. Last year, I requested that the U.S. small and medium-sized businesses about the goods? support a resolution condemning the human Not one of the markets selling counterfeit unfair trading practices of Chinese companies. rights abuses in China in the context of the pharmaceuticals, health and safety goods, and There were charges that U.S. trade agencies U.N. Commission on Human Rights. The State automobile parts has been shut down. Not a were unfairly favoring Chinese corporations at Department explained to me that the depart- single one. Yet, the USTR believes the Peo- the expense of American companies in trade ment was encouraged by promises made by ple’s Republic of China is keeping its promise dumping cases. The Commerce-Justice-State the Chinese. Therefore, the U.S. refused to to enforce intellectual property rights. appropriations subcommittee, which I chair put forth condemning resolutions. and which oversees the funding for most U.S. I know the Office of the USTR has hard- Last week, the State Department released trade-related agencies, held a hearing to look working people whose goal is to give U.S. the 2003 Human Rights Report on China. This into this matter. My subcommittee heard from businesses the opportunity to flourish in the report showed that not only did China fail to representatives of hard-hit furniture, pharma- global economy. But I believe it is being live up to its promises, but its human rights ceutical and agriculture industries. Their testi- stretched too thin under its current operation record actually grew worse. The people of mony was alarming. of having the same people who negotiate China do not enjoy the freedoms that we have America’s manufacturers contend that China trade agreements be the same people who as American citizens. Imagine a country where is deliberately undervaluing its currency—the determine whether or not countries are living factory workers have no workplace safety, yuan—by as much as 40 percent, giving up to their obligations. labor or environmental protections and are re- China a trade advantage when competing with Enforcement is being shortchanged and quired to work 80 hour-weeks for no more U.S. companies and contributing to the loss of U.S. companies are not being well served. I than $110 per month to produce goods for ex- U.S. factory jobs. During a visit to China last believe our nation’s business community and port. September, U.S. Treasury Secretary John our trade policy would be better served by Snow called on China to adopt a more flexible having the Department of Commerce as the Many CEO’s of U.S. companies supported exchange rate system. The Chinese govern- trade law enforcer. PNTR with China hoping for new markets for ment has not made any such changes. The Department of Commerce has the their products and services. We are now see- When it comes to trade with China, the list budget and the resources to address the ing some of these same business leaders is long with promises made and promises bro- issues of small and medium-sized companies. questioning whether or not it was the right de- ken. China has broken its promise: The Commerce Department works daily with cision for their businesses and their commu- To remove agricultural and industrial quotas American companies to promote competitive- nities in the long term. Many of these compa- and tariff rate quotas; ness and increase productivity. The Com- nies today who trade with China do so with To stop requiring American companies to merce Department is on the ground floor with the hope that the Chinese don’t copy their pay exorbitant rates to partner with Chinese these companies. They understand how Chi- products before they can make a profit. companies so our companies can have ac- nese imports and trade barriers are hurting That’s not the way free and fair trade should cess to the Chinese markets; and American companies. work. If the U.S. has made trade agreements To stop using its tax policies on U.S. im- By comparison, the Office of the USTR has with China and with other countries, we need ports into China, therefore discriminating 202 federal employees to do all this work. The to make sure those agreements are enforced. against the import of our goods. For example, USTR is in the Executive Office of the Presi- The Office of the USTR has had many oppor- our semiconductor companies and our fer- dent and regardless of the administration, this tunities to bring unfair trading cases against tilizer producers state that China’s practice of office’s budget requests are tightly controlled. China. Meanwhile, U.S. factories continue to rebating more than 80 percent of its value- Within the past two years alone, the budget close, American workers continue to lose jobs added tax (VAT) to domestic firms puts foreign request was woefully inadequate to just main- to foreign companies, and the U.S. trade def- suppliers, our companies, at a huge disadvan- tain ongoing operations of the office. icit continues to soar. tage in the Chinese market. The FY 2004 request also was insufficient Free trade must be our strategy and not just China also has a complete disregard for to continue the operations of the USTR and at a goal. If trading partners don’t play by the U.S. intellectual property rights. The Chinese the urging of the trade community, the Appro- rules, then U.S. firms are at a disadvantage market also continues to be dominated by pi- priations committees provided additional fund- and American workers and families are hurt. racy of copyrighted material. Some U.S. ing for the USTR. This effort was supported by The U.S. must enforce trade laws, and we sources charge that American businesses the Senate Finance and House Ways and need to give the Commerce Department the have lost billions in revenue due to China’s Means committees. opportunity to take on that responsibility.

VerDate jul 14 2003 04:33 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00006 Fmt 0626 Sfmt 9920 E:\CR\FM\A03MR8.014 E03PT1 March 3, 2004 CONGRESSIONAL RECORD — Extensions of Remarks E289 H.R. — (II) by striking ‘‘direct the administering friend, Steve Neal. Steve was a strong and in- Be it enacted by the Senate and House of Rep- authority to’’; and telligent voice in Illinois politics for over two (D) in subsection (c)(1)— resentatives of the United States of America in decades as a writer for the Chicago Sun- Congress assembled, (i) in subparagraph (A), by striking ‘‘the date on which’’ and all that follows through Times and the Chicago Tribune. We lost that SECTION 1. TRANSFER OF FUNCTIONS. ‘‘determination,’’ and inserting ‘‘the date on voice when he died on February 17th at the (a) IDENTIFICATION OF CERTAIN COUN- which the Secretary of Commerce revokes an age of 54. TRIES.—Section 182 of the Trade Act of 1974 order pursuant to that determination,’’; and (19 U.S.C. 2242) is amended— (ii) in subparagraph (B), by striking ‘‘the Politics was fun to Steve. He enjoyed the (1) in subsection (a)— date on which’’ and all that follows through game more than anyone I ever met. He en- (A) by striking ‘‘United States Trade Rep- the end of the sentence and inserting ‘‘the joyed taking a story and finding an angle that resentative’’ and inserting ‘‘Secretary of date on which the Secretary of Commerce Commerce’’; and had not yet been reported on. And, I for one implements that determination’’. can tell you that he knew how to praise as (B) by striking ‘‘Trade Representative’’ (2) EFFECTIVE DATE.—The amendments each subsequent place it appears and insert- made by paragraph (1) shall take effect 90 well as criticize. But, Steve was always willing ing ‘‘Secretary’’; and days after the date of the enactment of this to look at an issue or a person and give you (2) in subsections (b) through (g), by strik- Act. his honest opinion. ing ‘‘Trade Representative’’ each place it appears and inserting ‘‘Secretary’’. f I will always remember Steve as the toast- (b) ENFORCEMENT OF UNITED STATES RIGHTS FCC MUST COMPLY WITH master of the greatest political discussions in UNDER TRADE AGREEMENTS AND RESPONSE TO FEDERAL COURT DECISIONS Chicago, hosted over a great plate of food at CERTAIN FOREIGN TRADE PRACTICES.—Chap- Gene and Georgetti. It was at these Friday ter 1 of title III of the Trade Act of 1974 (19 lunches, where scholars, historians, and elect- U.S.C. 2411 et seq.) is amended as follows: HON. GEORGE RADANOVICH (1) Section 301(a)(1) is amended by striking OF CALIFORNIA ed officials of all backgrounds discussed ev- ‘‘United States Trade Representative’’ and IN THE HOUSE OF REPRESENTATIVES erything from our thoughts on an upcoming election, to a discussion of a new book on phi- inserting ‘‘Secretary of Commerce’’. Wednesday, March 3, 2004 (2) Section 303(b)(1)(A) is amended by strik- losophy. ing ‘‘United States Trade Representative’’ Mr. RADANOVICH. Mr. Speaker, I rise in and inserting ‘‘Secretary of Commerce.’’ support of the decision made by the United Steve’s table did not discriminate along (3) Section 301(d)(8) is amended to read as States Court of Appeals for the District of Co- party lines and neither did his column. His follows: lumbia Circuit on March 2, 2004 with regard to weekly analysis addressed all sides of the po- ‘‘(8) The term ‘Secretary’ means the Sec- the United States Telecom Association’s chal- litical spectrum and every level of government retary of Commerce.’’. lenge to the Federal Communications Com- with the same uncompromising objectivity and (4) Sections 301 through 310 are amended by directness. striking ‘‘Trade Representative’’ each place mission’s (FCC) Triennial Review Order. This it appears and inserting ‘‘Secretary’’. is a decisive victory for consumers, for innova- Steve was born and raised in Oregon. He SEC. 2. APPLICABILITY. tion and for free markets. The decision in the began his career covering sports for local pa- (a) IN GENERAL.—Subject to subsection (b), case of USTA v. FCCII has once again, as it pers, and after earning a graduate degree in the amendments made by section 1 shall did previously in 2002 in USTA v. FCC I, cor- journalism at Columbia University he moved to take effect 90 days after the date of the en- rectly interpreted the intent of Congress re- Chicago to work as a general assignment re- actment of this Act. garding the unbundling requirements of Sec- porter for the Chicago Tribune. (b) PENDING PETITIONS, INVESTIGATIONS, tion 251 of the Telecommunications Act of AND DETERMINATIONS.—The amendments 1996. The FCC, on the other hand, has for 8 After six months, he was sent to Wash- made by section 1 shall not affect any peti- ington, DC to cover politics at the national tion filed before, or investigation pending years now rejected that intent, even after two previous Federal court decisions rejecting their level. Many journalists come to this town and on, the effective date set forth in subsection never look back, but when the Tribune offered (a), under chapter 1 of title III of the Trade unbundling rules decisions. The FCC must Act of 1974. Such petitions and investiga- comply with the decisions of the Federal him a chance to return to his adopted home tions shall proceed as if section 1 had not Courts without delay. to write a column covering local politics, he been enacted. The amendments made by sec- f took the opportunity and Chicago has bene- tion 1 shall not affect any determination fited from his insight ever since. made or action taken under chapter 1 of title PERSONAL EXPLANATION III of the Trade Act of 1974 before the effec- The column was always about politics, but tive date set forth in subsection (a). the focus could easily be the American Revo- HON. STEPHANIE TUBBS JONES lution one day, ward level conflicts the next. SEC. 3. URUGUAY ROUND AGREEMENTS ACT. OF OHIO The late Senator Paul Simon noted that he (a) TRANSFER OF CERTAIN FUNCTIONS.— IN THE HOUSE OF REPRESENTATIVES Those functions of the United States Trade was one of only a few political writers with a Representative under the following provi- Wednesday, March 3, 2004 sense of history. He knew the history behind sions of the Uruguay Round Agreements Act Mrs. JONES of Ohio. Mr. Speaker, I missed each office, and was even more familiar with are transferred to the Secretary of Com- votes on Tuesday, March 2, 2004 due to the each office holder. He always looked for the merce, effective 90 days after the date of the Ohio Primary. I respectfully request an ex- enactment of this Act: story behind the story, and his writing reflected (1) Section 123. cused absence for this date. Had I been this sense of perspective. He also wrote sev- (2) Paragraphs (5), (6), and (7) of section present, the record would reflect that I would eral history books, on topics including Wendell 124. have voted: ‘‘Yea,’’ on Roll 33, H. Res. 526 on Wilkie, Harry Truman and Dwight Eisenhower. (3) Section 127. the Motion to Suspend the Rules and Agree, He recently finished writing a book called (4) Subsections (e) and (f) of section 281. Expressing the sympathy of the House of Happy Days are Here Again, about the early (b) CONFORMING AMENDMENTS.— Representatives for the victims of the dev- days of the Franklin Roosevelt administration. (1) AMENDMENTS.—Section 129 of the Uru- astating earthquake that occurred on Decem- guay Round Agreements Act (19 U.S.C. 3538) Among his last columns was an assertion is amended— ber 26, 2003, in Bam, Iran, and ‘‘Yea,’’ on Roll 32, H.R. 3769 on the Motion to Suspend the that James Madison was the most important (A) by striking ‘‘Trade Representative’’ founding father, and he provided the facts to each place it appears and inserting ‘‘Sec- Rules and Pass, Ben Atchley Post Office retary of Commerce’’; Building. back it up. Another column provided a histor- (B) in subsection (a)(6), by striking ‘‘direct f ical perspective on the current Presidential pri- the administering authority to’’; maries by citing specific details about the (C) in subsection (b)— HONORING THE MEMORY OF CHI- campaigns of Adlai Stevenson and Thomas (i) in paragraph (1), by striking ‘‘the ad- CAGO SUN-TIMES COLUMNIST Dewey. You always learned something more ministering authority and’’; STEVE NEAL (ii) in paragraph (2), by striking ‘‘shall,’’ than his opinion when you read his column. and all that follows through ‘‘issue a deter- You learned about our city, our state, and our mination’’ and inserting ‘‘may issue a deter- HON. RAHM EMANUEL country. OF ILLINOIS mination’’; Mr. Speaker, my thoughts are with Steve’s (iii) in paragraph (3), by striking ‘‘the ad- IN THE HOUSE OF REPRESENTATIVES wife, his two daughters, and the rest of his ministering authority and’’; and Wednesday, March 3, 2004 (iv) in paragraph (4)— family today, and I ask my colleagues to join (I) by striking ‘‘the administering author- Mr. EMANUEL. Mr. Speaker, I rise today to me in honoring the memory of this important ity and’’; and remember a respected journalist and good and talented journalist.

