Armed Forces Citizenship Act of 2003

Mr. President, I rise today to introduce, along with Senators Durbin, Reid, and Kerry, the ``Renewable Energy Investment Act of 2003.''

This legislation will guarantee that by the year 2020, twenty percent of our electricity will be produced from renewable energy resources. These resources include wind, biomass, solar, ocean, geothermal and landfill gas.

Again and again, I have heard members come to this floor and say how important renewable energy is to our environment, to our national security, and to our domestic economic stability. I agree. But if we want to achieve these great benefits, we must, as they say, ``put our money where our mouth is.'' It is time to pass realistic, achievable standards to guarantee that renewable energy is produced.

The Renewable Energy Investment Act of 2003 is a very important step in that direction. It will create a renewable portfolio standard or ``RPS'' under which utilities and others who supply electricity to retail consumers will be required to ensure that by the year 2020, twenty percent of our domestic electricity is generated from renewable energy sources. The RPS in this legislation provides a flexible, market-driven system of tradeable credits by which utilities can readily achieve these renewable energy requirements.

Why twenty percent by 2020? Because the U.S. Department of Energy, through its Energy Information Administration, has repeatedly indicated that requiring that twenty percent of our electricity come from renewable energy by the year 2020 will actually lower overall consumer energy costs, while at the same time achieving tremendous environmental benefits.

According to the most recent estimates derived from the Department of Energy, consumer electricity prices under a twenty percent renewable portfolio standard would be largely the same as without one. According to the Department of Energy, retail electricity costs by the year 2020 without an RPS would be 6.5 cents per kilowatt hour. If a 20 percent RPS is in effect, retail electricity costs would be approximately 6.7 cents per kilowatt hour.

However, the Department of Energy studies also indicate that because an RPS creates a more diverse and competitive market for energy supply, overall domestic consumer energy costs will actually decrease by almost nine percent.

Equally important, shifting to greater renewable energy production will have dramatic impacts on human health and the environment. The Department of Energy has found that, as demand for energy grows, without changes to Federal law U.S. carbon emissions will increase forty seven percent above the 1990 level by 2020. However, with a twenty percent renewables standard, U.S. carbon dioxide emissions will decrease by more than eighteen percent by 2020.

Electricity production, primarily from burning coal, is the source of an estimated sixty six percent of sulfur oxide, SOx, emissions. These chemicals are the main cause of acid rain, which kills rivers and lakes, and damages crops and buildings. Burning fossil fuels to produce electricity also emits nitrogen oxides, NOx, which cause health-damaging smog. Ground-level ozone caused by nitrogen oxide contributes to asthma, bronchitis and other respiratory problems.

Electricity produced from nuclear power, while not responsible for the emissions associated with burning of fossil fuels, results in highly toxic, and essentially permanent wastes for which no complete disposal option currently exists.

Switching to renewable resources virtually eliminates these concerns. The Renewable Energy Investment Act of 2003 will help reduce emissions of carbon dioxide, sulfur dioxide, nitrogen dioxide, mercury and particulate matter, without creation of toxic wastes.

The twenty percent RPS established in this legislation will also create thousands of new, high quality jobs and bring significant new investment to rural communities. It will create an estimated $80 million in new capitol investment, and result in more than $5 billion in new property tax revenues.

It will bring increased diversity to our energy sector, creating greater market stability and reducing the price spikes that so often plague our domestic natural gas markets.

Greater diversity also reduces the vulnerability of our energy infrastructure to terrorist threats.

In a letter to Congress shortly after the attacks of September 11, 2001, several national security experts endorsed congressional passage of an RPS. The letter, signed by former CIA director James Woolsey; former National Security Advisor to President Reagan, Robert McFarlane; and former Chairman of the Joint Chiefs of Staff, Thomas Moorer, stated that a strong RPS is an important component of addressing the significant challenges to America's new energy security.

Rapidly increasing the production of renewable energy is vital to America's future. We must be willing to take the steps necessary to make that happen. The Renewable Energy Investment Act of 2003 is an essential part of that goal and I urge my colleagues to join with me in supporting this important legislation.

