I 

108TH CONGRESS 

2D SESSION H. R. 3762

To establish the Corporate Subsidy Reform Commission to review inequitable 

Federal subsidies and make recommendations for termination, modification, or retention of such subsidies, and to state the sense of the Congress 

that the Congress should promptly consider legislation that would make 

the changes in law necessary to implement the recommendations. 

IN THE HOUSE OF REPRESENTATIVES 

FEBRUARY 3, 2004

Mr. SMITH of Washington (for himself, Mr. SHAYS, Mr. CASE, Mr. TIERNEY, 

Mr. CARTER, Mr. DUNCAN, Mr. EMANUEL, Mr. BEAUPREZ, Mr. 

HEFLEY, and Mr. KIND) introduced the following bill; which was referred 

to the Committee on Government Reform, and in addition to the Committee on Ways and Means, for a period to be subsequently determined 

by the Speaker, in each case for consideration of such provisions as fall 

within the jurisdiction of the committee concerned 

A BILL

To establish the Corporate Subsidy Reform Commission to 

review inequitable Federal subsidies and make recommendations for termination, modification, or retention 

of such subsidies, and to state the sense of the Congress 

that the Congress should promptly consider legislation 

that would make the changes in law necessary to implement the recommendations.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,
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1 SECTION 1. SHORT TITLE. 

2 This Act may be cited as the ‘‘Corporate Subsidy Re3 form Commission Act of 2004’’. 

4 SEC. 2. FINDINGS. 

5 The Congress finds that—

6 (1) Federal subsidies, including tax advantages, 

7 which may have been enacted with a valid purpose 

8 for specific industries or industry segments can—

9 (A) fall subject to abuse, causing unantici10 pated and unjustified windfalls to some indus11 tries and industry segments; or 

12 (B) become obsolete, anticompetitive, or no 

13 longer in the public interest, making such sub14 sidies unnecessary or undesired; 

15 (2) it is unfair to force the United States tax16 payer to support unnecessary subsidies, including 

17 tax advantages, that do not provide a substantial 

18 public benefit or serve the public interest; 

19 (3) the Congress has been unable to evaluate 

20 methodically those Federal subsidies that are unfair 

21 and unnecessary and require reform or elimination; 

22 and 

23 (4) a Commission to advise the Congress is es24 sential to a comprehensive review of such unfair cor25 porate subsidies and to the reform or elimination of 

26 such subsidies. 
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1 SEC. 3. PURPOSE. 

2 The purpose of this Act is to establish a fair and de3 liberative process that will result in the timely identifica4 tion, review, and reform or elimination of unnecessary and 

5 inequitable subsidies, including tax advantages, provided 

6 by the Federal Government to entities or industries en7 gaged in profit-making enterprises. 

8 SEC. 4. DEFINITION. 

9 For purposes of this Act, the term ‘‘inequitable Fed10 eral subsidy’’—

11 (1) except as provided in paragraph (2), means 

12 a payment, benefit, service, or tax advantage that—

13 (A) is provided by the Federal Government 

14 to any corporation, partnership, joint venture, 

15 association, or business trust other than—

16 (i) a nonprofit organization described 

17 under section 501(c)(3) of the Internal 

18 Revenue Code of 1986 that is exempt from 

19 taxation under section 501(a) of the Inter20 nal Revenue Code of 1986; or 

21 (ii) a State or local government or In22 dian Tribe; and 

23 (B) provides an unfair competitive advan24 tage or financial windfall; and 

25 (2) does not include a payment, benefit, service, 

26 or tax advantage that is awarded for the purposes 
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1 of research and development in the broad public in2 terest on the basis of a peer reviewed or other open, 

3 competitive, merit-based procedure. 

4 SEC. 5. THE COMMISSION. 

5 (a) ESTABLISHMENT.—There is established an inde6 pendent commission to be known as the ‘‘Corporate Sub7 sidy Reform Commission’’ (hereafter in this Act referred 

8 to as the ‘‘Commission’’). 

9 (b) DUTIES.—The Commission shall—

10 (1) examine the programs and laws of the Fed11 eral Government and identify such programs and 

12 laws that provide inequitable Federal subsidies; 

13 (2) review inequitable Federal subsidies; and 

14 (3) submit the report required under section 

15 6(c) to the Congress, making recommendations re16 garding the termination, modification, or retention 

17 of inequitable Federal subsidies. 