VerDate jul 14 2003 04:33 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00007 Fmt 0626 Sfmt 9920 E:\CR\FM\A03MR8.018 E03PT1 E290 CONGRESSIONAL RECORD — Extensions of Remarks March 3, 2004 IN HONOR OF THE 90TH ANNIVER- The graves that Saddam Hussein’s hench- The United States Geological Survey has an SARY OF ACTOR’S EQUITY ASSO- men dug and filled with human beings are a outstanding history of public service and sci- CIATION bitter sign that mankind still has a long way entific breakthroughs. It has been at the fore- to go before every person has the basic human rights promised by all our religions front of advances in our understanding of the HON. JERROLD NADLER and cultures—the rights of life and liberty. Earth, its processes, and its resources. Sci- OF NEW YORK Iraqi Foreign Minister Hoshyar Zebari told entists from the U.S. Geological Survey pio- the United Nations that under Saddam Hus- IN THE HOUSE OF REPRESENTATIVES neered hydrologic techniques for gauging the sein, Iraq was ‘‘a murderous tyranny that impact of floods and modeling the flow of Wednesday, March 3, 2004 lasted over 35 years.’’ ‘‘Today we are un- complex ground-water systems. The astro- earthing thousands of victims in horrifying nauts who landed on the Moon in 1969 were Mr. NADLER. Mr. Speaker, I rise today to testament,’’ Zebari said. pay tribute to Actors’ Equity Association, in I walked across the sandy plains of Iraq trained in geology by the USGS. honor of its 90 years of contributions to the and saw the mass graves that were just found Innovative ventures with the private sector American theater. and are beginning to yield their tragic se- have given the world access to digital images Since 1913, Actors’ Equity Association has crets. The bones tell a story of horror and of neighborhoods and communities in one of fought for better wages, working conditions, shame: arms bound together, skulls pierced the largest data sets ever made available on- and pension and health benefits for actors and from behind. Hundreds in one long trench. line. Modern-day understanding of the forma- Those who survived inside Iraq, and those stage managers. Equity has fostered and stim- who watched helplessly from abroad, have tion and location of energy and mineral re- ulated the art of live theater and contributed to joined together to begin the long, painful source deposits is rooted in fundamental sci- the health of the American theatrical commu- process of accounting for the dead. British entific breakthroughs by USGS scientists. nity. In particular, Actors’ Equity plays an im- Prime Minister Tony Blair said on November Their biologists revolutionized thinking about portant role in the Broadway industry, in the 20, 2003, that as many as 400,000 Iraqis lie in managing wildlife resources, providing a heart of my district, which contributes $4 bil- these mass graves. sound scientific basis that lets waterfowl con- They are Kurds, killed because of their servation and recreational hunting work in tan- lion annually to the economy of New York City ethnicity. They are Shiites, killed because of and depends greatly on the talent and profes- their religion. They are Sunnis, killed for dem as adaptive management, not as con- sionalism of Equity’s members. their political views. They are Egyptians, flicting interests. Advances in seismology are Throughout Actors’ Equity’s distinguished Kuwaitis, and Iranians, killed because their making early warnings of earthquakes a reality history, it has built a proud tradition of contrib- lives meant nothing to Saddam Hussein, his that will give the needed alert time to save uting to the overall good of our society and sons, and their followers. lives. The future of the global community pre- community by: fighting against segregation, As Saddam’s evil regime collapsed in April sents infinite opportunities for the science of and May, 2003, and his Baath Party mass the USGS to continue to make substantive blacklisting and discrimination; supporting murderers retreated into the shadows, Iraqis funding for the arts; and spearheading fund- began to act on their formerly hidden grief. and life-enhancing contributions to the better- raising for charities such as Broadway Cares/ They searched for their loved ones rounded ment of the nation and the world. Equity Fights AIDS. up over the years in campaigns of terror. I congratulate the United States Geological In addition, in the aftermath of the Sep- They had heard rumors about shots in the Survey on its 125th anniversary. By com- tember 11, 2001 attacks on New York City, night, mass burials, and vanished prisoners. memorating this date, I hope we will come to Equity came together with other theatrical Now they followed those bloody trails to the recognize the crucial services that this institu- unions to keep Broadway shows up and run- mounds of earth they suspected entombed tion continues to provide this nation. ning, helping New York City recover. their beloved children and parents. The United States Geological Survey is a The new leaders in Al Hillah, Karbala, vital Federal science agency that is The hard work and talent of the more than Najaf, and a dozen other cities and towns 45,000 members of Actors’ Equity Association around Iraq worked with U.S. and British headquartered in my District in Northern Vir- contribute to the arts and to their communities forces to try and protect some of the mass ginia; however, Members should know that in cities and theaters across the country. Ac- graves. We hope to preserve the evidence of this agency has an important presence in tors’ Equity Association is committed to ensur- these crimes against humanity. every state of the union. ing these members are treated with dignity Human rights groups have formed, assisted How has 125 years of independent science by USAID and working with the Coalition and respect, and that the art of live theater benefitted our nation? It has given us an ex- Provisional Authority, to urge people to tensive record of our land and resources, continues to flourish. record the names of those being exhumed Mr. Speaker, I invite my colleagues to ap- and describe the circumstances under which which allows us to realize and track the plaud Equity’s ongoing efforts to uphold the they were seized and slain. changes in our land, water, and wildlife. It has highest artistic standards of live theater in the Yes—people want to find the remains of provided a wealth of long-term data and re- United States. I commend Actor’s Equity for all their loved ones and give them a proper bur- search, which continues to serve thousands of of its good work and offer my sincerest con- ial in consecrated ground. But the Iraqi peo- government agencies, companies, non-profit gratulations upon reaching this milestone. ple also want justice—to punish those who organizations, recreational groups, and indi- callously killed their fellow citizens by the vidual Americans. And it has given us sci- f busload, day after day, year after year. Above all, if people in Iraq and around the entific expertise and understanding that we A VAST HUMAN TRAGEDY world hope to learn from the crimes of the can count on to be accurate and up to date. past, the mass graves of Iraq must be docu- Since its inception, the United States Geo- HON. CLIFF STEARNS mented, reported, and never forgotten or de- logical Survey has become the premier OF FLORIDA nied. science organization for the nation, covering This booklet is a small, early marker on IN THE HOUSE OF REPRESENTATIVES all of the natural science disciplines (biology, that path. geography, geology, and hydrology) in every Wednesday, March 3, 2004 f state. This expansive coverage provides us Mr. STEARNS. Mr. Speaker, I submit the THE 125TH ANNIVERSARY OF THE with the comprehensive information we need following article for the RECORD. Surely this is ESTABLISHMENT OF THE to tackle many complicated issues in many evidence of a vast human tragedy. UNITED STATES GEOLOGICAL geographical areas. A VAST HUMAN TRAGEDY SURVEY As an unbiased science agency, the United (By Andrew Natsios) States Geological Survey often serves the In a decade and a half of humanitarian needs of the nation behind the scenes. HON. JAMES P. MORAN Whether it’s research on windborne dusts, work I have witnessed the aftermath of OF VIRGINIA much human tragedy, including the Rwan- mercury contamination, or West Nile Virus IN THE HOUSE OF REPRESENTATIVES dan genocide and the killing fields of Cam- used to protect public health; or natural haz- bodia. In June 2003, I visited Iraq’s mass Wednesday, March 3, 2004 ards assessments used to ensure public safe- graves, the most recent addition to man- Mr. MORAN of Virginia. Mr. Speaker, today ty; or the energy and mineral resources, water kind’s legacy of mass murder. I am introducing a resolution to acknowledge and biological information, and geologic map- Rows of white bundles containing bones filled room after room. Families filed by, 125 years of reliable, timely, and objective ping and geospatial information used to serve searching for signs of those who had dis- science that illustrates and enhances our un- our economy, for 125 years, the United States appeared, some stolen during the night, oth- derstanding of the Earth, and serves the im- Geological Survey has provided the science ers taken in daylight. Even small children portant needs of individuals and communities that serves as the basis for our most important were not spared the butchery. across this great land. decisions.

VerDate jul 14 2003 04:33 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00008 Fmt 0626 Sfmt 9920 E:\CR\FM\A03MR8.023 E03PT1 March 3, 2004 CONGRESSIONAL RECORD — Extensions of Remarks E291 It’s time we congratulated those whose WARM SPRINGS ELEMENTARY Mr. Speaker, Warm Springs Elementary has labor provides us with the information we need SCHOOL CELEBRATES 150 YEARS provided a free education—the foundation of to manage our resources and safeguard soci- OF EDUCATION our American success—to thousands of chil- ety. I am delighted to have this opportunity to dren over the past 150 years. I would be bring attention to the work of the United States HON. JERRY LEWIS proud to be associated with this school for that Geological Survey and showcase its remark- OF CALIFORNIA fact alone, but I have a special reason to be able history. I urge you to support this resolu- IN THE HOUSE OF REPRESENTATIVES fond of Warm Springs. It is the alma mater of tion, thereby confirming our appreciation for the Walker girls of San Bernardino—Mary, Wednesday, March 3, 2004 their ongoing work that has served the health, Darlene, and her twin sister Arlene, who hap- safety, and prosperity of the United States for Mr. LEWIS of California. Mr. Speaker, I pens to be my bride. Arlene and I will be re- 125 years. would like today to recognize Warm Springs turning to her old school on March 9 to cele- Elementary School, the first permanent school brate the sesquicentennial, and encourage the RESOLUTION in San Bernardino, California, which is cele- current students to take advantage of the op- Whereas March 3, 2004 will mark the 125th brating its 150th year of providing education to portunities their education can provide. Anniversary of the establishment of the the children of ranchers, railroad workers, Air I have always believed, Mr. Speaker, that United States Geological Survey; Force personnel and immigrants. our education system is a success because of Whereas the United States Geological Sur- In 1854, ranchers near the small Mormon local schools run by wonderful teachers, sup- vey has become the Nation’s premiere earth town of San Bernardino decided seven miles ported by great principals. Warm Springs Ele- and biological science agency; was too far for their children to walk to school. mentary continues the tradition of excellence Whereas during its 125-year history, the They got together and built an adobe east of under Principal Arlan Anderson that it has car- United States Geological Survey has been downtown, and named it after the nearby ried on for the past 150 years. Please join me the birthplace of a number of other Federal Warm Creek. As a one-room school, it pro- in congratulating those educators on their con- agencies, including the Reclamation Service vided an education for about 25 children of all tinued dedication, and wish their current stu- (later renamed the Bureau of Reclamation) ages. This was just four years after California dents well for the future. in 1902, the Forest Service in 1905, the United gained statehood, and the same year as the States Bureau of Mines in 1910, the Grazing f Service (later renamed the Bureau of Land City of San Bernardino was incorporated as Management) in 1934, and the Minerals Man- the county seat. HIGH COST OF PRESCRIPTION agement Service in 1982; Over the next 10 years, the school grew DRUGS Whereas the United States Geological Sur- slowly as many of the Mormon settlers re- vey has been a widely respected source of rel- turned to Utah. Gold was discovered in the HON. JOHN J. DUNCAN, JR. evant and objective science to address the San Bernardino Mountains—bringing thou- OF TENNESSEE Nation’s diverse natural resource issues; sands of fortune-seekers but few families. The IN THE HOUSE OF REPRESENTATIVES school building was nearly destroyed by an Whereas the United States Geological Sur- Wednesday, March 3, 2004 vey continues to serve the Nation as an inde- earthquake and a flood, so the adobe was re- pendent fact-finding agency that collects, placed with a log cabin on the same site fac- Mr. DUNCAN. Mr. Speaker, Dean Stone, monitors, analyzes, and provides scientific ing Sterling Avenue. The students were long-time editor of The Daily Times newspaper information and understanding about nat- grouped by reading ability rather than age, in Maryville, TN, has written a really out- ural resource conditions, issues, and prob- and boys and girls sat on opposite sides of standing editorial about prescription drug lems; the room. prices. Whereas a hallmark value of the United The log-cabin school was destroyed by fire Mr. Stone frequently writes very thoughtful States Geological Survey to the Nation is its in 1974, and a clapboard building replaced it— and informative editorials about issues of na- ability to carry out studies on a national with an auditorium added in 1887. That school tional importance. scale and to sustain long-term monitoring also later burned to the ground and was re- and assessment of natural hazards and nat- He points out in this editorial that we have ural resource conditions; placed. drug prices that are far too high because the By the 1890s, the railroads had come to Food and Drug Administration, FDA, seems to Whereas the United States Geological Sur- San Bernardino and the area was booming. vey is an agency of the Federal Government be controlled by the giant pharmaceutical with no regulatory or land management re- The Santa Fe Railway built a huge repair yard companies. sponsibilities and is thus a trusted entity to near downtown, and the population grew rap- I have consistently supported in committee provide impartial science that serves the idly. In 1898, Warm Creek School grew to four meetings and in votes on the floor of the needs of the Nation; and rooms and had as many as 100 students. House the right of the people to purchase Whereas the United States Geological Sur- That school was torn down in 1926 and re- drugs from Canada. Mr. Stone points out that vey has a scientific presence in every State placed with a Spanish-style tile-roofed building FDA concerns about safety are not supported and Territory of the United States and that remains the school’s core. by any evidence. serves the Nation’s extensive and diverse Students at Warm Springs School became I would like to call this fine editorial to the needs for objective scientific knowledge and close witnesses to America’s war efforts in the attention of my colleagues and other readers understanding: Now, therefore, be it 1940s. The San Bernardino Municipal Airport, of the RECORD. Resolved, That the House of Representa- just seven blocks south, became the San WITH MORE THAN 600 LOBBYISTS, THERE’S tives— Bernardino Army Airfield, repairing and serv- LITTLE CHANCE ON DRUG PRICES (1) congratulates the United States Geo- icing hundreds of transport planes moving Know why we Americans will not get rea- logical Survey on its 125th anniversary; and troops around the country. The airfield be- sonable prescription drug prices? (2) expresses strong support for the United came Norton Air Force Base in 1950, and for The pharmaceutical industry has more States Geological Survey as it serves the Na- the next 38 years was one of the most active than 600 lobbyists in Washington, more than tion by providing timely, relevant, and ob- Air Force fields in the West. Children of the the total number of representatives and sen- jective scientific information which helps to base’s civilian repair workers swelled the ators. describe and understand the Earth, minimize ranks of students at the school, which added They have spent $435 million to influence the loss of life and property from natural dis- Washington from 1996 to 2003 and handed out nine classrooms in 1945 and two more in $57.9 million in contributions between 1991 asters, manage water, biological, energy, and 1947. mineral resources, and enhance and protect and 2002 to buy their way through Congress. the quality of life of all Americans. By 1954, the city of San Bernardino had They are well paid (we pay for them with grown far beyond the former outpost school, exorbitant drug prices) and they do their job, In addition to Congressman JAMES P. and it was absorbed into the city’s unified cutting to pieces any legislation that might MORAN, the following members are original school district, becoming Warm Springs Ele- tend to lower the price of prescription drugs. sponsors of the House Resolution Congratu- mentary School. It continued to grow to 32 The Feb. 2 issue of Time magazine contains lating the United States Geological Survey on classrooms, and today 45 teachers serve an excellent article about how Americans are being ripped off with high prices from the its 125th Anniversary: BARBARA CUBIN, TOM 1,000 students in year-round classes, making manufacturers of drugs. DAVIS, NORM DICKS, ANNA G. ESHOO, RON it one of the largest elementary schools in the And most of our drugs are manufactured KIND, EDDIE BERNICE JOHNSON, ZOE LOFGREN, district. The student population today is nearly overseas by American companies who moved RALPH REGULA, NICK SMITH, BILL YOUNG, and 60 percent Latino, many of them the children there because of the tax breaks. And it is il- SHERWOOD BOEHLERT. of recent immigrants. legal for Americans to import these drugs.

