I

105TH CONGRESS

1ST SESSION H. R. 515

To eliminate corporate welfare.

IN THE HOUSE OF REPRESENTATIVES

FEBRUARY 4, 1997

Mr. ANDREWS introduced the following bill; which was referred to the Committee on Ways and Means, and in addition to the Committees on Commerce, Resources, Agriculture, Transportation and Infrastructure, and

the Budget, 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 eliminate corporate welfare.

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

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

4 (a) SHORT TITLE.—This Act may be cited as the

5 ‘‘Corporate Welfare Elimination Act of 1997’’.

6 (b) TABLE OF CONTENTS.—

Sec. 1. Short title; table of contents.

TITLE I—TAX REFORM

Sec. 101. Short title; references to Internal Revenue Code of 1986.

Sec. 102. Repeal of expensing of intangible drilling and development costs and

of mining exploration and development costs.

Sec. 103. Termination of credit for producing fuel from nonconventional source.
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Sec. 104. Repeal of percentage depletion.

Sec. 105. Repeal of tax benefits for alcohol fuels.

Sec. 106. Repeal of enhanced oil recovery credit.

Sec. 107. Repeal of credit and deduction for electric vehicles, clean-fuel vehicles,

and certain refueling property.

Sec. 108. Repeal of deduction for tertiary injectants.

Sec. 109. Repeal of rehabilitation credit for nonhistoric structures; reduction of

rehabilitation credit for certified historic structures.

Sec. 110. Repeal of treatment of blue cross and blue shield organizations, etc.

Sec. 111. Repeal of small life insurance company deduction.

Sec. 112. Repeal of alternative tax on small property and casualty insurance

companies.

Sec. 113. Cash accounting and expensing for agriculture.

Sec. 114. Repeal of exclusion for cancellation of qualified farm indebtedness.

Sec. 115. Repeal of exclusion for certain cost-sharing payments.

Sec. 116. Reduction of expensing of timber-growing costs.

Sec. 117. Repeal of reforestation credit.

Sec. 118. Repeal of rapid amortization of reforestation expenditures.

Sec. 119. Termination of exclusion of certain income of citizens or residents of

United States living abroad.

Sec. 120. Repeal of exclusion for income of foreign sales corporations.

Sec. 121. Repeal of deferral of income of controlled foreign corporations.

Sec. 122. Repeal of deferral of tax under merchant marine capital constructions

funds.

Sec. 123. Repeal of special treatment for magazine circulation expenditures.

Sec. 124. Repeal of special treatment for returns of magazines, paperbacks,

and records.

Sec. 125. Repeal of exclusion for interest on State and local bonds.

TITLE II—NATURAL RESOURCES

Sec. 201. Public Resources Deficit Reduction Act of 1997.

Subtitle A—General Provisions

Sec. 211. Fair market value for resource disposal.

Sec. 212. Fees from program beneficiaries.

Sec. 213. Revenues from sale, lease, and transfer of assets.

Subtitle B—Revenue From Mining Claims

Sec. 221. Definitions.

Sec. 222. Mining claim maintenance requirements.

Sec. 223. Royalty.

Sec. 224. Severance tax.

Sec. 225. Fund for abandoned locatable minerals mine reclamation.

Sec. 226. Limitation on patent issuance.

Sec. 227. Purchasing power adjustment.

Sec. 228. Savings clause.

Sec. 229. Effective date.

Subtitle C—Use or Disposal of Federal Natural Resources

Sec. 241. Annual domestic livestock grazing fee.

Sec. 242. Elimination of below-cost sales of timber from National Forest System lands.

Sec. 243. Timberland suitability.
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Sec. 244. Reduction in maximum amount of payments under agricultural assistance programs to reflect receipt of Federal irrigation water.

Sec. 245. Elimination of off budget expenditures.

Sec. 246. Deposit of Taylor Grazing Act receipts in Treasury.

Sec. 247. Repeal of livestock feed assistance program.

Sec. 248. Oil and gas rentals.

Sec. 249. Communication permits.

Subtitle D—National Park Concessions

Sec. 251. Findings and policy.

Sec. 252. Definitions.

Sec. 253. Repeal of National Park Service Concessions Policy Act of 1965.

Sec. 254. Use of concession contracts to provide services to park visitors.

Sec. 255. Other authorities to provide services to park visitors.

Sec. 256. Competitive selection process for concession contracts.

Sec. 257. Preferential right of renewal of concession contracts.

Sec. 258. Franchise fees.

Sec. 259. Use of franchise fees.

Sec. 260. Park Improvement Funds.

Sec. 261. Duration of concession contracts.

Sec. 262. Transfer of concession contracts.

Sec. 263. Protection of concessioner investment.

Sec. 264. Rates and charges to public.

Sec. 265. Concessioner performance evaluation.

Sec. 266. Recordkeeping requirements.

Sec. 267. Exemption from certain lease requirements.

Sec. 268. No effect on ANILCA provisions.

Sec. 269. Implementation.

Sec. 270. Authorization of appropriations.

1 TITLE I—TAX REFORM

2 SEC. 101. SHORT TITLE; REFERENCES TO INTERNAL REVE3 NUE CODE OF 1986.

4 (a) SHORT TITLE.—This title may be cited as the

5 ‘‘Termination of Energy and Natural Resource Tax Sub6 sidies Act of 1997’’.

7 (b) REFERENCES TO INTERNAL REVENUE CODE OF

8 1986.—Except as otherwise expressly provided, whenever

9 in this title an amendment or repeal is expressed in terms

10 of an amendment to, or repeal of, a section or other provi11 sion, the reference shall be considered to be made to a
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1 section or other provision of the Internal Revenue Code

2 of 1986.

3 SEC. 102. REPEAL OF EXPENSING OF INTANGIBLE DRILL4 ING AND DEVELOPMENT COSTS AND OF MIN5 ING EXPLORATION AND DEVELOPMENT

6 COSTS.

7 (a) INTANGIBLE DRILLING AND DEVELOPMENT

8 COSTS.—Section 263(c) is hereby repealed.

9 (b) DEVELOPMENT EXPENDITURES.—Section 616

10 (relating to development expenditures) is hereby repealed.

11 (c) EXPLORATION EXPENDITURES.—Subsection (i)

12 of section 617 is amended to read as follows:

13 ‘‘(i) TERMINATION.—No deduction shall be allowed

14 under this section for any expenditure paid or incurred

15 in a taxable year beginning after the date of the enactment

16 of this subsection.’’

17 (d) CONFORMING AMENDMENTS.—

18 (1) Paragraph (2) of section 56(a) is hereby re19 pealed.

20 (2) Subsection (a) of section 57 is amended by

21 striking paragraph (2).

22 (3) Paragraph (2) of section 59(e) is amended

23 by adding ‘‘and’’ at the end of subparagraph (A), by

24 striking the comma at the end of subparagraph (B)
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1 and inserting a period, and by striking subpara2 graphs (C), (D), and (E).

3 (4) Subparagraph (A) of section 59(e)(5) is

4 amended by inserting before the period ‘‘, as in ef5 fect before the Termination of Energy and Natural

6 Resource Tax Subsidies Act of 1997’’.

7 (5) Subsection (c) of section 193 is amended to

8 read as follows:

9 ‘‘(c) APPLICATION WITH OTHER DEDUCTIONS.—No

10 deduction shall be allowed under subsection (a) with re11 spect to any expenditure with respect to which a deduction

12 is allowed or allowable to the taxpayer under any other

13 provision of this chapter.’’

14 (6) Paragraph (1) of section 263(a) is amended

15 by striking subparagraph (A) and by redesignating

16 the succeeding subparagraphs accordingly.

17 (7) Section 263 is amended by striking sub18 section (i).

19 (8) Subsection (c) of section 263A is amended

20 by striking paragraph (3) and by redesignating the

21 succeeding paragraphs accordingly.

22 (9) Paragraph (5) of section 263A(c), as redes23 ignated by paragraph (8), is amended by striking

24 ‘‘subparagraphs (B), (C), (D), and (E)’’ and insert25 ing ‘‘subparagraph (B)’’.
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1 (10) Section 291 is amended by striking sub2 section (b).

3 (11) Subsection (n) of section 312 is amended

4 by striking paragraph (2).

5 (12) Paragraph (1) of section 1254(a) is

6 amended—

7 (A) by inserting ‘‘(as in effect before the

8 Termination of Energy and Natural Resource

9 Tax Subsidies Act of 1997)’’ after ‘‘617’’ in

10 subparagraph (A)(i), and

11 (B) by adding at the end the following:

12 ‘‘For purposes of clause (i), any deduction

13 under section 291(b)(2) (as in effect before the

14 Termination of Energy and Natural Resource

15 Tax Subsidies Act of 1997) shall be treated as

16 a deduction allowable under section 263, 616,

17 or 617 (whichever is appropriate).’’

18 (c) EFFECTIVE DATE.—The amendments made by

19 this section shall apply to amounts paid or incurred in tax20 able years beginning after the date of the enactment of

21 this Act.

22 SEC. 103. TERMINATION OF CREDIT FOR PRODUCING FUEL

23 FROM NONCONVENTIONAL SOURCE.

24 Section 29 is amended by adding at the end the fol25 lowing new subsection:
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1 ‘‘(h) TERMINATION.—Notwithstanding any other

2 provision of this section, no credit shall be allowed under

3 this section with respect to any qualified fuels produced

4 by a facility placed in service after December 31, 1997.’’

5 SEC. 104. REPEAL OF PERCENTAGE DEPLETION.

6 (a) IN GENERAL.—Section 613 (relating to limita7 tions on percentage depletion in case of oil and gas wells)

8 is amended by adding at the end the following new sub9 section:

10 ‘‘(f) TERMINATION.—The allowance under section

11 611 shall be determined without regard to this section for

12 taxable years beginning after the date of the enactment

13 of this subsection.’’

14 (b) TERMINATION OF SECTION 613A.—Section 613A

15 is amended by adding at the end the following new sub16 section:

17 ‘‘(f) TERMINATION.—The allowance under section

18 611 shall be determined without regard to this section for

19 taxable years beginning after the date of the enactment

20 of this subsection.’’

21 SEC. 105. REPEAL OF TAX BENEFITS FOR ALCOHOL FUELS.

22 (a) REPEAL OF ALCOHOL FUELS CREDIT.—

23 (1) IN GENERAL.—Section 40 (relating to alco24 hol used as fuel) is hereby repealed.

25 (2) CONFORMING AMENDMENTS.—
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1 (A) Subsection (b) of section 38 is amend2 ed by striking paragraph (3) and by redesignat3 ing the following paragraphs accordingly.

4 (B) Section 87 is hereby repealed.

5 (C) Subsection (c) of section 196 is

6 amended by striking paragraph (3) and by re7 designating the following paragraphs accord8 ingly.

9 (D) Subsection (n) of section 6501 is

10 amended by striking ‘‘40(f)’’.

11 (E) The table of sections for subpart D of

12 part IV of subchapter A of chapter 1 is amend13 ed by striking the item relating to section 40.

14 (F) The table of sections for part II of

15 subchapter B of chapter 1 is amended by strik16 ing the item relating to section 87.

17 (3) EFFECTIVE DATE.—The amendments made

18 by this subsection shall apply to taxable years begin19 ning after the date of the enactment of this Act.

20 (b) REPEAL OF REDUCED FUEL TAX RATES.—

21 (1) GASOLINE AND DIESEL FUEL.—Section

22 4081 is amended by striking subsection (c) and by

23 redesignating subsections (d) and (e) as subsections

24 (c) and (d), respectively.
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1 (2) AVIATION FUEL.—Section 4091 is amended

2 by striking subsection (c).

3 (3) SPECIAL MOTOR FUELS.—

4 (A) Section 4041 is amended by striking

5 subsections (k) and (m).

6 (B) Subsection (b) of section 4041 is

7 amended by striking paragraph (2).

8 (4) CONFORMING AMENDMENTS.—

9 (A) Section 6427 is amended by striking

10 subsection (f).

11 (B) Subsection (i) of section 6427 is

12 amended by striking paragraph (3) and by re13 designating paragraphs (4) and (5) as para14 graphs (3) and (4), respectively.

15 (C) Paragraph (4) of section 6427(i), as

16 redesignated by subparagraph (B), is amended

17 by striking the last sentence of subparagraph

18 (A) and inserting the following new flush sen19 tence:

20 ‘‘Notwithstanding subsection (l)(1), if the Sec21 retary has not paid pursuant to a claim filed

22 under the preceding sentence within 20 days of

23 the date of the filing of such claim, the claim
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1 shall be paid with interest from such date de2 termined by using the overpayment rate and

3 method under section 6621.’’

4 (D) Section 9502 is amended by striking

5 subsection (e).

6 (E) Subsection (f) of section 9502 is

7 amended by striking paragraph (2) and by re8 designating paragraph (3) as paragraph (2).

9 (F) Subsection (b) of section 9503 is

10 amended by striking paragraph (5).

11 (G) Subsection (f) of section 9503 is

12 amended by striking paragraph (3) and by re13 designating paragraph (4) as paragraph (3).

14 (5) EFFECTIVE DATE.—The amendments made

15 by this subsection shall take effect on the date of the

16 enactment of this Act.

17 SEC. 106. REPEAL OF ENHANCED OIL RECOVERY CREDIT.

18 (a) IN GENERAL.—Section 43 is hereby repealed.

19 (b) CONFORMING AMENDMENTS.—

20 (1) Subsection (b) of section 38 is amended by

21 striking paragraph (5), as redesignated by section

22 105, and by redesignating the succeeding para23 graphs accordingly.
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1 (2) The table of sections for subpart D of part

2 IV of subchapter A of chapter 1 is amended by

3 striking the item relating to section 43.

4 (c) EFFECTIVE DATE.—The amendments made by

5 this section shall apply to taxable years beginning after

6 December 31, 1997.

7 SEC. 107. REPEAL OF CREDIT AND DEDUCTION FOR ELEC8 TRIC VEHICLES, CLEAN-FUEL VEHICLES, AND

9 CERTAIN REFUELING PROPERTY.

10 (a) REPEAL OF CREDIT FOR QUALIFIED ELECTRIC

11 VEHICLES.—Section 30 is hereby repealed.

12 (b) REPEAL OF DEDUCTION FOR CLEAN-FUEL VEHI13 CLES AND CERTAIN REFUELING PROPERTY.—Section

14 179A is hereby repealed.

15 (c) CONFORMING AMENDMENTS.—

16 (1) Paragraph (24) of section 1016(a) is

17 amended by inserting ‘‘(as in effect on the day be18 fore the date of the enactment of the Corporate Wel19 fare Elimination Act of 1997)’’ after ‘‘section

20 179A(e)(6)(A)’’.

21 (2) Paragraph (25) of section 1016(a) is

22 amended by inserting ‘‘(as in effect on the day be23 fore the date of the enactment of the Corporate Wel24 fare Elimination Act of 1997)’’ after ‘‘section

25 30(d)(1)’’.
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1 (3) The table of sections for subpart B of part

2 IV of subchapter A of chapter 1 is amended by

3 striking the item relating to section 30.

4 (4) The table of sections for part VI of sub5 chapter B of chapter 1 is amended by striking the

6 item relating to section 179A.

7 (d) EFFECTIVE DATE.—The amendments made by

8 this section shall apply to taxable years beginning after

9 December 31, 1997.

10 SEC. 108. REPEAL OF DEDUCTION FOR TERTIARY

11 INJECTANTS.

12 (a) IN GENERAL.—Section 193 (relating to tertiary

13 injectants) is hereby repealed.

14 (b) CLERICAL AMENDMENT.—The table of sections

15 for part VI of subchapter B of chapter 1 is amended by

16 striking the item relating to section 193.

17 (c) EFFECTIVE DATE.—The amendments made by

18 this section shall apply to taxable years beginning after

19 December 31, 1997.

20 SEC. 109. REPEAL OF REHABILITATION CREDIT FOR NON21 HISTORIC STRUCTURES; REDUCTION OF RE22 HABILITATION CREDIT FOR CERTIFIED HIS23 TORIC STRUCTURES.

24 (a) IN GENERAL.—Subsection (a) of section 47 is

25 amended to read as follows:
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1 ‘‘(a) GENERAL RULE.—For purposes of section 46,

2 the rehabilitation credit for any taxable year is 15 percent

3 of the qualified rehabilitation expenditures with respect to

4 any certified historic structure.’’

5 (b) CONFORMING AMENDMENTS.—

6 (1) Subparagraph (A) of section 47(c)(1) is

7 amended by adding ‘‘and’’ at the end of clause (ii),

8 by striking clause (iii) and by redesignating clause

9 (iv) as clause (iii).

10 (2) Paragraph (1) of section 47(c) is amended

11 by striking subparagraph (B) and by redesignating

12 subparagraphs (C) and (D) as subparagraphs (B)

13 and (C), respectively.

14 (c) EFFECTIVE DATE.—The amendments made by

15 this section shall apply to property placed in service after

16 December 31, 1997.

17 SEC. 110. REPEAL OF TREATMENT OF BLUE CROSS AND

18 BLUE SHIELD ORGANIZATIONS, ETC.

19 (a) IN GENERAL.—Section 833 (relating to treat20 ment of Blue Cross and Blue Shield organizations, etc.)

21 is hereby repealed.

22 (b) CLERICAL AMENDMENT.—The table of sections

23 for part II of subchapter L of chapter 1 is amended by

24 striking the item relating to section 833.
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1 (c) EFFECTIVE DATE.—The amendments made by

2 this section shall apply to taxable years beginning after

3 December 31, 1997.

4 SEC. 111. REPEAL OF SMALL LIFE INSURANCE COMPANY

5 DEDUCTION.

6 (a) IN GENERAL.—Section 806 is hereby repealed.

7 (b) CONFORMING AMENDMENTS.—

8 (1) The text of section 804 is amended to read

9 as follows:

10 ‘‘For purposes of this part, the term ‘life insurance

11 deductions’ means the general deductions provided in sec12 tion 805.’’