18 (c) LIMITATIONS.—

19 (1) CREATION OF NEW PROGRAMS OR TAXES.—

20 This Act is not intended to result in the creation of 

21 new programs or taxes. The Commission established 

22 in this section shall limit its activities to reviewing 

23 existing programs or laws with the goal of ensuring 

24 fairness and equity in the operation and application 

25 thereof. 
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1 (2) ELIMINATION OF AGENCIES AND DEPART2 MENTS.—The Commission—

3 (A) shall limit its recommendations to the 

4 termination or reform of payments, benefits, 

5 services, or tax advantages; and 

6 (B) shall not recommend the termination 

7 of any Federal agency or department. 

8 (d) ADVISORY COMMITTEE.—The Commission shall 

9 be considered an advisory committee within the meaning 

10 of that term in the Federal Advisory Committee Act (5 

11 U.S.C. App.). 

12 (e) APPOINTMENT.—

13 (1) MEMBERS.—The members of the Commis14 sion—

15 (A) shall be appointed for the life of the 

16 Commission; and 

17 (B) shall be composed of 8 members, of 

18 whom—

19 (i) 2 shall be appointed by the Speak20 er of the House of Representatives; 

21 (ii) 2 shall be appointed by the minor22 ity leader of the House of Representatives; 

23 (iii) 2 shall be appointed by the ma24 jority leader of the Senate, one of whom 
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1 shall be designated by the majority leader 

2 to serve as a co-chair; and 

3 (iv) 2 shall be appointed by the minor4 ity leader of the Senate, one of whom shall 

5 be designated by the minority leader to 

6 serve as a co-chair. 

7 (2) CONSULTATION REQUIRED.—The Speaker 

8 of the House of Representatives, the minority leader 

9 of the House of Representatives, the majority leader 

10 of the Senate, and the minority leader of the Senate 

11 shall consult among themselves prior to the appoint12 ment of the members of the Commission in order to 

13 achieve, to the maximum extent possible, fair and 

14 equitable representation of various points of view 

15 with respect to the matters to be studied by the 

16 Commission under subsection (b). 

17 (3) BACKGROUND.—The members shall rep18 resent a broad array of expertise covering, to the ex19 tent practical, all subject matter, programs, and 

20 laws the Commission is likely to review. 

21 (f) MEETINGS.—

22 (1) INITIAL MEETING.—No later than April 1, 

23 2004, the Commission shall conduct its first meet24 ing. 
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1 (2) OPEN MEETINGS.—Each meeting of the 

2 Commission shall be open to the public, except that 

3 in cases in which classified information, trade se4 crets, or personnel matters are discussed, the co5 chairs may close the meeting. All proceedings, infor6 mation, and deliberations of the Commission shall be 

7 available, upon request, to the Chairman and rank8 ing minority member of the relevant Committee of 

9 the Congress having jurisdiction to report legislation 

10 regarding the subject matter thereof. 

11 (g) VACANCIES.—A vacancy on the Commission shall 

12 be filled in the same manner as the original appointment. 

13 (h) PAY AND TRAVEL EXPENSES.—

14 (1) PAY.—Notwithstanding section 7 of the 

15 Federal Advisory Committee Act (5 App. U.S.C.), 

16 each member of the Commission, other than the co17 chairs, shall be paid at a rate equal to the daily 

18 equivalent of the minimum annual rate of basic pay 

19 for level IV of the Executive Schedule under section 

20 5315 of title 5, United States Code, for each day 

21 (including travel time) during which the member is 

22 engaged in the actual performance of duties vested 

23 in the Commission. 

24 (2) CHAIRMEN.—Notwithstanding section 7 of 

25 the Federal Advisory Committee Act (5 App. 
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1 U.S.C.), the co-chairs shall be paid for each day re2 ferred to in paragraph (1) at a rate equal to the 

3 daily payment of the minimum annual rate of basic 

4 pay payable for level III of the Executive Schedule 

5 under section 5314 of title 5, United States Code. 