VerDate jul 14 2003 04:40 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00009 Fmt 0626 Sfmt 0634 E:\CR\FM\A03MR8.026 E03PT1 E292 CONGRESSIONAL RECORD — Extensions of Remarks March 3, 2004 While the Federal Drug Administration The recent bus #19 suicide bombing in the unstable Middle East, sending a clear moder- (FDA) inspects these overseas plants when heart of Jerusalem with its heavy toll found ating message to the Arabs. Gazit was opti- built to certify their products, there is little me in Israel’s capital during a solidarity mistic that the ultimate resolution of supervision later. mission of my Reform Jewish movement. Israeli-Palestinian conflict has begun. He Ireland is a favorite location and Singa- I passed by that doomed site, near another and Melchior stressed building bridges to pore is getting new plants. This overseas pro- past one, only hours before the latest of in- Israel’s own Arab minority, attending to its duction of drugs was $40.7 billion in 2002, a credible serial terrorist attacks in the three special needs with the hope to draw the two five-fold increase from 1995. The impact has and a half years of the bloody Second essential partners closer. Otherwise Israel’s given us a negative balance of trade in that Intifada. Once again violating Jerusalem security is at risk. field. where Biblical Abraham proclaimed the I watched Jewish kids purchase with their Pfizer Inc. and Eli Lilly & Co. enjoy huge sanctity of human life in the midst of a pa- moms costumes for the joyous Purim holi- profit margins compared with other U.S. ganism now being resurrected by its contem- day and Arab families celebrating the Eid. firms. Pfizer’s was 28.4 percent profit in 2002 porary messengers of death who should not For the sake of their inevitable shared fu- while Eli Lilly was at 24.4 percent. be allowed by the civilized world to reverse Pfizer reported $9.1 billion in profits on ture and that of their own children, may Abraham’s victory. Let what just ghastly these parents find a way to each other’s $32.4 billion, a return of 28 percent and a rate happened, newly available on Israel’s For- more than twice that of General Electric, hearts. Perhaps, Israeli Arabs will yet be a eign Ministry website for a reality check not bridge of shalom to the larger Arab world. nine times that of Wal-Mart and 31 times become an added statistic! that of General Motors. Rabbi Israel Zoberman, spiritual leader of Upon arriving in my parents’ home in Congregation Beth Chaverim in Virginia Our U.S. sales of prescription drugs is the Haifa on that hellish day, I found them anx- highest in the world at $654 per person with Beach, was born in Kazakhstan and grew up ious, even panicky, already having called in Haifa, Israel. an average life expectancy of 77 years. Japan hospitals in Jerusalem looking for me . . . I is second at $421 with a life expectancy of 81 thus experienced a bit the anguish encoun- f years. tered by Israelis, without parallel, with Hol- Americans pay on an average 40 percent RESOLUTION RECOGNIZING THE ocaust survivors like my parents whose con- more for their prescription drugs than do Ca- stant exposure to trauma may reawaken re- HUBBLE SPACE TELESCOPE’S nadians. And it has been ruled illegal for us ACCOMPLISHMENTS AND RECOM- to import them from Canada. Drug compa- pressed carnage images. The timing of the deadly Palestinian vio- MENDING RECONSIDERATION OF nies have threatened to cut off supplies to lence with both Arafat’s forces and Hamas Canadian drug stores that sell to Americans. FUTURE SERVICING MISSIONS Despite all this, the cities of Montgomery, competing to claim responsibility, purpose- Ala., and Springfield, Mass., have negotiated fully coincided with exchanging only four with Canadian sources. Montgomery alone is Israelis, three of them in coffins, and prom- HON. MARK UDALL saving $34,000 a month with its contract. ised information on the fate of Israeli navi- OF COLORADO Members of Congress, the FDA and all the gator Ron Arad, captured 17 years ago, in re- IN THE HOUSE OF REPRESENTATIVES rest who are in bed with the pharmaceutical turn for hundreds of Hizballah terrorists. Of industry who use the excuse of safety regard- the three killed Israeli soldiers, Benny Wednesday, March 3, 2004 ing Canadian drugs are just blowing hot air. Avraham, Adi Avitan and Omar Suad, whose Mr. UDALL of Colorado. Mr. Speaker, today So far there have been no reported incidents fate was cynically manipulated by the I am introducing a resolution recognizing the of any problem. In the U.S., 50,000 to 100,000 Hizballah to inflict pain upon their families, accomplishments of the Hubble Space Tele- people die annually as a result of adverse re- the first one was connected to Tidewater actions from FDA-approved drugs. Jewry through a joint communal program. scope and recommending reconsideration of Drug companies like to talk about the cost Israel has proved again, with Prime Min- future servicing mission to Hubble. I am very of developing new drugs. A report of the ister Sharon’s guiding input, that for hu- pleased that a number of my colleagues are Joint Economic Committee of Congress in manitarian values’ sake, sorely lacking by joining me as original cosponsors of this bill— 2000 dispels some of that. It found that the its enemy, it is willing to pay a high price including Representatives BARTLETT, HOYER, federal government, mainly through the Na- though it might be interpreted as a weak- MCDERMOTT, AKIN, GORDON, LAMPSON, and tional Institutes of Health, the National ness. Is it any wonder that without a cred- RUPPERSBERGER. Cancer Institute and other public agencies ible peace partner and unwilling to respond funds about 36 percent of all U.S. medical rein kind, Israel is forced to erect a costly se- I wish this resolution weren’t necessary. I search. Of the 21 most important drugs intro- curity separation fence to save innocent am introducing it in response to NASA’s deci- duced between 1965 and 2002, a total of 15 was lives? The fence, which our group observed sion made in mid-January to cancel all future developed using knowledge and techniques for miles, is not necessarily permanent and space shuttle missions to the Hubble Space from federally funded research. can be adjusted. Some resulted Palestinian Telescope, including SM–4, the next flight that Best current figure we could locate indi- hardship has to be weighed against pene- would have installed the new Cosmic Origins cates $2.5 billion was spent by the drug in- trating terror. It is the least Israel can do in Spectrograph and the Wide Field Camera 3 dustry on advertising in 2001. face of relentless terrorism, experienced by There is absolutely no real effort by the instruments—both largely completed at a cost the United States’ heroic troops in Iraq as President or Congress to take an honest look well, while questionably restraining itself to of about $200 million. Installation of these in- at the high cost of prescription drugs. We be- the very limits from using its superior mili- struments would have provided over a factor lieve in the capitalistic system but not in tary power. A state’s obligation for self-de- of ten improvement in Hubble’s imaging and those extreme profiteers whose huge profit is fense is no less incumbent upon Israel whose spectroscopy, and in addition to replacement at the cost of our health. Canada does a good national morale and very way of life are job of regulating prices and would be a good gyros and batteries, would make Hubble’s final threatened. In spite of Sharon’s example to follow. years its most scientifically capable and pro- Regulations always take away a little free- uncharacteristic dovishness, at the moving ductive. If SM–4 goes forward, Hubble will dom from some segment of the economy but state welcoming ceremony for the fallen sol- continue to operate until 2012. Without the diers he referred to unspecified options in the government has seen fit to regulate the mission, Hubble will likely die in orbit some- broadcast industry, the airline industry, Israel’s arsenal. His announced intent, tanta- mount to an earthquake, to unilaterally time in 2007. interstate commerce and through taxes nu- My goal in introducing this resolution is sim- merous other aspects of the economy. It is withdraw from the Gaza Strip reflects time to do something about runaway pre- Sharon’s commitment to peace even in the ple—I want to call attention to the Hubble scription drug prices. face of painful sacrifices, opposition within Space Telescope’s contributions to scientific There is a Republican president, a Repub- his own political camp, expected resistance, research and education and ensure that any lican Congress and this problem lies largely and increased threats on his life. Will the decision affecting its future is made carefully on their shoulders, election or not! Palestinian Authority finally respond by and seriously and for the right reasons. Pre- halting terror in compliance of President f Bush’s Roadmap? cisely because of Hubble’s extraordinary con- ARTICLE BY RABBI ISRAEL General Shlomo Gazit, former director of tributions in the past and promised contribu- ZOBERMAN Military Intelligence and fellow at the Jaffe tions in the future, I also believe that the deci- Strategic Center at Tel Aviv University, who sion to cancel the planned servicing mission to addressed us, justified the fence as a security Hubble should be considered by an inde- HON. EDWARD L. SCHROCK need, refusing to call it a wall. He urges eco- pendent panel of experts. OF VIRGINIA nomic and demographic separation from the Finally, I want to try to ensure that the plan- IN THE HOUSE OF REPRESENTATIVES West Bank to safeguard Israel as a Jewish ning for the servicing mission continues at Wednesday, March 3, 2004 and democratic entity. Both the reserve Gen- eral and former Minister Michael Melchior least until the panel comes up with its rec- Mr. SCHROCK. Mr. Speaker, l am pleased who serves in Israel’s parliament as chair of ommendations and until NASA provides a to share the following article written by a con- Diaspora Affairs, view the American war in timetable of compliance with recommendations stituent, Rabbi Israel Zoberman. Iraq to have a transforming impact on the of the Columbia Accident Investigation Board

VerDate jul 14 2003 04:33 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00010 Fmt 0626 Sfmt 9920 E:\CR\FM\A03MR8.032 E03PT1 March 3, 2004 CONGRESSIONAL RECORD — Extensions of Remarks E293 report, since NASA’s compliance will allow provides is integral to the work of researchers Mars exploration initiative. The agency will both a Hubble servicing mission and a mission in universities across the country and around be lucky to complete the station on time to the International Space Station to be carried the world. even with all three remaining shuttles devoted to the task. Servicing the Hubble out safely. Since NASA Administrator O’Keefe Mr. Speaker, this resolution will be wel- would be a diversion. cited safety concerns as the main reason for comed by school children, scientists, and in- The administration essentially argues that the cancellation of the mission, it seems to me terested citizens around the world who under- the scientific returns from extending that NASA must state how and when it plans stand that Hubble is a national treasure that Hubble’s life are not worth the risk and ef- to comply with the CAIB recommendations. we should not prematurely condemn to death. fort of a servicing flight. Our feeling is just Once the shuttles are deemed safe enough to I look forward to working with Members of the the opposite. The gains from extending fly, a trip to Hubble will be as safe as a trip House, including my colleagues on the Hubble’s life are real and achievable and to the Station. Indeed, there are some who Science Committee, to move forward with this should not be sacrificed for a distant exploration program that for now is mostly wish- argue that the Hubble mission will be the safer important initiative. ful thinking and can surely be delayed a bit. of the two. [From the New York Times, Feb. 29, 2004] f Hubble’s scientific contributions continue to PREMATURE DEATH FOR THE HUBBLE amaze us all, year in and year out. A few By all accounts the Hubble Space Tele- TRIBUTE TO TIMOTHY F. weeks ago Hubble detected oxygen and car- scope is one of the most productive scientific MALONEY bon in the atmosphere of a distant planet, the instruments in history. Orbiting high above first time the elements have been found at a the distorting effects of Earth’s atmosphere, HON. BENJAMIN L. CARDIN it has peered far out into space and back to- world outside our solar system. Hubble also OF MARYLAND ward the beginnings of time, producing im- contributed to the finding of new evidence IN THE HOUSE OF REPRESENTATIVES about recently discovered ‘‘dark energy.’’ ages of startling clarity. It has detected ex- Hubble measured properties of light from 16 tremely faint objects that can’t be seen from Wednesday, March 3, 2004 the Earth, calibrated the age and expansion Mr. CARDIN. Mr. Speaker, I rise today to exploding stars, or supernovas, to find that the rate of the universe, detected supermassive dark energy that pervades the universe might black holes in the cores of galaxies and gen- pay special tribute to Timothy F. Maloney who be what Einstein originally called the erally helped revolutionize our under- is being honored as Hibernian of the Year. ‘‘cosmological constant.’’ This discovery sup- standing of the universe. A distinguished Tim is a partner with the Greenbelt, MD law ports the theory that instead of ripping apart, panel of astronomers judged that Hubble firm of Joseph Greenwald & Laake, P.A. and the cosmos will continue expanding very slow- ‘‘has arguably had a greater impact on as- is a former member of the Maryland House of ly for at least the next 30 billion years. tronomy than any instrument since the Delegates. These are just recent discoveries. Hubble original astronomical telescope of Galileo.’’ He served in the Maryland House of Dele- remains one of the most productive scientific Yet now, just as Hubble was scheduled for gates from 1979 to 1995. When I was Speak- a major rejuvenation, the National Aero- instruments in history, and certainly NASA’s nautics and Space Administration has con- er of the Maryland House of Delegates, I most productive scientific mission, accounting signed it to slow death. The agency has can- came to know and appreciate his many talents for 35 percent of all its discoveries in the last celed a planned servicing mission that would and abilities. As a legislator, he chaired sub- 20 years. The Hubble has provided proof of have upgraded Hubble’s instruments and ex- committees on higher education, transpor- black holes, insights into the birth and death of tended its life past the end of the decade, tation, public safety and capital budgets. stars, spectacular views of Comet Shoemaker- making it likely that the telescope will run Tim stood out as a gifted legislator who had Levy 9’s collision with Jupiter, the age of the out of battery power and functioning gyro- a great sense of humor. He was known for universe, and evidence that the expansion of scopes by about 2007. Congress needs to pre- good fun practical jokes and on more than one vent the premature loss of this valuable in- occasion I was tempted to call out the Mary- the universe is accelerating. strument. So to me—and to so many others who have Cancellation of the servicing mission is land State Police to hunt him down (no com- voiced their opposition to NASA’s decision—it being justified on safety grounds, but that is parison to Texas intended). In recent years, seems as though canceling the mission is pre- not the whole story. Indeed, it looks as if he has put these talents to work as the Master mature at best. Hubble is being sacrificed primarily to make of Ceremonies of the annual Hibernian Dinner. I would rather not cynically believe, as some way for President Bush’s grand new plans to This year it is his turn to sit quietly at the head do, that the Hubble is being abandoned pri- send astronauts to the Moon and Mars in fu- table as his life transgressions are revealed. marily to enable the president’s Moon-Mars ture years. Once the shuttles are deemed safe Despite certain behavior lapses, he was an initiative to get underway. But there doesn’t enough to resume flying, probably early next extremely able and effective legislator. He was year, a shuttle flight to Hubble will be no seem to be any other explanation that makes more risky—and possibly even less risky— instrumental in the development and funding sense. than flights to the space station. The real of numerous capital projects, including the I have long believed that NASA needs a safety issue comes up if something goes Clarice Smith Performing Arts Center, the new vision for the future—but before this Con- wrong. A shuttle near the station might find Prince George’s County Courthouse, the Hy- gress and future Congresses commit to the safe haven and help in repairs. A shuttle attsville Justice Center and the College Park president’s expensive plan, NASA must first near Hubble could not. Airport Museum. His colleagues in the General generate broad public support and scientific Our guess is that with NASA on high alert Assembly voted him as one of the three ‘‘most backing for it. Today, as the general public after the Columbia tragedy, the next shuttle effective’’ members of the General Assembly flights will be the safest ever. Astronauts are and the scientific community alike call for paid to take risks, and there would be no in the WJLA-TV poll, although there is some Hubble to be saved, NASA risks undermining shortage of volunteers for a Hubble mission question and poll tampering by the Maloney its efforts to sell its Moon-Mars initiative to the that seems no more risky than other flights camp. public—not an auspicious beginning for a vi- and a lot more important scientifically. For the past 15 years, Mr. Maloney has sion that will require billions and decades to The Bush administration argues that been heavily involved in significant litigation complete. Hubble has passed its prime, that its unique- and administrative matters. These include I have attached a February 29 editorial from ness is diminishing, that advances in ground- complex litigation in federal and state courts in the New York Times calling for the administra- based telescopes enable them to do some of the District of Columbia and Maryland, and a tion to reconsider its decision. The final para- Hubble’s work and that future break- significant administrative practice before fed- throughs will require telescopes able to graph concludes, ‘‘The gains from extending search in other wavelengths than those used eral, state and local agencies. Surprisingly, he Hubble’s life are real and achievable and by Hubble. There is a germ of truth in all has never been a defendant. He is a member should not be sacrificed for a distant explo- those contentions, but a parade of experts of the District and Maryland Bar, and also is ration program that for now is mostly wishful have argued that Hubble, if serviced and up- admitted to practice before the Fourth Circuit thinking and can surely be delayed a bit.’’ dated, has years of great work ahead. There Court of Appeals and the U.S. Supreme Court. The gains from extending Hubble’s life are seems little doubt that the science still to be He serves on the Rules Committee of the indeed real and achievable. In addition to its done on Hubble is far more important than Maryland Court of Appeals, and frequently lec- past and potentially future scientific discov- anything likely to be accomplished on the tures to state and local bar organizations. space station. eries, Hubble provides information used by ap- The chief reason for Hubble’s demise is al- Mr. Maloney has worked tirelessly to im- proximately one million teachers per year most certainly NASA’s need to use its shut- prove our community and its many institutions. across the U.S. The demand for research time tles to finish building the space station by He is a member of the Executive Committee on the telescope far exceeds the time avail- 2010 so that the shuttles can be retired and of the University of Maryland Foundation, the able. The scientific imagery and data Hubble the money used for the president’s Moon- Administrative Board of the Maryland Catholic