13 (2) Subparagraph (A) of section 815(c)(2) is

14 amended by adding ‘‘and’’ at the end of clause (i),

15 by striking clause (ii), and by redesignating clause

16 (iii) as clause (ii).

17 (3) Subparagraph (B) of section 453B(e)(2) is

18 amended by striking ‘‘(as defined in section

19 806(b)(3))’’.

20 (4) Subsection (e) of section 453B is amended

21 by adding at the end the following new paragraph:

22 ‘‘(3) NONINSURANCE BUSINESS.—For purposes

23 of paragraph (2)—
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1 ‘‘(A) IN GENERAL.—The term ‘noninsur2 ance business’ means any activity which is not

3 an insurance business.

4 ‘‘(B) CERTAIN ACTIVITIES TREATED AS IN5 SURANCE BUSINESSES.—For purposes of sub6 paragraph (A), any activity which is not an in7 surance business shall be treated as an insur8 ance business if—

9 ‘‘(i) it is of a type traditionally carried

10 on by life insurance companies for invest11 ment purposes, but only if the carrying on

12 of such activity (other than in the case of

13 real estate) does not constitute the active

14 conduct of a trade or business, or

15 ‘‘(ii) it involves the performance of ad16 ministrative services in connection with

17 plans providing life insurance, pension, or

18 accident and health benefits.’’

19 (5) Subclause (II) of section 465(c)(7)(D)(v) is

20 amended by striking ‘‘(within the meaning of section

21 806(b)(3))’’ and inserting ‘‘(within the meaning of

22 section 453B(e)(3))’’.

23 (6) The table of sections for subpart C of part

24 I of subchapter L of chapter 1 is amended by strik25 ing the item relating to section 806.
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1 (c) EFFECTIVE DATE.—The amendments made by

2 this section shall apply to taxable years beginning after

3 December 31, 1997.

4 SEC. 112. REPEAL OF ALTERNATIVE TAX ON SMALL PROP5 ERTY AND CASUALTY INSURANCE COMPA6 NIES.

7 (a) IN GENERAL.—Section 831 (relating to tax on

8 insurance companies other than life insurance companies)

9 is amended by striking subsection (b) and by redesignat10 ing subsection (c) as subsection (b).

11 (b) CONFORMING AMENDMENTS.—

12 (1) Subparagraph (C) of section 501(c)(15) is

13 amended to read as follows:

14 ‘‘(C) For purposes of subparagraph (B),

15 the term ‘controlled group’ means any con16 trolled group of corporations (as defined in sec17 tion 1563(a)); except that—

18 ‘‘(i) ‘more than 50 percent’ shall be

19 substituted for ‘at least 80 percent’ each

20 place it appears in section 1563(a), and

21 ‘‘(ii) subsections (a)(4) and (b)(2)(D)

22 of section 1563 shall not apply.’’

23 (2) Sections 832(b)(7)(D)(ii) and 834(a) are

24 each amended by inserting ‘‘(as in effect on the day
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1 before the date of the enactment of the Corporate

2 Welfare Elimination Act of 1997)’’ after ‘‘831(b)’’.

3 (3) Sections 904(b)(3)(D) and 1201(a) are each

4 amended by striking ‘‘831(a) or (b)’’ and inserting

5 ‘‘831(a)’’.

6 (c) EFFECTIVE DATE.—The amendments made by

7 this section shall apply to taxable years beginning after

8 December 31, 1997.

9 SEC. 113. CASH ACCOUNTING AND EXPENSING FOR AGRI10 CULTURE.

11 (a) REPEAL OF PROVISIONS PERMITTING FARMING

12 BUSINESSES TO USE CASH METHOD OF ACCOUNTING.—

13 (1) Section 447 is amended by striking sub14 sections (g), (h), and (i).

15 (2) Subsection (b) of section 448 is amended by

16 striking paragraph (1).

17 (b) REPEAL OF DEDUCTION FOR SOIL AND WATER

18 CONSERVATION EXPENDITURES.—

19 (1) IN GENERAL.—Section 175 (relating to soil

20 and water conservation expenditures) is hereby re21 pealed.

22 (2) CLERICAL AMENDMENT.—The table of sec23 tions for part VI of subchapter B of chapter 1 is

24 amended by striking the item relating to section

25 175.
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1 (c) REPEAL OF DEDUCTION FOR EXPENDITURES BY

2 FARMERS FOR FERTILIZER, ETC.—

3 (1) IN GENERAL.—Section 180 (relating to ex4 penditures by farmers for fertilizer, etc) is hereby re5 pealed.

6 (2) CLERICAL AMENDMENT.—The table of sec7 tions for part VI of subchapter B of chapter 1 is

8 amended by striking the item relating to section

9 180.

10 (d) REPEAL OF CERTAIN EXCEPTIONS PERMITTING

11 CERTAIN FARM BUSINESS TO USE CASH METHOD OF AC12 COUNTING.—Section 447 (relating to method of account13 ing for corporations engaged in farming) is amended by

14 striking subsections (d)(2), (e), (g), (h), and (i).

15 (e) EFFECTIVE DATE.—The amendments made by

16 this section shall apply to taxable years beginning after

17 December 31, 1997.

18 SEC. 114. REPEAL OF EXCLUSION FOR CANCELLATION OF

19 QUALIFIED FARM INDEBTEDNESS.

20 (a) IN GENERAL.—Paragraph (1) of section 108(a)

21 is amended by inserting ‘‘or’’ at the end of subparagraph

22 (B), by striking subparagraph (C), and by redesignating

23 subparagraph (D) as subparagraph (C).
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1 (b) EFFECTIVE DATE.—The amendment made by

2 this section shall apply to taxable years beginning after

3 December 31, 1997.

4 SEC. 115. REPEAL OF EXCLUSION FOR CERTAIN COST5 SHARING PAYMENTS.

6 (a) IN GENERAL.—Section 126 (relating to certain

7 cost-sharing payments) is hereby repealed.

8 (b) CLERICAL AMENDMENT.—The table of sections

9 for part III of subchapter B of chapter 1 is amended by

10 striking the item relating to section 126.

11 (c) EFFECTIVE DATE.—The amendments made by

12 this section shall apply to taxable years beginning after

13 December 31, 1997.

14 SEC. 116. REDUCTION OF EXPENSING OF TIMBER-GROWING

15 COSTS.

16 (a) IN GENERAL.—Paragraph (5) of section 263A(c)

17 (relating to general exceptions) is amended by striking

18 ‘‘This section shall not apply to’’ and inserting ‘‘This section shall not apply to 2 19 ⁄3 of the costs described in sub20 section (a)(2) with respect to’’.

21 (b) EFFECTIVE DATE.—The amendment made by

22 this section shall apply to taxable years beginning after

23 December 31, 1997.
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1 SEC. 117. REPEAL OF REFORESTATION CREDIT.

2 (a) IN GENERAL.—Subsection (b) of section 48 is

3 hereby repealed.

4 (b) CONFORMING AMENDMENTS.—

5 (1) The heading of section 48 is amended to

6 read as follows:

7 ‘‘SEC. 48. ENERGY CREDIT.’’

8 (2) The table of sections for subpart E of part

9 IV of subchapter A of chapter 1 is amended by

10 amending the item relating to section 48 to read as

11 follows:

‘‘Sec. 48. Energy credit.’’

12 (c) EFFECTIVE DATE.—The amendments made by

13 this section shall apply to taxable years beginning after

14 December 31, 1997.

15 SEC. 118. REPEAL OF RAPID AMORTIZATION OF REFOREST16 ATION EXPENDITURES.

17 (a) IN GENERAL.—Section 194 is hereby repealed.

18 (b) CONFORMING AMENDMENTS.—

19 (1) Subsection (a) of section 62 is amended by

20 striking paragraph (11).

21 (2) Subsections (a)(3)(C) and (b)(8) of section

22 1245 are each amended by inserting ‘‘(as in effect

23 before its repeal by the Corporate Welfare Elimi24 nation Act of 1997)’’ after ‘‘section 194’’.
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1 (3) The table of sections for part VI of sub2 chapter B of chapter 1 is amended by striking the

3 item relating to section 194.

4 (c) EFFECTIVE DATE.—The amendments made by

5 this section shall apply to taxable years beginning after

6 December 31, 1997.

7 SEC. 119. TERMINATION OF EXCLUSION OF CERTAIN IN8 COME OF CITIZENS OR RESIDENTS OF UNIT9 ED STATES LIVING ABROAD.

10 (a) IN GENERAL.—Section 911 (relating to citizens

11 or residents of the United States living abroad) is amend12 ed by redesignating subsection (f) as subsection (g) and

13 by inserting after subsection (e) the following new sub14 section:

15 ‘‘(f) TERMINATION.—This section shall not apply to

16 any taxable year beginning after December 31, 1997.’’

17 (b) EFFECTIVE DATE.—The amendment made by

18 this section shall apply to taxable years beginning after

19 December 31, 1997.

20 SEC. 120. REPEAL OF EXCLUSION FOR INCOME OF FOR21 EIGN SALES CORPORATIONS.

22 (a) IN GENERAL.—Subpart C of part III of sub23 chapter N of chapter 1 (relating to taxation of foreign

24 sales corporations) is hereby repealed.
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1 (b) CLERICAL AMENDMENT.—The table of subparts

2 for such part III is amended by striking the item relating

3 to subpart C.

4 (c) EFFECTIVE DATE.—The amendments made by

5 this section shall apply to taxable years beginning after

6 December 31, 1997.

7 SEC. 121. REPEAL OF DEFERRAL OF INCOME OF CON8 TROLLED FOREIGN CORPORATIONS.

9 (a) GENERAL RULE.—Subpart F of part III of sub10 chapter N of chapter 1 is amended by striking sections

11 952, 953, and 954 and inserting the following new sec12 tions:

13 ‘‘SEC. 952. SUBPART F INCOME.

14 ‘‘(a) GENERAL RULE.—For purposes of this subpart,

15 the term ‘subpart F income’ means the earnings and prof16 its of the controlled foreign corporation for the taxable

17 year computed with the following adjustments:

18 ‘‘(1) There shall be excluded the amount of the

19 earnings and profits which are attributable to in20 come from sources within the United States which

21 is effectively connected with the conduct by the con22 trolled foreign corporation of a trade or business

23 within the United States, except to the extent such

24 income is exempt from taxation (or subject to a re25 duced rate of tax) pursuant to a treaty obligation of
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1 the United States. For purposes of the preceding

2 sentence, income described in paragraph (2) or (3)

3 of section 921(d) shall be treated as derived from

4 sources within the United States.

5 ‘‘(2) In determining earnings and profits (or

6 the deficit in earnings and profits), the amount of

7 any illegal bribe, kickback, or other payment (within

8 the meaning of section 162(c), except as otherwise

9 provided in this paragraph) shall not be taken into

10 account to decrease such earnings and profits or to

11 increase such deficit. The payments referred to in

12 the preceding sentence include payments which

13 would be unlawful under the Foreign Corrupt Prac14 tices Act of 1977 if the payor were a United States

15 person.

16 ‘‘(3) Under regulations prescribed by the Sec17 retary, there shall be excluded any part of any earn18 ings and profits if it is established to the satisfaction

19 of the Secretary that such part could not have been

20 distributed by the controlled foreign corporation to

21 United States shareholders who own (within the

22 meaning of section 958(a)) stock of such controlled

23 foreign corporation because of currency or other re24 strictions or limitations imposed under the laws of

25 any foreign country.
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1 ‘‘(4) Earnings and profits shall be determined

2 without regard to paragraphs (4), (5), and (6) of

3 section 312(n). Under regulations, the preceding

4 sentence shall not apply to the extent it would in5 crease earnings and profits by an amount which was

6 previously distributed by the controlled foreign cor7 poration.

8 Except as provided in this subsection and section

9 312(k)(4), the earnings and profits of any foreign corpora10 tion, and the deficit and earnings and profits of any for11 eign corporation for any taxable year shall be determined

12 according to rules similar to those applicable to domestic

13 corporations, under regulations prescribed by the Sec14 retary.

15 ‘‘(b) CERTAIN DEFICITS MAY BE TAKEN INTO AC16 COUNT.—

17 ‘‘(1) TREATMENT OF CERTAIN PRIOR YEAR

18 DEFICITS.—

19 ‘‘(A) IN GENERAL.—The amount included

20 in the gross income of any United States share21 holder under section 951(a)(1)(A)(i) for any

22 taxable year with respect to any controlled for23 eign corporation shall be reduced by the amount

24 of such shareholder’s pro rata share of any
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•HR 515 IH

1 qualified deficit of such controlled foreign cor2 poration.

3 ‘‘(B) QUALIFIED DEFICIT.—For purposes

4 of this paragraph—

5 ‘‘(i) IN GENERAL.—The term ‘quali6 fied deficit’ means any deficit in the earn7 ings and profits of the controlled foreign

8 corporation for any prior taxable year

9 which began after December 31, 1997, and

10 for which such corporation was a con11 trolled foreign corporation, but only to the

12 extent such deficit has not previously been

13 taken into account under this paragraph.

14 ‘‘(ii) SPECIAL RULE FOR DEFICITS

15 BEFORE 1996.—The term ‘qualified deficit’

16 includes any deficit in earnings and profits

17 for any taxable year beginning before Jan18 uary 1, 1998, to the extent that such defi19 cit qualified as a qualified deficit under

20 subsection (c)(1)(B) of this section (as in

21 effect on the day before the date of the en22 actment of this subsection); except that

23 any such deficit may be taken into account

24 under this paragraph only to offset
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1 amounts attributable to the same activity

2 as the activity giving rise to such deficit.

3 ‘‘(C) PRO RATA SHARE.—For purposes of

4 this paragraph, the shareholder’s pro rata share

5 of any deficit shall be determined under rules

6 similar to the rules of section 951(a)(2) for

7 whichever of the following yields the smallest

8 share:

9 ‘‘(i) the close of the taxable year, or

10 ‘‘(ii) the close of the taxable year in

11 which the deficit arose.

12 ‘‘(2) CERTAIN DEFICITS OF MEMBER OF THE

13 SAME CHAIN OF CORPORATIONS MAY BE TAKEN

14 INTO ACCOUNT.—

15 ‘‘(A) IN GENERAL.—A controlled foreign

16 corporation may elect to reduce the amount of

17 its subpart F income for any taxable year by

18 the amount of any deficit in earnings and prof19 its of a qualified chain member for a taxable

20 year ending with (or within) the taxable year of

21 such controlled foreign corporation. To the ex22 tent any deficit reduces subpart F income

23 under the preceding sentence, such deficit shall

24 not be taken into account under paragraph (1).
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1 ‘‘(B) QUALIFIED CHAIN MEMBER.—For

2 purposes of this paragraph, the term ‘qualified

3 chain member’ means, with respect to any con4 trolled foreign corporation, any other corpora5 tion which is created or organized under the

6 laws of the same foreign country as the con7 trolled foreign corporation but only if—

8 ‘‘(i) all the stock of such other cor9 poration (other than directors’ qualifying

10 shares) is owned at all times during the

11 taxable year in which the deficit arose (di12 rectly or through 1 or more corporations

13 other than the common parent) by such

14 controlled foreign corporation, or

15 ‘‘(ii) all the stock of such controlled

16 foreign corporation (other than directors’

17 qualifying shares) is owned at all times

18 during the taxable year in which the deficit

19 arose (directly or through 1 or more cor20 porations other than the common parent)

21 by such other corporation.

22 ‘‘(C) COORDINATION.—This paragraph

23 shall be applied after paragraph (1).

24 ‘‘(3) DETERMINATION OF DEFICIT.—In deter25 mining the amount of any deficit in earnings and
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1 profits, the adjustments set forth in subsection (a)

2 shall apply.

3 ‘‘SEC. 953. SPECIAL RULES FOR CERTAIN INSURANCE COM4 PANIES.

5 ‘‘(a) SPECIAL RULE FOR CERTAIN CAPTIVE INSUR6 ANCE COMPANIES.—

7 ‘‘(1) IN GENERAL.—For purposes only of tak8 ing into account subpart F income which is attrib9 utable to related person insurance income—

10 ‘‘(A) the term ‘United States shareholder’

11 means, with respect to any foreign corporation,

12 a United States person (as defined in section

13 957(c)) who owns (within the meaning of sec14 tion 958(a)) any stock of the foreign corpora15 tion,

16 ‘‘(B) the term ‘controlled foreign corpora17 tion’ has the meaning given to such term by

18 section 957(a) determined by substituting ‘25

19 percent or more’ for ‘more than 50 percent’,

20 and

21 ‘‘(C) the pro rata share referred to in sec22 tion 951(a)(1)(A)(i) shall be determined under

23 paragraph (5) of this subsection.

24 ‘‘(2) RELATED PERSON INSURANCE INCOME.—

25 For purposes of this subsection, the term ‘related
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•HR 515 IH

1 person insurance income’ means any insurance in2 come (within the meaning of subsection (c)) attrib3 utable to a policy of insurance or reinsurance with

4 respect to which the person (directly or indirectly)

5 insured is a United States shareholder in the foreign

6 corporation or a related person to such a share7 holder.

8 ‘‘(3) EXCEPTIONS.—

9 ‘‘(A) CORPORATIONS NOT HELD BY

10 INSUREDS.—Paragraph (1) shall not apply to

11 any foreign corporation if at all times during

12 the taxable year of such foreign corporation—

13 ‘‘(i) less than 20 percent of the total

14 combined voting power of all classes of

15 stock of such corporation entitled to vote,

16 and

17 ‘‘(ii) less than 20 percent of the total

18 value of such corporation,

19 is owned (directly or indirectly) under the prin20 ciples of section 883(c)(4) by persons who are

21 (directly or indirectly) insured under any policy

22 of insurance or reinsurance issued by such cor23 poration or who are related persons to any such

24 person.
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1 ‘‘(B) DE MINIMIS EXCEPTION.—Paragraph

2 (1) shall not apply to any foreign corporation

3 for a taxable year of such corporation if the re4 lated person insurance income (determined on a

5 gross basis) of such corporation for such tax6 able year is less than 20 percent of its insur7 ance income (as so determined) for such taxable

8 year determined without regard to those provi9 sions of subsection (c)(1) which limit insurance

10 income to income from countries other than the

11 country in which the corporation was created or

12 organized.

