Tobacco Tax Equity Act of 2013

Mr. President, each and every day the folks I represent in Delaware ask me why doesn't the Senate, why doesn't the Congress focus on jobs and focus on getting our economy moving again instead of what seem to be endless partisan struggles over secondary issues.

What I wanted to speak to was a bipartisan bill, which I am introducing, which focuses on how to help create innovation-focused jobs again in the United States.

As you know all too well, our economic recovery has been slower than we had hoped. Although it has been steady, there are still far too many Americans out of work in my home State of Delaware, more than 30,000, but we are building our way back.

The task before us is to think not just about an immediate economic crisis but to take a breath and, instead, focus strategically on the long-term future, to take account of what kind of an economy we want to build for our children and our grandchildren for the America of today and tomorrow.

The engine of our Nation's greatest economic successes has always been innovation. From the light bulb to the search engine, American inventors and innovators, those who have taken risks and started companies, have created jobs by the thousands and changed lives by the millions. Before new ideas scaled to market and reach out to change the world, they first have to start in a lab or garage.

I know from my own 8 years in the private sector, my work for a materials-based science company in Delaware, the products we take for granted that are today household items in the world marketplace, often started as just the sliver of an idea, an idea that

needed refining through determined investment in research and development.

If we want to fuel the next generation of innovation, if we want to lay a strong foundation for job creation through invention, I think we have to start by supporting research and development. Research and development is the lifeblood of great American companies and is what will allow us to make things in this country and to be a leading manufacturer in the world and deserves focused investment.

If we look at it, nearly 70 percent of America's private sector R&D and about 90 percent our patents are actually in manufacturing, a sector that deserves particular attention. Revitalizing American manufacturing will create high-quality, middle-class jobs for the long run, but doing so depends on our ability to take great ideas and turn them into marketable products or improvements in manufacturing processes that can and will result in things being made right here in America. Startups and small businesses all across this country are already taking chances to do just that, and I think it is time for all of us in Congress to take a chance on them.

Last year, I worked in a bipartisan way with Senator Enzi, Senator Rubio, Senator Schumer, and others to introduce a bill that would make startup companies eligible for the existing research and development or R&D tax credit. I am proud to reintroduce that legislation as the Startup Innovation Credit Act of 2013 with our original cosponsors, as well as Senator Blunt, Senator Stabenow, and Senator Moran.

This broad bipartisan support suggests a bill whose time has come. Although we represent, among the cosponsors, very different parts of our country, very different backgrounds, all of us know that to strengthen our economy we have to support innovation and entrepreneurship. Each of us is committed to fostering the kind of environment which supports the private sector and which turns ideas into innovations, innovations into products, and products into companies that help create good jobs.

Under current policy, one way we do that federally is by supporting research and development through the existing R&D tax credit. Companies that invest in R&D generate new products, which sparks new industries with spillover benefits for all kinds of sectors. That is why there has long been strong bipartisan support for the existing R&D tax credit. By all accounts it is working. The R&D has helped tens of thousands of American companies succeed and create jobs.

But there is a critical gap in the existing R&D credit. It isn't available to startups because they are not yet profitable, and thus they don't have an income tax liability against which to take a credit. In fact, more than half the R&D credit last year was taken by companies with revenue over $1 billion, well-established, profitable companies. There is nothing wrong with that; it is just not targeting these tax expenditures toward the sector of our economy that is taking the greatest risk and in some ways has the greatest potential.

This gaping hole in our policy around R&D can be fixed with a relatively simple tweak. I have been working on finding this solution since I first came here. In fact, the very first bill I introduced included an expanded version of the R&D credit.

Today, we take another step toward seeing this solution implemented with the reintroduction of this bipartisan Startup Innovation Credit Act. It says in order to spur research and development, we should allow companies to claim the R&D tax credit against their employment taxes, against their W-2 instead of their income tax liability. That opens this credit to new companies that don't yet have an income tax liability.

There lots of companies we could choose. Let me pick one example, DeNovix, a small company based in my home State of Delaware that is developing instrumentation for bioresearch with a team that includes molecular biologists and engineering professionals.