VerDate jul 14 2003 04:33 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00011 Fmt 0626 Sfmt 9920 E:\CR\FM\A03MR8.036 E03PT1 E294 CONGRESSIONAL RECORD — Extensions of Remarks March 3, 2004 Conference, the Board of Trustees of Villa Office in Ben’s hometown of Knoxville, Ten- IN MEMORY OF HAROLD E. Julie College and the Board of Trustees of nessee be named in his honor. Senator DETWILER Archbishop Carroll High School. Atchley graduated from Young High School, I hope my colleagues in the U.S. House of just down the street from this post office. HON. BILL SHUSTER Representatives will join me in saluting Tim When Ben and his wonderful wife Sue were OF PENNSYLVANIA Maloney as a top litigator who has dedicated first married, their apartment window looked IN THE HOUSE OF REPRESENTATIVES much of his life to helping others and improv- out across the street to this very post office. ing our community. Later, Ben worked next door to the post office, Wednesday, March 3, 2004 f which will now be named after him. From high Mr. SHUSTER. Mr. Speaker, I rise today to school student to Senate Leader, Gentle Ben recognize Harold E. Detwiler who passed CELEBRATING GLOBAL BUSINESS has given back so much to his community and away on Saturday, January 31, 2004. He was CONTINUITY WEEK Tennessee. a wonderful person who contributed so much I am pleased to recognize Senator Atchley to his community. HON. TOM DAVIS for all of his many accomplishments and his Born on March 3, 1930, in New Enterprise, OF VIRGINIA work in the Tennessee General Assembly. PA, Mr. Detwiler was taught at a young age IN THE HOUSE OF REPRESENTATIVES The Tennessee congressional delegation and the advantages of freedom and democracy the U.S. House of Representatives proudly Wednesday, March 3, 2004 that this country offers its citizens. After grad- designate the facility of the United States uating from Replogle High School in 1948, Mr. DAVIS of Virginia. Mr. Speaker, Mr. Postal Service located at 137 East Young and marrying his wife, E. Anne Baker, on No- MORAN and I rise today to celebrate Global High Pike in Knoxville, Tennessee, most suit- vember 21, 1953, Harold became the personi- Business Continuity Week, which is being held ably, as the ‘‘Ben Atchley Post Office Build- fication of patriotism. He served with the mili- from March 7–12 this year. This international ing’’. tary police in the Korean War, rising to the week recognizes the disaster recovery profes- f rank of Private First Class before completing sionals, certified business continuity planners, HONORING THE TARPON SPRINGS his duty. He returned to Pennsylvania to serve and business executives who work closely as a deacon of St. John’s United Church of with first responders to protect our nation’s HIGH SCHOOL GIRLS’ SOCCER TEAM Christ in Martinsburg, where he later acted as economy and the global business community a member for the majority of his life. from unexpected disturbances. Mr. Detwiler found his business niche, how- This is the fourth year this week has been HON. MICHAEL BILIRAKIS ever, in the Mutual Insurance Industry. dedicated to educating the leaders of com- OF FLORIDA Throughout his life he acted as chairman of merce, industry, and governments on the im- IN THE HOUSE OF REPRESENTATIVES the PA Association of Mutual Insurance Com- portance of business continuity management. Wednesday, March 3, 2004 panies and the NAMIC Farm Underwriting There will be numerous events across the Mr. BILIRAKIS. Mr. Speaker, I rise today to Committee, in addition to acting as a member globe including meetings near Wall Street on honor the Tarpon Springs, Florida, High of the National Association of Mutual Insur- March 4–5 and a conference sponsored by School girls’ soccer team, which recently won ance Companies, the MSO board of directors, the ‘‘Disaster Recovery Journal’’ in Orlando the class 4A state soccer championship. the AAIS Advisory Council, the Mutual Inspec- the following week. I am especially proud of the Spongers, as tion Bureau board of directors, the Sparks Business continuity management serves to they are known, because I am a resident of Club, and the Eastern Mutual Group, among protect a wide array of organizations from all Tarpon Springs. I know how important ath- others. In recognition of the time and dedica- types of potential disruptions. We are proud to letics are to these young student-athletes and tion that he put in to attaining professionalism mention that much of the necessary training how their accomplishments reflect positively within the insurance industry, NAMIC honored and certification which enables businesses on our community. I am fortunate to have him with their merit award and the National worldwide to promptly respond in the face of been able to attend many athletic events at Service Award. With so much experience and disaster is provided by DRI International, lo- Tarpon Springs High School over the years education on the subject, Mr. Detwiler became cated in Northern Virginia. This week is essen- and always have been impressed with the the President and CEO of Everett Cash Mu- tial in raising awareness of the need for busi- spirit, determination, and skill of Sponger tual and Evergreene Insurance Companies, ness continuity management, while it also rec- teams, both boys and girls. eventually retiring from the position in 1998. ognizes the crucial role business continuity I also am heartened that these fine young Although he was a highly influential busi- professionals play in our economy. women recognize and acknowledge the impor- nessman throughout central Pennsylvania, Mr. Speaker, in closing, Mr. MORAN and I tance of faith in their lives. Team members Harold’s generosity within the community in are honored to congratulate all the businesses prayed together regularly and wrote the words which he lived far surpassed his fiscal con- participating in this commemorative week and ‘‘faith’’ and ‘‘believe’’ on their shin guards so tributions. From 1974 until 1993, he served on are proud to dedicate this acknowledgment to that they remembered the importance of their the Martinsburg Borough Council, eventually continuity planners worldwide. We call upon commitment to themselves, each other, and rising to the position of President. As a mem- our colleagues to join us in applauding their their faith. ber of the D. Merle Tipton VFW Post 43 and efforts, and thanking them for their daily con- I want to congratulate Coach John a leader of the Boy Scouts, he willingly tributions to the global business continuity. Freiermuth, and assistant coaches Jaimie passed down his knowledge to the children f Adkins and John Freiermuth, Jr., on leading who would benefit the most from his teach- their charges to victory and teaching such a ings. BEN ATCHLEY POST OFFICE fine group of young women about competition, Harold Detwiler was a man who refused to BUILDING sportsmanship, and excellence. settle for anything less than the best. He de- I also want to congratulate each of the SPEECH OF voted much of his time to the improvement of team’s members on their fine season: Kara society, and as a result, Martinsburg is a bet- HON. MARSHA BLACKBURN Torasso, Brandi Bianco, Whitney Gause, Re- ter place to live. He will be missed, but the OF TENNESSEE becca Smith, Giana Kase, Valerie Viggiano, legacy of his actions and the influence of his IN THE HOUSE OF REPRESENTATIVES Paige Beyer, Savannah Brum, Ashley Jeffris, spirit will never be forgotten. Jordan Beyer, Katy Conrad, Maria Tuesday, March 2, 2004 f Tagaropoulos, Kristen Freiermuth, Kaitlyn Mrs. BLACKBURN. Madam Speaker, today Dassat, Libby Gianeskis, Jessica Miller, Jes- PEACE CORPS WEEK 2004 I rise to pay tribute to a great Tennessee lead- sica Lukas, Brittany Gomez, Barbara Packard, er. State Senator Ben Atchley—better known Lindsey Davis, Alexia Berg, Megan HON. JIM McDERMOTT as Gentle Ben—has served in the Tennessee Nowikowski, and Jamie Ouverson. OF WASHINGTON General Assembly since 1972, where he Mr. Speaker, I hope our colleagues will join IN THE HOUSE OF REPRESENTATIVES began his service as Senate Republican lead- me in commending the Tarpon Springs High er in 1986. School girls’ soccer team for winning the class Wednesday, March 3, 2004 It is appropriate that today we take time to 4A state girls’ soccer championship and for Mr. MCDERMOTT. Mr. Speaker, Ralph thank Senator Atchley for his service and pro- the outstanding example they have set for us, Waldo Emerson once said, ‘‘Do not go where vide that the East Young High Pike U.S. Post their peers, and my community. the path may lead, go instead where there is

VerDate jul 14 2003 04:33 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00012 Fmt 0626 Sfmt 9920 E:\CR\FM\A03MR8.039 E03PT1 March 3, 2004 CONGRESSIONAL RECORD — Extensions of Remarks E295 no path and leave a trail.’’ This week marks ting that growth stand in the way of protecting sion of his was designing and constructing the 43rd anniversary of the Peace Corps. An the unique aspects of their city. This award is tree houses. Doug could be found traveling organization that is forging ahead, creating a one more reason why the Delaware area re- between lumberyards asking for discarded trail of peace and understanding around the mains a great place to live, work and raise a lumber, and using tree branches as a ladder, globe with the hope that one day all peoples family. climbed up to build elaborate homes in the of the world will follow. f sky, oh he loved his tree house. Since its inception in 1961, over 170,000 Mr. Speaker, we are all terribly saddened by Volunteers have served 137 countries. Peace THE MEDICARE PRESCRIPTION the loss of Doug Donnelly, but take comfort in Corps Volunteers serve as teachers, business DRUG IMPROVEMENT AND MOD- the knowledge that our grief is overshadowed advisors, information technology consultants, ERNIZATION ACT only by his legacy of courage and love of all health and HIV/AIDS educators, and youth that Doug left with all of us. Doug’s over- and agriculture workers. HON. ERIC CANTOR whelming ability to live life to its fullest is a The Peace Corps is expanding and last OF VIRGINIA true testament to the man he was and serves year entered or re-entered Albania, Azer- IN THE HOUSE OF REPRESENTATIVES as an inspiration for us all. baijan, Chad, and Fiji and in 2003 the number Wednesday, March 3, 2004 f of people applying to serve as Volunteers increased by 10 percent. Today there are 7,500 Mr. CANTOR. Mr. Speaker, I rise today in THE RECENT DC COURT DECISION individuals serving in 71 countries. This is the support of the Medicare Prescription Drug Im- ON FCC BROADBAND REGULATION highest number of Volunteers in the field in provement and Modernization Act, which was over 28 years. Of those 7,500 dedicated indi- signed into law in December by the President. HON. CHARLES A. GONZALEZ viduals there are 32 people I would especially I spent a lot of time in the district explaining OF TEXAS like to recognize: the new law to my seniors. They were excited IN THE HOUSE OF REPRESENTATIVES Carrie A. Abendroth, Katherine P. Barnett, to learn that this bill is about choices. It gives Wednesday, March 3, 2004 Micael D. Bogar, Nathan A. Borgford-Parnel, them the freedom to finally make choices that April R. Brown, John S. Brown, Robert P. better fit their own needs. Mr. GONZALEZ. Mr. Speaker, I wish to ex- Burns, Rosemary S. Burns, Rachel S. Medicare once was an outdated, one size press my support for yesterday’s decision by Chernin, Alison M. Coady, Kevin D. Cummins, fits all program. Well, we know that not every the U.S. Court of Appeals—D.C. Circuit re- Ross C. Doll, Joy M. Hamilton, Jennie A. Hurt, senior is the same. Through this legislation, garding the Triennial Review Order. The ruling Tracey A. Lake, Amber L. Lancaster, Mahri S. seniors now have a much better Medicare with sends a clear signal that the intent of Con- Leonard-Fleckma, Nathan S. Lubetkin, lots of options. And if they like what they have gress in the 1996 Telecommunications Act Susannah M. Malarkey, Luke A. Mattheis, now, they can keep it. But if they want to en- was to create a fair competitive marketplace Marin McCutcheon, Alec E. Metz, Joan M. Mi- hance their Medicare coverage, they have that which fosters job creation. chaels, Carrie J. Mitchell, Janet D. O’Neil, Te- choice. Regulatory uncertainty has been devastating resa L. Peterson, Jean R. Salls, Barbara P. Some examples of the choices seniors will to telecommunications workers and their fami- Schlieper, Blaine M. Somerville, Rebecca S. have include the option of a free welcome to lies. The FCC’s Triennial Review Order added Talbott, Joseph S. Trahan, Karen M. Yantis Medicare physical, diabetes screening, heart to this uncertainty by delegating broadband To those individuals I have just mentioned, disease screening, and disease management policy-making to the states. In my view it was you have made me and the people of the 7th programs. These options will enhance the not the intent of Congress to put fifty individual district very proud. We salute your selfless health of our nation’s seniors. states in charge of national broadband policy. dedication to the empowerment of people in This law not only gives seniors better ac- Rather it expected the FCC to ensure a com- developing countries and throughout the cess to health care and prescription drugs, it petitive national market for this critical tech- world. As your journey of good-will abroad puts seniors back in the driver seat when it nology. It is time for the FCC to put America’s comes to an end may you return home safe comes to their health care. consumers and small businesses first and use and continue to share your experiences with f its authority to ensure true broadband com- others so that they will endeavor to blaze their petition. TRIBUTE TO DOUG DONNELLY own trail using the Peace Corps as their I hope that the FCC follows the D.C. Cir- guide. cuit’s lead and uses its authority as intended f HON. SCOTT McINNIS by Congress to foster an environment that OF COLORADO spurs capital investments by telecommuni- HONORING THE CITY OF DELA- IN THE HOUSE OF REPRESENTATIVES cations companies rather than continue down WARE, OHIO FOR ITS DESIGNA- Wednesday, March 3, 2004 the road of regulatory uncertainty. TION AS A ‘‘PRESERVE AMER- f ICA’’ COMMUNITY Mr. MCINNIS. Mr. Speaker, it is with a heavy heart that I rise before you to pay trib- IN MEMORY OF BILL SAMBRAILO HON. PATRICK J. TIBERI ute to the life of a remarkable and loved man OF OHIO from my district. Doug Donnelly of Monte HON. SAM FARR IN THE HOUSE OF REPRESENTATIVES Vista, Colorado, passed away recently at the OF CALIFORNIA young age of forty-one. Doug will forever be IN THE HOUSE OF REPRESENTATIVES Wednesday, March 3, 2004 remembered for his kind heart and spirit and Mr. TIBERI. Mr. Speaker, I’m delighted to I would like to take this opportunity to remem- Wednesday, March 3, 2004 congratulate the City of Delaware for its des- ber Doug here today. Mr. FARR. Mr. Speaker, I rise today to ignation as a ‘‘Preserve America’’ community. Doug was my cousin; so I had the privilege honor the life of Bill Sambrailo, a community While Mayor Windell Wheeler and City Man- to interact with him over the years and watch leader who dedicated his life to improving the ager Tom Homan were in Washington recently a young man with challenges grow into a man agriculture industry. Mr. Sambrailo passed to receive the designation from First Lady of accomplishment. Throughout his life, Doug away on January 31st, 2004, at the age of 76. Laura Bush, the entire community is rightly helped us appreciate the surroundings around He is survived by his wife Eileen Bromber proud of this honor. The city was one of the us that we typically did not see or have time Sambrailo and three children, Mark, Judy, and first eight across the country to gain this title. for. From an early age, Doug was diagnosed Michael, as well as seven grandchildren. The ‘‘Preserve America’’ designation is with a debilitating condition that doctors told Bill Sambrailo was born in Watsonville, Cali- meant for those cities that have taken special his family would cause him never to walk and fornia to Charles and Henrietta King care to preserve their heritage. The city has affect his learning abilities. Doug’s determina- Sambrailo. He was an avid athlete and played approved special ordinances to protect the tion helped him overcome the odds facing on the football team at Watsonville High historical integrity of its neighborhoods. A four- him, eventually learning to walk and grad- School, graduating in 1945. Bill attended year, $5 million ‘‘Streetscape’’ improvement uating from Boulder High School to a standing Santa Clara University where he played run- project for the historic downtown area was ovation. ning back on the university football team, in- also recently completed. Doug was an accomplished student, a class cluding an appearance in the Orange Bowl. The Delaware area is among the fastest president, and would later work in the medical He graduated with a degree in business in growing in the country, but officials are not let- industry making medical devices. Another pas- 1950.