6 (3) TRAVEL EXPENSES.—Members of the Com7 mission shall receive travel expenses, including per 

8 diem in lieu of subsistence, in accordance with sec9 tion 5702 and 5703 of title 5, United States Code. 

10 (i) DIRECTOR OF STAFF.—

11 (1) QUALIFICATIONS.—The co-chairs shall ap12 point as Director an individual who has not, during 

13 the 12 months preceding the date of such appoint14 ment, served in any of the entities or industries that 

15 the Commission intends to review. 

16 (2) PAY.—Notwithstanding section 7 of the 

17 Federal Advisory Committee Act (5 App. U.S.C.), 

18 the Director shall be paid at the rate of basic pay 

19 payable for level IV of the Executive Schedule under 

20 section 5315 of title 5, United States Code. 

21 (3) REPORTS.—The Director shall submit peri22 odic reports on administrative and personnel matters 

23 to the co-chairs of the Commission and the Chair24 man and ranking minority member of the Committee 

25 on Governmental Affairs of the Senate and the Com-
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1 mittee on Government Reform of the House of Rep2 resentatives. 

3 (j) STAFF.—

4 (1) ADDITIONAL PERSONNEL.—Subject to para5 graphs (2) and (4), the Director, with the approval 

6 of the Commission, may appoint and fix the pay of 

7 additional personnel. 

8 (2) APPOINTMENTS.—The Director may make 

9 such appointments without regard to the provisions 

10 of title 5, United States Code, governing appoint11 ments in the competitive service, and any personnel 

12 so appointed may be paid without regard to the pro13 visions of chapter 51 and subchapter III of chapter 

14 53 of that title relating to classification and General 

15 Schedule pay rates. 

16 (3) LEGAL STAFF.—The Director shall appoint 

17 under paragraph (2) such professional legal staff as 

18 are necessary for the performance of the functions 

19 of the Commission. 

20 (4) DETAILEES.—Upon the request of the Di21 rector, the head of any Federal department or agen22 cy may detail any of the personnel of that depart23 ment or agency to the Commission to assist the 

24 Commission in accordance with an agreement en25 tered into with the Commission. 
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1 (5) RESTRICTIONS ON PERSONNEL AND

2 DETAILEES.—The following restrictions shall apply 

3 to personnel and detailees of the Commission: 

4 (A) PERSONNEL.—No more than one-third 

5 of the personnel detailed to the Commission 

6 may be on detail from Federal agencies that 

7 deal directly or indirectly with the Federal sub8 sidies the Commission intends to review. 

9 (B) ANALYSTS.—No more than one-fifth of 

10 the professional analysts of the Commission 

11 may be persons detailed from a Federal agency 

12 that deals directly or indirectly with the Federal 

13 subsidies the Commission intends to review. 

14 (C) LEAD ANALYST.—No person detailed 

15 from a Federal agency to the Commission may 

16 be assigned as the lead professional analyst 

17 with respect to an entity or industry the Com18 mission intends to review if the person has been 

19 involved in regulatory or policy-making deci20 sions affecting any such entity or industry in 

21 the 12 months preceding such assignment. 

22 (D) DETAILEE.—A person may not be de23 tailed from a Federal agency to the Commission 

24 if, within 12 months before the detail is to 

25 begin, that person participated personally and 
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1 substantially in any matter within that par2 ticular agency concerning the preparation of 

3 recommendations under this Act. 

4 (E) FEDERAL OFFICER OR EMPLOYEE.—

5 No officer or employee of a Federal agency 

6 may—

7 (i) prepare any report concerning the 

8 effectiveness, fitness, or efficiency of the 

9 performance on the staff of the Commis10 sion of any person detailed from a Federal 

11 agency to that staff; 

12 (ii) review the preparation of such re13 port; or 

14 (iii) approve or disapprove such a re15 port. 

16 (F) LIMITATION ON STAFF SIZE.—(i) Sub17 ject to clause (ii), there may not be more than 

18 25 persons (including any detailees) on the 

19 staff at any time. 

20 (ii) The Commission may increase the 

21 member of its personnel in excess of the limita22 tion under clause (i), 15 days after submitting 

23 notification of such increase to the Committee 

24 on Governmental Affairs of the Senate and the 
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1 Committee on Government Reform of the 

2 House of Representatives. 

3 (G) LIMITATION ON FEDERAL OFFICER.—

4 No member of a Federal agency and no em5 ployee of a Federal agency may serve as a 

6 member of the Commission or as a paid mem7 ber of its staff. 