The managing director of DeNovix, Fred Kielhorn, said the legislation we are introducing would help that company to offset some of the costs of bringing new, innovative, technology-based products to market and for that this bill earned his strong support.

He is just one of many. There is a remarkable list of outside groups, companies, and organizations that have supported it. I will mention a few: Silicon Valley Leadership Group; Revolution, led by Steve Case of AOL; Delaware Chamber of Commerce; the Association for Manufacturing Technology Policy; American Small Manufacturers Coalition; and BIO, a national organization that supports companies doing research and development in the biotechnology space.

Supporting small innovative companies in critical early stages of research and development, in my view could unleash untold innovations for growth and create new jobs for America. At its heart, today's legislation is a jobs bill.

Between 1980 and 2005, all net new jobs created in the United States were created by firms 5 years old or less, all of them, about 40 million jobs over those 25 years. This credit is specifically designed toward those new, young, risk-taking firms. It does not pick winners and losers, it doesn't focus on a specific area of the economy or technology, but instead supports all private sector investments, judgments, and decisions that prioritize investment in research and development. Cash in the pocket of small startup companies, such as this tax credit, can make a real difference, especially with financing and credit so hard to come by.

It was once said the States are the laboratory of democracy. In fact, that is where this idea has come from. Credits just like this have been done before in Iowa, Arizona, New York, Connecticut, Pennsylvania, and they have been game changers, helping companies get off the ground and keep their doors open during those demanding first years where they invest and spend so much on hiring and growth.

We know this can work. We also know more than half our current Fortune 500 companies were launched during a recession or a bear market. The next great American company that may redefine whole categories that may be known worldwide for its products, its services, may be starting right now in a garage or lab somewhere in this great country. It is an exciting prospect.

In fact, we are depending on our inventors, our innovators, and our small business owners to help innovate our way to a stronger economy and fuel a new generation of job creation. Let's give them the support they need and they deserve at a time when they need it the most.

I am grateful for all the cosponsors of this bipartisan legislation in this Chamber and as well to Congressman Gerlach of Pennsylvania and Congressman Kind of Wisconsin, who will introduce the House version of this legislation next week.

Rather than shutting our startups out of the R&D tax credit, let's open the doors to these innovators and see what they can do. I am confident they will surprise us yet again with how high they can reach and how far they can go. I think this is a wise investment in opening the doors of innovation, invention, and job creation for our future.

Mr. President, I rise today to reintroduce the Natomas Basin Flood Protection Improvements Act of 2013.

This legislation authorizes the U.S. Army Corps of Engineers to improve the flood control infrastructure in the Sacramento area. The improvements will safeguard hundreds of thousands of homes and businesses.

There is a pressing need to improve levees in Sacramento.

The Army Corps perpetually cites the city as one of our nation's most at-risk for severe flooding. A quick review of the Corps' National Levee Database will tell you why. Of the nearly 300 miles of levees within 10 miles of Sacramento the Corps has deemed 94 miles of levees, or 32 percent, ``unacceptable.'' An unacceptable designation means the levee is deficient to the point where it does not provide the protection it is supposed to.

The Corps has deemed 29 miles of levees, only 10 percent, ``minimally acceptable.''

The Corps has yet to even review the remaining 172 miles, 58 percent.

None of the 300 miles of levees within 10 miles of Sacramento received the passing grade of ``acceptable.''

But even in this high-risk city, there are priority areas. And the Natomas basin, which lies between the American and Sacramento rivers, is the top priority for Sacramento flood control.

More than 100,000 people in the Natomas flood plain are at high or moderate risk of flooding.

The vast majority of these homes would be inundated with more than 10 feet of water should a levee break.

In some places, inundation levels would exceed 20 feet.

The risks are clear. The Army Corps of Engineers estimates the damage from a single flood could top $7 billion.

Recognizing the need to upgrade the Natomas levees, the Corps of Engineers completed a Chief's Report in December 2010 that identified $1.1 billion in essential levee improvements.