VerDate jul 14 2003 04:33 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00013 Fmt 0626 Sfmt 9920 E:\CR\FM\A03MR8.044 E03PT1 E296 CONGRESSIONAL RECORD — Extensions of Remarks March 3, 2004 Bill went on to manage his family’s busi- Lennex is going to be a hard act to follow. He he is abused and tortured. My Colleagues, we ness, with the help of his brother Chuck, and is a superb role model for the children of Flint. cannot allow Mr. Fernańdez Sainz to remain in quickly became an entrepreneur and inventor. His words are backed by his actions. He be- a gulag with totalitarian thugs who want to Bill helped the business grow by inventing lieves in the children and they believe in him. murder him. We must demand the immediate new corrugated tray designs for containing Aside from being an outstanding role model release of Juan Adolfo Fernańdez Sainz and produce, increasing their shelf life. He also and educator he is also a talented Gospel every prisoner of conscience languishing in started the Samco Plastic Company which in- singer. In 1996, he released two musical tapes the totalitarian gulags of the nightmare called vented and produced the green mesh baskets entitled Motivation and Inspiration. Lennex has the Castro regime. used for strawberries in the spring. He later in- received numerous accolades for his commu- f vented the clamshell package designed to nity services, but of them all, Lennex con- RECOGNIZING A KANSAS CITY store many varieties of produce ranging from siders his most esteemed award to be his rec- PHOTOJOURNALISM EXHIBIT potatoes, beans, peas, strawberries, blue- ognition by the City of Flint as Father of the AND CULTURAL EXCHANGE COM- berries, raspberries, and cherries. Samco Year 1990. Lennex is a faithful family man. MEMORATING THE 35TH ANNI- Plastic Company also holds a patent on His wife of 33 years is Linda. They have two VERSARY OF THE 1968 INVASION MIXIM packaging which produces extremely wonderful children named Erica and Sean. OF CZECHOSLOVAKIA efficient packaging materials that condense Mr. Speaker, as a Member of Congress, I the produce into smaller areas without dam- ask my colleagues in the 108th Congress to aging them. In addition to his agricultural suc- please join me in honoring my constituent and HON. KAREN McCARTHY cesses, Bill also became the founding director friend Mr. Lennex Burroughs and wishing him OF MISSOURI of the Pajaro Valley Bank, and later the direc- the very best in his retirement. IN THE HOUSE OF REPRESENTATIVES tor of the new First National Bank. f Wednesday, March 3, 2004 Mr. Speaker, I would like to express my Ms. MCCARTHY of Missouri. Mr. Speaker, I deepest sympathy to Bill’s family and honor FREEDOM FOR JUAN ADOLFO FERNA´ NDEZ SAINZ rise to honor the opening of Ladislav Bielik’s him by celebrating his life and contribution to photojournalism exhibit at the Art Incubator society. Furthermore, anyone who has pur- Gallery in Kansas City, Missouri. Ross P. Ma- chased strawberries or raspberries can thank HON. LINCOLN DIAZ-BALART rine, Honorary Consul of the Slovak Republic, Bill for the packaging that keeps them fresh. OF FLORIDA along with the Czech and Slovak Club of Bill was admired by all for his dedication to IN THE HOUSE OF REPRESENTATIVES Greater Kansas City have arranged for this both his business and community, and will be Wednesday, March 3, 2004 outstanding public showing from March 5 to greatly missed. March 31. Mr. Miroslav Wlachovsky of the Mr. LINCOLN DIAZ-BALART of Florida. Mr. f Embassy of the Slovak Republic will officially Speaker, I rise today to speak about Juan welcome guests to the exhibit on March 4. HONORING LENNEX BURROUGHS ´ Adolfo Fernandez Sainz, a prisoner of con- The collection commemorates the 35th anni- science in totalitarian Cuba. versary of the 1968 invasion of Czecho- Mr. Fernańdez Sainz worked for about 15 HON. DALE E. KILDEE slovakia by the Warsaw Pact armies, pic- years as an interpreter for government agen- OF MICHIGAN torially recorded through Ladislav Bielik’s pho- cies before being dismissed for his support of IN THE HOUSE OF REPRESENTATIVES tographs. democracy and the rule of law in 1994. After Wednesday, March 3, 2004 On the evening of August 20, 1968, Warsaw being forced from his government job, Mr. Pact armies comprised of soldiers from the Mr. KILDEE, Mr. Speaker, I rise before you Fernańdez Sainz began to expose the repres- Soviet Union, East Germany, Poland, Hungary today on behalf of the Flint Community School sion and corruption of the dictator’s regime as and Bulgaria invaded Czechoslovakia with the district, to honor Mr. Lennex Burroughs for 33 an independent journalist. He originally joined strength of approximately 200,000 troops and years of dedicated service to the children of the independent news agency Nueva Prensa 5,000 tanks to squelch the Czech movement Flint, Michigan. On Friday, March 12, 2004, and a year later became part of the Patria toward democracy. Bielik’s photograph of one the Flint Community School district will honor agency where he wrote about all aspects of Czechoslovakian’s desperate attempt to halt a Mr. Burroughs during a special retirement din- totalitarian Cuban society. Mr. Fernańdez tank captured the attention of the world and ner to be held at the Grace Emmanuel Baptist Sainz contributed to numerous foreign publica- became Life Magazine’s 1968 photograph of Church in my hometown of Flint, Michigan. tions and became a correspondent for Prima, the year. This exhibit further pictorially illus- Mr. Burroughs was born and raised in the Russian human rights news agency, in trates the haunting images of sacrifice made Inskter, Michigan. He graduated from Inskter July 2001. in pursuit of democracy from the first days of High School, where he was noted as an out- Because Mr. Fernańdez Sainz wrote the the invasion at Bratislava, Czechoslovakia. standing athlete. He received letters in foot- truth about a ruthless, repressive, bankrupt, The invasion crushed Secretary Alexander ball, basketball, and baseball. In 1966 he was and broken tyranny, he was arrested as part Dubcek’s new Action Program that promoted awarded the esteemed Willie Heston Scholar- of the brutal March 2003 crackdown against democratic elections and basic liberties. Prior ship-athletic award. Upon graduation from high Cuban pro-democracy activists. After a sham to the invasion, the country had enjoyed a school he immediately enrolled at the Univer- trial, where he was accused of supplying infor- short period referred to as Prague Spring that sity of Central Michigan on a football scholar- mation to the U.S. government and endan- revitalized their national culture. The impetus ship. He graduated from the University holding gering Cuban internal security, Mr. Fernańdez that perpetuated the Warsaw Pact wrath was a Master of Educational Leadership/Adminis- Sainz was sentenced to 15 years in the totali- a petition known as Two Thousand Words tration degree in 1978. In January of 1971 he tarian gulag. which called for democracy in Czechoslovakia. began his career with the Flint Community However, Castro’s ruthless machinery of re- The Warsaw Pact invasion in 1968 crushed School district as the physical education pression does not stop after sentencing inno- Czechoslovakia’s quest for democracy, seized teacher and community school director for cent Cubans to the totalitarian gulag. Accord- control of the government and killed hundreds Dewey Elementary School. During the span of ing to the U.S. State Department’s 2003 of protesters. In 1993, following the 1989 Vel- his career, Lennex held positions at the ele- Country Report on Human Rights Practices: vet Revolution, Czechoslovakia, through mentary, middle and high school level. He On December 6, a common prisoner in peaceful negotiations, evolved into two inde- holds tenure at Dewey, Manley, Cook, Scott, Holguin Provincial Prison beat 54-year-old pendent countries, the Slovak Republic and Cummings, Merrill, Washington, Coolidge, political prisoner Adolfo Fernandez Sainz the Czech Republic. Sobey, Civic Park Elementary, Bryant & Whit- until Fernandez was unconscious. The pris- On March 12, 1999, the Czech Republic of- tier Middle Schools and Northwestern High oner who carried out the beating was author- ficially became a member of the North Atlantic ized by prison guards to exercise control over School, and for the past fourteen years he has other inmates. Prison officials told Treaty Organization (NATO) at a ceremony I held the position of Principal of Civic Park Ele- Fernandez the common prisoner should have attended at the Harry S Truman Library in mentary. Lennex is a strong advocate of com- beaten him harder in order to kill him. In Independence, Missouri. The Slovak Republic munity education. He is committed to keeping April, Fernandez was sentenced to 15 years is expected to become a full member of NATO students, parents, and community involved in imprisonment for his work as an independent and the European Union in May of this year, all aspects of school functions. He strongly be- journalist. thus completing a long journey for independ- lieves that where there is community involve- Mr. Speaker, we cannot allow Mr. ence and achieving world status with accept- ment, a student’s education is enriched. Fernańdez Sainz to languish in a gulag where ance into NATO.

VerDate jul 14 2003 04:33 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00014 Fmt 0626 Sfmt 9920 E:\CR\FM\A03MR8.048 E03PT1 March 3, 2004 CONGRESSIONAL RECORD — Extensions of Remarks E297 Mr. Speaker, please join me in congratu- Mr. Ladislav Bielik’s historic photo exhibit cele- racy is to free thinking people throughout the lating Ross P. Marine, Honorary Consul for brates courage and perseverance and serves world. the Slovak Republic in Kansas City, Missouri as a timely reminder of how important democ- for arranging this significant cultural exchange.

VerDate jul 14 2003 04:33 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00015 Fmt 0626 Sfmt 0634 E:\CR\FM\A03MR8.051 E03PT1 E298 CONGRESSIONAL RECORD — Extensions of Remarks March 3, 2004 SENATE COMMITTEE MEETINGS Health, Education, Labor, and Pensions Armed Services To hold hearings to examine advantages Readiness and Management Support Sub- Title IV of Senate Resolution 4, and impediments in relation to a year committee agreed to by the Senate on February 4, round college calendar. To hold hearings to examine military 1977, calls for establishment of a sys- SD–430 readiness programs in review of the de- tem for a computerized schedule of all 10 a.m. fense authorization request for fiscal meetings and hearings of Senate com- Energy and Natural Resources year 2005. mittees, subcommittees, joint commit- To hold oversight hearings to examine SR–232A water supply issues in the arid West. tees, and committees of conference. MARCH 10 This title requires all such committees SD–366 9:30 a.m. to notify the Office of the Senate Daily Finance To hold hearings to examine the admin- Commerce, Science, and Transportation Digest—designated by the Rules Com- istration’s international trade agenda. To hold hearings to examine the use and mittee—of the time, place, and purpose SD–215 effects of steroids. of the meetings, when scheduled, and Governmental Affairs SR–253 any cancellations or changes in the To hold hearings to examine sustaining Armed Services meetings as they occur. the 9 million jobs in the $900 billion Emerging Threats and Capabilities Sub- committee As an additional procedure along mailing industry relating to postal reform. To hold hearings to examine the defense with the computerization of this infor- nuclear nonproliferation programs of mation, the Office of the Senate Daily SD–342 Appropriations the Department of Energy and the Co- Digest will prepare this information for Homeland Security Subcommittee operative Threat Reduction programs of the Department of Defense in review printing in the Extensions of Remarks To hold hearings to examine proposed of the defense authorization request for section of the CONGRESSIONAL RECORD budget estimates for fiscal year 2005 for fiscal year 2005; to be followed by on Monday and Wednesday of each border and transportation security. closed hearings in SR–232A. week. SD–124 SR–222 Appropriations Meetings scheduled for Thursday, Environment and Public Works March 4, 2004 may be found in the Daily Transportation, Treasury and General To hold hearings to examine the Presi- Government Subcommittee Digest of today’s RECORD. dent’s proposed fiscal year 2005 budget To hold hearings to examine budget and for the Environmental Protection management challenges for the Depart- Agency. MEETINGS SCHEDULED ment of Transportation. SD–406 SD–138 Foreign Relations MARCH 5 Aging To hold hearings to examine non- 9:30 a.m. To hold hearings to examine the new proliferation and arms control issues, Joint Economic Committee Medicare drug discount card. focusing on strategic choices. To hold hearings to examine the employ- SD–628 SD–419 ment situation for February. 10:30 a.m. Indian Affairs SD–562 Appropriations To hold oversight hearings to examine Commerce, Justice, State, and the Judici- proposed reorganization of major agen- MARCH 8 ary Subcommittee cies and functions related to Indian 12:30 p.m. To hold hearings to examine proposed trust reform matters within the De- Foreign Relations budget estimates for fiscal year 2005 for partment of the Interior. To hold a closed briefing regarding secu- the Department of Justice. SR–485 rity preparations for 2004 Olympic SD–192 Rules and Administration Games. 2:30 p.m. To hold hearings to examine the scope S–407, Capitol Energy and Natural Resources and operation of organizations reg- 2 p.m. National Parks Subcommittee istered under Section 527 of the Inter- Finance To hold hearings to examine S. 1306, to nal Revenue Code. To hold hearings to examine the nomina- introduce the efforts of the California SR–301 tions of Mark B. McClellan, of the Dis- Missions Foundation to restore and re- 10 a.m. trict of Columbia, to be Administrator pair the Spanish colonial and mission- Appropriations of the Centers for Medicare and Med- era missions in the State of California Defense Subcommittee icaid Services, Brian Carlton Roseboro, and to preserve the artworks and arti- To hold hearings to examine proposed of New Jersey, to be an Under Sec- facts of these missions, H.R. 1521, to budget estimates for fiscal year 2005 for retary of the Treasury, Donald Korb, of provide for additional lands to be in- Navy and Marine Corps programs. Ohio, to be Chief Counsel for the Inter- cluded within the boundary of the SD–192 nal Revenue Service and an Assistant Johnstown Flood National Memorial in Judiciary General Counsel in the Department of the State of Pennsylvania, H.R. 1446, to To hold hearings to examine the con- the Treasury, and Mark J. support the efforts of the California stitutional amendment authorizing Warshawsky, of Maryland, to be an As- Missions Foundation to restore and re- congress to prohibit physical desecra- sistant Secretary of the Treasury. pair the Spanish colonial and mission- tion of the flag of the United States. SD–215 SD–106 era missions in the State of California 3 p.m. Veterans’ Affairs and to preserve the artworks and arti- Foreign Relations To hold joint hearings with the House facts of these missions, S. 1430, to di- To hold a closed briefing on counter-ter- Committee on Veterans’ Affairs to ex- rect the Secretary of the Interior to rorism cooperation relating to Saudi amine the legislative presentation of conduct a study of the Baranov Mu- Arabia. the Veterans of Foreign Wars. seum in Kodiak, Alaska, for potential S–407, Capitol SH–216 inclusion in the National Park System, Joint Economic Committee MARCH 9 and S. 1687, to direct the Secretary of To hold hearings to examine issues rel- the Interior to conduct a study on the 9:30 a.m. ative to helping Americans save. preservation and interpretation of the Armed Services SD–628 To hold hearings to examine current and historic sites of the Manhattan Project 11:30 a.m. future worldwide threats to the na- for potential inclusion in the National Energy and Natural Resources tional security of the United States; to Park System. Business meeting to consider pending be followed by a closed session in SH– SD–366 calendar business. 219. Armed Services SD–366 SD–106 Readiness and Management Support Sub- 1 p.m. Commerce, Science, and Transportation committee Banking, Housing, and Urban Affairs Business meeting to consider pending To hold hearings to examine military International Trade and Finance Sub- calendar business; to be followed by a readiness programs in review of the de- committee hearing to examine the use of scientific fense authorization request for fiscal To hold hearings to examine Argentina’s information in federal policy. year 2005. financial crisis. SR–253 SR–232A SD–538

VerDate jul 14 2003 04:33 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00016 Fmt 0626 Sfmt 0634 E:\CR\FM\M03MR8.000 E03PT1 March 3, 2004 CONGRESSIONAL RECORD — Extensions of Remarks E299 2 p.m. Control and Reclamation Act of 1977 to Special Operations Command in de- Armed Services reauthorize collection of reclamation fending the homeland and in the global SeaPower Subcommittee fees, revise the abandoned mine rec- war on terrorism, in review of the de- To hold hearings to examine the posture lamation program, promote remining, fense authorization request for fiscal of the U.S. Transportation Command authorize the Office of Surface Mining year 2005; to be followed by a closed in review of the defense authorization to collect the black lung excise tax, session in SH–219. request for fiscal year 2005 and the fu- and make sundry other changes. SH–216 ture years defense program. SD–366 10 a.m. SR–232A 2 p.m. Health, Education, Labor, and Pensions 2:30 p.m. Armed Services Employment, Safety, and Training Sub- Judiciary Airland Subcommittee committee To hold hearings to examine judicial To hold hearings to examine Army nominations. Transformation in review of the de- To hold hearings to examine MSDS and SD–226 fense authorization request for fiscal OSHA hazardous commission. Energy and Natural Resources year 2005 and the future years defense SD–430 Public Lands and Forests Subcommittee program. Veterans’ Affairs To hold hearings to examine S. 1354, to SR–232A To hold joint hearings with the House resolve certain conveyances and pro- 2:30 p.m. Committee on Veterans’ Affairs to ex- vide for alternative land selections Energy and Natural Resources amine the legislative presentations of under the Alaska Native Claims Settle- To hold hearings to examine the nomina- the National Association of State Di- ment Act related to Cape Fox Corpora- tion of Sue Ellen Wooldridge, of Vir- rectors of Veterans Affairs, AMVETS, tion and Sealaska Corporation, S. 1575 ginia, to be Solicitor of the Depart- American Ex-Prisoners of War, the and H.R. 1092, both to direct the Sec- ment of the Interior. Vietnam Veterans of America, and the retary of Agriculture to sell certain SD–366 Military Officers Association of Amer- parcels of Federal land in Carson City ica. and Douglas County, Nevada, S. 1778, to MARCH 18 345 CHOB authorize a land conveyance between 10 a.m. 2:30 p.m. the United State and the City of Craig, Veterans’ Affairs Energy and Natural Resources Alaska, S. 1819 and H.R. 272, both to di- To hold joint hearings with the House Water and Power Subcommittee rect the Secretary of Agriculture to Committee on Veterans Affairs to ex- To hold hearings to examine S. 1085, to convey certain land to Lander County, amine the legislative presentations of provide for a Bureau of Reclamation Nevada, and the Secretary of the Inte- the Air Force Sergeants Association, program to assist states and local com- rior to convey certain land to Eureka the Retired Enlisted Association, Gold munities in evaluating and developing County, Nevada, for continued use as Star Wives of America, and the Fleet cemeteries, and H.R. 3249, to extend the rural and small community water sup- Reserve Association. ply systems, and S. 1732, to direct the term of the Forest Counties Payments 345 CHOB Committee. Secretary of the Interior to establish a rural water supply program in the Rec- SD–366 MARCH 23 Commerce, Science, and Transportation lamation States to provide a clean, 9:30 a.m. Science, Technology, and Space Sub- safe, affordable, and reliable water sup- Armed Services committee ply to rural residents. To hold hearings to examine atomic en- To hold hearings to examine NASA/Mars SD–366 ergy defense activities of the Depart- exploration program. ment of Energy relating to the Defense SR–253 MARCH 31 Authorization request for fiscal year 2005. 10 a.m. MARCH 11 SD–106 Health, Education, Labor, and Pensions 9:30 a.m. 10 a.m. Business meeting to consider pending Commerce, Science, and Transportation Health, Education, Labor, and Pensions calendar business. To hold hearings to examine lessons Substance Abuse and Mental Health Serv- SD–430 learned relating to the 1996 Tele- ices Subcommittee communications Act. To hold hearings to examine mental SEPTEMBER 21 SR–253 health services. 10 a.m. Governmental Affairs SD–430 To hold hearings to examine sustaining Veterans’ Affairs To hold joint hearings with the House the 9 million jobs in the $900 billion MARCH 24 mailing industry relating to postal re- Committee on Veterans’ Affairs to ex- form. 9:30 a.m. amine the legislative presentation of SD–342 Indian Affairs the American Legion. 10 a.m. To hold hearings to examine S. 1529, to 345 CHOB Health, Education, Labor, and Pensions amend the Indian Gaming Regulatory Children and Families Subcommittee Act to include provisions relating to the payment and administration of To hold hearings to examine child and CANCELLATIONS family issues. gaming fees. SD–430 SR–485 Energy and Natural Resources MARCH 10 To hold hearings to examine S. 2086, to MARCH 25 10 a.m. amend the Surface Mining Control and 9:30 a.m. Health, Education, Labor, and Pensions Reclamation Act of 1977 to improve the Armed Services Business meeting to consider pending reclamation of abandoned mines, and To hold hearings to examine the role of calendar business. S. 2049, to amend the Surface Mining the U.S. Northern Command and U.S. SD–430