13 ‘‘(C) ELECTION TO TREAT INCOME AS EF14 FECTIVELY CONNECTED.—Paragraph (1) shall

15 not apply to any foreign corporation for any

16 taxable year if—

17 ‘‘(i) such corporation elects (at such

18 time and in such manner as the Secretary

19 may prescribe)—

20 ‘‘(I) to treat its related person in21 surance income for such taxable year

22 as income effectively connected with

23 the conduct of a trade or business in

24 the United States, and
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1 ‘‘(II) to waive all benefits (other

2 than with respect to section 884) with

3 respect to related person insurance in4 come granted by the United States

5 under any treaty between the United

6 States and any foreign country, and

7 ‘‘(ii) such corporation meets such re8 quirements as the Secretary shall prescribe

9 to ensure that the tax imposed by this

10 chapter on such income is paid.

11 An election under this subparagraph made for

12 any taxable year shall not be effective if the

13 corporation (or any predecessor thereof) was a

14 disqualified corporation for the taxable year for

15 which the election was made or for any prior

16 taxable year beginning after 1986.

17 ‘‘(D) SPECIAL RULES FOR SUBPARAGRAPH

18 (C).—

19 ‘‘(i) PERIOD DURING WHICH ELEC20 TION IN EFFECT.—

21 ‘‘(I) IN GENERAL.—Except as

22 provided in subclause (II), any elec23 tion under subparagraph (C) shall

24 apply to the taxable year for which

25 made and all subsequent taxable years
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•HR 515 IH

1 unless revoked with the consent of the

2 Secretary.

3 ‘‘(II) TERMINATION.—If a for4 eign corporation which made an elec5 tion under subparagraph (C) for any

6 taxable year is a disqualified corpora7 tion for any subsequent taxable year,

8 such election shall not apply to any

9 taxable year beginning after such sub10 sequent taxable year.

11 ‘‘(ii) EXEMPTION FROM TAX IMPOSED

12 BY SECTION 4371.—The tax imposed by

13 section 4371 shall not apply with respect

14 to any related person insurance income

15 treated as effectively connected with the

16 conduct of a trade or business within the

17 United States under subparagraph (C).

18 ‘‘(E) DISQUALIFIED CORPORATION.—For

19 purposes of this paragraph the term ‘disquali20 fied corporation’ means, with respect to any

21 taxable year, any foreign corporation which is a

22 controlled foreign corporation for an uninter23 rupted period of 30 days or more during such

24 taxable year (determined without regard to this
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1 subsection) but only if a United States share2 holder (determined without regard to this sub3 section) owns (within the meaning of section

4 958(a)) stock in such corporation at some time

5 during such taxable year.

6 ‘‘(4) TREATMENT OF MUTUAL INSURANCE COM7 PANIES.—In the case of a mutual insurance com8 pany—

9 ‘‘(A) this subsection shall apply,

10 ‘‘(B) policyholders of such company shall

11 be treated as shareholders, and

12 ‘‘(C) appropriate adjustments in the appli13 cation of this subpart shall be made under reg14 ulations prescribed by the Secretary.

15 ‘‘(5) DETERMINATION OF PRO RATA SHARE.—

16 ‘‘(A) IN GENERAL.—The pro rata share

17 determined under this paragraph for any Unit18 ed States shareholder is the lesser of—

19 ‘‘(i) the amount which would be deter20 mined under paragraph (2) of section

21 951(a) if—

22 ‘‘(I) only related person insur23 ance income were taken into account,

24 ‘‘(II) stock owned (within the

25 meaning of section 958(a)) by United
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•HR 515 IH

1 States shareholders on the last day of

2 the taxable year were the only stock

3 in the foreign corporation, and

4 ‘‘(III) only distributions received

5 by United States shareholders were

6 taken into account under subpara7 graph (B) of such paragraph (2), or

8 ‘‘(ii) the amount which would be de9 termined under paragraph (2) of section

10 951(a) on the basis of the entire subpart

11 F income of the foreign corporation for the

12 taxable year.

13 ‘‘(B) COORDINATION WITH OTHER PROVI14 SIONS.—The Secretary shall prescribe regula15 tions providing for such modifications to the

16 provisions of this subpart as may be necessary

17 or appropriate by reason of subparagraph (A).

18 ‘‘(6) RELATED PERSON.—For purposes of this

19 subsection—

20 ‘‘(A) IN GENERAL.—Except as provided in

21 subparagraph (B), the term ‘related person’ has

22 the meaning given such term by section 964(a).

23 ‘‘(B) TREATMENT OF CERTAIN LIABILITY

24 INSURANCE POLICIES.—In the case of any pol25 icy of insurance covering liability arising from
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•HR 515 IH

1 services performed as a director, officer, or em2 ployee of a corporation or as a partner or em3 ployee of a partnership, the person performing

4 such services and the entity for which such

5 services are performed shall be treated as relat6 ed persons.

7 ‘‘(7) COORDINATION WITH SECTION 1248.—For

8 purposes of section 1248, if any person is (or would

9 be but for paragraph (3)) treated under paragraph

10 (1) as a United States shareholder with respect to

11 any foreign corporation which would be taxed under

12 subchapter L if it were a domestic corporation and

13 which is (or would be but for paragraph (3)) treated

14 under paragraph (1) as a controlled foreign corpora15 tion—

16 ‘‘(A) such person shall be treated as meet17 ing the stock ownership requirements of section

18 1248(a)(2) with respect to such foreign cor19 poration, and

20 ‘‘(B) such foreign corporation shall be

21 treated as a controlled foreign corporation.

22 ‘‘(8) REGULATIONS.—The Secretary shall pre23 scribe such regulations as may be necessary to carry

24 out the purposes of this subsection, including—
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•HR 515 IH

1 ‘‘(A) regulations preventing the avoidance

2 of this subsection through cross insurance ar3 rangements or otherwise, and

4 ‘‘(B) regulations which may provide that a

5 person will not be treated as a United States

6 shareholder under paragraph (1) with respect

7 to any foreign corporation if neither such per8 son (nor any related person to such person) is

9 (directly or indirectly) insured under any policy

10 of insurance or reinsurance issued by such for11 eign corporation.

12 ‘‘(b) ELECTION BY FOREIGN INSURANCE COMPANY

13 TO BE TREATED AS DOMESTIC CORPORATION.—

14 ‘‘(1) IN GENERAL.—If—

15 ‘‘(A) a foreign corporation is a controlled

16 foreign corporation (as defined in section

17 957(a) by substituting ‘25 percent or more’ for

18 ‘more than 50 percent’ and by using the defini19 tion of United States shareholder under sub20 section (a)(1)(A) of this section),

21 ‘‘(B) such foreign corporation would qual22 ify under part I or II of subchapter L for the

23 taxable year if it were a domestic corporation,

24 ‘‘(C) such foreign corporation meets such

25 requirements as the Secretary shall prescribe to
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1 ensure that the taxes imposed by this chapter

2 on such foreign corporation are paid, and

3 ‘‘(D) such foreign corporation makes an

4 election to have this paragraph apply and

5 waives all benefits to such corporation granted

6 by the United States under any treaty,

7 for purposes of this title, such corporation shall be

8 treated as a domestic corporation.

9 ‘‘(2) PERIOD DURING WHICH ELECTION IS IN

10 EFFECT.—

11 ‘‘(A) IN GENERAL.—Except as provided in

12 subparagraph (B), an election under paragraph

13 (1) shall apply to the taxable year for which

14 made and all subsequent taxable years unless

15 revoked with the consent of the Secretary.

16 ‘‘(B) TERMINATION.—If a corporation

17 which made an election under paragraph (1) for

18 any taxable year fails to meet the requirements

19 of subparagraph (A), (B), or (C) of paragraph

20 (1) for any subsequent taxable year, such elec21 tion shall not apply to any taxable year begin22 ning after such subsequent taxable year.

23 ‘‘(3) TREATMENT OF LOSSES.—If any corpora24 tion treated as a domestic corporation under this

25 subsection is treated as a member of an affiliated
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1 group for purposes of chapter 6 (relating to consoli2 dated returns), any loss of such corporation shall be

3 treated as a dual consolidated loss for purposes of

4 section 1503(d) without regard to paragraph (2)(B)

5 thereof.

6 ‘‘(4) EFFECT OF ELECTION.—

7 ‘‘(A) IN GENERAL.—For purposes of sec8 tion 367, any foreign corporation making an

9 election under paragraph (1) shall be treated as

10 transferring (as the 1st day of the 1st taxable

11 year to which such election applies) all of its as12 sets to a domestic corporation in connection

13 with an exchange to which section 354 applies.

14 ‘‘(B) EXCEPTION FOR PRE-1988 EARNINGS

15 AND PROFIT.—

16 ‘‘(i) IN GENERAL.—Earnings and

17 profits of the foreign corporation accumu18 lated in taxable years beginning before

19 January 1, 1988, shall not be included in

20 the gross income of the persons holding

21 stock in such corporation by reason of sub22 paragraph (A).

23 ‘‘(ii) TREATMENT OF DISTRIBU24 TIONS.—For purposes of this title, any dis25 tribution made by a corporation to which
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1 an election under paragraph (1) applies

2 out of earnings and profits accumulated in

3 taxable years beginning before January 1,

4 1988, shall be treated as a distribution

5 made by a foreign corporation.

6 ‘‘(iii) CERTAIN RULES TO CONTINUE

7 TO APPLY TO PRE-1988 EARNINGS.—The

8 provisions specified in clause (iv) shall be

9 applied without regard to paragraph (1),

10 except that, in the case of a corporation to

11 which an election under paragraph (1) ap12 plies, only earnings and profits accumu13 lated in taxable years beginning before

14 January 1, 1988, shall be taken into ac15 count.

16 ‘‘(iv) SPECIFIED PROVISIONS.—The

17 provisions specified in this clause are:

18 ‘‘(I) Section 1248 (relating to

19 gain from certain sales or exchanges

20 of stock in certain foreign corpora21 tions).

22 ‘‘(II) This subpart to the extent

23 such subpart relates to earnings in24 vested in United States property or
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1 amounts referred to in clause (ii) or

2 (iii) of section 951(a)(1)(A).

3 ‘‘(III) Section 884 to the extent

4 the foreign corporation reinvested

5 1987 earnings and profits in United

6 States assets.

7 ‘‘(5) EFFECT OF TERMINATION.—For purposes

8 of section 367, if—

9 ‘‘(A) an election is made by a corporation

10 under paragraph (1) for any taxable year, and

11 ‘‘(B) such election ceases to apply for any

12 subsequent taxable year,

13 such corporation shall be treated as a domestic cor14 poration transferring (as of the 1st day of such sub15 sequent taxable year) all of its property to a foreign

16 corporation in connection with an exchange to which

17 section 354 applies.

18 ‘‘(6) ADDITIONAL TAX ON CORPORATION MAK19 ING ELECTION.—

20 ‘‘(A) IN GENERAL.—If a corporation

21 makes an election under paragraph (1), the

22 amount of tax imposed by this chapter for the

23 1st taxable year to which such election applies

24 shall be increased by the amount determined

25 under subparagraph (B).
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1 ‘‘(B) AMOUNT OF TAX.—The amount of

2 tax determined under this paragraph shall be

3 equal to the lesser of—

‘‘(i) 3 4 ⁄4 of 1 percent of the aggregate

5 amount of capital and accumulated surplus

6 of the corporation as of December 31,

7 1987, or

8 ‘‘(ii) $1,500,000.

9 ‘‘(c) INSURANCE INCOME DEFINED.—For purposes

10 of this section, the term ‘insurance income’ means any in11 come which—

12 ‘‘(1) is attributable to the issuing (or reinsur13 ing) of any insurance or annuity contract—

14 ‘‘(A) in connection with property in, liabil15 ity arising out of activity in, or in connection

16 with the lives or health of residents of, a coun17 try other than the country under the laws of

18 which the controlled foreign corporation is cre19 ated or organized, or

20 ‘‘(B) in connection with risks not described

21 in subparagraph (A) as the result of any ar22 rangement whereby another corporation receives

23 a substantially equal amount of premiums or
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1 other consideration in respect of issuing (or re2 insuring) a contract described in subparagraph

3 (A), and

4 ‘‘(2) would (subject to the modifications pro5 vided by paragraphs (1) and (2) of subsection (d))

6 be taxed under subchapter L of this chapter if such

7 income were the income of a domestic insurance

8 company.

9 ‘‘(d) SPECIAL RULES.—In determining the amount

10 of insurance income—

11 ‘‘(1) The following provisions of subchapter L

12 shall not apply:

13 ‘‘(A) The small life insurance company de14 duction.

15 ‘‘(B) Section 805(a)(5) (relating to oper16 ations loss deduction).

17 ‘‘(C) Section 832(c)(5) (relating to certain

18 capital losses).

19 ‘‘(2) The items referred to in—

20 ‘‘(A) section 803(a)(1) (relating to gross

21 amount of premiums and other considerations),

22 ‘‘(B) section 803(a)(2) (relating to net de23 crease in reserves),

24 ‘‘(C) section 805(a)(2) (relating to net in25 crease in reserves), and
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1 ‘‘(D) section 832(b)(4) (relating to pre2 miums earned on insurance contracts),

3 shall be taken into account only to the extent they

4 are in respect of any reinsurance or the issuing of

5 any insurance or annuity contract described in sub6 section (a)(1).

7 ‘‘(3) All items of income, expenses, losses, and

8 deductions shall be properly allocated or apportioned

9 under regulations prescribed by the Secretary.’’

10 (b) REPEAL OF EXPORT TRADE CORPORATION PRO11 VISIONS.—Subpart G of part III of subchapter N of chap12 ter 1 (relating to export trade corporations) is hereby re13 pealed.

14 (c) CONFORMING AMENDMENTS TO SUBPART F.—

15 (1) Subparagraph (A) of section 955(a)(1) is

16 amended by inserting ‘‘(as in effect for taxable years

17 beginning before 1987)’’ after ‘‘section 954(b)(2)’’.

18 (2) Subsection (b) of section 955 is amended by

19 striking ‘‘within the meaning of section 954(d)(3)’’

20 and inserting ‘‘within the meaning of section

21 964(a)’’.

22 (3) Paragraph (2) of section 956(c) is amend23 ed—
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1 (A) by striking ‘‘section 953(a)(1)’’ in sub2 paragraph (E) and inserting ‘‘section

3 953(c)(1)’’, and

4 (B) by inserting ‘‘(as in effect on the day

5 before the date of the enactment of this par6 enthetical) or under section 952(a)(1)’’ after

7 ‘‘section 952(b)’’ in subparagraph (H).

8 (4) Subsection (b) of section 957 is amended—

9 (A) by striking ‘‘income described in sec10 tion 953(a)’’ and inserting ‘‘subpart F income

11 attributable to income described in section

12 953(c)’’, and

13 (B) by striking ‘‘section 953(a)(1)’’ and in14 serting ‘‘section 953(c)(1)’’.

15 (5) Subsection (b) of section 958 is amended—

16 (A) by striking ‘‘954(d)(3), 956(b)(2), and

17 957’’ and inserting ‘‘956(b)(2), 957, and

18 964(a)’’, and

19 (B) by striking ‘‘954(d)(3)’’ the second

20 place it appears and inserting ‘‘964(a)’’.

21 (6) Subsection (b) of section 959 is amended by

22 striking ‘‘be also included in the gross income’’ and

23 inserting ‘‘be also included in the subpart F in24 come’’.
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1 (7) Subsection (a) of section 964 is amended to

2 read as follows:

3 ‘‘(a) RELATED PERSON.—For purposes of this part,

4 a person is a related person with respect to a controlled

5 foreign corporation, if—

6 ‘‘(1) such person is an individual, corporation,

7 partnership, trust, or estate which controls, or is

8 controlled by, the controlled foreign corporation, or

9 ‘‘(2) such person is a corporation, partnership,

10 trust, or estate which is controlled by the same per11 son or persons which control the controlled foreign

12 corporation.

13 For purposes of the preceding sentence, control means,

14 with respect to a corporation, the ownership, directly or

15 indirectly, of stock possessing more than 50 percent of the

16 total voting power of all classes of stock entitled to vote

17 or of the total value of stock of such corporation. In the

18 case of a partnership, trust, or estate, control means the

19 ownership, directly or indirectly, more than 50 percent (by

20 value) of the beneficial interests in such partnership, trust,

21 or estate. For purposes of this paragraph, rules similar

22 to the rules of section 958 shall apply.’’

23 (8) Section 964 is amended by striking sub24 section (b).
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1 (9) The table of sections for subpart F of part

2 III of subchapter N of chapter 1 is amended by

3 striking the items relating to sections 952, 953 and

4 954 and inserting the following:

‘‘Sec. 952. Subpart F income.

‘‘Sec. 953. Special rules for certain insurance companies.’’

5 (d) OTHER CONFORMING AMENDMENTS.—

6 (1) Paragraph (2) of section 552(c) is amend7 ed—

8 (A) by amending subparagraph (A) to read

9 as follows:

10 ‘‘(A) is received from a related person

11 which (i) is a corporation created or organized

12 under the laws of the same foreign country

13 under the laws of which the foreign corporation

14 involved was created or organized, and (ii) has

15 a substantial part of its assets used in its trade

16 or business located in such same foreign coun17 try, and’’, and

18 (B) by striking ‘‘954(d)(3)’’ and inserting

19 ‘‘964(a)’’.

20 (2) Subparagraph (B) of section 861(c)(2) is

21 amended by striking ‘‘954(d)(3)’’ and inserting

22 ‘‘964(a)’’.

23 (3) Subparagraph (A) of section 864(d)(5) is

24 amended by striking clauses (ii), (iii), and (iv).
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1 (4) Subparagraph (A) of section 881(c)(5) is

2 hereby repealed.