According to the report, the principal levee modifications include the widening of 41.9 miles of existing levees; installation of about 34.8 miles of soil bentonite cutoff wall; installation of 8.3 miles of seepage berms, and bridge remediation on State Route 99.

In addition, the report recommends the creation of 75 acres of canal habitat, 200 acres of marsh habitat, and 60 acres of woodland habitat to ensure the project complies with the Endangered Species Act.

The cost of these improvements will be significant, but the burden will be shared.

Understanding the urgency of this work, the Sacramento Area Flood Control Agency, SAFCA, and the California Department of Water Resources have begun work on the levee. They have invested more than $400 million in the Natomas Basin project, far more than their share, and completed about 18 miles of the basin's 42 miles of levees.

I want to recognize SAFCA and the people of Sacramento for this good work. They have done the right thing, moving ahead before the federal authorization, because people's lives and property are in danger.

I am proud to say the people of Sacramento have really stepped up and contributed. On two occasions county voters approved special tax assessments to begin paying for the repairs on the levee system, first in 2007 and again in 2011.

The most recent assessment passed overwhelmingly with 84.5 percent of voters supporting the measure.

This kind of local commitment should be a model for the Nation. When such major vulnerabilities exist that threaten a community, it is imperative to act quickly.

If the Sacramento levees fail, the results will be devastating Sacramento International Airport, which serves 4.4 million passengers per year and is the primary air-cargo hub for the region, will be largely underwater.

Interstate 5, Interstate 80 and State Route 99 will be closed or restricted. These roads serve as freight arteries and facilitate the passage of more than 2,500 trucks per day.

Access to the Port of West Sacramento, the city's primary seaport, will be jeopardized.

Just months ago Super-storm Sandy slammed into the East Coast. The destruction in New York and New Jersey reminded us that unpredictable weather events can overwhelm our infrastructure with devastating consequences.

But with well-placed timely investments, much of worst damage can be averted. That's why even during the worst economic downturns in a generation, Sacramento voters stood together and passed the local tax- measure to fund this critical project.

We don't know when the next flood will occur, but we do know Sacramento has a well-documented history of catastrophic flooding.

Record-breaking storms hit the region in 1956, 1964, 1986 and 1997.

During the 1997 storm, levee failures in the nearby cities of Olivehurst, Arboga, Wilton, Manteca and Modesto caused mass evacuations and millions of dollars in damage.

Going back even further, an even more devastating flood in 1861 occurred when the American River Levee failed. California's newly elected Governor, Leland Stanford, was forced to take a row-boat to his inauguration at the State Capitol. The flooding was so bad the state government was temporarily relocated to San Francisco.

U.S. Geological Survey scientists now believe that the 1861 storm may have been an atmospheric river storm, or ``ARkStorm.'' These events, which occur every 200 to 400 years, can produce truly devastating floods.

In 2011, the USGS conducted a study about the impacts of a large ARkStorm in California's Central Valley. The results were shocking.

The storm would cause a 300 mile long, 20 mile wide flood zone across much of our nation's most productive agriculture lands. It would force the evacuation of 1.5 million residents and cause hundreds of landslides damaging roads, highways, and homes. The study estimates the cost to private homeowners and businesses would be $725 billion, nearly three times the cost of a major earthquake in the State.

The bottom line is this: the infrastructure currently in place will not stand up to a storm of this magnitude.

And the Natomas Basin Flood Protection Improvements Act of 2011 is one small step toward preparing for such a disaster.

This legislation is nearly identical to the bill I introduced with my friend and colleague Senator Boxer, the Chairwoman of the Environment and Public Works Committee, last Congress. The only change is that the current bill does not include language from the previous bill that specifically allowed ``credits'' for non-federal work on the project.

This modification should not be interpreted to reflect a change my support for the work of the local entities; I believe they have done the right thing by beginning construction on this project, and I support them receiving credit for their work.

Instead, the modification was included to comport with work being done by Chairwoman Boxer on the upcoming Water Resources Development Act, or WRDA. That bill will generically address non-Federal crediting provisions and I will work with Chairman Boxer to ensure that Sacramento can still receive credits for the work they have completed.