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HIGHLIGHTS The House passed S. 2136, to extend the final report date and termination date of the National Commission on Terrorist Attacks Upon the United States, to provide additional funding for the Commission— clearing the measure for the President. The House passed H.R. 1561, United States Patent and Trademark Fee Modernization Act of 2003. Senate Grassley/Baucus Amendment No. 2646 (to Chamber Action Amendment No. 2645), modifying provisions relat- Routine Proceedings, pages S2019–S2176 ing to leasing. Page S2072 Measures Introduced: Four bills and two resolu- Bingaman Amendment No. 2651 (to Amendment tions were introduced, as follows: S. 2159–2162, and No. 2647), to expand the research credit. S. Res. 308–309. Pages S2105–06 Pages S2079–88 Measures Passed: By a unanimous vote of 93 yeas (Vote No. 31), Hatch Amendment No. 2647, to extend and modify U.S. Armed Forces Reimbursement: Committee the research credit. Pages S2073–88 on Armed Services was discharged from further con- Pending: sideration of S. 2057, to require the Secretary of De- Dodd Amendment No. 2660, to protect United fense to reimburse members of the United States States workers from competition of foreign Armed Forces for certain transportation expenses in- workforces for performance of Federal and State concurred by the members in connection with leave tracts. Page S2088 under the Central Command Rest and Recuperation A unanimous-consent agreement was reached pro- Leave Program before the program was expanded to viding for further consideration of the bill at 10:30 include domestic travel, and the bill was then a.m., on Thursday, March 3, 2004. Page S2171 passed. Page S2171 Messages From the President: Senate received the Jumpstart Our Business Strength (JOBS) Act: following message from the President of the United Senate began consideration of S. 1637, to amend the States: Internal Revenue Code of 1986 to comply with the Transmitting, pursuant to law, a notification of World Trade Organization rulings on the FSC/ETI the continuation of the national emergency blocking benefit in a manner that preserves jobs and produc- property of persons undermining democratic proc- tion activities in the United States, to reform and esses or institutions in Zimbabwe; to the Committee simplify the international taxation rules of the on Banking, Housing, and Urban Affairs. (PM–69) United States, agreeing to the committee amend- Page S2104 ment in the nature of a substitute, which will be considered as original text for the purpose of further Nominations Received: Senate received the fol- amendment, and taking action on the following lowing nomination: amendments proposed thereto: Pages S2025–S2102 Benjamin Grumbles, of Virginia, to be an Assist- Adopted: ant Administrator of the Environmental Protection Grassley/Baucus Amendment No. 2645, to pro- Agency. Page S2176 vide certain modifications to the revenue provisions. Record Votes: One record vote was taken today. Page S2072 (Total—31) Page S2088

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VerDate jul 14 2003 04:13 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00001 Fmt 0627 Sfmt 0627 E:\CR\FM\D03MR4.REC D03MR4 March 3, 2004 CONGRESSIONAL RECORD — DAILY DIGEST D171 Adjournment: Senate convened at 9:30 a.m., and emerging threats in review of the defense authoriza- adjourned at 6:36 p.m., until 9:30 a.m., on Thurs- tion request for fiscal year 2005, after receiving testi- day, March 4, 2004. (For Senate’s program, see the mony from Dale G. Uhler, Acquisition Executive remarks of the Acting Majority Leader in today’s and Senior Procurement Executive, Special Oper- Record on page S2171.) ations Acquisition and Logistics Center, United States Special Operations Command; Brigadier Gen- Committee Meetings eral Thomas D. Waldhauser, USMC, Commanding General, Marine Corps Warfighting Laboratory, Vice (Committees not listed did not meet) Chief, Office of Naval Research; Brigadier General Charles A. Cartwright, USA, Deputy Commanding APPROPRIATIONS: DEPARTMENT OF General for Systems of Systems Integration, United ENERGY States Army Research, Development and Engineer- Committee on Appropriations: Subcommittee on Energy ing Command; Ronald M. Sega, Director, Defense and Water Development concluded a hearing to ex- Research and Engineering; Thomas H. Killion, Act- amine proposed budget estimates for fiscal year 2005 ing Deputy Assistant Secretary of the Army for Re- for the Department of Energy’s Office of Science, Of- search and Technology, Chief Scientist; Rear Admi- fice of Nuclear Energy, Science and Technology, and ral Jay M. Cohen, USN, Chief of Naval Research; Office of Energy Efficiency and Renewable Energy, and James B. Engle, Deputy Assistant Secretary of after receiving testimony from David Garman, As- the Air Force for Science, Technology and Engineer- sistant Secretary, Energy Efficiency and Renewable ing. Energy, Raymond L. Orbach, Director, Office of DEPARTMENT OF DEFENSE Science, and William D. Magwood, IV, Director, AUTHORIZATION Office of Nuclear Energy, Science and Technology, all of the Department of Energy. Committee on Armed Services: Subcommittee on Seapower concluded a hearing to examine future APPROPRIATIONS: DISTRICT OF Navy and Marine Corps capabilities and require- COLUMBIA ments in review of the defense authorization request Committee on Appropriations: Subcommittee on the for fiscal year 2005 and the future years defense pro- District of Columbia concluded a hearing to examine gram, after receiving testimony from John J. Young, proposed budget estimates for fiscal year 2005 for Jr., Assistant Secretary of the Navy for Research, De- the government of the District of Columbia, focus- velopment and Acquisition; Vice Admiral John B. ing on Court Services, Offender Supervision Agency, Nathman, USN, Deputy Chief of Naval Operations and the Public Defender Service, after receiving tes- for Warfare Requirements and Programs; Vice Ad- timony from Paul A. Quander, Jr., Director, Court miral J. Cutler Dawson, Jr., USN, Deputy Chief of Services and Offender Supervision Agency for the Naval Operations for Resources, Requirements and District of Columbia; Ronald S. Sullivan, Jr., Direc- Assessments; Lieutenant General Robert Magnus, tor, Public Defender Service for the District of Co- USMC, Deputy Commandant for Programs and Re- lumbia; and Rev. Donald Isaac, East of the River sources, Headquarters, United States Marine Corps; Clergy-Police-Community Partnership, Washington, and Lieutenant General Edward Hanlon, Jr., USMC, D.C. Commanding General, Combat Development Com- APPROPRIATIONS: DEPARTMENT OF THE mand, United States Marine Corps. ARMY 2005: BUDGET Committee on Appropriations: Subcommittee on Defense Committee on the Budget: Committee met to mark up concluded a hearing to examine proposed budget es- a proposed concurrent resolution setting forth the timates for fiscal year 2005 for the Department of fiscal year 2005 budget for the Federal Government, the Army, after receiving testimony from R. Les but did not complete consideration thereon, and will Brownlee, Acting Secretary of the Army; and Gen- meet again tomorrow. eral Peter T. Schoomaker, Chief of Staff, Department CLIMATE CHANGE of the Army. Committee on Commerce, Science, and Transportation: DEPARTMENT OF DEFENSE Committee concluded a hearing to examine the im- AUTHORIZATION pact and consequences of climate change, focusing on Committee on Armed Services: Subcommittee on Emerg- its implications for society, effects of burning of fos- ing Threats and Capabilities concluded a hearing to sil fuels (coal, oil, and natural gas), and climate vari- examine the role of defense science and technology ability and changes across the Arctic region, includ- in the global war on terrorism and in preparing for ing issues relative to UV radiation, after receiving

VerDate jul 14 2003 04:13 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00002 Fmt 0627 Sfmt 0627 E:\CR\FM\D03MR4.REC D03MR4 D172 CONGRESSIONAL RECORD — DAILY DIGEST March 3, 2004 testimony from Senator Lieberman; Marvin A. Gel- General Accounting Office; and Steve Ellis, Tax- ler, Stony Brook University Institute for Terrestrial payers for Common Sense, Washington, D.C. and Planetary Atmospheres, Stonybrook, New York; Jerry Mahlman, National Center for Atmospheric HEALTH INSURANCE CHALLENGES Research, Boulder, Colorado; Robert W. Corell, Arc- Committee on Finance: Committee concluded a hearing tic Climate Impact Assessment, Lee Hannah, Cli- to examine health insurance challenges, focusing on mate Change Biology, and Lara Hansen, World insurance scams, and their effect on workers and Wildlife Fund Climate Change Program, all of Washington, D.C. their families, and business owners who wish to provide health benefits, after receiving testimony from IMPACT OF ABORTION Ann L. Combs, Assistant Secretary of Labor for Em- Committee on Commerce, Science, and Transportation: Sub- ployee Benefits Security; Kathryn G. Allen, Director, committee on Science, Technology and Space con- Health Care—Medicaid and Private Health Insur- cluded a hearing to examine the impact of abortion ance Issues, and Robert J. Cramer, Managing Direc- on women, after receiving testimony from Georgette tor, Office of Special Investigations, both of the Forney, National Organization of Episcopalians for General Accounting Office; Fred Nepple, Wisconsin Life (NOEL), Sewickley, Pennsylvania; Michaelene Office of the Commissioner of Insurance, Madison, Jenkins, Life Resource Network, San Diego, Cali- on behalf of the National Association of Insurance fornia; Roselyn Smith-Withers, The Pavilion of God, Commissioners ERISA Working Group; and Jose Washington, D.C., on behalf of the Clergy Advisory Montemayor, Texas Department of Insurance, Aus- Committee of the Religious Coalition for Reproduc- tin; Mila Kofman, Georgetown University Health tive Choice (RCRC); Elizabeth Shadigian, University Policy Institute, Washington, D.C.; Marie Almond, of Michigan Department of Obstetrics and Gyne- Albemarle, North Carolina; and Joan Piantadosi, cology, Ann Arbor; and Nada L. Stotland, Rush Deerfield Beach, Florida. Medical College, Chicago, Illinois. FOREIGN AFFAIRS AGENCIES OUTFITTER POLICY ACT Committee on Foreign Relations: Committee concluded Committee on Energy and Natural Resources: Sub- a hearing to examine S. 2127, to build operational committee on Public Lands and Forests concluded a readiness in civilian agencies, focusing on post con- hearing to examine S. 1420, to establish terms and conditions for use of certain Federal land by outfit- flict stabilization and reconstruction requiring a ters and to facilitate public opportunities for the rec- broadly-based government response, including Fed- reational use and enjoyment of such land, after re- eral efforts to fulfill ongoing objectives in Iraq and ceiving testimony from David Tenny, Deputy Under Afghanistan, after receiving testimony from James Secretary of Agriculture for Natural Resources and Dobbins, RAND International Security and Defense Environment; Jim Hughes, Deputy Director, Bureau Policy Center, John J. Hamre, Center for Strategic of Land Management, Department of the Interior; and International Studies, and Hans Binnendijk, Na- Todd Davidson, Oregon Tourism Commission, tional Defense University, all of Washington, D.C. Salem, on behalf of the Western States Tourism Pol- icy Council; David L. Brown, America Outdoors, BUSINESS MEETING Knoxville, Tennessee; and Dave Simon, Sierra Club, Committee on Indian Affairs: Committee met and ap- San Francisco, California. proved the committee’s views and estimates with re- EPA GRANTS MANAGEMENT spect to the President’s proposed budget request for fiscal year 2005 for Indian programs. Committee on Environment and Public Works: Com- mittee concluded an oversight hearing to examine NATIONAL MUSEUM OF THE AMERICAN grants management within the Environmental Pro- INDIAN tection Agency, focusing on a comprehensive system of management controls and initiatives to address Committee on Indian Affairs: Committee concluded an grants management challenges, after receiving testi- oversight hearing to examine the status of the com- mony from David J. O’Connor, Acting Assistant Ad- pletion of the Smithsonian Institution’s National ministrator for the Office of Administration and Re- Museum of the American Indian, after receiving tes- sources Management, and Melissa Heist, Assistant timony from W. Richard West, Jr., Director, Na- Inspector General for Audit, both of the Environ- tional Museum of the American Indian; and Jac- mental Protection Agency; John B. Stephenson, Di- queline Johnson, National Congress of American In- rector, Natural Resources and the Environment, dians, of Washington, D.C.