3 (5) Subparagraph (D) of section 884(d)(2) is

4 amended by striking ‘‘953(c)(3)(C)’’ and inserting

5 ‘‘953(a)(3)(C)’’.

6 (6) Subparagraph (A) of section 898(b)(3) is

7 amended—

8 (A) by striking ‘‘953(c)(2)’’ and inserting

9 ‘‘953(a)(2)’’, and

10 (B) by striking ‘‘953(c)(1) and inserting

11 ‘‘953(a)(1)’’.

12 (7) Clause (i) of section 904(d)(2)(A) is amend13 ed by inserting ‘‘, as in effect on the day before the

14 date of the repeal of such section’’ after ‘‘section

15 954(c)’’.

16 (8) Subclause (III) of section 904(d)(2)(C)(ii)

17 is amended by striking ‘‘953(a)’’ and inserting

18 ‘‘953(c)’’.

19 (9) Subparagraph (D) of section 904(d)(2) is

20 amended—

21 (A) by inserting ‘‘, as in effect on the day

22 before the date of the repeal of such section’’

23 after ‘‘954(f)’’, and

24 (B) by inserting ‘‘or passive income’’ be25 fore the period at the end thereof.
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1 (10) Subparagraph (H) of section 904(d)(2) is

2 amended by striking ‘‘954(d)(3)’’ and inserting

3 ‘‘964(a)’’.

4 (11) Subparagraph (E) of section 904(d)(3) is

5 hereby repealed.

6 (12) Subparagraph (C) of section 988(a)(3) is

7 amended by striking ‘‘954(d)(3)’’ and inserting

8 ‘‘964(a)’’.

9 (13) Subsection (c) of section 999 is amend10 ed—

11 (A) by striking ‘‘, 952(a)(3),’’ in para12 graph (1), and

13 (B) by striking ‘‘, the addition to subpart

14 F income under section 952(a)(3),’’ in para15 graph (2).

16 (14) Subsection (a) of section 6046 is amended

17 by striking ‘‘953(c)’’ and inserting ‘‘953(a)’’.

18 (15) The table of subparts for part III of sub19 chapter M of chapter 1 is amended by striking the

20 item relating to subpart G.

21 (e) EFFECTIVE DATE.—The amendments made by

22 this section shall apply to taxable years of controlled for23 eign corporations beginning after December 31, 1997, and

24 to the taxable years of United States shareholders with
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1 which (or in which) such taxable years of controlled for2 eign corporations end.

3 SEC. 122. REPEAL OF DEFERRAL OF TAX UNDER MER4 CHANT MARINE CAPITAL CONSTRUCTIONS

5 FUNDS.

6 (a) IN GENERAL.—Subsection (c) of section 7518

7 (relating to tax incentives relating to Merchant Marine

8 Capital Construction Fund) is amended by adding at the

9 end the following new paragraph:

10 ‘‘(3) TERMINATION.—Subparagraphs (A), (B),

11 and (C) of paragraph (1) shall not apply to any tax12 able year beginning after December 31, 1997.’’

13 (b) CONFORMING AMENDMENT TO MERCHANT MA14 RINE ACT, 1936.—Subsection (d) of section 607 of the

15 Merchant Marine Act, 1936, is amended by adding at the

16 end the following new paragraph:

17 ‘‘(3) TERMINATION.—Subparagraphs (A), (B),

18 and (C) of paragraph (1) shall not apply to any tax19 able year beginning after December 31, 1997.’’

20 SEC. 123. REPEAL OF SPECIAL TREATMENT FOR MAGAZINE

21 CIRCULATION EXPENDITURES.

22 (a) IN GENERAL.—Section 173 (relating to circula23 tion expenditures) is hereby repealed.

24 (b) CONFORMING AMENDMENTS.—
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1 (1) Subparagraph (A) of section 56(b)(2) is

2 amended to read as follows:

3 ‘‘(A) IN GENERAL.—The amount allowable

4 as a deduction under section 174(a) in comput5 ing the regular tax for amounts paid or in6 curred after December 31, 1986, shall be cap7 italized and shall be amortized ratably over the

8 10-year period beginning with the taxable year

9 in which the expenditures were made.’’

10 (2) Paragraph (2) of section 56(c) is amended

11 by striking subparagraph (C).

12 (3) Clause (ii) of section 56(g)(4)(D) is amend13 ed to read as follows:

14 ‘‘(ii) AMORTIZATION OF ORGANIZA15 TION EXPENDITURES NOT TO APPLY.—

16 Section 248 shall not apply to expenditures

17 paid or incurred in taxable year beginning

18 after December 31, 1989.’’

19 (4) Paragraph (1) of section 59(e) is amended

20 by striking ‘‘(3-year period in the case of circulation

21 expenditures described in section 173)’’.

22 (5) Paragraph (2) of section 59(e) is amended

23 by striking subparagraph (A) and by redesignating

24 the following subparagraphs accordingly.
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1 (6) Paragraph (3) of section 312(n) is amended

2 to read as follows:

3 ‘‘(3) AMORTIZATION OF ORGANIZATION EX4 PENDITURES NOT TO APPLY.—Section 248 shall not

5 apply.’’

6 (7) Subparagraph (B) of section 1016(a)(1) is

7 amended by striking ‘‘expenditures’’ and inserting

8 ‘‘expenditures, as in effect on the day before the

9 date of the enactment of the Corporate Welfare

10 Elimination Act of 1997’’.

11 (8) The table of sections for part VI of sub12 chapter B of chapter 1 is amended by striking the

13 item relating to section 173.

14 (c) EFFECTIVE DATE.—The amendments made by

15 this section shall apply to amounts paid or incurred after

16 December 31, 1997.

17 SEC. 124. REPEAL OF SPECIAL TREATMENT FOR RETURNS

18 OF MAGAZINES, PAPERBACKS, AND RECORDS.

19 (a) IN GENERAL.—Section 458 (relating to maga20 zines, paperbacks, and records returned after the close of

21 the taxable year) is hereby repealed.

22 (b) CLERICAL AMENDMENT.—The table of sections

23 for subpart B of part II of subchapter E of chapter 1

24 is amended by striking the item relating to section 458.
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1 (c) EFFECTIVE DATE.—The amendments made by

2 this section shall apply to taxable years beginning after

3 December 31, 1997.

4 SEC. 125. REPEAL OF EXCLUSION FOR INTEREST ON STATE

5 AND LOCAL BONDS.

6 Section 103 (relating to interest on State and local

7 bonds) is amended by adding at the end the following new

8 subsection:

9 ‘‘(d) TERMINATION.—This section shall not apply to

10 any obligation issued after December 31, 1997.’’

11 TITLE II—NATURAL RESOURCES

12 SEC. 201. PUBLIC RESOURCES DEFICIT REDUCTION ACT OF

13 1997.

14 This title may be cited as the ‘‘Public Resources Defi15 cit Reduction Act of 1997’’.

16 Subtitle A—General Provisions

17 SEC. 211. FAIR MARKET VALUE FOR RESOURCE DISPOSAL.

18 (a) IN GENERAL.—Notwithstanding any other provi19 sion of law, no timber, minerals, forage, or other natural

20 resource owned by the United States, no Federally owned

21 water, and no hydroelectric energy generated at a Federal

22 facility may be sold, leased, or otherwise disposed of by

23 any department, agency, or instrumentality of the United

24 States for an amount less than fair market value, as deter25 mined by such department, agency, or instrumentality.
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1 (b) EXISTING CONTRACTS, LEASES, ETC.—

2 (1) EXISTING ARRANGEMENTS.—The provisions

3 of subsection (a) shall not apply to any existing con4 tract, lease, or other binding arrangement entered

5 into before the date of the enactment of this title

6 unless such contract, lease or other arrangement is

7 renewed or extended after such date of enactment.

8 (2) ARRANGEMENTS ENTERED INTO IN 5-YEAR

9 PERIOD.—The provisions of subsection (a) shall take

10 effect on the date 5 years after the date of enact11 ment of this title in the case of any contract, lease,

12 or other binding arrangement entered into or re13 newed or extended after such date but before the

14 date 5 years after such date.

15 (3) ARRANGEMENTS ENTERED INTO AFTER 5

16 YEARS.—The provisions of subsection (a) shall apply

17 immediately to all contracts, leases, or other binding

18 arrangements entered into or renewed or extended

19 after the date 5 years after the enactment of this

20 title.

21 (c) WAIVER.—The President may waive the require22 ments of subsection (a) whenever the President deter23 mines that such waiver is in the national interest. The

24 President shall submit a notice to Congress containing an
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1 explanation of the reasons for any such determination

2 within 60 days after the date of the determination.

3 SEC. 212. FEES FROM PROGRAM BENEFICIARIES.

4 (a) GENERAL AUTHORITY.—The Secretary of the In5 terior and the Secretary of Agriculture are each author6 ized to establish and collect from persons subject to pro7 grams administered by each such Secretary such user fees

8 as may be necessary to reimburse the United States for

9 the expenses incurred in administering such programs.

10 The aggregate amount of fees that may be assessed and

11 collected under this section by each such Secretary in any

12 fiscal year from persons subject to any such program shall

13 not exceed the aggregate amount of expenses incurred in

14 administering such program in such fiscal year.

15 (b) EFFECTIVE DATE; OIL AND GAS LEASE TRANS16 FERS.—The Secretary of the Interior and the Secretary

17 of Agriculture may, by rule, establish the applicable effec18 tive date of any fee to be imposed under this section, ex19 cept that fees shall be established and collected under this

20 section from each person receiving a transfer of a Federal

21 onshore oil and gas lease after the date of the enactment

22 of this section.
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1 SEC. 213. REVENUES FROM SALE, LEASE, AND TRANSFER

2 OF ASSETS.

3 (a) IN GENERAL.—Section 1105(a) of chapter 11 of

4 title 31, United States Code, is amended by adding at the

5 end the following new paragraph:

6 ‘‘(31) a separate statement of—

7 ‘‘(A) projected revenues during the fiscal

8 year for which the budget is submitted from the

9 anticipated sale, lease, or transfer of any phys10 ical asset; and

11 ‘‘(B) the estimated price at which this

12 asset or a comparable asset would be sold in an

13 arms length transaction in the private sector;

14 asset by asset and aggregated by major functional

15 category.’’.

16 (b) EFFECTIVE DATE.—The amendment made by

17 subsection (a) shall become effective for fiscal year 1998

18 and shall be fully reflected in the fiscal year 1998 budget

19 submitted by the President in February 1997 as required

20 by section 1105(a) of title 31, United States Code.

21 Subtitle B—Revenue From Mining

22 Claims

23 SEC. 221. DEFINITIONS.

24 (a) DEFINITIONS.—As used in this subtitle:
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1 (1) The term ‘‘locatable mineral’’ means any

2 mineral not subject to disposition under any of the

3 following:

4 (A) the Mineral Leasing Act (30 U.S.C.

5 181 and following);

6 (B) the Geothermal Steam Act of 1970

7 (30 U.S.C. 100 and following);

8 (C) the Act of July 31, 1947, commonly

9 known as the Materials Act of 1947 (30 U.S.C.

10 601 and following); or

11 (D) the Mineral Leasing for Acquired

12 Lands Act (30 U.S.C. 351 and following).

13 (2) The term ‘‘mineral activities’’ means any

14 activity for, related to, or incidental to mineral ex15 ploration, mining, beneficiation, and processing ac16 tivities for any locatable mineral, including access.

17 When used with respect to this term—

18 (A) The term ‘‘exploration’’ means those

19 techniques employed to locate the presence of a

20 locatable mineral deposit and to establish its

21 nature, position, size, shape, grade, and value.

22 (B) The term ‘‘mining’’ means the proc23 esses employed for the extraction of a locatable

24 mineral from the earth.
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1 (C) The term ‘‘beneficiation’’ means the

2 crushing and grinding of locatable mineral ore

3 and such processes as are employed to free the

4 mineral from other constituents, including but

5 not necessarily limited to, physical and chemical

6 separation techniques.

7 (D) The term ‘‘processing’’ means proc8 esses downstream of beneficiation employed to

9 prepare locatable mineral ore into the final

10 marketable product, including but not limited

11 to, smelting and electrolytic refining.

12 (3) The term ‘‘mining claim’’ means a claim for

13 the purposes of mineral activities.

14 (4) The term ‘‘Secretary’’ means, unless other15 wise provided in this subtitle, the Secretary of the

16 Interior acting through the Director of the Minerals

17 Management Service.

18 SEC. 222. MINING CLAIM MAINTENANCE REQUIREMENTS.

19 (a) IN GENERAL.—The holder of each mining claim

20 located on lands open to location shall pay to the Secretary

21 an annual claim maintenance fee of $100 per claim per

22 calendar year.

23 (b) TIME OF PAYMENT.—The claim maintenance fee

24 payable pursuant to subsection (a) for any year shall be

25 paid on or before August 31 of each year, except that for
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1 the initial calendar year in which the location is made,

2 the locator shall pay the initial claim maintenance fee at

3 the time the location notice is recorded with the Bureau

4 of Land Management.

5 (c) OIL SHALE CLAIMS SUBJECT TO CLAIM MAINTE6 NANCE FEES UNDER ENERGY POLICY ACT OF 1992.—

7 This section shall not apply to any oil shale claims for

8 which a fee is required to be paid under section 2511(e)(2)

9 of the Energy Policy Act of 1992 (106 Stat. 3111; 30

10 U.S.C. 242).

11 (d) CLAIM MAINTENANCE FEES PAYABLE UNDER

12 1993 ACT.—The claim maintenance fees payable under

13 this section for any period with respect to any claim shall

14 be reduced by the amount of the claim maintenance fees

15 paid under section 10101 of the Omnibus Budget Rec16 onciliation Act of 1993 (30 U.S.C. 28f) with respect to

17 that claim and with respect to the same period.

18 (e) WAIVER.—(1) The claim maintenance fee re19 quired under this section may be waived for a claim holder

20 who certifies in writing to the Secretary that on the date

21 the payment was due, the claim holder and all related par22 ties held not more than 10 mining claims on lands open

23 to location. Such certification shall be made on or before

24 the date on which payment is due.
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1 (2) For purposes of paragraph (1), with respect to

2 any claim holder, the term ‘‘related party’’ means each

3 of the following:

4 (A) The spouse and dependent children (as de5 fined in section 152 of the Internal Revenue Code of

6 1986), of the claim holder.

7 (B) Any affiliate of the claim holder.

8 (f) CO-OWNERSHIP.—Upon the failure of any one or

9 more of several co-owners to contribute such co-owner or

10 owners’ portion of the fee under this section, any co-owner

11 who has paid such fee may, after the payment due date,

12 give the delinquent co-owner or owners notice of such fail13 ure in writing (or by publication in the newspaper nearest

14 the claim for at least once a week for at least 90 days).

15 If at the expiration of 90 days after such notice in writing

16 or by publication, any delinquent co-owner fails or refuses

17 to contribute his portion, his interest in the claim shall

18 become the property of the co-owners who have paid the

19 required fee.

20 SEC. 223. ROYALTY.

21 (a) RESERVATION OF ROYALTY.—Production of all

22 locatable minerals from any mining claim located under

23 the general mining laws, or mineral concentrates or prod24 ucts derived from locatable minerals from any mining

25 claim located under the general mining laws, as the case
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1 may be, shall be subject to a royalty of 8 percent of the

2 gross income from such production. The claimholder and

3 any operator to whom the claimholder has assigned the

4 obligation to make royalty payments under the claim and

5 any person who controls such claimholder or operator shall

6 be jointly and severally liable for payment of such royal7 ties.

8 (b) DUTIES OF CLAIM HOLDERS, OPERATORS, AND

9 TRANSPORTERS.—(1) A person—

10 (A) who is required to make any royalty pay11 ment under this section shall make such payments

12 to the United States at such times and in such man13 ner as the Secretary may by rule prescribe; and

14 (B) shall notify the Secretary, in the time and

15 manner as may be specified by the Secretary, of any

16 assignment that such person may have made of the

17 obligation to make any royalty or other payment

18 under a mining claim.

19 (2) Any person paying royalties under this section

20 shall file a written instrument, together with the first roy21 alty payment, affirming that such person is liable to the

22 Secretary for making proper payments for all amounts due

23 for all time periods for which such person as a payment

24 responsibility. Such liability for the period referred to in

25 the preceding sentence shall include any and all additional
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1 amounts billed by the Secretary and determined to be due

2 by final agency or judicial action. Any person liable for

3 royalty payments under this section who assigns any pay4 ment obligation shall remain jointly and severally liable

5 for all royalty payments due for the claim for the period.

6 (3) A person conducting mineral activities shall—

7 (A) develop and comply with the site security

8 provisions in operations permit designed to protect

9 from theft the locatable minerals, concentrates, or

10 products derived therefrom which are produced or

11 stored on a mining claim, and such provisions shall

12 conform with such minimum standards as the Sec13 retary may prescribe by rule, taking into account the

14 variety of circumstances on mining claims; and

15 (B) not later than the 5th business day after

16 production begins anywhere on a mining claim, or

17 production resumes after more than 90 days after

18 production was suspended, notify the Secretary, in

19 the manner prescribed by the Secretary, of the date

20 on which such production has begun or resumed.

21 (4) The Secretary may by rule require any person en22 gaged in transporting a locatable mineral, concentrate, or

23 product derived therefrom to carry on his or her person,

24 in his or her vehicle, or in his or her immediate control,
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1 documentation showing, at a minimum, the amount, ori2 gin, and intended destination of the locatable mineral, con3 centrate, or product derived therefrom in such cir4 cumstances as the Secretary determines is appropriate.