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

Mr. President, today, Senator Hagel and I, and others introduce ``The IDEA Full Funding Act of 2003.'' This bill will provide increased mandatory funding for the Individuals with Disabilities Education Act, IDEA, and meet the Federal Government's commitment to pay 40 percent of the average per pupil expenditures. These additional funds will ensure that every child with a disability gets a free, appropriate public education.

In 1975, when the IDEA was passed in the House and Senate, there was an agreement made by negotiators based on the understanding that the Federal Government's goal would be to provide 40 percent of the average per pupil expenditures in each local education area. There was no time frame placed on this goal, but since that time it has been understood that ``full funding'' for IDEA means reaching that 40 percent goal.

For the past 28 years, we have put additional resources into IDEA but we have not come close to full funding. This bill will put our money where our mouth is and say that the federal government will be full partners with states and local governments in meeting the needs of children with disabilities.

This bill fully funds the IDEA. It appropriates funds for the next 10 years, gradually increasing the percentage of funds which are mandatory and increasing the amounts so that in year 8 we are at the level projected to equal 40 percent of the average per pupil expenditure. While we have seen welcome increases in IDEA spending over the past few years, past year increases do not guarantee future increases. This bill guarantees full funding, phased in over 8 years.

This bill does not create a new entitlement program. It provides advanced appropriations for the next 10 years, but it has a set amount for each year, not an open-ended figure.

This bill also provides incentive for compliance with the requirements of IDEA. If all of the IDEA-eligible children are getting the services that they are entitled to, then local property taxpayers get relief.

Last year, the Senate passed an amendment to the reauthorization of the Elementary and Secondary Education Act which would have required full funding of IDEA. The full funding provision was not in the final conference report. Prior to that amendment, there have been 22 separate bills and resolutions in the House and Senate calling for full funding.

This year, the time has come for full funding to make it into law. It has been 28 years since the Federal Government agreed to pay a share of IDEA and it is time to meet that goal.

The IDEA has been remarkably successful. In 1975, only \1/5\ of children with disabilities received a formal education and several States had laws specifically excluding many children with disabilities, including those who were blind, deaf, or had mental health needs from receiving such an education. The most recent data on the number of children served under IDEA indicates that over 6 million children are currently benefiting from the law.

Although IDEA has been successful, there is more work to be done. Every time I speak to school districts in Iowa, they tell me that the costs of special education are very difficult for them to manage. Some parents of children with disabilities also complain that their children are not getting the education promised by IDEA.

This bill will provide significant additional resources. In 2003, we are funding $17.6 percent of the cost at 8.8 billion dollars. Under our bill, this number rises steeply to 22 percent of the cost and 10.8 billion dollars in 2004. The increases continue until 2011, when we reach 40 percent and an expenditure of 24.6 billion. Iowa sees its funding rise from 96 million in 2003 to 278.3 million in 2011. We are more than doubling the resources going to special education in Iowa and elsewhere.

I want to thank Senator Hagel for his ongoing leadership on this issue and for his work in achieving bipartisan support for this bill. I also want to thank Senators Kennedy, Jeffords and Dodd for their longstanding commitment to fully funding IDEA. In addition, I want to acknowledge all of the co-sponsors of this bill, who are joining me today in leading the way for Congress to finally pass full funding into law.

This is a win-win-win bill. With this advance appropriations, students with disabilities will get the public education they have a right to, school districts will be able to provide services without cutting into their general education budgets, and in cases where all IDEA-eligible children are getting the services they are entitled to, property taxpayers get relief.

Mr. President, today, we are introducing the ``Government Settlement Transparency Act of 2003.'' Over the past several months, we have become increasingly concerned about the approval of various settlements that allow penalty payments made to the government in settlement of a violation or potential violation of the law to be tax deductible. This payment structure shifts the tax burden from the wrongdoer onto the backs of the American people. This is unacceptable.

The issue of tax deductibility is particularly relevant in the settlement of various SEC investigations into violations or potential violations of the securities laws. The corporate meltdown of the past two years has caused investors to lose confidence in the stock market. To address investors' loss of faith, Congress passed the Sarbanes-Oxley Act last July. However, Sarbanes-Oxley begins to address only part of the corporate reform problem, as it applies solely to future corporate activity. To more fully restore confidence in the markets, America's State and Federal regulators are also working to hold accountable the corporate executives and others in corporate America responsible for damaging investor confidence. With these efforts to achieve greater accountability in the business community and ensure the integrity of our financial markets, it is important that the rules governing the appropriate tax treatment of settlements be clear and adhered to by taxpayers.