8 (6) ASSISTANCE.—

9 (A) IN GENERAL.—The Comptroller Gen10 eral of the United States may provide assist11 ance, including the detailing of employees, to 

12 the Commission in accordance with an agree13 ment entered into with the Commission. 

14 (B) CONSULTATION.—The Commission 

15 and the Comptroller General of the United 

16 States shall consult with the Committee on 

17 Governmental Affairs of the Senate and the 

18 Committee on Government Reform of the 

19 House of Representatives on the agreement re20 ferred to under subparagraph (A) before enter21 ing into such agreement. 

22 (k) OTHER AUTHORITY.—

23 (1) EXPERTS AND CONSULTANTS.—The Com24 mission may procure by contract, to the extent funds 

25 are available, the temporary or intermittent services 
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1 of experts or consultants pursuant to section 3109 

2 of title 5, United States Code. 

3 (2) LEASING.—The Commission may lease 

4 space and acquire personal property to the extent 

5 that funds are available. 

6 (l) FUNDING.—There is authorized to be appro7 priated to the Commission $4,000,000 to carry out its du8 ties under this Act. 

9 (m) TERMINATION.—The Commission shall termi10 nate on January 1, 2006. 

11 SEC. 6. PROCEDURE FOR MAKING RECOMMENDATIONS TO 

12 TERMINATE CORPORATE SUBSIDIES. 

13 (a) AGENCY PLAN.—

14 (1) IN GENERAL.—The head of each Federal 

15 department or agency shall include in the documents 

16 submitted in support of the budget of the agency for 

17 fiscal year 2005 a list identifying all programs and 

18 laws administered by that department or agency 

19 that the head of the department or agency deter20 mines provide inequitable Federal subsidies. 

21 (2) CONTENTS.—Such list shall include—

22 (A) a detailed description of each program 

23 or law in question; 

24 (B) a statement identifying and detailing 

25 the extent to which each payment, benefit, serv-
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1 ice, or tax advantage under such program or 

2 law is an inequitable Federal subsidy; 

3 (C) a statement summarizing the legisla4 tive history and purpose of such payment, ben5 efit, service, or tax advantage, and the laws or 

6 policies directly or indirectly giving rise to the 

7 need for such programs or law; and 

8 (D) a recommendation to the Commission 

9 regarding the termination, modification, or re10 tention of each inequitable Federal subsidy 

11 identified in the list. 

12 (b) REVIEW BY THE COMMISSION.—

13 (1) IN GENERAL.—At any time after the sub14 mission of the budget documents to the Congress, 

15 the Commission shall conduct public hearings on the 

16 termination, modification, or retention of inequitable 

17 Federal subsidies, including the recommendations in18 cluded in the lists required under subsection (a). 

19 (2) TESTIMONY UNDER OATH.—All testimony 

20 before the Commission at a public hearing conducted 

21 under this paragraph shall be presented under oath. 

22 (c) REPORT AND RECOMMENDATIONS OF COMMIS23 SION.—

24 (1) REPORT TO CONGRESS.—
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1 (A) REQUIREMENT.—No later than March 

2 31, 2005, the Commission shall submit a report 

3 to the Congress containing the Commission’s 

4 findings and recommendations for termination, 

5 modification, or retention of each of the inequi6 table Federal subsidies reviewed by the Com7 mission. 

8 (B) CONTENTS.—Such findings and rec9 ommendations shall specify—

10 (i) all actions, circumstances, and con11 siderations relating to or bearing upon the 

12 recommendations; and 

13 (ii) to the maximum extent prac14 ticable, the estimated effect of the rec15 ommendations upon the policies, laws, and 

16 programs directly or indirectly affected by 

17 the recommendations. 

18 (C) SUPERMAJORITY REQUIREMENT.—The 

19 Commission may not include a recommendation 

20 in the report unless inclusion of the rec21 ommendation is approved by at least 6 mem22 bers of the Commission. 