5 (c) RECORDKEEPING AND REPORTING REQUIRE6 MENTS.—(1) A claim holder, operator, or other person di7 rectly involved in developing, producing, processing, trans8 porting, purchasing, or selling locatable minerals, con9 centrates, or products derived therefrom, subject to this

10 title, through the point of royalty computation shall estab11 lish and maintain any records, make any reports, and pro12 vide any information that the Secretary may reasonably

13 require for the purposes of implementing this section or

14 determining compliance with rules or orders under this

15 section. Such records shall include, but not be limited to,

16 periodic reports, records, documents, and other data. Such

17 reports may also include, but not be limited to, pertinent

18 technical and financial data relating to the quantity, qual19 ity, composition volume, weight, and assay of all minerals

20 extracted from the mining claim. Upon the request of any

21 officer or employee duly designated by the Secretary or

22 any State conducting an audit or investigation pursuant

23 to this section, the appropriate records, reports, or infor24 mation which may be required by this section shall be
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1 made available for inspection and duplication by such offi2 cer or employee or State.

3 (2) Records required by the Secretary under this sec4 tion shall be maintained for 6 years after cessation of all

5 mining activity at the claim concerned unless the Sec6 retary notifies the operator that he or she has initiated

7 an audit or investigation involving such records and that

8 such records must be maintained for a longer period. In

9 any case when an audit or investigation is underway,

10 records shall be maintained until the Secretary releases

11 the operator of the obligation to maintain such records.

12 (d) AUDITS.—The Secretary is authorized to conduct

13 such audits of all claim holders, operators, transporters,

14 purchasers, processors, or other persons directly or indi15 rectly involved in the production or sales of minerals cov16 ered by this subtitle, as the Secretary deems necessary for

17 the purposes of ensuring compliance with the require18 ments of this section. For purposes of performing such

19 audits, the Secretary shall, at reasonable times and upon

20 request, have access to, and may copy, all books, papers

21 and other documents that relate to compliance with any

22 provision of this section by any person.

23 (e) COOPERATIVE AGREEMENTS.—(1) The Secretary

24 is authorized to enter into cooperative agreements with the

25 Secretary of Agriculture to share information concerning
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1 the royalty management of locatable minerals, con2 centrates, or products derived therefrom, to carry out in3 spection, auditing, investigation, or enforcement (not in4 cluding the collection of royalties, civil or criminal pen5 alties, or other payments) activities under this section in

6 cooperation with the Secretary, and to carry out any other

7 activity described in this section.

8 (2) Except as provided in paragraph (4)(A) of this

9 subsection (relating to trade secrets), and pursuant to a

10 cooperative agreement, the Secretary of Agriculture shall,

11 upon request, have access to all royalty accounting infor12 mation in the possession of the Secretary respecting the

13 production, removal, or sale of locatable minerals, con14 centrates, or products derived therefrom from claims on

15 lands open to location under the general mining laws.

16 (3) Trade secrets, proprietary, and other confidential

17 information shall be made available by the Secretary pur18 suant to a cooperative agreement under this subsection to

19 the Secretary of Agriculture upon request only if—

20 (A) the Secretary of Agriculture consents in

21 writing to restrict the dissemination of the informa22 tion to those who are directly involved in an audit

23 or investigation under this section and who have a

24 need to know;
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1 (B) the Secretary of Agriculture accepts liabil2 ity for wrongful disclosure; and

3 (C) the Secretary of Agriculture demonstrates

4 that such information is essential to the conduct of

5 an audit or investigation under this subsection.

6 (f) INTEREST AND SUBSTANTIAL UNDERREPORTING

7 ASSESSMENTS.—(1) In the case of mining claims where

8 royalty payments are not received by the Secretary on the

9 date that such payments are due, the Secretary shall

10 charge interest on such under payments at the same inter11 est rate as is applicable under section 6621(a)(2) of the

12 Internal Revenue Code of 1986. In the case of an under13 payment, interest shall be computed and charged only on

14 the amount of the deficiency and not on the total amount.

15 (2) If there is any underreporting of royalty owed on

16 production from a claim for any production month by any

17 person liable for royalty payments under this section, the

18 Secretary may assess a penalty of 10 percent of the

19 amount of that underreporting.

20 (3) If there is a substantial underreporting of royalty

21 owed on production from a claim for any production

22 month by any person responsible for paying the royalty,

23 the Secretary may assess an additional penalty of 10 per24 cent of the amount of that underreporting.
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1 (4) For the purposes of this subsection, the term

2 ‘‘underreporting’’ means the difference between the roy3 alty on the value of the production which should have been

4 reported and the royalty on the value of the production

5 which was reported, if the value which should have been

6 reported is greater than the value which was reported. An

7 underreporting constitutes a ‘‘substantial underreporting’’

8 if such difference exceeds 10 percent of the royalty on the

9 value of production which should have been reported.

10 (5) The Secretary shall not impose the assessment

11 provided in paragraph (2) or (3) of this subsection if the

12 person liable for royalty payments under this section cor13 rects the underreporting before the date such person re14 ceives notice from the Secretary that an underreporting

15 may have occurred, or before 90 days after the date of

16 the enactment of this section, whichever is later.

17 (6) The Secretary shall waive any portion of an as18 sessment under paragraph (2) or (3) of this subsection

19 attributable to that portion of the underreporting for

20 which the person responsible for paying the royalty dem21 onstrates that—

22 (A) such person had written authorization from

23 the Secretary to report royalty on the value of the

24 production on the basis on which it was reported,
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1 (B) such person had substantial authority for

2 reporting royalty on the value of the production on

3 the basis on which it was reported,

4 (C) such person previously had notified the Sec5 retary, in such manner as the Secretary may by rule

6 prescribe, of relevant reasons or facts affecting the

7 royalty treatment of specific production which led to

8 the underreporting, or

9 (D) such person meets any other exception

10 which the Secretary may, by rule, establish.

11 (7) All penalties collected under this subsection shall

12 be deposited in the Treasury.

13 (g) EXPANDED ROYALTY OBLIGATIONS.—Each per14 son liable for royalty payments under this section shall

15 be jointly and severally liable for royalty on all locatable

16 minerals, concentrates, or products derived therefrom lost

17 or wasted from a mining claim located or converted under

18 this section when such loss or waste is due to negligence

19 on the part of any person or due to the failure to comply

20 with any rule, regulation, or order issued under this sec21 tion.

22 (h) EXCEPTION.—No royalty shall be payable under

23 subsection (a) with respect to minerals processed at a fa24 cility by the same person or entity which extracted the

25 minerals if an urban development action grant has been
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1 made under section 119 of the Housing and Community

2 Development Act of 1974 with respect to any portion of

3 such facility.

4 (i) EFFECTIVE DATE.—The royalty under this sec5 tion shall take effect with respect to the production of

6 locatable minerals after the enactment of this title, but

7 any royalty payments attributable to production during

8 the first 12 calendar months after the enactment of this

9 title shall be payable at the expiration of such 12-month

10 period.

11 SEC. 224. SEVERANCE TAX.

12 (a) SEVERANCE TAX ON MINERALS.—Chapter 36 of

13 the Internal Revenue Code of 1986 (relating to certain

14 other excise taxes) is amended by adding at the end the

15 following new subchapter:

16 ‘‘Subchapter G—Tax on Severance of

17 Locatable Minerals

18 ‘‘SEC. 4500. TAX ON SEVERANCE OF LOCATABLE MINERALS.

19 ‘‘(a) IN GENERAL.—There is hereby imposed a tax

20 on gross income resulting from the severance of any

21 locatable mineral, or mineral concentrates or products,

22 from a mine or other natural deposit located within the

23 United States.

24 ‘‘(b) AMOUNT OF TAX.—The amount of the tax im25 posed by subsection (a) shall be 8 percent of the gross
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1 income derived from the locatable mineral, or from the

2 mineral concentrates or products, severed as described in

3 such subsection.

4 ‘‘(c) EXCEPTION IF ROYALTY IMPOSED.—Subsection

5 (a) shall not apply to gross income with respect to which

6 a royalty is imposed by section 203 of the Public Re7 sources Deficit Reduction Act of 1997.’’.

8 (b) CONFORMING AMENDMENT.—The table of sub9 chapters for chapter 36 of such Code (relating to certain

10 other excise taxes) is amended by adding at the end the

11 following new item:

‘‘SUBCHAPTER G. Tax on severance of locatable minerals.’’.

12 SEC. 225. FUND FOR ABANDONED LOCATABLE MINERALS

13 MINE RECLAMATION.

14 (a) ESTABLISHMENT OF FUND.—(1) There is estab15 lished on the books of the Treasury of the United States

16 a trust fund to be known as the Abandoned Locatable

17 Minerals Mine Reclamation Fund (hereinafter in this sub18 title referred to as the ‘Fund’). The Fund shall be admin19 istered by the Secretary acting through the Director of

20 the Office of Surface Mining Reclamation and Enforce21 ment.

22 (2) The Secretary shall notify the Secretary of the

23 Treasury as to what portion of the Fund is not, in the
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1 Secretary’s judgment, required to meet current withdraw2 als. The Secretary of the Treasury shall invest such por3 tion of the Fund in public debt securities with maturities

4 suitable for the needs of such Fund and bearing interest

5 at rates determined by the Secretary of the Treasury, tak6 ing into consideration current market yields on outstand7 ing marketplace obligations of the United States of com8 parable maturities. The income on such investments shall

9 be credited to, and form a part of, the Fund.

10 (b) AMOUNTS.—The following amounts shall be cred11 ited to the Fund:

12 (1) All moneys received from royalties under

13 section 223.

14 (2) All taxes collected under section 4500 of the

15 Internal Revenue Code of 1986.

16 (3) All donations by persons, corporations, as17 sociations, and foundations for the purposes of this

18 section.

19 (c) USE AND OBJECTIVES OF THE FUND.—The Sec20 retary is authorized, subject to appropriations, to use

21 moneys in the Fund for the reclamation and restoration

22 of land and water resources adversely affected by past

23 mineral activities on lands the legal and beneficial title to

24 which resides in the United States, and of land within the

25 exterior boundary of any National Forest System unit.
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1 (d) SPECIFIC SITES AND AREAS NOT ELIGIBLE.—

2 The provisions of section 411(d) of the Surface Mining

3 Control and Reclamation Act of 1977 (30 U.S.C.

4 1240a(d)) shall apply to expenditures made from the

5 Fund established under this section.

6 (e) FUND EXPENDITURES.—Moneys available from

7 the Fund may be expended for the purposes specified in

8 subsection (c) directly by the Director of the Office of Sur9 face Mining Reclamation and Enforcement. The Director

10 may also make such money available for such purposes

11 to the Director of the Bureau of Land Management, to

12 the Chief of the United States Forest Service, to the Di13 rector of the National Park Service, to the Director of the

14 United States Fish and Wildlife Service, to any other

15 agency of the United States, to an Indian tribe, or to any

16 public entity that volunteers to develop and implement,

17 and that has the ability to carry out, all or a significant

18 portion of a reclamation program under this subtitle.

19 (f) AUTHORIZATION OF APPROPRIATIONS.—Amounts

20 credited to the Fund are authorized to be appropriated

21 for the purpose of this section without fiscal year limita22 tion.

23 SEC. 226. LIMITATION ON PATENT ISSUANCE.

24 (a) MINING CLAIMS.—After the date of enactment of

25 this title, no patent shall be issued by the United States
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1 for any mining claim located under the general mining

2 laws unless the Secretary determines that, for the claim

3 concerned—

4 (1) a patent application was filed with the Sec5 retary on or before January 27, 1995; and

6 (2) all requirements established under sections

7 2325 and 2326 of the Revised Statutes (30 U.S.C.

8 29 and 30) for vein or lode claims and sections

9 2329, 2330, 2331, and 2333 of the Revised Statutes

10 (30 U.S.C. 35, 36, and 37) for placer claims were

11 fully complied with by that date.

12 If the Secretary makes the determinations referred to in

13 paragraphs (1) and (2) for any mining claim, the holder

14 of the claim shall be entitled to the issuance of a patent

15 in the same manner and degree to which such claim holder

16 would have been entitled to prior to the enactment of this

17 title, unless and until such determinations are withdrawn

18 or invalidated by the Secretary or by a court of the United

19 States.

20 (b) MILL SITES.—After the date of enactment of this

21 title, no patent shall be issued by the United States for

22 any mill site claim located under the general mining laws

23 unless the Secretary determines that for the mill site con24 cerned—
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1 (1) a patent application for such land was filed

2 with the Secretary on or before January 27, 1997;

3 and

4 (2) all requirements applicable to such patent

5 application were fully complied with by that date.

6 If the Secretary makes the determinations referred to in

7 paragraphs (1) and (2) for any mill site claim, the holder

8 of the claim shall be entitled to the issuance of a patent

9 in the same manner and degree to which such claim holder

10 would have been entitled to prior to the enactment of this

11 title, unless and until such determinations are withdrawn

12 or invalidated by the Secretary or by a court of the United

13 States.

14 SEC. 227. PURCHASING POWER ADJUSTMENT.

15 The Secretary shall adjust all dollar amounts estab16 lished in this subtitle for changes in the purchasing power

17 of the dollar every 10 years following the date of enact18 ment of this title, employing the Consumer Price Index

19 for all-urban consumers published by the Department of

20 Labor as the basis for adjustment, and rounding accord21 ing to the adjustment process of conditions of the Federal

22 Civil Penalties Inflation Adjustment Act of 1990 (104

23 Stat. 890).
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1 SEC. 228. SAVINGS CLAUSE.

2 Nothing in this title shall be construed as repealing

3 or modifying any Federal law, regulation, order, or land

4 use plan, in effect prior to the effective date of this title,

5 that prohibits or restricts the application of the general

6 mining laws, including such laws that provide for special

7 management criteria for operations under the general

8 mining laws as in effect prior to the effective date of this

9 title, to the extent such laws provide environmental protec10 tion greater than required under this subtitle.

11 SEC. 229. EFFECTIVE DATE.

12 Except as otherwise provided in section 226 (relating

13 to limitation on patent issuance), this subtitle shall take

14 effect on the date 1 year after the date of enactment of

15 this title.

16 Subtitle C—Use or Disposal of

17 Federal Natural Resources

18 SEC. 241. ANNUAL DOMESTIC LIVESTOCK GRAZING FEE.

19 The Federal Land Policy and Management Act of

20 1976 is amended by inserting after section 401 (43 U.S.C.

21 1751) the following new section:

22 ‘‘SEC. 401A. ESTABLISHMENT OF FAIR MARKET VALUE

23 GRAZING FEES.

24 ‘‘(a) ESTABLISHMENT OF ANNUAL DOMESTIC LIVE25 STOCK GRAZING FEE.—(1) Notwithstanding any other

26 provision of law, the Secretary of Agriculture, with respect
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1 to National Forest System lands in the 16 contiguous

2 Western States (except National Grasslands) administered

3 by the Forest Service where domestic livestock grazing is

4 permitted under applicable law, shall establish an annual

5 domestic livestock grazing fee equal to fair market value.

6 ‘‘(2) Notwithstanding any other provision of law, the

7 Secretary of the Interior, with respect to public domain

8 lands administered by the Bureau of Land Management

9 where domestic livestock grazing is permitted under appli10 cable law, shall establish an annual domestic livestock

11 grazing fee equal to fair market value.

12 ‘‘(b) CALCULATION OF FAIR MARKET VALUE.—(1)

13 For purposes of determining the annual domestic livestock

14 grazing fee under this section, the Secretary concerned

15 shall calculate fair market value using the following for16 mula:

Fair Market Value=

Appraised Base Value×Forage Value Index

100

17 ‘‘(2) For purposes of the formula in paragraph (1):

18 ‘‘(A) The term ‘Forage Value Index’ means the

19 Forage Value Index (FVI) computed annually by the

20 Economic Research Service, United States Depart21 ment of Agriculture, and set with the 1997 FVI

22 equal to 100; and
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1 ‘‘(B) The term ‘Appraised Base Value’ means

2 the 1983 Appraisal Value conclusions for mature

3 cattle and horses (expressed in dollars per head or

4 per month), as determined in the 1986 report pre5 pared jointly by the Secretary of Agriculture and the

6 Secretary of the Interior entitled ‘Grazing Fee Re7 view and Evaluation’, dated February 1986, on a

8 west-wide basis using the lowest appraised value of

9 the pricing areas adjusted for advanced payment

10 and indexed to 1997.

11 ‘‘(c) LIMITATION ON FLUCTUATIONS OF FEES.—

12 Notwithstanding the amount calculated under subsection

13 (b) for a year, the domestic livestock grazing fee charged

14 for any given year shall not increase nor decrease by more

15 than 33.3 percent from the domestic livestock grazing fee

16 for the previous year.

17 ‘‘(d) EFFECT ON EXECUTIVE ORDER.—Executive

18 Order No. 12548, dated February 14, 1986 (51 Fed. Reg.

19 5985), shall not apply to grazing fees established pursuant

20 to this section.

21 ‘‘(e) EFFECT ON GRAZING ADVISORY BOARDS.—The

22 grazing advisory boards established pursuant to Secretar23 ial action, notice of which was published in the Federal
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1 Register on May 14, 1986 (51 Fed. Reg. 17874), are abol2 ished, effective as of the date of the enactment of this sec3 tion, and the advisory functions exercised by such boards

4 shall be exercised only by the appropriate councils estab5 lished under section 309 of this Act.

6 ‘‘(f) USE OF FEES AND RANGE IMPROVEMENT

7 FUNDS.—Funds appropriated pursuant to section 5 of the

8 Public Rangelands Improvement Act of 1978 (43 U.S.C.

9 1904) or any other provision of law related to disposition

10 of the Federal share of receipts from fees for grazing on

11 public domain lands or National Forest lands in the 16

12 contiguous western States shall be used for restoration

13 and enhancement of fish and wildlife habitat, for restora14 tion and improved management of riparian areas, and for

15 implementation and enforcement of applicable land man16 agement plans, allotment plans, and regulations regarding

17 the use of such lands for domestic livestock grazing. Such

18 funds shall be distributed as the Secretary concerned con19 siders advisable after consultation and coordination with

20 the advisory councils established pursuant to section 309

21 of this Act and other interested parties.