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JUDICIAL ACTIVISM VS. DEMOCRACY liance of Greater Boston; Daniel de Leon, Sr., Committee on the Judiciary: Subcommittee on the Con- Templo Calvario, Santa Ana, California, on behalf of stitution, Civil Rights and Property Rights con- Associacion Evangelica de Ministerios Nacionales cluded a hearing to examine national implications of (AMEN); Hilary Shelton, National Association for the Massachusetts Goodridge decision and the judi- the Advancement of Colored People, and Chuck cial invalidation of traditional marriage laws, after Muth, Citizen Outreach, both of Washington D.C.; receiving testimony from Nebraska Attorney General R. Lea Brilmayer, Yale University School of Law, Jon Bruning, Lincoln; Richard Richardson, St. Paul New Haven, Connecticut; and Maggie Gallagher, In- African Methodist Episcopal (AME) Church, Boston, stitute for Marriage and Public Policy, New York, Massachusetts, on behalf of the Black Ministerial Al- New York. h House of Representatives

tories, by a 2⁄3 yea-and-nay vote of 404 yeas to1 Chamber Action nays, Roll No. 35; Pages H757–59, H787–88 Measures Introduced: 11 public bills, H.R. Amending the Stevenson-Wydler Technology In- 3879–3889; and 1 resolution, H. Res. 550, were innovation Act of 1980: H.R. 3389, to amend the troduced. Page H830 Stevenson-Wydler Technology Innovation Act of Additional Cosponsors: Pages H830–31 1980 to permit Malcolm Baldrige National Quality Reports Filed: No reports were filed today. Awards to be made to nonprofit organizations, by a 2⁄3 yea-and-nay vote of 408 yeas with none voting Speaker Pro Tempore: Read a letter from the ‘‘nay’’, Roll No. 36; and Pages H759–62, H788–89 Speaker wherein he appointed Representative Shaw to act as Speaker Pro Tempore for today. Page H755 Copyright Royalty and Distribution Reform Act of 2003: H.R. 1417, amended, to amend title 17, Suspensions: The House agreed to suspend the rules United States Code, to replace copyright arbitration and pass the following measures: royalty panels with a Copyright Royalty Judge, by Urging the introduction of a resolution calling a 2⁄3 yea-and-nay vote of 406 yeas with none voting upon the Government of the People’s Republic of ‘‘nay’’, Roll No. 37. Pages H762–72, H789 China to end its human rights violations in Agreed to amend the title so as to read: to amend China: Debated on Tuesday, March 2, H. Res. 530, title 17, United States Code, to replace copyright ar- amended, urging the appropriate representative of bitration royalty panels with Copyright Royalty the United States to the 60th session of the United Judges. Page H789 Nations Commission on Human Rights to introduce a resolution calling upon the Government of the Suspensions—Proceedings Postponed: The House People’s Republic of China to end its human rights completed debate on the following measures to suspend the rules. Further proceedings were postponed violations in China, by a 2⁄3 yea-and-nay vote of 402 yeas to 2 nays, Roll No. 34; Page H787 until Thursday, March 4. Agreed to amend the title so as to read: resolution Honoring the men and women of the Drug En- urging the appropriate representative of the United forcement Administration on the occasion of its States to the 60th Session of the United Nations 30th Anniversary: H. Res. 412, honoring the men Commission on Human Rights to introduce a reso- and women of the Drug Enforcement Administration lution calling upon the Government of the People’s on the occasion of its 30th Anniversary; and Republic of China to end its human rights violations Pages H772–78 in China. Page H787 Supporting the goals of Japanese American, Charles ‘Pete’ Conrad Astronomy Awards Act: German American, and Italian American commu- H.R. 912, amended, to authorize the Administrator nities in recognizing a National Day of Remem- of the National Aeronautics and Space Administra- brance: H. Res. 56, supporting the goals of the Jap- tion to establish an awards program in honor of anese American, German American, and Italian Charles ‘‘Pete’’ Conrad, astronaut and space scientist, American communities in recognizing a National for recognizing the discoveries made by amateur as- Day of Remembrance to increase public awareness of tronomers of asteroids with near-Earth orbit trajec- the events surrounding the restriction, exclusion, and

VerDate jul 14 2003 04:13 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00004 Fmt 0627 Sfmt 0627 E:\CR\FM\D03MR4.REC D03MR4 D174 CONGRESSIONAL RECORD — DAILY DIGEST March 3, 2004 internment of individuals and families during World national Relations and ordered printed (H. Doc. War II. Pages H778–84 108–168). Page H784 Recess: The House recessed at 12:25 p.m. and re- Senate Message: Message from the Senate appears convened at 1:33 p.m. Page H785 today on page H755. National Commission on Terrorist Attacks Upon Senate Referral: S. 2136 was held at the desk. the United States: By unanimous consent the Amendments: Amendments ordered printed pursu- House passed S. 2136, to extend the final report ant to the rule appear on page H831. date and termination date of the National Commis- sion on Terrorist Attacks Upon the United States, to Quorum Calls—Votes: Five yea-and-nay votes de- provide additional funding for the Commission— veloped during the proceedings today. There were no quorum calls. Pages H787, H787–88, H788–89, H789, H803 clearing the measure for the President. Page H785 Rule for Consideration of Commercial Space Adjournment: The House met at 10 a.m. and ad- Launch Amendments Act of 2004: The House journed at 9:25 p.m. agreed to H. Res. 546, the rule providing for consideration of H.R. 3752, to promote the development Committee Meetings of the emerging commercial human space flight in- BUDGET VIEWS AND ESTIMATES dustry, to extend the liability indemnification re- Committee on Agriculture: Approved Committee’s gime for the commercial space transportation indus- Budget Views and Estimates for Fiscal Year 2005 for try, to authorize appropriations for the Office of the submission to the Committee on the Budget. Associate Administrator for Commercial Space Transportation, by a voice vote. Pages H785–86 AGRICULTURE, RURAL DEVELOPMENT, FHA AND RELATED AGENCIES Recess: The House recessed at 2:32 p.m. and recon- APPROPRIATIONS vened at 4:08 p.m. Pages H789–90 Committee on Appropriations: Subcommittee on Agri- United States Patent and Trademark Fee Mod- culture, Rural Development, Food and Drug Admin- ernization Act of 2003—Order of Business: istration and Related Agencies held a hearing on In- Agreed by unanimous consent that the amendment spector General. Testimony was heard from the fol- placed at the desk be considered as the amendment lowing officials of the USDA: Phyllis K. Fong, In- printed in H. Rept. 108–431 and numbered 1. spector General; Joyce N. Fleischman, Deputy In- Page H790 spector General; Robert W. Young, Jr., Assistant In- United States Patent and Trademark Fee Mod- spector General, Audit; Jon E. Novak, Deputy As- ernization Act of 2003: The House passed H.R. sistant Inspector General, Investigations; Delmas R. 1561, to amend title 35, United States Code, with Thornsbury, Director, Resources Management Divi- respect to patent fees, by a yea-and-nay vote of 379 sion; and Stephen B. Dewhurst, Budget Officer. yeas to 28 nays, Roll No. 38. Pages H793–S804 COMMERCE, JUSTICE, STATE, JUDICIARY Pursuant to the rule, the amendment in the na- AND RELATED AGENCIES ture of a substitute was considered as an original bill APPROPRIATIONS for the purpose of amendment. Page H799 Committee on Appropriations: Subcommittee on Com- Agreed to: merce, Justice, State, Judiciary and Related Agencies Sensenbrenner amendment that creates a ‘‘refund’’ held a hearing on the Secretary of State. Testimony program to eliminate the potential for diverting was heard from Colin L. Powell, Secretary of State. PTO revenue to non-PTO revenue programs and sets other regulations on patent searches (agreed to by INTERIOR AND RELATED AGENCIES voice vote). Pages H801–03 APPROPRIATIONS H. Res. 547, the rule providing for consideration Committee on Appropriations: Subcommittee on Interior of the bill was agreed to by a voice vote. and Related Agencies held a hearing on the Forest Pages H790–93 Service. Testimony was heard from Dale Bosworth, Meeting Hour: Agreed that when the House ad- Chief, Forest Service, USDA. journ today, it adjourn to meet at 11:30 a.m. on LABOR, HHS, EDUCATION AND RELATED Thursday, March 4. Page H804 AGENCIES APPROPRIATIONS Presidential Message: Read a letter from the Presi- Committee on Appropriations: Subcommittee on Labor, dent wherein he notified Congress of the continu- Health and Human Services, Education and Related ation of the National Emergency with respect to Agencies held a hearing on P–16 Education Systems. Zimbabwe—referred to the Committee on Inter- Testimony was heard from public witnesses.

VerDate jul 14 2003 04:13 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00005 Fmt 0627 Sfmt 0627 E:\CR\FM\D03MR4.REC D03MR4 March 3, 2004 CONGRESSIONAL RECORD — DAILY DIGEST D175 MILITARY CONSTRUCTION sional Research Services, Library of Congress: Chris- APPROPRIATIONS topher Bolkcom; and Ronald O’Rourke, both Spe- Committee on Appropriations: Subcommittee on Mili- cialists in National Defense. tary Construction held a hearing on Family Housing NATIONAL DEFENSE AUTHORIZATION Privatization. Testimony was heard from William A. BUDGET REQUEST Armbruster, Deputy Assistant Secretary, Privatiza- Committee on Armed Services: Subcommittee on Total tion and Partnerships, Department of the Army. Force held a hearing on the Fiscal Year 2005 Na- The Subcommittee also held a hearing on Central tional Defense Authorization budget request on Command Budget Request. Testimony was heard Military Resale and Morale, Welfare and Recreation from Gen. John Abizaid, USA, Commander, U.S. Programs. Testimony was heard from the following Central Command, Department of Defense. officials of the Department of Defense: Charles S. TRANSPORTATION, TREASURY AND Abell, Principal Under Secretary, Personnel and INDEPENDENT AGENCIES Readiness; Maj. Gen. Mike Wiedemer, USAF, Direc- APPROPRIATIONS tor, Defense Commissary Agency; Maj. Gen. Kath- Committee on Appropriations: Subcommittee on Trans- ryn Frost, USA, Commander, Army and Air Force portation, Treasury and Independent Agencies held a Exchange Service Command; Rear Adm. William J. hearing on the Secretary of Transportation. Testi- Maguire, USN, Supply Corps, U.S. Navy, Com- mony was heard from Norman Y. Mineta, Secretary mander, Navy Exchange Service Command; and Mi- of Transportation. chael P. Downs, USMC, Director, Personnel and Family Readiness Division, Headquarters, U.S. Ma- VA, HUD, AND INDEPENDENT AGENCIES rine Corps; and public witnesses. APPROPRIATIONS Committee on Appropriations: Subcommittee on VA, MEMBERS’ DAY HUD, and Independent Agencies on the Department Committee on the Budget: Held a hearing on Members’ of Housing and Urban Development. Testimony was Day. Testimony was heard from Representatives heard from the following officials of HUD: Michael Young of Alaska, Hunter, Skelton, Evans, LoBiondo, Liu, Assistant Secretary, Public and Indian Housing; Kirk, Hayes, Mica, Herger, Tiahrt, Ehlers, Bordallo, and John C. Weicher, Assistant Secretary, Housing/ Radanovich, Ryan of Wisconsin, Rogers of Alabama, Federal Housing Commissioner. Case, Blackburn, Issa, Shaw, Alexander, Ross, Miller of Florida, Holt and Biggert. NATIONAL DEFENSE AUTHORIZATION BUDGET REQUEST—DOD ‘‘NO CHILD LEFT BEHIND: IMPROVING Committee on Armed Services: Held a hearing on the RESULTS FOR CHILDREN WITH Fiscal Year 2005 National Defense Authorization DISABILITIES’’ budget request for the Department of Defense. Testi- Committee on Education and the Workforce: Held a hear- mony was heard from the following officials of the ing entitled ‘‘No Child Left Behind: Improving Re- Department of Defense: General John Abizaid, USA, sults for Children with Disabilities.’’ Testimony was Commander, U.S. Central Command; and Peter W. heard from public witnesses. Rodman, Assistant Secretary, International Security MISCELLANEOUS MEASURES; COMMITTEE Affairs. BUSINESS NATIONAL DEFENSE AUTHORIZATION Committee on Energy and Commerce: Ordered reported BUDGET REQUEST the following measures: H.R. 3717, amended, Committee on Armed Services: Subcommittee on Projec- Broadcast Decency Enforcement Act of 2004; H.R. tion Forces held a hearing on the Fiscal Year 2005 3261, unfavorably, Database and Collections of In- National Defense Authorization budget request— formation Misappropriation Act; H.R. 3658, amend- Department of Defense Capabilities for Conducting ed, Stroke Treatment and Ongoing Prevention Act; Conventional Long-range Strike Operations. Testi- H. Res. 522, Expressing the sense of the House of mony was heard from the following officials of the Representatives that there is a critical need to in- Department of Defense: Lt. Gen. James E. Cart- crease awareness and education about heart disease wright, USMC, Director, Force Structure, Resources and the risk factors of heart disease among women; and Assessment (J8), Joint Chiefs of Staff; Gen. T. S. 1881, amended, Medical Devices Technical Cor- Michael Moseley, USAF, Vice Chief of Staff, U.S. rections Act; and H.R. 3872, Consumer Access to Air Force; and Rear Adm. Mark P. Fitzgerald, USN, Information Act of 2004. Director, Air Warfare, Staff, Chief of Naval Oper- The Committee also approved pending Committee ations; and the following officials of the Congres- business.

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STOCK OPTION ACCOUNTING REFORM Hemisphere Affairs; Arthur E. Dewey, Assistant Sec- ACT retary, Bureau of Population, Refugees, and Migra- Committee on Financial Services: Subcommittee on Cap- tion; and Adolfo A. Franco, Assistant Administrator, ital Markets, Insurance, and Government Sponsored Bureau for Latin America and the Caribbean, AID; Enterprises held a hearing on H.R. 3574, Stock Op- Timothy M. Carney, former U.S. Ambassador to tion Accounting Reform Act. Testimony was heard Haiti; and public witnesses. from public witnesses. OVERSIGHT—FINANCIAL REPORT U.S. ‘‘MINERALS AND ENERGY; OUTSOURCING GOVERNMENT FISCAL YEAR 2003 AMERICAN JOBS OVERSEAS’’ Committee on Government Reform: Subcommittee on Committee on Resources: Subcommittee on Energy and Government Efficiency and Financial Management Mineral Resources held an oversight hearing entitled held an oversight hearing on ‘‘Financial Report of ‘‘Minerals and Energy: Outsourcing American Jobs the U.S. Government for Fiscal Year 2003.’’ Testi- Overseas.’’ Testimony was heard from public wit- mony was heard from David M. Walker, Comp- nesses. troller General, GAO; Linda M. Springer, Controller, Office of Federal Financial Management, OMB; and REVIEW—HYDROGEN FUEL AND Donald V. Hammond, Fiscal Assistant Secretary, De- FREEDOMCAR INITIATIVES partment of the Treasury. Committee on Science: Held a hearing to Review the FEDERAL INFORMATION TECHNOLOGY Hydrogen Fuel and FreedomCAR Initiatives. Testi- INVESTMENT MANAGEMENT mony was heard from David K. Garman, Assistant Committee on Government Reform: Subcommittee on Secretary, Energy Efficiency and Renewable Energy, Technology, Information Policy, Intergovernmental Department of Energy; and public witnesses. Relations and the Census held a hearing entitled ‘‘Federal Information Technology Investment Man- DOD INTELLIGENCE SURVEILLANCE AND agement, Strategic Planning, and Performance Meas- RECONNAISSANCE urement: 60 Billion Reasons Why.’’ Testimony was Permanent Select Committee on Intelligence: Met in execu- heard from the following officials of the OMB: Clay tive session to hold a hearing on Department of De- Johnson III, Deputy Director, Management and fense Intelligence Surveillance and Reconnaissance. Budget; and Karen S. Evans, Administrator, E-Gov- Testimony was heard from departmental witnesses. ernment and Information Technology; and David A. Powner, Director, Information Technology Manage- ENABLING INFORMATION SHARING ment Issues, GAO. ACROSS INTELLIGENCE COMMUNITY RESOLUTION REGARDING DEATH OF Permanent Select Committee on Intelligence: Sub- MACEDONIAN PRESIDENT; U.S. PRIORITIES IN EUROPE committee on Technical and Tactical Intelligence met in executive session to hold a hearing on Ena- Committee on International Relations: Subcommittee on bling Information Sharing Across the Intelligence Europe approved for full Committee action H. Res. Community. Testimony was heard from depart- 540, Expressing the condolences and deepest sym- mental witnesses. pathies of the House of Representatives for the un- timely death of Macedonian President Boris DEPARTMENT OF HOMELAND SECURITY— Trajkovski. EMERGENCY PREPAREDNESS AND The Subcommittee also held a hearing on U.S. Priorities in Europe. Testimony was heard from A. RESPONSE DIRECTORATE BUDGET Elizabeth Jones, Assistant Secretary, Bureau of Euro- Select Committee on Homeland Security: Subcommittee pean and Eurasian Affairs, Department of State. on Emergency Preparedness and Response held a SITUATION IN HAITI hearing entitled ‘‘Department of Homeland Security Emergency Preparedness and Response Directorate Committee on International Relations: Subcommittee on Fiscal Year 2005 Budget.’’ Testimony was heard Western Hemisphere held a hearing on The Situa- from Michael D. Brown, Under Secretary, Emer- tion in Haiti. Testimony was heard from the fol- gency Preparedness and Response, Department of lowing officials of the Department of State: Roger F. Homeland Security. Noriega, Assistant Secretary, Bureau of Western