I urge my colleagues to support this legislation.

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

Mr. President, today I am introducing legislation to expand the geographic boundaries of HUBZones located at former U.S. military installations closed through the so-called Base Closure and Realignment--or BRAC--process. This legislation mirrors S. 3675, the HUBZone Expansion Act of 2012, which I introduced with Senator Snowe last session.

I am pleased to have my new colleague from Maine, Senator Angus King, join me in offering this legislation. Senator King knows the impact a base closing can have on a local community all too well, coming as he does from Brunswick, ME, which recently lost a major military installation through the BRAC process. Military bases are often the economic heart of the towns and cities in which they are located, and communities can struggle for years to overcome the closure of those facilities.

In recognition of this fact, Congress passed legislation providing HUBZone status for 5 years to military facilities closed through the BRAC process. This allows small businesses located within the HUBZone to obtain certain federal contracting preferences. The HUBZone program is also available to small businesses located in ``economically distressed communities,'' that suffer from low income, high poverty rates, or high unemployment.

According to the Congressional Research Service, there are currently 127 BRAC-related HUBZones in the United States. Unfortunately, for many of the military bases that have been closed, HUBZone status has not brought the benefits we had hoped for. One of the reasons is simple-- the law defines the geographic boundaries of a BRAC-related HUBZone to be the same as the boundaries of the base that was closed. When that is combined with the requirement that 35 percent of the employees of a qualifying business must live within the HUBZone, the problem is clear: very few people live on these former bases, so it is difficult or impossible for businesses to get the workers they need to meet the requirements of the HUBZone program.

As I mentioned, one of these HUBZones is located at the former Brunswick Naval Air Station, in Brunswick, Maine. This facility closed in 2011, as a result of the 2005 BRAC round. When the Navy left, Brunswick and its neighbor, Topsham, lost more than 2400 military and civilian personnel. These two towns have a combined population of just 22,000, so losing the Naval Air Station has had a significant economic impact on them. Because so few people actually live within the boundaries of the former base, its HUBZone designation does not provide the help they need, and that we had hoped for.

My legislation would expand the geographic boundaries of BRAC-related HUBZones to include the town or county where the closed installation is located, or census tracts contiguous to the installation, up to a total population base of 50,000. This would provide a large enough pool of potential workers to enable qualifying businesses to locate within the HUBZone, and to help host communities overcome the loss of military installations closed through the BRAC process.

The Association of Defense Communities has endorsed the concept of expanding BRAC-related HUBZones in this manner. In December, the ADC wrote to Senate Armed Services Committee Chairman Levin and Ranking Member McCain, noting how important it is that ``Congress restore its intent to support BRAC-impacted communities attracting small businesses to help build and strengthen their local economies.''

Steve Levesque, the Executive Director of the Midcoast Regional Redevelopment Authority, or ``MRRA,'' which oversees the redevelopment of the former Brunswick Naval Air Station, has also urged Congress to modify the HUBZone program. In a letter to me last month, Steve explained that BRAC facilities do not have the residential areas needed to support the 35 percent residency requirement for businesses located within the HUBZone. As a consequence, these businesses cannot ``realize the HUBZone benefits for BRAC'd installations as envisioned by Congress.''

This point was underscored in a letter from Heather Blease, an entrepreneur who is hoping to locate a new business at the former Brunswick Naval Air Station. Ms. Blease describes the HUBZone law as ``flawed,'' because the 35 percent residency requirement makes it impossible for businesses like hers to achieve HUBZone status.

I ask my collegues to consider the legislation we are offering today to help communities get back on their feet after the loss of a military installation closed through the BRAC process.

Mr. President, I ask unanimous consent that letters of support be printed in the Record.

Mr. President, today, along with several colleagues, I am introducing legislation to permanently authorize and expand the E- Verify program. My bill, the Accountability Through Electronic Verification Act, wil1 be a tool for employers who want a legal workforce and it will enhance our ability to hold employers accountable for their hiring practices.