22 ‘‘(g) COMMENCEMENT DATE FOR FEES.—The first

23 annual domestic livestock grazing fee required by this sec24 tion shall apply with respect to the grazing season com25 mencing on March 1, 1998.’’.
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1 SEC. 242. ELIMINATION OF BELOW-COST SALES OF TIMBER

2 FROM NATIONAL FOREST SYSTEM LANDS.

3 (a) IN GENERAL.—The National Forest Management

4 Act of 1976 is amended by inserting after section 14 (16

5 U.S.C. 472a) the following new section:

6 ‘‘SEC. 14A. ELIMINATION OF BELOW-COST TIMBER SALES

7 FROM NATIONAL FOREST SYSTEM LANDS.

8 ‘‘(a) REQUIREMENT THAT SALE REVENUES EXCEED

9 COSTS.—On and after October 1, 2002, in appraising tim10 ber and setting a minimum bid for trees, portions of trees,

11 or forest products located on National Forest System

12 lands proposed for sale under section 14 or any other pro13 vision of law, the Secretary of Agriculture shall ensure

14 that the estimated cash returns to the United States

15 Treasury from each sale exceed the estimated costs to be

16 incurred by the Federal Government in the preparation

17 of the sale or as a result of the sale.

18 ‘‘(b) COSTS TO BE CONSIDERED.—For purposes of

19 estimating under this section the costs to be incurred by

20 the Federal Government from each timber sale, the Sec21 retary shall assign to the sale the following costs:

22 ‘‘(1) The actual appropriated expenses for sale

23 preparation and harvest administration incurred or

24 to be incurred by the Federal Government from the

25 sale and the payments to counties to be made as a

26 result of the sale.
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1 ‘‘(2) A portion of the annual timber resource

2 planning costs, silvicultural examination costs, other

3 resource support costs, road design and construction

4 costs, road maintenance costs, transportation plan5 ning costs, appropriated reforestation costs, timber

6 stand improvement costs, forest genetics costs, gen7 eral administrative costs (including administrative

8 costs of the national and regional offices of the For9 est Service), and facilities construction costs of the

10 Federal Government directly or indirectly related to

11 the timber harvest program conducted on National

12 Forest System lands.

13 ‘‘(c) METHOD OF ALLOCATING COSTS.—The Sec14 retary shall allocate the costs referred to in subsection

15 (b)(2) to each unit of the National Forest System, and

16 each proposed timber sale in such unit, on the basis of

17 harvest volume.

18 ‘‘(d) TRANSITIONAL REQUIREMENTS.—To ensure the

19 elimination of all below-cost timber sales by the date speci20 fied in subsection (a), the Secretary shall progressively re21 duce the number and size of below-cost timber sales on

22 National Forest System lands as follows:
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1 ‘‘(1) In fiscal years 1998 and 1999, the quan2 tity of timber sold in below-cost timber sales on Na3 tional Forest System lands shall not exceed 75 per4 cent of the quantity of timber sold in such sales in

5 the preceding fiscal year.

6 ‘‘(2) In fiscal year 2000, the quantity of timber

7 sold in below-cost timber sales on National Forest

8 System lands shall not exceed 65 percent of the

9 quantity of timber sold in such sales in fiscal year

10 1998.

11 ‘‘(3) In fiscal year 2001, the quantity of timber

12 sold in below-cost timber sales on National Forest

13 System lands shall not exceed 50 percent of the

14 quantity of timber sold in such sales in the fiscal

15 year 2000.

16 ‘‘(e) BELOW-COST TIMBER SALE.—For purposes of

17 this section, the term ‘below-cost timber sale’ means a sale

18 of timber in which the costs to be incurred by the Federal

19 Government exceed the cash returns to the United States

20 Treasury.’’.

21 (b) FINDINGS.—Section 2 of the Forest and Range22 land Renewable Resources Planning Act of 1974 (16

23 U.S.C. 1600) is amended—

24 (1) by striking ‘‘and’’ at the end of paragraph

25 (6);
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1 (2) by striking the period at the end of para2 graph (7) and inserting ‘‘; and’’; and

3 (3) by adding at the end the following new

4 paragraph:

5 ‘‘(8) the practice of selling timber from Na6 tional Forest System lands for less than the cost to

7 the Federal Government of growing the timber and

8 preparing the timber for sale is not in the best inter9 ests of the United States, and such below-cost sales

10 should be eliminated in an orderly manner to achieve

11 a more economically and environmentally sound tim12 ber program for the National Forest System.’’.

13 SEC. 243. TIMBERLAND SUITABILITY.

14 Subsection (k) of section 6 of the Forest and Range15 land Renewable Resources Planning Act of 1974 (16

16 U.S.C. 1604) is amended to read as follows:

17 ‘‘(k) DETERMINATION OF SUITABILITY OF LANDS

18 FOR TIMBER PRODUCTION.—

19 ‘‘(1) DETERMINATION REQUIRED.—In revising

20 land management plans developed pursuant to this

21 section, the Secretary shall identify lands within the
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1 management area that are not suited for timber pro2 duction based on physical, economic, or other rel3 evant factors. The Secretary shall review the identi4 fications made under this paragraph during each re5 vision of the forest plan.

6 ‘‘(2) EVIDENCE OF ECONOMIC

7 UNSUITABILITY.—The Secretary shall identify lands

8 as economically unsuitable for timber production

9 under paragraph (1) if—

10 ‘‘(A) the expected cash returns to the

11 United States Treasury that would result from

12 the sale of standing timber on the lands do not

13 exceed the expected costs that would be in14 curred by the Federal Government in prepara15 tion or as a result of such sales; or

16 ‘‘(B) the expected cash returns to the

17 United States Treasury that would result from

18 the sale of subsequent timber stands on the

19 lands do not exceed the expected costs that

20 would be incurred by the Federal Government

21 in preparation or as a result of such sales.

22 ‘‘(3) COSTS TO BE CONSIDERED.—For purposes

23 of estimating under paragraph (2) the costs to be in24 curred by the Federal Government from timber sales

25 conducted on the lands being reviewed, the Secretary
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1 shall assign to sales on such lands the following

2 costs:

3 ‘‘(A) The appropriated expenses for sale

4 preparation and harvest administration that

5 would be incurred by the Federal Government

6 from such sales and the payments to counties

7 that would be made as a result of such sales.

8 ‘‘(B) A portion of the annual timber re9 source planning costs, silvicultural examination

10 costs, other resource support costs, road design

11 and construction costs, road maintenance costs,

12 transportation planning costs, appropriated re13 forestation costs, timber stand improvement

14 costs, forest genetics costs, general administra15 tive costs (including administrative costs of the

16 national and regional offices of the Forest Serv17 ice), and facilities construction costs of the Fed18 eral Government directly or indirectly related to

19 the timber harvest program conducted on Na20 tional Forest System lands.

21 ‘‘(4) METHOD OF ALLOCATING COSTS.—The

22 Secretary shall allocate the costs referred to in para23 graph (3)(B) to each unit of the National Forest

24 System on the basis of harvest volume.
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1 ‘‘(5) PROHIBITION ON TIMBER HARVESTS ON

2 UNSUITABLE LANDS.—In the case of lands identified

3 under paragraph (1) as unsuitable for timber pro4 duction, no timber harvesting shall occur on such

5 lands for a period of 10 years or the life of the plan,

6 whichever is greater.

7 ‘‘(6) DEFINITIONS.—For purposes of this sub8 section:

9 ‘‘(A) The term ‘standing timber’ means an

10 existing stand of timber that has not been har11 vested.

12 ‘‘(B) The term ‘subsequent timber stand’

13 means a regenerated stand of timber produced

14 on land from which standing timber has been

15 harvested.’’.

16 SEC. 244. REDUCTION IN MAXIMUM AMOUNT OF PAYMENTS

17 UNDER AGRICULTURAL ASSISTANCE PRO18 GRAMS TO REFLECT RECEIPT OF FEDERAL

19 IRRIGATION WATER.

20 (a) PRICE SUPPORT PROGRAMS.—Title X of the

21 Food Security Act of 1985 is amended—

22 (1) by redesignating sections 1001D (7 U.S.C.

23 1308–4) and 1001E (7 U.S.C. 1308–5) as sections

24 1001E and 1001F, respectively; and
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1 (2) by inserting after section 1001C (7 U.S.C.

2 1308–3) the following new section:

3 ‘‘SEC. 1001D. REDUCTION OF PAYMENT LIMITATIONS TO

4 REFLECT RECEIPT OF FEDERAL IRRIGATION

5 WATER.

6 ‘‘(a) REDUCTION OF PAYMENT LIMITATIONS RE7 QUIRED.—If a person subject to section 1001 receives

8 Federal irrigation water for agricultural purposes from the

9 operation of a Federal reclamation project, the payment

10 limitations specified in paragraphs (1) and (2) of such sec11 tion and applicable to such person shall be reduced for

12 the year in which such person receives irrigation water.

13 The amount of the reduction shall be equal to the total

14 value during that year of the subsidy portion of the con15 tract with such person for the delivery of the irrigation

16 water.

17 ‘‘(b) DETERMINATION OF SUBSIDY PORTION OF

18 WATER CONTRACT.—The subsidy portion of an irrigation

19 water delivery contract is equal to the amount by which

20 full cost for the delivery of the irrigation water exceeds

21 the actual contract price for the delivery of the water.

22 ‘‘(c) DEFINITIONS.—For purposes of this section, the

23 terms ‘contract’, ‘full cost’, ‘irrigation water’, and ‘project’

24 have the meanings given such terms in section 202 of the

25 Reclamation Reform Act of 1982 (43 U.S.C. 390bb).’’.
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1 (b) NONINSURED CROP DISASTER ASSISTANCE.—

2 Section 196(i) of the Federal Agriculture Improvement

3 and Reform Act of 1996 (7 U.S.C. 7333(i)) is amended—

4 (1) by redesignating paragraph (5) as para5 graph (6); and

6 (2) by inserting after paragraph (4) the follow7 ing new paragraph:

8 ‘‘(5) EFFECT OF RECEIPT OF IRRIGATION

9 WATER.—

10 ‘‘(A) REDUCTION OF PAYMENT LIMITA11 TION.—If a person who receives payments

12 under this section also receives, during the

13 same year, Federal irrigation water for agricul14 tural purposes from the operation of a Federal

15 reclamation project, the payment limitation

16 specified in paragraph (2) for such person shall

17 be reduced for that year. The amount of the re18 duction shall be equal to the total value during

19 that year of the subsidy portion of the contract

20 with such person for the delivery of the irriga21 tion water.

22 ‘‘(B) DETERMINATION OF SUBSIDY POR23 TION OF WATER CONTRACT.—The subsidy por24 tion of an irrigation water delivery contract is

25 equal to the amount by which full cost for the
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1 delivery of the irrigation water exceeds the ac2 tual contract price for the delivery of the water.

3 ‘‘(C) DEFINITIONS.—For purposes of this

4 paragraph, the terms ‘contract’, ‘full cost’, ‘irri5 gation water’, and ‘project’ have the meanings

6 given such terms in section 202 of the Reclama7 tion Reform Act of 1982 (43 U.S.C. 390bb).’’.

8 (c) CONFORMING AMENDMENTS.—Section

9 1001(5)(A) of the Food Security Act of 1985 (7 U.S.C.

10 1308(5)(A)) is amended by striking ‘‘through 1001C’’ and

11 inserting ‘‘through 1001D’’.

12 SEC. 245. ELIMINATION OF OFF BUDGET EXPENDITURES.

13 (a) KNUTSON-VANDENBERG FUND.—Section 3 of

14 the Act of June 9, 1930 (commonly known as the

15 Knutson-Vandenberg Act; 16 U.S.C. 576b), is amended

16 by striking ‘‘and shall constitute a special fund, which is

17 hereby appropriated and made available until expended,’’

18 in the second sentence and inserting ‘‘and are authorized

19 to be appropriated’’.

20 (b) DEPOSITS FROM BRUSH DISPOSAL.—The para21 graph relating to deposits from brush disposal under the

22 heading ‘‘FOREST SERVICE’’ in the Act of August 11, 1916

23 (39 Stat. 462; 16 U.S.C. 490), is amended by striking
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1 ‘‘and constitute a special fund, which is hereby appro2 priated and shall remain available until expended’’ and in3 serting ‘‘and are authorized to be appropriated for the

4 purpose of disposing of such brush and other debris’’.

5 (c) NATIONAL FORESTS ROADS AND TRAILS.—Sec6 tion 7 of Public Law 88–657 (commonly known as the

7 Forest Roads and Trails Act; 16 U.S.C. 538) is amended

8 by striking ‘‘may be placed in a fund to be available’’ and

9 inserting ‘‘are authorized to be appropriated’’.

10 (d) TIMBER SALVAGE SALE FUND.—Section 303(d)

11 of Public Law 96–451 (16 U.S.C. 1606a) is amended by

12 striking ‘‘The Secretary of Agriculture’’ and inserting ‘‘In

13 such amounts as are provided in advance in appropriations

14 Acts, the Secretary of Agriculture’’.

15 SEC. 246. DEPOSIT OF TAYLOR GRAZING ACT RECEIPTS IN

16 TREASURY.

17 Section 10 of the Act of June 28, 1934 (commonly

18 known as the Taylor Grazing Act; 43 U.S.C. 315i), is

19 amended by striking all after ‘‘miscellaneous receipts’’ and

20 inserting a period.

21 SEC. 247. REPEAL OF LIVESTOCK FEED ASSISTANCE PRO22 GRAM.

23 The Emergency Livestock Feed Assistance Act of

24 1988 (title VI of the Agricultural Act of 1949; 7 U.S.C.

25 1471–1471j) is repealed.
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1 SEC. 248. OIL AND GAS RENTALS.

2 The Mineral Leasing Act (30 U.S.C. 181 et seq.) is

3 amended as follows:

4 (1) In section 14 by striking out ‘‘a rental of

5 $1 per acre’’ and inserting ‘‘a rental established by

6 the Secretary of the Interior’’ and by adding the fol7 lowing at the end thereof: ‘‘The Secretary shall es8 tablish fair market value rental fees under this sec9 tion based upon the rental fees which would be

10 charged in arm’s length transactions for comparable

11 leases of oil and gas resources on non-Federal

12 land.’’.

13 (2) In section 17(d) by striking out ‘‘rental of

14 not less than $1.50 per acre per year for the first

15 through fifth years of the lease and not less than $2

16 per acre per year for each year thereafter’’ and in17 serting ‘‘rental established by the Secretary of the

18 Interior’’ and by adding the following at the end

19 thereof: ‘‘The Secretary shall establish fair market

20 value rental fees under this section based upon the

21 rental fees which would be charged in arms length

22 transactions for comparable leases of oil and gas re23 sources on non-Federal land.’’.

24 (3) In section 21(a) by striking out ‘‘rental,

25 payable at the beginning of each year, at the rate of

26 50 cents per acre per annum, for the lands included
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1 in the lease,’’ and inserting ‘‘rental established by

2 the Secretary of the Interior’’ and by adding the fol3 lowing at the end thereof: ‘‘The Secretary shall es4 tablish fair market value rental fees under this sec5 tion based upon the rental fees which would be

6 charged in arms length transactions for comparable

7 leases on non-Federal land.’’.

8 (4) In section 31(e)(2) by striking ‘‘rate of not

9 less than $10 per acre per year, or the inclusion in

10 a reinstated lease issued pursuant to the provisions

11 of section 17(c) of this Act of a requirement that fu12 ture rentals shall be at a rate not less than $5 per

13 acre per year’’ and inserting ‘‘fair market value rate

14 (but not less than $10 per acre per year)’’.

15 (5) In section 31(f)(3) by striking out ‘‘of not

16 less than $5 per acre per year’’ and inserting ‘‘es17 tablished by the Secretary at fair market value

18 based upon the rental fees which would be charged

19 in arms length transactions for comparable leases on

20 non-Federal land’’.

21 SEC. 249. COMMUNICATION PERMITS.

22 (a) IN GENERAL.—No permit, lease, or authorization

23 for the use of any area of the public lands or National

24 Forests for communication uses, including but not limited

25 to radio and television broadcast, mobile radio, cellular
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1 telephone, or microwave relay facilities, shall remain in

2 force and effect after October 1, 1997, unless, by such

3 date, and by October 1 of each year thereafter, the holder

4 of such permit, lease, or authorization pays to the Sec5 retary of the Interior or the Secretary of Agriculture, as

6 appropriate, an amount equal to the fair market value,

7 as determined by such Secretary, of the right to use and

8 occupy such area for such communication uses.

9 (b) DEFINITION.—For the purposes of this section,

10 the term ‘‘public lands’’ shall have the same meaning as

11 defined in section 103(e) of the Federal Land Policy Man12 agement Act of 1976 (43 U.S.C. 1702(e)).

13 Subtitle D—National Park

14 Concessions

15 SEC. 251. FINDINGS AND POLICY.

16 (a) FINDINGS.—In furtherance of the Act of August

17 25, 1916 (commonly known as the National Park Service

18 Organic Act; 16 U.S.C. 1, 2–4), which directs the Sec19 retary of the Interior to administer units of the National

20 Park System in accordance with the fundamental purpose

21 of conserving their scenery, wildlife, and natural and his22 toric objects, and providing for their enjoyment in a man23 ner that will leave them unimpaired for the enjoyment of
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1 future generations, the Congress finds that the preserva2 tion and conservation of park resources and values re3 quires that such public accommodations, facilities, and

4 services within such areas as the Secretary, in accordance

5 with this subtitle, determines necessary and appropriate—

6 (1) should be provided only under carefully con7 trolled safeguards against unregulated and indis8 criminate use so that visitation will not unduly im9 pair park resources and values; and

10 (2) should be limited to locations and designs

11 consistent to the highest practicable degree with the

12 preservation and conservation of park resources and

13 values.

