Conservation Reserve Program Tax Fairness Act of 2003

Mr. President, I rise today to introduce a bill to extend Chapter 12 of the Bankruptcy Code until January 1, 2004. This measure will provide our family farmers with the necessary bankruptcy protections during hard times. However, I remain hopeful that the Senate will take up and pass the comprehensive bankruptcy legislation that the House passed not long ago. That bill makes Chapter 12 of the Bankruptcy Code permanent, so family farms are guaranteed the ability to reorganize. The bill also makes significant improvements to Chapter 12 so that it will be more accessible and helpful to farmers. So while I urge quick passage of this temporary Chapter 12 measure, I would like to see the comprehensive bankruptcy Reform bill and permanent Chapter 12 enacted into law as soon as possible. I ask unanimous consent that the text of the bill be printed in the Record.

Mr. President, I'm pleased to introduce today the United States Agricultural Products Market Access Act of 2003. This bill will be yet one more tool for the United States to use to expand its exports of agricultural products.

Agricultural exports are key to the economic health of rural America. Just last year, $53.1 billion worth of U.S.-produced agricultural products were exported. About one-third of America's farm products are sold outside of our borders. These sales in foreign markets translate to improved incomes for our country's farmers. Today, approximately one-fourth of gross farm income for U.S. producers comes from exports.

Agricultural exports are particularly important to farmers in my State of Iowa. In 2001, some $3.3 billion worth of Iowa's agricultural production was exported. This makes Iowa the second largest agricultural exporting State in the country. Iowa's largest commodities--corn, soybeans, pork, and beef--greatly benefit from sales abroad. Approximately one-half of U.S. soybean production, and 20 percent of our country's corn production, is exported. Last year U.S. pork exports set record levels. Since the implementation of the NAFTA, exports of U.S. beef and beef

variety meats to Mexico have increased five-fold. Iowa's producers clearly benefit from exports.

While Iowa's agricultural exports are already high, they have the potential to grow even more in coming years. Demand in the U.S. market for agricultural products is relatively stable. But populations, as well as disposable incomes, are increasing rapidly in foreign countries. With the hardest-working farmers and ranchers in the world, and with productivity increasing through improved technologies, the United States clearly has the ability to continue feeding a growing world.

But trade barriers imposed by foreign governments often cloud this bright spot for U.S. agriculture. Too frequently, misguided foreign governments overlook the wants and needs of their consumers and take measures to restrict, or prevent, imports of U.S. farm products. These policies hurt U.S. farmers. They also hurt foreign consumers.

In fact, due in part to foreign trade barriers, U.S. agricultural exports declined from $60.4 billion in 1996 to $53.1 billion in 2002.

Unfortunately, even countries that should be our closest trade allies are proving adept at imposing measures that block imports of U.S. farm products. As an example, our NAFTA-partner Mexico is imposing, or threatening to impose, barriers to imports of a wide variety of U.S. agricultural products. These products include corn, high fructose corn syrup, pork, beef, rice, apples, and dry beans. Iowa is a major producer of four of these products--corn, high fructose corn syrup, pork, and beef.

Not surprisingly, much of U.S. agriculture is upset with Mexico and other of our trading partners at this time. U.S. agricultural producers have traditionally been the strongest supporters of new trade deals. But due to foreign trade barriers, some in U.S. agriculture are beginning to question their support for new trade agreements.

The U.S. Trade Representative, in conjunction with Congress, is working hard to remove trade barriers imposed by Mexico and other countries. But the current tools available to the USTR, including negotiations, NAFTA challenges, and WTO challenges, don't always accomplish the job.

Let me give you an example. For several years now, Mexico has gone to great lengths to block imports of U.S.-produced high fructose corn syrup. In 1998, Mexico imposed antidumping duties on imports of this product from the United States. The United States challenged this antidumping order under the NAFTA. Mexico lost at the NAFTA. The United States challenged this order at the WTO. Mexico lost at the WTO. Following its defeats at the NAFTA and the WTO, Mexico revoked this antidumping order.

But, no, that wasn't the end of the story. Mexico turned around and imposed a 20 percent tax on sales of soft drinks containing high fructose corn syrup. This discriminatory tax was designed to boost sales of Mexican sugar at the expense of U.S.-produced high fructose corn syrup.