Section 162(f) of the Internal Revenue Code provides that no deduction is allowed as a trade or business expense under section 162(a) for the payment of a fine or penalty to a government for violation of any law. The enactment of section 162(f) in 1969 codified existing case law that denied the deductibility of fines and penalties as ordinary and necessary business expenses on the grounds that ``allowance of the deduction would frustrate sharply defined national or state policies proscribing the particular types of conduct evidenced by some governmental declaration thereof.'' Treasury regulations provide that fine or penalty includes an amount paid in settlement of the taxpayer's actual or potential liability for a fine or penalty.

The legislation introduced today modifies the rules regarding the determination of whether payments are nondeductible payments of fines of penalties under section 162(f). In particular, the bill generally provides that amounts paid or incurred, whether by suit, agreement, or otherwise to, or at the direction of, a government in relation to the violation of any law or the investigation or inquiry into the potential violation of any law are nondeductible. The bill applies to deny a deduction for any payment, including those where there is no admission of guilt or liability and those made for the purpose of avoiding further investigation or litigation.

An exception applies to payments that the taxpayer establishes are restitution. It is intended that a payment will be treated as restitution only if the payment is required to be paid to the specific persons, or in relation to the specific property, actually harmed by the conduct of the taxpayer that resulted in the payment. Thus, a payment to or with respect to a class broader than the specific persons or property that were actually harmed, for example, to class including similarly situated persons or property, does

not qualify as restitution. Restitution is limited to the amount that bears a substantial quantitative relationship to the harm caused by the past conduct or actions of the taxpayer that resulted in the payment in question. If the party harmed is a government, then restitution includes payment to such harmed government, provided the payment bears a substantial quantitative relationship to the harm. However, restitution does not include reimbursement of government investigative or litigation costs, or do payments to whistleblowers.

The bill would be effective for amounts paid or incurred on or after April 28th, 2003, except that it would not apply to amounts paid or incurred under any binding order or agreement entered into before such date.

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

Mr. President, today I rise to introduce the Fuel Tax Equalization Credit for Substantial Power Takeoff Vehicles Act. This bill upholds a long-held principle in the application of the Federal fuels excise tax, and restores this principle for certain single engine ``dual-use'' vehicles.

This long-held principle is simple: fuel consumed for the purpose of moving vehicles over the road is taxed, while fuel consumed for ``off- road'' purposes is not taxed. The tax is designed to compensate for the wear and tear impacts on roads. Fuel used for a non-propulsion ``off- road'' purpose has no impact on the roads. It should not be taxed as if it does. This bill is based on this principle, and it remedies a problem created by IRS regulations that control the application of the federal fuels excise tax to ``dual-use'' vehicles.

Duel-use vehicles are vehicles that use fuel both to propel the vehicle on the road, and also to operate separate, on-board equipment. The two prominent examples of duel-use vehicles are concrete mixers, which use fuel to rotate the mixing drum, and sanitation trucks, which use fuel to operate the compactor. Both of these trucks move over the road, but at the same time, a substantial portion of their fuel use is attributable to the non-propulsion function.

The current problem developed because progress in technology has outstripped the regulatory process. In the past, duel-use vehicles commonly had two engines, IRS regulations, written in the 1950's, specifically exempt the portion of fuel used by the separate engine that operates special equipment such as a mixing drum or a trash compactor. These IRS regulations reflect the principle that fuel consumed for non-propulsion purposes is not taxed.

Today, however, typical duel-use vehicles use only one engine. The single engine both propels the vehicle over the road and powers the non-propulsion function through ``power takeoff.'' a major reason for the growth of these single-engine, power takeoff vehicles is that they use less fuel. And a major benefit for everyone is that they are better for the environment.

Power takeoff was not in widespread use when the IRS regulations were drafted, and the regulations deny an exemption for fuel used in single- engine, duel-use vehicles. The IRS defends its distinction between one- engine and two-engine, vehicles based on possible administrative problems if vehicle owners were permitted to allocate fuel between the propulsion and non-propulsion functions.