14 (b) POLICY.—It is the policy of the Congress that—

15 (1) development on Federal lands within a park

16 shall be limited to those facilities that the Secretary

17 determines are necessary and appropriate for public

18 use and enjoyment of the park in which such facili19 ties and services are located;

20 (2) development within a park should be con21 sistent to the highest practicable degree with the

22 preservation and conservation of the resources and

23 values of the park;

24 (3) park facilities and services that the Sec25 retary determines suitable to be provided by parties
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1 other than the National Park Service should be pro2 vided by private persons, corporations, or other enti3 ties, except when no private interest is qualified and

4 willing to provide such facilities and services;

5 (4) if the Secretary determines that develop6 ment should occur within a park, such development

7 shall be designed, located, and operated in a manner

8 that is consistent with the purposes for which such

9 park was established;

10 (5) the right to provide such services and to de11 velop or utilize facilities should be awarded to the

12 person, corporation, or entity submitting the best

13 proposal through a competitive selection process;

14 and

15 (6) such facilities or services should be provided

16 to the public at reasonable rates.

17 SEC. 252. DEFINITIONS.

18 As used in this subtitle:

19 (1) The term ‘‘concessioner’’ means a person,

20 corporation, or other entity to whom a concession

21 contract has been awarded.

22 (2) the term ‘‘concession contract’’ means a

23 contract or permit (other than an authorization is24 sued pursuant to section 255) to provide facilities or

25 services, or both, at a park.
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1 (3) The term ‘‘facilities’’ means improvements

2 to real property within a park used to provide ac3 commodations, facilities, or services to park visitors.

4 (4) The term ‘‘franchise fee’’ means the fee re5 quired by a concession contract to be paid to the

6 United States in consideration for the privileges af7 forded by such contract to the holder of the con8 tract, which may be expressed as a percentage of

9 revenues derived by the contract holder from activi10 ties authorized by the contract, and which shall be

11 in addition to fees required to be paid to the United

12 States for the use of federally-owned buildings or

13 other facilities.

14 (5) The term ‘‘Park Improvement Fund’’

15 means a Park Improvement Fund established under

16 section 260(b).

17 (6) The term ‘‘park’’ means a unit of the Na18 tional Park System.

19 (7) The term ‘‘proposal’’ means the complete

20 proposal for a concession contract offered by a po21 tential or existing concessioner in response to the

22 minimum requirements for the contract established

23 by the Secretary.

24 (8) The term ‘‘Secretary’’ means the Secretary

25 of the Interior.
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1 SEC. 253. REPEAL OF NATIONAL PARK SERVICE CONCES2 SIONS POLICY ACT OF 1965.

3 (a) REPEAL.—Public Law 89–249 (commonly known

4 as the National Park Service Concessions Policy Act of

5 1965; 16 U.S.C. 20–20g) is repealed.

6 (b) EFFECT OF REPEAL.—The repeal of Public Law

7 89–249 shall not affect the validity of any contract entered

8 into under such Act before the date of the enactment of

9 this subtitle. However, the provisions of this subtitle shall

10 apply to any such contract except to the extent such provi11 sions are inconsistent with the express terms and condi12 tions of the contract.

13 (c) TRANSITION.—Nothing in this subtitle that is in14 consistent with a prospectus issued before January 27,

15 1995, shall apply to the contract with respect to which

16 such prospectus was issued. The Secretary may award a

17 concession contract prior to the promulgation of new regu18 lations to implement this subtitle if the Secretary deter19 mines that protection of public health and safety warrants

20 such action and the contract is consistent with this sub21 title.

22 (d) CONFORMING AMENDMENT.—The fourth sen23 tence of section 3 of the Act of August 25, 1916 (com24 monly known as the National Park Service Organic Act;

25 16 U.S.C. 3), is amended by striking ‘‘He may also grant’’
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1 and all that follows through ‘‘no natural’’ and inserting

2 ‘‘No natural’’.

3 SEC. 254. USE OF CONCESSION CONTRACTS TO PROVIDE

4 SERVICES TO PARK VISITORS.

5 (a) CONCESSIONS CONTRACTS.—Subject to the find6 ings and policy stated in section 251 and the provisions

7 of this section, the Secretary may award a concession con8 tract that authorizes a private person, corporation, or

9 other entity to provide services to park visitors and to uti10 lize facilities if the Secretary determines that such a con11 tract is the appropriate means for such authorization.

12 (b) WHEN CONTRACT AUTHORIZED.—A concession

13 contract shall be awarded only to the extent that the Sec14 retary finds that the services to be provided and the facili15 ties to be utilized pursuant to the contract are necessary

16 and appropriate for the accommodation of visitors to a

17 park.

18 (c) APPLICABLE LAWS.—The provision of services

19 and the utilization of facilities pursuant to a concession

20 contract shall be consistent with all applicable require21 ments of law, including laws relating generally to the ad22 ministration and management of parks and with the gen23 eral management plan, concessions plan, and other rel24 evant plans developed by the Secretary for the relevant

25 park.
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1 SEC. 255. OTHER AUTHORITIES TO PROVIDE SERVICES TO

2 PARK VISITORS.

3 (a) OTHER AUTHORITY TO PROVIDE SERVICES.—To

4 the extent specified in this section, the Secretary, upon

5 request, may authorize a private person, corporation, or

6 other entity to provide services to park visitors otherwise

7 than by award of a concession contract.

8 (b) CONDITIONS ON ISSUANCE.—(1) The authority

9 provided by this section may be used only to authorize the

10 provision to park visitors of services that the Secretary

11 determines will have minimal impact on park resources

12 and values and will be consistent with the purposes for

13 which the park was established and with all applicable

14 management plans for the park. The Secretary shall re15 quire that the provision of services under such an author16 ization be accomplished in a manner consistent to the

17 highest practicable degree with the preservation and con18 servation of park resources and values.

19 (2) The Secretary shall have no authority under this

20 section to issue more authorizations than are consistent

21 with the preservation and proper management of park re22 sources and values. The Secretary shall establish such

23 other conditions for issuance of such an authorization as

24 the Secretary determines appropriate for the protection of

25 visitors, provision of adequate and appropriate visitor
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1 services, and protection and proper management of the re2 sources and values of the National Park System.

3 (3) Any authorization issued under this section shall

4 be limited to commercial operations with annual gross rev5 enues of not more than $25,000 resulting from the serv6 ices provided within the park pursuant to such authoriza7 tion.

8 (c) TERM OF AUTHORIZATION.—The term of any au9 thorization issued under this section shall not exceed two

10 years.

11 (d) FEES FOR AUTHORIZATION.—The Secretary shall

12 require payment of a reasonable fee for issuance of an au13 thorization under this section.

14 (e) USE OF FEES.—Fees collected under subsection

15 (d) shall remain available to the Secretary without further

16 appropriation to be used to recover the costs of managing

17 and administering this section.

18 (f) LIMITATION ON LIABILITY.—The Secretary shall

19 take appropriate steps to limit the liability of the United

20 States arising from the provision of services under an au21 thorization issued under this section.

22 (g) EFFECT ON CONCESSION CONTRACTS.—A per23 son, corporation, or other entity seeking or obtaining an

24 authorization under this section shall not be precluded

25 from also submitting proposals for concession contracts.
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1 SEC. 256. COMPETITIVE SELECTION PROCESS FOR CONCES2 SION CONTRACTS.

3 (a) SELECTION OF BEST PROPOSAL.—(1) Except as

4 provided in subsection (b), and consistent with the provi5 sions of subsection (g), any concession contract entered

6 into pursuant to this subtitle shall be awarded to the per7 son submitting the best proposal, as determined by the

8 Secretary through the competitive selection process speci9 fied in this section.

10 (2) Within 180 days after the date of the enactment

11 of this subtitle, the Secretary shall promulgate regulations

12 establishing a process to implement this section. The regu13 lations shall include provisions for establishing a method

14 or procedure for the resolution of disputes between the

15 Secretary and a concessioner in those instances where the

16 Secretary has been unable to meet conditions or require17 ments or provide such services, if any, as set forth in a

18 prospectus pursuant to subparagraphs (D) and (E) of sub19 section (c)(2).

20 (b) TEMPORARY CONTRACT.—Notwithstanding sub21 section (a), the Secretary may award on a noncompetitive

22 basis a temporary concession contract if the Secretary de23 termines such an award to be necessary in order to avoid

24 interruption of services to the public at a park. Before

25 making such a determination, the Secretary shall take all
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1 reasonable and appropriate steps to consider alternative

2 actions to avoid such interruptions.

3 (c) PROSPECTUS.—(1) Before soliciting proposals for

4 a concession contract at a park, the Secretary shall pre5 pare a prospectus soliciting proposals, shall publish a no6 tice of its availability at least once in such local or national

7 newspapers or trade publications as the Secretary deter8 mines appropriate, and shall make such prospectus avail9 able upon request to all interested parties.

10 (2) The prospectus shall include at least the following

11 information:

12 (A) The minimum requirements for such con13 tract, as set forth in subsection (d).

14 (B) The terms and conditions of the existing

15 concession contract awarded for such park, if any,

16 including all fees and other forms of compensation

17 provided to the United States by the concessioner.

18 (C) Other authorized facilities or services which

19 may be included in a proposal.

20 (D) Facilities and services to be provided by the

21 Secretary to the concessioner, if any, including pub22 lic access, utilities, and buildings.

23 (E) Minimum public services to be offered with24 in a park by the Secretary, including interpretive

25 programs, campsites, and visitor centers.
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1 (F) Such other information related to the con2 cessions operation as is provided by the Secretary

3 pursuant to a concession contract or is otherwise

4 available to the Secretary, as the Secretary deter5 mines is necessary to allow for the submission of

6 competitive proposals.

7 (d) MINIMUM PROPOSAL REQUIREMENTS.—(1) No

8 proposal shall be considered which fails to meet the mini9 mum requirements included in the prospectus. Such mini10 mum requirements shall include payment to the United

11 States of a franchise fee and shall also include at least

12 the following:

13 (A) The minimum acceptable franchise fee, fees

14 for use of any Federal buildings or other facilities,

15 and any other fees to be paid to the United States.

16 (B) The duration of the contract.

17 (C) Any facilities, services, or capital invest18 ments required to be provided by the concessioner.

19 (D) Measures that will be required in order to

20 ensure the protection and preservation of park re21 sources and values.

22 (2) The Secretary may reject any proposal, notwith23 standing the amount of franchise fee offered, if the Sec24 retary determines that the person, corporation, or entity

25 making such proposal is not qualified, is likely to provide
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1 unsatisfactory service, or that the proposal is not suffi2 ciently responsive to the objectives of protecting and pre3 serving park resources and of providing necessary and ap4 propriate facilities or services to the public at reasonable

5 rates.

6 (3) If all proposals submitted to the Secretary either

7 fail to meet the minimum requirements or are rejected by

8 the Secretary, the Secretary shall establish new minimum

9 contract requirements and re-initiate the competitive se10 lection process pursuant to this section.

11 (e) PRINCIPAL FACTORS IN SELECTION PROCESS.—

12 (1) In selecting the best proposal, the Secretary shall con13 sider the following principal factors:

14 (A) The responsiveness of the proposal to the

15 objectives of protecting and preserving park re16 sources and of providing necessary and appropriate

17 facilities and services to the public at reasonable

18 rates.

19 (B) The experience, expertise, and related back20 ground of the person, corporation, or other entity

21 submitting the proposal, including whether the per22 son, corporation, or entity has a record of outstand23 ing performance in providing the same or similar fa24 cilities or services.
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1 (C) The financial capability of the person, cor2 poration, or entity submitting the proposal.

3 (D) The proposed franchise fee. However, the

4 importance of securing revenue to the United States

5 is subordinate to the objectives of protecting and

6 preserving park resources, including cultural re7 sources, and of providing necessary and appropriate

8 facilities or services to the public at reasonable rates.

9 (2) The Secretary may also consider such secondary

10 factors as the Secretary considers appropriate.

11 (3) In developing regulations to implement this sub12 title, the Secretary shall consider the extent to which plans

13 for employment of Indians (including Native Alaskans)

14 and involvement of businesses owned by Indians, Indian

15 tribes, or Native Alaskans in the operation of concession

16 contracts should be identified as a factor in the selection

17 of a best offer under this section.

18 (f) CONGRESSIONAL NOTIFICATION.—(1) If a pro19 posed concession contract has anticipated annual gross re20 ceipts in excess of $1,000,000 (indexed to 1993 constant

21 dollars) or a duration in excess of ten years, the Secretary

22 shall submit the proposed contract to the Committee on

23 Energy and Natural Resources of the Senate and the

24 Committee on Resources of the House of Representatives.
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1 (2) The Secretary shall not award any such proposed

2 contract until at least 60 days after the date on which

3 the proposed contract is submitted to Congress under

4 paragraph (1).

5 SEC. 257. PREFERENTIAL RIGHT OF RENEWAL OF CONCES6 SION CONTRACTS.

7 (a) GENERAL RULE OF NO PREFERENTIAL RIGHT

8 OF RENEWAL.—Except as provided in subsection (b), the

9 Secretary shall not grant a preferential right to a conces10 sioner to renew a concession contract executed under this

11 subtitle.

12 (b) EXCEPTIONS.—The Secretary shall grant a pref13 erential right of renewal with respect to a concession con14 tract covered by subsection (c) or (d), subject to the re15 quirements of such subsections. A concessioner who exer16 cises a preferential right of renewal in accordance with

17 this paragraph shall be entitled to award of the new con18 cession contract with respect to which such right is exer19 cised.

20 (2) As used in this section, the term ‘‘preferential

21 right of renewal’’ means that the Secretary shall allow a

22 concessioner satisfying the requirements of paragraph (1)

23 the opportunity to match the terms and conditions of any

24 competing proposal which the Secretary determines to be

25 the best offer.
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1 (c) OUTFITTING AND GUIDE CONTRACTS.—(1) Ex2 cept as provided in subsection (d), the provisions of sub3 section (b) shall apply only—

4 (A) to a concession contract—

5 (i) that solely authorizes a concessioner to

6 provide outfitting, guide, river running, or other

7 substantially similar services within a park; and

8 (ii) which does not grant such concessioner

9 any interest in any structure, fixture, or im10 provement pursuant to section 263;

11 (B) where the concessioner has been awarded

12 an annual rating of ‘‘excellent’’ in at least 50 per13 cent of the annual ratings during the term of the

14 contract;

15 (C) where the concessioner has not received any

16 annual unsatisfactory ratings during the term of the

17 contract; and

18 (D) where the Secretary determines that the

19 concessioner has submitted a responsive proposal for

20 a new contract which satisfies the minimum require21 ments established by the Secretary.

22 (2) In granting a preferential right of renewal pursu23 ant to subsection (b), the Secretary shall not require a

24 concessioner to match any portion of a proposed franchise

25 fee which exceeds by more than 10 percent the minimum
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1 fee established by the Secretary in the prospectus for the

2 contract.

3 (3)(A) With respect to a concession contract (or ex4 tension thereof) covered by this subsection, which is in ef5 fect on the date of the enactment of this subtitle, this

6 paragraph shall apply if the holder of such contract, under

7 the laws and policies in effect on the day before the date

8 of enactment of this subtitle, would have been entitled to

9 a preferential right of renewal upon the expiration of such

10 contract.

11 (B) Upon the expiration of a concession contract (or

12 extension thereof) covered by this paragraph, the Sec13 retary, with respect to the award of a new concession con14 tract to provide the same or substantially similar services

15 as those authorized by the previous contract or extension,

16 shall allow the holder of such contract or extension the

17 right to exercise a preferential right of renewal to the

18 same extent as would have been the case under the laws

19 and policies in effect on the day before the date of enact20 ment of this subtitle.

21 (4)(A) In promulgating regulations to implement this

22 subsection, the Secretary shall include a rating category

23 of ‘‘excellent’’, and shall establish clear and achievable

24 standards necessary for the award of such rating, includ25 ing criteria relating to—
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1 (i) protection of the park’s resources and val2 ues;

3 (ii) furtherance of the educational, recreational,

4 and other purposes for which the Secretary manages

5 the park; and

6 (iii) the adequacy of services provided to park

7 visitors.

8 (B) The Secretary shall take appropriate steps to en9 able all holders of concession contracts covered by this

10 subsection, and all parties seeking to obtain such con11 tracts, to be aware of the criteria established pursuant to

12 this paragraph.

13 (d) CONTRACTS WITH ANNUAL GROSS RECEIPTS

14 UNDER $500,000.—(1) The provisions of subsection (b)

15 shall also apply to a concession contract—

16 (A) that the Secretary estimates will result in

17 annual gross receipts of less than $500,000;

18 (B) where the Secretary has determined that

19 the concessioner has operated satisfactorily during

20 the term of the contract (including any extensions

21 thereof); and

22 (C) that the concessioner has submitted a re23 sponsive proposal for a new concession contract

24 which satisfies the minimum requirements estab25 lished by the Secretary.
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1 (2) This subsection shall not apply to a concession

2 contract covered by subsection (c).

3 SEC. 258. FRANCHISE FEES.

4 (a) IN GENERAL.—Franchise fees, however stated,

5 shall not be less than the minimum franchise fee estab6 lished by the Secretary for each contract. The minimum

7 franchise fee shall be determined in a manner that will

8 provide the concessioner with a reasonable opportunity to

9 realize a profit on the operation as a whole, commensurate

10 with the capital invested and the obligations assumed.

11 (b) MULTIPLE CONTRACTS WITHIN A PARK.—If

12 multiple concession contracts are awarded to authorize

13 concessioners to provide the same outfitting, guide, river

14 running, or other similar services at the same approximate

15 location within a specific park, the Secretary shall estab16 lish a standardized schedule of franchise fees for all such

17 contracts, subject to periodic review and revision by the

18 Secretary.

19 SEC. 259. USE OF FRANCHISE FEES.

20 (a) DEPOSIT IN SPECIAL ACCOUNT.—Except as pro21 vided in section 260, all receipts, including fees for use

22 of federally owned buildings or other facilities collected

23 pursuant to this subtitle, shall be covered into a special

24 account established in the Treasury.
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1 (b) USE OF FEES.—Amounts covered into the special

2 account in a fiscal year shall be available for expenditure,

3 subject to appropriation, solely as follows:

4 (1) 50 percent shall be allocated among the

5 units of the National Park System in the same pro6 portion as franchise fees collected from a specific

7 unit bears to the total amount covered into the ac8 count for each fiscal year, to be used for resource

9 management and protection, maintenance activities,

10 interpretation, and research.