VerDate jul 14 2003 04:13 Mar 04, 2004 Jkt 029060 PO 00000 Frm 00007 Fmt 0627 Sfmt 0627 E:\CR\FM\D03MR4.REC D03MR4 March 3, 2004 CONGRESSIONAL RECORD — DAILY DIGEST D177 NEW PUBLIC LAWS Transportation, W. Douglas Buttrey, of Tennessee, and Francis Mulvey, of Maryland, both to be a Member of the (For last listing of Public Laws, see DAILY DIGEST, p. D137) Surface Transportation Board, 2:30 p.m., SR–253. H.R. 743, to amend the Social Security Act and Committee on Energy and Natural Resources: to hold hear- the Internal Revenue Code of 1986 to provide addi- ings to examine the Energy Information Administration tional safeguards for Social Security and Supple- (EIA) Annual Energy Outlook 2004 forecast regarding mental Security Income beneficiaries with representa- the supply, demand, and price projections for oil, natural tive payees, to enhance program protections. Signed gas, nuclear, coal and renewable sources, including com- on March 2, 2004. (Public Law 108–203). mercial and market perspectives on the state of oil and S. 523, to make technical corrections to law relat- natural gas markets, 10 a.m., SD–366. ing to Native Americans. Signed on March 2, 2004. Subcommittee on Energy, to hold hearings to examine (Public Law 108–204). new nuclear power generation in the United States, 2:30 p.m., SD–366. f Committee on Foreign Relations: business meeting to con- COMMITTEE MEETINGS FOR THURSDAY, sider S. 2144, to authorize appropriations for the Depart- MARCH 4, 2004 ment of State and international broadcasting activities for (Committee meetings are open unless otherwise indicated) fiscal year 2005, for the Peace Corps for fiscal year 2005 through 2007, for foreign assistance programs for fiscal Senate year 2005, S. 2096, to promote a free press and open Committee on Agriculture, Nutrition, and Forestry: Sub- media through the National Endowment for Democracy, committee on Marketing, Inspection, and Product Pro- S. 2127, to build operational readiness in civilian agen- motion, to hold oversight hearings to examine the devel- cies, Convention Between the Government of the United opment of a national animal identification plan, 2 p.m., States of America and the Government of Japan for the SH–216. Avoidance of Double Taxation and the Prevention of Fis- Committee on Appropriations: Subcommittee on Interior, cal Evasion with respect to Taxes on Income, signed at to hold hearings to examine proposed budget estimates Washington on November 6, 2003, together with a Pro- for fiscal year 2005 for the Department of Energy, 9:30 tocol and an exchange of notes (the ‘‘Convention’’) (Treaty a.m., SD–124. Doc. 108–14), Protocol Amending the Convention Be- Subcommittee on Labor, Health and Human Services, tween the Government of the United States of America and Education, to hold hearings to examine proposed and the Government of the Democratic Socialist Republic budget estimates for fiscal year 2005 for the Department of Sri Lanka for the Avoidance of Double Taxation and of Education, 9:30 a.m., SD–192. the Prevention of Fiscal Evasion with Respect to Taxes on Subcommittee on Legislative Branch, to hold hearings Income signed at Colombo on March 14, 1985, together to examine proposed budget estimates for fiscal year 2005 with an exchange of notes, signed at Washington on Sep- for the General Accounting Office, the Government tember 20, 2002 (the ‘‘Protocol’’) (Treaty Doc. 108–09), Printing Office, and the Congressional Budget Office, 11 the Protocol Additional to the Agreement Between the a.m., SD–116. United States of America and the International Atomic Committee on Armed Services: to hold open and closed Energy Agency for the Application of Safeguards in the hearings to examine the Defense Authorization Request United States of America, with annexes, signed at Vienna for Fiscal Year 2005, focusing on military strategy and June 12, 1998 (Treaty Doc. 107–07), and the nomina- operational requirements (closed in SH–219), 9:30 a.m., tions of Feliciano Foyo, of Florida, and Robert Hurley SH–216. McKinney, of Indiana, each to be a Member of the Advi- Subcommittee on Personnel, to hold hearings to exam- sory Board for Cuba Broadcasting, Edward E. Kaufman, ine compensation, benefits, and health care for active and of Delaware, and Steven J. Simmons, of Connecticut, each Reserve military personnel and their families in review of the defense authorization request for fiscal year 2005, to be a Member of the Broadcasting Board of Governors, 2:30 p.m., SR–222. Glyn T. Davies, of the District of Columbia, for the rank Committee on the Budget: business meeting to mark up of Ambassador during his tenure of service as the Polit- the concurrent resolution on the budget for fiscal year ical Director for the United States Presidency of the G–8, 2005, 10 a.m., SD–608. and Sanford Gottesman, of Texas, Diane M. Ruebling, of Full Committee, business meeting to mark up the con- California, C. William Swank, of Ohio, each to be a current resolution on the budget for fiscal year 2005, 10 Member of the Board of Directors of the Overseas Private a.m., SD–608. Investment Corporation, and Richard S. Williamson, of Committee on Commerce, Science, and Transportation: to Illinois, for the rank of Ambassador during his tenure of hold hearings to examine the nominations of Rhonda service as Representative of the United States of America Keenum, of Mississippi, to be Assistant Secretary of Com- on the Human Rights Commission of the Economic and merce and Director General of the United States and For- Social Council of the United Nations, 9:30 a.m., SD–419. eign Commercial Services, Linda Morrison Combs, of Subcommittee on East Asian and Pacific Affairs, to North Carolina, to be an Assistant Secretary for Budget hold hearings to examine the state of democracy in Hong and Programs and Chief Financial Officer, Department of Kong, 2:30 p.m., SD–419.

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Committee on Health, Education, Labor, and Pensions: to tion and Related Agencies, on Marketing and Regulatory hold hearings to examine issues for reauthorization of the Programs, 9:30 a.m., 2362A Rayburn. Higher Education Act, 10 a.m., SD–430. Subcommittee on Energy and Water Development, on Committee on the Judiciary: business meeting to consider Bureau of Reclamation, 10 a.m., 2362B Rayburn. the nominations of Henry W. Saad, of Michigan, to be Subcommittee on Homeland Security, on Secretary of United States Circuit Judge for the Sixth Circuit, Wil- Homeland Security, 10 a.m., 2359 Rayburn. liam James Haynes II, of Virginia, to be United States Subcommittee on Interior and Related Agencies, on Circuit Judge for the Fourth Circuit, Raymond W. Fish and Wildlife Service, 10 a.m., B–308 Rayburn. Gruender, of Missouri, to be United States Circuit Judge Subcommittee on Labor, Health and Human Services, for the Eighth Circuit, Franklin S. Van Antwerpen, of Education and Related Agencies, on Secretary of Health Pennsylvania, to be United States Circuit Judge for the and Human Services, 10 a.m., 2358 Rayburn. Third Circuit, Diane S. Sykes, of Wisconsin, to be United Subcommittee on Veterans’ Affairs, HUD and Inde- States Circuit Judge for the Seventh Circuit, Judith C. pendent Agencies, on EPA, 1:30 p.m., 2359 Rayburn. Herrera, to be United States District Judge for the Dis- Committee on Armed Services, Subcommittee on Readi- trict of New Mexico, F. Dennis Saylor IV, to be United ness, hearing on the Fiscal Year 2005 National Defense States District Judge for the District of Massachusetts, Authorization budget request—Military Construction Sandra L. Townes, to be United States District Judge for Budget Request for the Programs of the Department of the Eastern District of New York, Louis Guirola, Jr., to the Army and the Department of the Navy, 2 p.m., 2118 be United States District Judge for the Southern District Rayburn. of Mississippi, Virginia E. Hopkins, to be United States Subcommittee on Tactical Air and Land Forces, hear- District Judge for the Northern District of Alabama, ing on the Fiscal Year 2005 National Defense Authoriza- Kenneth M. Karas, to be United States District Judge for tion budget request—Aviation Industrial Base and De- the Southern District of New York, Ricardo S. Martinez, partment of Defense Rotorcraft Investment Programs, 9 of Washington, to be United States District Judge for the a.m., 2118 Rayburn. Western District of Washington, Gene E. K. Pratter, to Subcommittee on Terrorism, Unconventional Threats be United States District Judge for the Eastern District and Capabilities, hearing on the Fiscal Year 2005 Na- of Pennsylvania, Neil Vincent Wake, to be United States tional Defense Authorization Budget Request—Depart- District Judge for the District of Arizona, William S. ment of Defense Responsibilities in Homeland Defense Duffey, Jr., to be United States District Judge for the and Homeland Security Missions, 3 p.m., 2212 Rayburn. Northern District of Georgia, James L. Robart, to be Committee on Education and the Workforce, Subcommittee United States District Judge for the Western District of on Education Reform, to mark up H.R. 3873, Child Nu- Washington, Juan R. Sanchez, to be United States Dis- trition Improvement and Integrity Act, 10:15 a.m., 2175 trict Judge for the Eastern District of Pennsylvania, Law- Rayburn. rence F. Stengel, to be United States District Judge for Committee on Energy and Commerce, Subcommittee on the Eastern District of Pennsylvania and Michele M. Health, hearing entitled ‘‘Prescription Drug Monitoring: Leonhart, of California, to be Deputy Administrator of Strategies to Promote Treatment and Deter Prescription Drug Enforcement, Domingo S. Herraiz, of Ohio, to be Drug Abuse,’’ 1 p.m., 2123 Rayburn. Director of the Bureau of Justice Assistance, LaFayette Subcommittee on Oversight and Investigations, hearing Collins, to be United States Marshal for the Western Dis- entitled ‘‘A Review of Security DOE Nuclear Facilities trict of Texas, and Ronald J. Tenpas, of Illinois, to be and the Implementation of the Revised Design Basis United States Attorney for the Southern District of Illi- Threat,’’ 11 a.m., 2322 Rayburn. nois, all of the Department of Justice, 9:30 a.m., Committee on Financial Services, Subcommittee on Over- SD–226. sight and Investigations, hearing entitled ‘‘Oversight of Committee on Veterans’ Affairs: to hold joint hearings the Federal Deposit Insurance Corporation,’’ 10 a.m., 2128 Rayburn. with the House Committee on Veterans’ Affairs to exam- Committee on Government Reform, to consider the fol- ine the legislative presentations of the Non-Commis- lowing bills: H.R. 3059, To designate the facility of the sioned Officers Association, the Military Order of the United States Postal Service located at 304 West Michi- Purple Heart, the Paralyzed Veterans of America, the gan Street in Stuttgart, Arkansas, as the ‘‘Lloyd L. Burke Jewish War Veterans, and the Blinded Veterans Associa- Post Office;’’ H.R. 3723, To designate the facility of the tion, 10 a.m., 345 CHOB. United States Postal Service located at 8135 Forest Lane Select Committee on Intelligence: to hold closed hearings to in Dallas, Texas, as the ‘‘Vaughn Gross Post Office Build- examine certain intelligence matters, 2:30 p.m., SH–219. ing;’’ and H.R. 3855, To designate the facility of the United States Senate Caucus on International Narcotics Con- United States Postal Service located at 607 Pershing trol: to hold hearings to examine the current status of fed- Drive in Laclede, Missouri, as the ‘‘General John J . Per- eral efforts to coordinate and combat money laundering shing Post Office;’’ followed by a hearing entitled ‘‘Amer- and terrorist financing, 2 p.m., SD–215. ica’s New Welcome Mat: A Look at the Goals and Chal- lenges of the US-VISIT Program,’’ 2 p.m., 2154 Ray- House burn. Committee on Appropriations, Subcommittee on Agri- Committee on International Relations, hearing on The culture, Rural Development, Food and Drug Administra- United States Government Strategy for Fighting HIV/

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AIDS: Implementation of Public Law 108–25, 10:30 Permanent Select Committee on Intelligence, executive, hear- a.m., 2172 Rayburn. ing on Terror Threats, 10 a.m., and, executive, hearing Committee on the Judiciary, Subcommittee on Immigra- on Detainee Information Update, 1 p.m., H–405 Capitol. tion, Border Security, and Claims, oversight hearing on Select Committee on Homeland Security, Subcommittee on Alien Removal Under ‘‘Operation Predator,’’ 10 a.m., Intelligence and Counterterrorism and the Subcommittee 2141 Rayburn. on Infrastructure and Border Security, joint hearing enti- Committee on Transportation and Infrastructure, Sub- tled ‘‘The Department of Homeland Security’s Informa- committee on Coast Guard and Maritime Transportation, tion Analysis and Infrastructure Protection Budget Pro- oversight hearing on the U.S. Coast Guard and Federal posal for Fiscal Year 2005,’’ 10 a.m., 2318 Rayburn. Maritime Commission Fiscal Year 2005 Budget Requests, Joint Meetings and on the Coast Guard Authorization Act for Fiscal Year 2005, 11 a.m., 2167 Rayburn. Joint Meetings: Senate Committee on Veterans’ Affairs, Committee on Ways and Means, to mark up Committee’s to hold joint hearings with the House Committee on Budget Views and Estimates for Fiscal Year 2005 for Veterans’ Affairs to examine the legislative presentations submission to the Committee on the Budget; followed by of the Non-Commissioned Officers Association, the Mili- a hearing on the President’s Fiscal Year 2005 Budget for tary Order of the Purple Heart, the Paralyzed Veterans the Department of Labor, 10 a.m., 1100 Longworth. of America, the Jewish War Veterans, and the Blinded Veterans Association, 10 a.m., 345 CHOB.

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Next Meeting of the SENATE Next Meeting of the HOUSE OF REPRESENTATIVES 9:30 a.m., Thursday, March 4 11:30 a.m., Thursday, March 4

Senate Chamber House Chamber Program for Thursday: After the transaction of any Program for Thursday: Rolled Suspension votes: morning business (not to extend beyond 10:30 a.m.), Sen- (1) H. Res. 412, honoring the men and women of the ate will continue consideration of S. 1637, Jumpstart Our Drug Enforcement Administration on the occasion of its Business Strength (JOBS) Act. 30th Anniversary; and (2) H. Res. 56, supporting the goals of the Japanese American, German American, and Italian American communities in recognizing a National Day of Remembrance to increase public awareness of the events surrounding the restriction, exclusion, and internment of individuals and families during World War II. Consideration of H.R. 3752, Commercial Space Launch Amendments Act of 2004 (modified closed rule).

Extensions of Remarks, as inserted in this issue

HOUSE Gordon, Bart, Tenn., E286 Nadler, Jerrold, N.Y., E290 Hart, Melissa A., Pa., E283, E284 Pryce, Deborah, Ohio, E285 Bilirakis, Michael, Fla., E294 Hastert, J. Dennis, Ill., E283 Radanovich, George, Calif., E289 Blackburn, Marsha, Tenn., E294 Hoeffel, Joseph M., Pa., E286 Sanchez, Loretta, Calif., E283, E286 Cantor, Eric, Va., E295 Jones, Stephanie Tubbs, Ohio, E289 Schrock, Edward L., Va., E292 Cardin, Benjamin L., Md., E293 Kennedy, Mark R., Minn., E286 Sessions, Pete, Tex., E285 Clay, Wm. Lacy, Mo., E285 Kildee, Dale E., Mich., E296 Shuster, Bill, Pa., E294 Davis, Tom, Va., E294 Lantos, Tom, Calif., E287 Diaz-Balart, Lincoln, Fla., E296 Lewis, Jerry, Calif., E291 Skelton, Ike, Mo., E286 Duncan, John J., Jr., Tenn., E291 McCarthy, Karen, Mo., E296 Stearns, Cliff, Fla., E290 Emanuel, Rahm, Ill., E289 McDermott, Jim, Wash., E295 Thompson, Bennie G., Miss., E283, E284 Emerson, Jo Ann, Mo., E286 McInnis, Scott, Colo., E295 Tiberi, Patrick J., Ohio, E295 Farr, Sam, Calif., E295 Maloney, Carolyn B., N.Y., E287 Udall, Mark, Colo., E292 Gonzalez, Charles A., Tex., E295 Moran, James P., Va., E290 Wolf, Frank R., Va., E287

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