Our bill is designed to address the administrative concerns expressed by the

IRS, but at the same time, restore tax fairness for fuel-use vehicles with one engine. The bill does this by establishing an annual tax credit available for taxpayers that own a licensed and insured concrete mixer or sanitation truck with a compactor. The amount of the credit is $250 and is a conservative estimate of the excise taxes actually paid, based on information compiled on typical sanitation trucks and concrete mixers.

In sum, as a fixed income tax credit, no audit or administrative issue will arise about the amount of fuel used for the off-road purpose. At the same time, the credit provides a rough justice method to make sure these taxpayers are not required to pay tax on fuels that they shouldn't be paying. Also, as an income tax credit, the proposal would have no effect on the highway trust fund.

I would like to stress that I believe the IRS' interpretation of the law is not consistent with long-held principles under the tax law, despite their administrative concerns. Quite simply, the law should not condone a situation where taxpayers are required to pay the excise tax on fuel attributable to non-propulsion functions. This bill corrects an unfair tax that should have never been imposed in the first place, I urge my colleagues to cosponsor this important piece of legislation.

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

Mr. President, last November, the Drug Competition Act passed the Senate by unanimous consent. This morning, I am proud to join Senator Grassley, along with Senators Durbin, Feingold, Kohl and Schumer in re-introducing this important bill, I hope that in this Congress it is actually enacted into law. Prescription drug prices are rapidly increasing, and are a source of considerable concern to many Americans, especially senior citizens and families. Generic drug prices can be as much as 80 percent lower than the comparable brand name version.

While the Drug Competition Act is small in terms of length, it is large in terms of impact. It will ensure that law enforcement agencies can take quick and decisive action against companies that are driven more by greed than by good sense. It gives the Federal Trade Commission and the Justice Department access to information about secret deals between drug companies that keep generic drugs off the market. This is a practice that hurts American families, particularly senior citizens, by denying them access to low-cost generic drugs, and further inflating medical costs.

Last fall, the Federal Trade Commission released a comprehensive report on barriers the entry of generic drugs into the pharmaceutical marketplace. The FTC had two recommendations to improve the current situation and to close the loopholes in the law that allow drug manufacturers to manipulate the timing of generics' introduction to the market. One of those recommendations was simply to enact our bill, as the most effective solution to the problem of ``sweetheart'' deals between brand name and generic drug manufacturers that keep generic drugs off the market, thus depriving consumers of the benefits of quality drugs at lower prices. In short, this bill enjoys the unqualified endorsement of the current FTC, which follows on the support by the Clinton Administration's FTC during the initial stages of our formulation of this bill. We can all have every confidence in the common sense approach that our bill takes to ensuring that our law enforcement agencies have the information they need to take quick action, if necessary, to protect consumers from drug companies that abuse the law.

Under current law, the first generic manufacturer that gets permission to sell a generic drug before the patent on the brand-name drug expires, enjoys protection from competition for 180

days--a headstart on other generic companies. That was a good idea--but the unfortunate loophole exploited by a few is that secret deals can be made that allow the manufacturer of the generic drug to claim the 180- day grace period--to block other generic drugs from entering the market--while, at the same time, getting paid by the brand-name manufacturer not to sell the generic drug.

Our legislation closes this loophole for those who want to cheat the public, but keeps the system the same for companies engaged in true competition. I think it is important for Congress not to overreact and throw out the good with the bad. Most generic companies want to take advantage of this 180-day provision and deliver quality generic drugs at much lower costs for consumers. We should not eliminate the incentive for them. Instead, we should let the FTC and Justice look at every deal that could lead to abuse, so that only the deals that are consistent with the intent of that law will be allowed to stand. The Drug Competition Act accomplishes precisely that goal, and helps ensure effective and timely access to generic pharmaceuticals that can lower the cost of prescription drugs for seniors, for families, and for all of us.

I regret that some in the Senate stalled action on this worthwhile measure until very late in the last Congress and that the House chose not to act at all, and I hope that the growing need for more cost- effective health care solutions will serve as a catalyst for quick action on this needed legislation.