23 (2) INFORMATION AND JUSTIFICATIONS.—The 

24 Commission shall include in its report information 

25 specifying—
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1 (A) the reasons and justifications for the 

2 recommendations of the Commission; 

3 (B) to the maximum extent practicable, 

4 the estimated fiscal, economic, and budgetary 

5 impact of accepting its recommendations; 

6 (C) the amount of the projected savings re7 sulting from each of its recommendations; 

8 (D) all actions, circumstances, and consid9 erations relating to or bearing upon the rec10 ommendations and to the maximum extent 

11 practicable, the estimated effect of the rec12 ommendations upon the policies, laws and pro13 grams directly or indirectly affected by the rec14 ommendations; and 

15 (E) the specific changes in Federal stat16 utes necessary to implement the recommenda17 tions, including citation of the relevant provi18 sions of existing law. 

19 (3) SUBMISSION TO CONGRESS.—The report 

20 submitted to the Congress under this subsection 

21 shall be submitted to the Senate and the House of 

22 Representatives on the same day, and shall be deliv23 ered to the Secretary of the Senate if the Senate is 

24 not in session, and to the Clerk of the House of the 

25 Representatives if the House is not in session. 
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1 (4) FEDERAL REGISTER.—The report sub2 mitted under this subsection shall be printed in the 

3 first issue of the Federal Register after such submis4 sion. 

5 (5) CHANGES IN AGENCY OR DEPARTMENT

6 RECOMMENDATIONS.—

7 (A) IN GENERAL.—Subject to the deadline 

8 in paragraph (1) and to subparagraphs (B) and 

9 (C) of this paragraph, in making its rec10 ommendations, the Commission may make 

11 changes in any of the recommendations made 

12 by a department or agency if the Commission 

13 determines that such department or agency, in 

14 treating any matter as an inequitable Federal 

15 subsidy, deviated substantially from the provi16 sions of section 4. 

17 (B) LIMITATION.—The Commission may 

18 make a change in the recommendations made 

19 by a department or agency, only if the Commis20 sion—

21 (i) makes the determination required 

22 under subparagraph (B); and 

23 (ii) conducts a public hearing on the 

24 Commission’s proposed changes. 
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1 (C) APPLICATION OF LIMITATION.—Sub2 paragraph (B) shall apply only to a change by 

3 the Commission in a department or agency rec4 ommendation that would—

5 (i) add or delete a payment, benefit, 

6 service, or tax advantage to or from, re7 spectively, the list recommended for termi8 nation; 

9 (ii) add or delete a payment, benefit, 

10 service, or tax advantage to or from, re11 spectively, the list recommended for modi12 fication; or 

13 (iii) increase or decrease the extent of 

14 a recommendation to modify a payment, 

15 benefit, service, or tax advantage included 

16 in a department’s or agency’s rec17 ommendation. 

18 (D) JUSTIFICATION.—The Commission 

19 shall explain and justify in the report submitted 

20 to the Congress under this subsection any rec21 ommendation made by the Commission that is 

22 different from a recommendation made by an 

23 agency under subsection (a). 

24 (6) PROVISION OF INFORMATION TO MEMBERS

25 OF CONGRESS.—After March 31, 2005, the Commis-
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1 sion shall, upon request, promptly provide to any 

2 Member of Congress the information used by the 

3 Commission in making its recommendations. 

4 (7) COMPTROLLER GENERAL.—The Comp5 troller General of the United States shall—

6 (A) assist the Commission, to the extent 

7 requested, in the Commission’s review and anal8 ysis of the lists, statements, and recommenda9 tions made by departments and agencies under 

10 subsection (a); and 

11 (B) no later than 60 days after April 1, 

12 2004, or the public release of the President’s 

13 budget documents in 2004, whichever is earlier, 

14 submit to the Congress and to the Commission 

15 a report containing a detailed analysis of the 

16 list, statements, and recommendations of each 

17 department or agency. 

18 SEC. 7. CONGRESSIONAL ACTION ON COMMISSION REC19 OMMENDATIONS. 

20 It is the sense of the Congress that, following submis21 sion of the report of the Corporate Subsidy Reform Com22 mission under section 6, the House of Representatives and 

23 the Senate should promptly consider legislation that would 
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1 enact changes in Federal statutes necessary to implement 

2 the recommendations of the Commission.

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