Mexico's tax in effect shut down the Mexican market for this product. Iowa's high fructose corn syrup producers are now being locked out of what was at one time their largest export market. This discriminatory tax is hurting Iowa's high fructose corn syrup producers. It's hurting Iowa's corn farmers.

This example clearly demonstrates that existing tools aren't always enough to remove entrenched trade barriers. Despite losing at the NAFTA, despite losing at the WTO, and despite lengthy negotiations, Mexico is still blocking imports of U.S. high fructose corn syrup.

It's time to add yet another tool to our arsenal.

That's why I'm introducing the United States Agricultural Products Market Access Act of 2003. This bill creates a new mechanism with which to confront foreign trade barriers. The new mechanism operates in a similar fashion to the existing special 301 provision for intellectual property. The bill requires USTR to identify and report on those foreign countries that deny fair and equitable market access for U.S. agricultural exports, or countries that apply to U.S. agricultural products sanitary or phytosanitary measures that are not based on sound science. USTR would annually issue a report on its findings.

Out of the countries identified in USTR's report, USTR would identify which ones have the most egregious practices impacting U.S. agricultural exports and, further, are not entering into good faith negotiations with the United States to end these practices.

This legislation also authorizes additional staffing for USTR to focus on these agricultural enforcement issues.

This bill will further strengthen the ability of the United States to enforce its existing market access rights for agricultural exports. Perhaps just as important, it will help Congress and the Administration prioritize barriers imposed by our trading partners. Through such prioritization, U.S. negotiators will be better able to focus upon removing the most egregious of these barriers.

The United States Agricultural Products Market Access Act will not solve all of our agricultural market access problems. We need to move ahead vigorously in bilateral and multilateral negotiations to tear down barriers to our exports. At the top of this list is successful completion of agricultural negotiations in the WTO. However, the United States Agricultural Products Market Access Act of 2003 will help us identify the most egregious problems, so we can focus our energy on fixing them. It will also provide a new enforcement tool to help make sure American farmers are getting the benefit of our hard fought trade bargains.

This bill is strongly supported by Iowa's agricultural community, including the Iowa Corn Growers, the Iowa Farm Bureau Federation, and the Iowa Soybean Association.

I would like to thank my distinguished colleagues Senator Max Baucus, Ranking Member of the Finance Committee, and Representative Dave Camp for their hard work on this legislation.

I ask unanimous consent that the text of the bill be printed in the Record.

Mr. President, I rise today to introduce three bills for harbors in Maine, two of them that will deauthorize the Federal Navigation Projects in Tenants Harbor and Northeast Harbor in Mt. Desert, and the third will redesignate the Upper Basin of the Union River Federal Navigational Channel in Ellsworth as an anchorage. The bills will help strengthen the economic viability of these three popular Maine harbors.

My first bill, S. 1318, pertains to Tenants Harbor, ME. Officials of the Town of Tenants Harbor have requested that the harbor be deauthorized. The original project was authorized in 1919, and was dredged that same year so that steamboats could access the Harbor. The channel has a width of 375 feet and extended out to 1,100 feet from Steamboat Wharf. Times have certainly changed as no steamboat has landed in the Harbor for 75 years. Over the years there have been mounting problems with the Army Corps of Engineers' mooring permit process as people seeking permits for moorings that have existed for 30 years continue to be notified that the mooring locations are prohibited because they fall within the Federal navigational channel. Deauthorizing the FNC would be of great help to the town in appropriately managing the Harbor to maximize mooring areas.

My second bill S. 1319 concerns Northeast Harbor in Mt. Desert, ME. The Town of Mount Desert has requested that Northeast Harbor be withdrawn from the Federal Navigation Project because of changing harbor usage over the last 45 years. This removal will allow the town to adapt to the high demand for moorings and will allow residents to obtain moorings in a more timely manner. The Harbor has now reached capacity for both moorings and shoreside facilities and has a waiting list of over sixty people, along with commercial operators who have been waiting for years to obtain a mooring for their commercial vessels.