11 (2) 50 percent shall be allocated among the

12 units of the National Park System on the basis of

13 need, in a manner to be determined by the Sec14 retary, to be used for resource management and pro15 tection, maintenance activities, interpretation, and

16 research.

17 SEC. 260. PARK IMPROVEMENT FUNDS.

18 (a) PARK IMPROVEMENT FUND.—In lieu of collecting

19 all or a portion of the franchise fees that would otherwise

20 be collected pursuant to the concession contract, the Sec21 retary may, if the Secretary determines it to be prac22 ticable, require a concessioner to establish a Park Im23 provement Fund in which the concessioner shall deposit

24 the franchise fees that would otherwise be paid under the

25 contract.
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1 (b) MAINTENANCE OF FUND.—The Park Improve2 ment Fund established by a concessioner shall be main3 tained by the concessioner in an interest bearing account

4 in a federally insured financial institution. The conces5 sioner shall maintain the Park Improvement Fund sepa6 rately from any other funds or accounts and shall not com7 mingle the monies in the Park Improvement Fund with

8 any other monies. The Secretary may establish such other

9 terms, conditions, or requirements as the Secretary deter10 mines to be necessary to ensure the financial integrity of

11 the Park Improvement Fund.

12 (c) USE OF FUND.—(1) Monies in a Park Improve13 ment Fund for a park, including interest, shall be ex14 pended solely for activities and projects within the park

15 that—

16 (A) are consistent with the park’s general man17 agement plan, concessions plan, and other applicable

18 plans; and

19 (B) the Secretary determines will enhance pub20 lic use, safety, and enjoyment of the park.

21 (2) Authorized projects under paragraph (1) may in22 clude projects that directly or indirectly support conces23 sion facilities or services required by the concession con24 tract. However, no expenditure from a Park Improvement

25 Fund may have the effect of creating or increasing any
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1 compensable interest of any concessioner in any such fa2 cilities. A concessioner shall not be allowed to make any

3 advances or credits to a Park Improvement Fund.

4 (d) PROHIBITION ON CONCESSIONER INTEREST IN

5 IMPROVEMENTS.—A concessioner shall not be granted any

6 interest in improvements made using amounts in a Park

7 Improvement Fund, including any interest granted pursu8 ant to section 263.

9 (e) PROHIBITION ON CERTAIN CAPITAL EXPENDI10 TURES.—A Park Improvement Fund may not be used for

11 any capital expenditure exceeding $2,500,000 in any fiscal

12 year unless the expenditure has been authorized in ad13 vance by Act of Congress. The Secretary shall annually

14 inform the Congress concerning the actual and projected

15 use of moneys in each Park Improvement Fund.

16 (f) EFFECT ON OTHER CONCESSIONER DUTIES.—

17 Nothing in this section shall affect the obligation of a con18 cessioner to insure, maintain, and repair any structure,

19 fixture, or improvement assigned to such concessioner and

20 to insure that such structure, fixture, or improvement

21 fully complies with applicable safety and health laws and

22 regulations.

23 (g) RECORDKEEPING.—The concessioner shall main24 tain proper records for all expenditures made from a Park

25 Improvement Fund. Such records shall include invoices,
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1 bank statements, canceled checks, and such other informa2 tion as the Secretary may require.

3 (h) ACTIVITY STATEMENT.—The concessioner shall

4 annually submit to the Secretary a statement reflecting

5 total activity in the Park Improvement Fund for the pre6 ceding financial year. The statement shall reflect monthly

7 deposits, expenditures by project, interest earned, and

8 such other information as the Secretary may require.

9 (i) EFFECT OF CONTRACT TERMINATION.—Upon the

10 termination of a concession contract, or upon the sale or

11 transfer of the contract, any remaining balance in the

12 Park Improvement Fund related to the contract shall be

13 transferred by the concessioner to the successor conces14 sioner, to be used solely as set forth in this section. In

15 the event there is no successor concessioner, the Park Im16 provement Fund balance shall be deposited into the special

17 account established in section 259.

18 SEC. 261. DURATION OF CONCESSION CONTRACTS.

19 (a) MAXIMUM TERM.—A concession contract shall be

20 awarded for a term not to exceed 10 years. The Secretary

21 may award a concession contract for a term not to exceed

22 20 years if the Secretary determines that a longer term

23 is a necessary component of the overall contract in order

24 to reduce the costs to the United States of acquiring
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1 possessory interests or to carry out the policies of this sub2 title and other laws applicable to the National Park Sys3 tem.

4 (b) TEMPORARY CONTRACT.—A temporary conces5 sion contract awarded on a noncompetitive basis under

6 section 256(b) shall be for a term not to exceed two years.

7 SEC. 262. TRANSFER OF CONCESSION CONTRACTS.

8 (a) SECRETARIAL APPROVAL REQUIRED.—No con9 cession contract may be transferred, assigned, sold, or oth10 erwise conveyed by a concessioner without prior written

11 notification to, and approval of the Secretary.

12 (b) CONSIDERATION OF TRANSFER REQUEST.—The

13 Secretary shall not unreasonably withhold approval of a

14 transfer, assignment, sale, or conveyance of a concession

15 contract, but shall not approve the transfer of a concession

16 contract to any individual, corporation or other entity if,

17 among other matters, the Secretary determines that—

18 (1) such individual, corporation or entity is, or

19 is likely to be, unable to completely satisfy all of the

20 requirements, terms, and conditions of the contract;

21 (2) such transfer, assignment, sale or convey22 ance is not consistent with the objectives of protect23 ing and preserving park resources, and of providing

24 necessary and appropriate facilities or services to the

25 public at reasonable rates;
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1 (3) such transfer, assignment, sale, or convey2 ance relates to a concession contract which does not

3 provide to the United States consideration commen4 surate with the probable value of the privileges

5 granted by the contract; or

6 (4) the terms of the transfer, assignment, sale,

7 or conveyance directly or indirectly attribute a sig8 nificant value to intangible assets or otherwise may

9 so reduce the opportunity for a reasonable profit

10 over the remaining term of the contract that the

11 United States would be required to make substantial

12 additional expenditures in order to avoid interrup13 tion of services to park visitors.

14 (c) CONGRESSIONAL NOTIFICATION.—Within 30

15 days after receiving a request to approve a transfer, as16 signment, sale, or other conveyance of a concession con17 tract with anticipated annual gross receipts in excess of

18 $1,000,000 (indexed to 1993 constant dollars) or a dura19 tion in excess of 10 years, the Secretary shall notify the

20 Committee on Energy and Natural Resources of the Sen21 ate and the Committee on Resources of the House of Rep22 resentatives of the proposal. Approval of the proposal, if

23 granted by the Secretary, shall not take effect until sixty

24 days after the date of notification of both Committees.
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1 SEC. 263. PROTECTION OF CONCESSIONER INVESTMENT.

2 (a) EXISTING STRUCTURES.—(1) A concessioner

3 who, pursuant to a concession contract, before the date

4 of the enactment of this subtitle acquired or constructed,

5 or as of such date was required by such a contract to com6 mence acquisition or construction of, any structure, fix7 ture, or improvement upon land owned by the United

8 States within a park, shall have a possessory interest

9 therein to the extent provided by such contract. The value

10 of the possessory interest shall be determined for all pur11 poses on the basis of applicable laws and contracts in ef12 fect on the day before the date of the enactment of this

13 subtitle.

14 (2) The provisions of this subsection shall not apply

15 to a concessioner whose contract, as in effect on the date

16 of the enactment of this subtitle, does not include recogni17 tion of a possessory interest.

18 (3)(A) Except as provided in paragraph (4), with re19 spect to a concession contract entered into on or after the

20 date of the enactment of this subtitle, the provisions of

21 subsection (b) shall apply to any existing structure, fix22 ture, or improvement (as defined in paragraph (1)), except

23 that the value of the possessory interest as of the termi24 nation date of the first contract expiring after the date

25 of enactment of this subtitle shall be used as the basis
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1 for depreciation, in lieu of the actual original cost of such

2 structure, fixture, or improvement.

3 (B) Notwithstanding generally accepted accounting

4 principles, a concessioner with a possessory interest as

5 provided in paragraph (1) may, at the termination date

6 of the first contract expiring after the date of the enact7 ment of this subtitle, reestimate the useful life of the ap8 plicable structure, fixture, or improvement, consistent with

9 subsection (b). However, the estimated useful life of such

10 structure, fixture, or improvement shall not thereafter be

11 reestablished or revalued.

12 (4) If the Secretary determines during the competi13 tive selection process that all proposals submitted either

14 fail to meet the minimum requirements or are rejected (as

15 provided in section 256), the Secretary may, solely with

16 respect to a structure, fixture, or improvement covered

17 under paragraph (3), suspend the depreciation provisions

18 of subsection (b)(1) for the duration of the contract. How19 ever, the Secretary may suspend such depreciation provi20 sions only if the Secretary determines that the establish21 ment of other new minimum contract requirements is not

22 likely to result in the submission of satisfactory proposals

23 and that the suspension of the depreciation provisions is

24 likely to result in the submission of satisfactory proposals.
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1 (b) NEW STRUCTURES.—(1) On or after the date of

2 the enactment of this subtitle, a concessioner who con3 structs or acquires a new, additional, or replacement

4 structure, fixture, or improvement upon land owned by the

5 United States within a park, pursuant to a concession con6 tract, shall have an interest in such structure, fixture, or

7 improvement equivalent to the actual original cost of ac8 quiring or constructing such structure, fixture, or im9 provement, less straight line depreciation over the esti10 mated useful life of the asset according to generally ac11 cepted accounting principles. In no event shall the esti12 mated useful life of the asset exceed the depreciation pe13 riod used for the asset for Federal income tax purposes.

14 (2) In the event that the contract expires or is termi15 nated prior to the estimated useful life of an asset de16 scribed in paragraph (1), the concessioner shall be entitled

17 to receive from the United States or the successor conces18 sioner payment equal to the value of the concessioner’s

19 interest in such structure, fixture, or improvement. A suc20 cessor concessioner may not revalue the interest in such

21 structure, fixture, or improvement, the method of depre22 ciation, or the estimated useful life of the asset.

23 (3) Title to any such structure, fixture, or improve24 ment shall be vested in the United States.
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1 (c) INSURANCE, MAINTENANCE, AND REPAIR.—

2 Nothing in this section shall affect the obligation of a con3 cessioner to insure, maintain, and repair any structure,

4 fixture, or improvement assigned to such concessioner and

5 to insure that such structure, fixture, or improvement

6 fully complies with applicable safety and health laws and

7 regulations.

8 SEC. 264. RATES AND CHARGES TO PUBLIC.

9 Unless otherwise provided in the prospectus and con10 tract, the reasonableness of a concessioner’s rates and

11 charges to the public shall be judged primarily by compari12 son with those rates and charges for facilities and services

13 of comparable character charged by parties in reasonable

14 proximity to the relevant park and operating under similar

15 conditions, with due consideration for length of season,

16 seasonal variance, average percentage of occupancy, acces17 sibility, availability and costs of labor and materials, type

18 of patronage, and other factors deemed significant by the

19 Secretary.

20 SEC. 265. CONCESSIONER PERFORMANCE EVALUATION.

21 (a) REGULATIONS.—Within 180 days after the date

22 of the enactment of this subtitle, the Secretary, after an

23 appropriate period for public comment, shall publish regu24 lations establishing standards and criteria for evaluating

25 the performance of concessioners operating within parks.
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1 (b) PERIODIC EVALUATION.—(1) The Secretary shall

2 periodically conduct an evaluation of each concessioner op3 erating under a concession contract pursuant to this sub4 title to determine whether such concessioner has per5 formed satisfactorily. In evaluating a concessioner’s per6 formance, the Secretary shall seek and consider applicable

7 reports and comments from appropriate Federal, State,

8 and local regulatory agencies, and shall seek and consider

9 the views of park visitors and concession customers. If the

10 Secretary’s performance evaluation results in an unsatis11 factory rating of the concessioner’s overall operation, the

12 Secretary shall so notify the concessioner in writing, and

13 shall provide the concessioner with a list of the minimum

14 requirements necessary for the operation to be rated satis15 factory.

16 (2) The Secretary may terminate a concession con17 tract if the concessioner fails to meet the minimum oper18 ational requirements identified by the Secretary within the

19 time limitations established by the Secretary at the time

20 notice of the unsatisfactory rating is provided to the con21 cessioner.

22 (3) If the Secretary terminates a concession contract

23 pursuant to this section, the Secretary shall solicit propos24 als for a new contract consistent with the provisions of

25 this subtitle.
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1 (c) CONGRESSIONAL NOTIFICATION.—The Secretary

2 shall notify the Committee on Energy and Natural Re3 sources of the Senate and the Committee on Resources

4 of the House of Representatives of each unsatisfactory

5 overall annual rating and of each concession contract ter6 minated pursuant to this section.

7 SEC. 266. RECORDKEEPING REQUIREMENTS.

8 (a) IN GENERAL.—Each concessioner shall keep such

9 records as the Secretary may prescribe to enable the Sec10 retary to determine that all terms of the concessioner’s

11 contract have been and are being faithfully performed. For

12 the purpose of audit and examination, the Secretary, the

13 Inspector General of the Department of the Interior, or

14 any of the Secretary’s duly authorized representatives

15 shall have access to such records and to other books, docu16 ments, and papers of the concessioner pertinent to the

17 contract and all the terms and conditions thereof as the

18 Secretary and the Inspector General consider necessary.

19 (b) GENERAL ACCOUNTING OFFICE REVIEW.—The

20 Comptroller General of the United States, or any duly au21 thorized representative of the Comptroller General, shall

22 have access to and the right to examine any pertinent

23 books, documents, papers, and records of the concessioner

24 related to a concession contract, including those related

25 to any Park Improvement Fund. The authority provided
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1 by this subsection shall apply until the expiration of five

2 calendar years after the close of the business year under

3 consideration.

4 SEC. 267. EXEMPTION FROM CERTAIN LEASE REQUIRE5 MENTS.

6 The provisions of section 321 of the Act of June 30,

7 1932 (40 U.S.C. 303b), relating to the leasing of buildings

8 and properties of the United States, shall not apply to con9 cession contracts awarded by the Secretary pursuant to

10 this subtitle.

11 SEC. 268. NO EFFECT ON ANILCA PROVISIONS.

12 Nothing in this subtitle shall be construed to amend,

13 supersede, or otherwise affect any provision of the Alaska

14 National Interest Lands Conservation Act (Public Law

15 96–487; 16 U.S.C. 3101 et seq.).

16 SEC. 269. IMPLEMENTATION.

17 (a) AUDIT REQUIREMENT.—Beginning with fiscal

18 year 1998, the Inspector General of the Department of

19 the Interior shall conduct a biennial audit of the Sec20 retary’s implementation of this subtitle and the award and

21 management of concession contracts under section 254

22 and authorizations under section 255.

23 (b) BIENNIAL REPORTS.—Beginning on June 1,

24 1998, and biannually thereafter the Secretary and the In25 spector General of the Department of the Interior shall
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1 submit a report to the Committee on Energy and Natural

2 Resources of the Senate and the Committee on Resources

3 of the House of Representatives on the implementation of

4 this subtitle and the effect of such implementation on fa5 cilities operated and services provided pursuant to conces6 sion contracts.

7 (c) INFORMATION FROM SECRETARY.—In each re8 port required by this section, the Secretary shall—

9 (1) identify any concession contracts which have

10 been renewed, renegotiated, terminated, or trans11 ferred during the two years prior to the submission

12 of the report and identify any significant changes in

13 the terms of the new contract;

14 (2) state the amount of franchise fees, the rates

15 which would be charged for services, and the level of

16 other services required to be provided by the conces17 sioner in comparison to that required in any pre18 vious concession contract for the same facilities or

19 services at the same park;

20 (3) assess the degree to which facilities are

21 being maintained, using the condition of such facili22 ties on the date of enactment of this subtitle as a

23 baseline;
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1 (4) indicate whether competition has been in2 creased or decreased with respect to the awarding of

3 concession contracts;

4 (5) set forth the total amount of revenues re5 ceived and financial obligations incurred or reduced

6 by the Federal Government as a result of enactment

7 of this subtitle for the reporting period and in com8 parison with previous reporting periods and the

9 baseline year of 1993, including the costs, if any, as10 sociated with the acquisition of possessory interests;

11 and

12 (6) include information concerning any Park

13 Improvement Funds, including—

14 (A) the total amounts deposited into and

15 expended from each Park Improvement Fund

16 during the preceding two-year period; and

17 (B) the purposes for which expenditures

18 from Park Improvement Funds during such pe19 riod were used.

20 (d) INFORMATION FROM INSPECTOR GENERAL.—In

21 each report required by this section, the Inspector General

22 of the Department of the Interior shall include informa23 tion as to the results of the audit required by subsection

24 (a), including—
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1 (1) the status of the Secretary’s implementation

2 of this subtitle;

3 (2) the extent to which such implementation

4 has furthered the policies of this subtitle, as set

5 forth in section 251, and has led to an increase or

6 decrease in competition for concession contracts;

7 (3) the adequacy of recordkeeping and other re8 quirements imposed on establishment and use of

9 Park Improvement Funds; and

10 (4) any recommendations the Inspector General

11 may find appropriate in order to further the pur12 poses of this subtitle and other laws applicable to

13 the National Park System or to assure that Park

14 Improvement Funds are maintained and expendi15 tures therefrom are used in accordance with this

16 subtitle and sound business practices.

17 SEC. 270. AUTHORIZATION OF APPROPRIATIONS.

18 There is authorized to be appropriated such sums as

19 may be necessary to carry out this subtitle.

Æ