Known as the Basic Pilot Program, E-Verify currently provides employers with a simple, web-based tool to verify the work eligibility of new hires. In 1986, Congress made it unlawful for employers to knowingly hire or employ aliens not eligible to work in the United States. Under current law, if the documents provided by an employee reasonably appear on their face to be genuine, the employer has met its obligation to review the worker's documents.

Because identity theft and counterfeit documents became a thriving industry after the 1986 bill, Congress looked to create a program to help employers verify the work eligibility of its new hires. We created the Basic Pilot Program in 1996. Employers in this program can electronically verify a new hires' employment authorization by checking data of employees with records maintained by the Department of Homeland Security and the Social Security Administration.

Currently, the E-Verify program is voluntary and free for all employers to use. It is a proven tool in combating illegal immigration. Today, I am proposing that the program be a staple in every workplace so that American workers are on a level playing field with cheaper foreign labor.

My legislation would increase penalties on employers who continue to hire people unauthorized to work in the country. Employers would be required to check the status of current employees within 3 years, and would allow employers to run a check prior to offering a job, saving that employer valuable time and resources. Employers will also be required to re-check those workers whose authorization is about to expire, such as those who come to the United States on temporary visas.

My bill also addresses identity theft concerns. The Social Security Administration would be required to develop algorithm technology that would flag social security numbers that are being used more than once. For those who find themselves victim of identity theft, this bill would amend the criminal code to clarify identity fraud is punishable regardless if the defendant did not have knowledge of the victim. This provision stems from the 2009 Supreme Court decision holding that identity theft requires proof that an individual knew the number being used belonged to an actual person.

While everyone may not agree with every aspect of this bill, it serves as a starting point for a much-needed conversation about worksite enforcement. The President and many members in Congress are going to make it a priority to pass an immigration reform bill this year. We need to act. We need change. We need a better system in place for future generations.

Part of the discussion on immigration will be on a reliable employment verification program. People back home want employers to be held accountable. And, employers want to be responsible. People want to see our government do more to reduce the magnet for people to cross our borders illegally. We must take this opportunity to make sure that employers are abiding by, and able to abide by, the rules. Let us give them the tools they need to do that. I hope more colleagues will join me in my effort to achieve accountability through electronic verification and by making E-Verify a permanent program.

Mr. President, I wish to speak about legislation I am introducing today that would restore basic fairness to how our Nation shares revenue from energy produced Federal waters.

The Alaska Adjacent Zone Safe Oil Transport and Revenue Sharing Act would provide Alaskans with the same share of Federal bonus bid and royalty revenue, 37.5 percent, as residents of Gulf Coast States. This is about fairness and a fix that is long overdue. Alaskans deserve to be treated as well as residents of the Gulf Coast. We bear the risks and the responsibilities of offshore development. It is only fair that we share in the proceeds.

Revenue sharing will provide funding for the State of Alaska, local governments and tribes to mitigate effects of development and provide support for public sector infrastructure required to both develop the resources and respond in terms of emergency.

The measure distributes to Alaska 37.5 percent of the Federal bonus bids and royalty share from any energy development, fossil or renewable. Of that 37.5 percent; 25 percent is directed to local governments; 25 percent is directed to Alaska Native corporations; 10 percent is directed to tribal governments; and 40 percent is directed to the State of Alaska.

Additionally, the Federal share is subdivided with 15 percent of the Federal royalties directed, without further appropriation, to the Land and Water Conservation Fund; and 7.5 percent directly to deficit reduction.

In addition, this legislation requires oil produced in the Federal waters of the Chukchi and Beaufort Seas to be brought ashore by pipeline, a method that is safer than tanker transport and secures future throughput for the Trans-Alaska Pipeline.

I am committed to putting in place all the pieces necessary to responsibly develop oil and gas from the Arctic Ocean. Beyond better permit coordination, that I have worked on in other legislation and with the administration, this includes more accurate marine science and the two main features of this bill: sharing revenue with the state and coastal communities as well as keeping Trans-Alaska Pipeline System, TAPS, flowing into the future.

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