The Harbor was authorized in 1945 and constructed in 1954 as a mixed- use commercial fishing/recreational boating harbor--and it still is today. It was dredged in the early 1950s to provide more space for recreational boating and the U.S. Army Corps of Engineers has informed the town that Northeast Harbor would be very low on its dredging priority list as it has become primarily a recreational harbor. The town says it realizes that, once it is no longer part of the Federal Navigational Project, any further dredging within the harbor would be carried out at town expense.

The language will not only allow for more recreational moorages and commercial activities, it will also be an economic boost to Northeast Harbor, which is surrounded by Acadia National Park, one of the nation's most visited parks--both by land and by water.

My third bill, S. 1320, addresses the Union River in Ellsworth, ME. The bill supports the City of Ellsworth's efforts to revitalize the Union River navigation channel, harbor, and shoreline. The modification called for in my legislation will redesignate a portion of the Union River as an anchorage area. This redesignation will allow for a greater number of moorings in the harbor without interfering with navigation and will further improve the city's revitalization efforts for the harbor area.

I have worked with the New England Division of the Corps to draft these bills and the language has been approved by Army Corps Headquarters in Washington. I look forward to working with my colleagues for their passage, either as stand alone bills or as separate provisions in the Corps reauthorization bill, the Water Resources Development Act of 2003, that Congress is currently drafting.

Mr. President, I'm pleased to join Senator Brownback and a number of our colleagues today in re-introducing the Conservation Reserve Program Tax Fairness Act. This legislation is virtually identical to the bill we introduced in the 107th Congress, which garnered nearly twenty Senate cosponsors. It clarifies that Conservation Reserve Program, CRP, payments received by farmers are treated for Federal tax purposes as rental payments from real estate, not self-employment income subject to self-employment taxes.

Despite past strong bipartisan support for this legislation, the Congress did not make this long overdue tax law clarification in the major tax reduction bill that was recently signed into law. This is regrettable and I hope that the Congress will move expeditiously to reverse the IRS's wrong-headed position on this matter.

Let me take a moment to describe this problem. For many years, the IRS has been taking the erroneous position that CRP payments received by farmers are income from self-employment and therefore are subject to self-employment taxes. This position imposes a significant financial hardship on family farmers farmers who have voluntarily agreed to take environmentally-sensitive lands out of farm production and place them in the Conservation Reserve Program in return for an annual rental payment from the Commodity Credit Corporation of the U.S. Department of Agriculture.

In our judgment, the IRS's tax treatment of CRP payments is not what Congress intended, nor is it supportable in law. The U.S. Tax Court shares our view that the IRS position is improper. In fact, the U.S. Tax Court ruled in 1998 that CRP payments are properly treated by farmers as rental payments and, thus, not subject to self-employment taxes. Unfortunately, the IRS challenged the Tax Court decision and the Tax Court was later reversed by a federal appellate court.

Today, North Dakota has some 3.3 million acres with $110 million in rental payments in the CRP program. Left unchanged, the IRS's interpretation means that farmers in North Dakota will owe an additional $16 million in federal taxes this year. A typical North Dakota farmer with 160 acres in CRP would have a CRP payment of $5,280 and would owe nearly $800 in self-employment taxes because of the IRS's ill-advised position. If the IRS also decides to pursue back taxes on returns filed by farmers in past years, the amount of taxes owed by individuals farmers for CRP payments could amount to thousands of dollars.

I believe that it is absolutely wrong for the IRS to load up farmers with an added tax burden, especially when most of our Nation's family farmers are still struggling from day to day to make ends meet. With the legislation we are introducing today, Congress can tell the IRS that its effort to treat CRP payments as net earnings from self- employment is inappropriate and will not be allowed to stand.

Senator Brownback and I ask our colleagues to support this much- needed tax relief for family farmers by cosponsoring the Conservation Reserve Program Tax Fairness Act. And we hope you will work with us to get this legislation enacted into law at the first available opportunity.

Mr. President, I'm pleased to join Senator Brownback and a number of our colleagues today in re-introducing the Conservation Reserve Program Tax Fairness Act. This legislation is virtually identical to the bill we introduced in the 107th Congress, which garnered nearly twenty Senate cosponsors. It clarifies that Conservation Reserve Program, CRP, payments received by farmers are treated for Federal tax purposes as rental payments from real estate, not self-employment income subject to self-employment taxes.

Despite past strong bipartisan support for this legislation, the Congress did not make this long overdue tax law clarification in the major tax reduction bill that was recently signed into law. This is regrettable and I hope that the Congress will move expeditiously to reverse the IRS's wrong-headed position on this matter.

Let me take a moment to describe this problem. For many years, the IRS has been taking the erroneous position that CRP payments received by farmers are income from self-employment and therefore are subject to self-employment taxes. This position imposes a significant financial hardship on family farmers farmers who have voluntarily agreed to take environmentally-sensitive lands out of farm production and place them in the Conservation Reserve Program in return for an annual rental payment from the Commodity Credit Corporation of the U.S. Department of Agriculture.

In our judgment, the IRS's tax treatment of CRP payments is not what Congress intended, nor is it supportable in law. The U.S. Tax Court shares our view that the IRS position is improper. In fact, the U.S. Tax Court ruled in 1998 that CRP payments are properly treated by farmers as rental payments and, thus, not subject to self-employment taxes. Unfortunately, the IRS challenged the Tax Court decision and the Tax Court was later reversed by a federal appellate court.

Today, North Dakota has some 3.3 million acres with $110 million in rental payments in the CRP program. Left unchanged, the IRS's interpretation means that farmers in North Dakota will owe an additional $16 million in federal taxes this year. A typical North Dakota farmer with 160 acres in CRP would have a CRP payment of $5,280 and would owe nearly $800 in self-employment taxes because of the IRS's ill-advised position. If the IRS also decides to pursue back taxes on returns filed by farmers in past years, the amount of taxes owed by individuals farmers for CRP payments could amount to thousands of dollars.

I believe that it is absolutely wrong for the IRS to load up farmers with an added tax burden, especially when most of our Nation's family farmers are still struggling from day to day to make ends meet. With the legislation we are introducing today, Congress can tell the IRS that its effort to treat CRP payments as net earnings from self- employment is inappropriate and will not be allowed to stand.

Senator Brownback and I ask our colleagues to support this much- needed tax relief for family farmers by cosponsoring the Conservation Reserve Program Tax Fairness Act. And we hope you will work with us to get this legislation enacted into law at the first available opportunity.

Mr. President, today I am introducing legislation that will protect an existing exemption for farmers and agribusinesses from the Department of Transportation's, DOT, limitations on maximum driving time in transporting agricultural commodities or farm supplies during peak planting and growing seasons.

In 1995, Public Law 104-59 passed by Congress granted farmers and retail farm suppliers a limited exemption from DOT limitations on maximum driving time in transporting agricultural commodies or farm supplies within a 100-mile radius of a final distribution point. This legislation recognized the special needs of rural America, understanding that drivers employed by farm retailers generally operate in local areas to farmers' fields delivering and applying crop inputs. Much of their time is spent waiting at the field or the farm store loading and unloading their trucks. In short, farm retail drivers stay in a local area and return to their homes each night to sleep. The work of these crop input suppliers is essential to the Nation's farmers, who often have short windows of time to plant and harvest their crop around changing weather patterns.

The agricultural exemption is seasonal, applying only during designated months throughout the year as determined by each State. Every State has now taken this action, and to my knowledge this exemption has not had any impact on public safety.

It is important to note that under my clarifying legislation, the farm supply/farm commodity exemption would remain limited in scope.

My legislation reiterates original Congressional support for the agricultural exemption. The DOT has no expertise in this area nor, in my opinion, does the definition of agricultural commodity come under the jurisdiction of this agency. In addition, the term ``agricultural commodity'' is already defined by Section 102 of the Agricultural Trade Act of 1978 (7 U.S.C. 5602). Therefore, in my legislation, Section 345 (e) of the National Highway System Designation Act of 1995 is amended to reflect the definition in the Agricultural Trade Act.

A bipartisan group of House Members are also seeking clarifying legislation in this regard with Representative Bereuter of Nebraska taking the lead.

I urge all my colleagues to join me in passing this legislation to protect the agricultural exemption to hours of service rules and prevent DOT from diminishing or revoking the exemption.