I
106TH CONGRESS
1ST SESSION
H. R. 2203
To eliminate corporate welfare.
IN THE HOUSE OF REPRESENTATIVES
JUNE 15, 1999
Mr. ANDREWS introduced the following bill; which was referred to the Com-
mittee on Ways and Means, and in addition to the Committees on Re-
sources, Agriculture, Commerce, 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 juris-
diction of the committee concerned
A BILL
To eliminate corporate welfare.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Corporate Welfare Elimination Act of 1999’’.
(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.
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.
TITLE II—NATURAL RESOURCES
Sec. 201. Public Resources Deficit Reduction Act of 1999.
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 Sys-
tem lands.
Sec. 243. Timberland suitability.
Sec. 244. Reduction in maximum amount of payments under agricultural as-
sistance 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.
TITLE I—TAX REFORM
SEC. 101. SHORT TITLE; REFERENCES TO INTERNAL REV-
ENUE CODE OF 1986.
(a) SHORT TITLE.—This title may be cited as the
‘‘Termination of Energy and Natural Resource Tax Sub-
sidies Act of 1999’’.
(b) REFERENCES TO INTERNAL REVENUE CODE OF
1986.—Except as otherwise expressly provided, whenever
in this title an amendment or repeal is expressed in terms
of an amendment to, or repeal of, a section or other provi-
sion, the reference shall be considered to be made to a
section or other provision of the Internal Revenue Code
of 1986.
SEC. 102. REPEAL OF EXPENSING OF INTANGIBLE DRILL-
ING AND DEVELOPMENT COSTS AND OF MIN-
ING 
EXPLORATION 
AND 
DEVELOPMENT
COSTS.
(a) INTANGIBLE
DRILLING
AND
DEVELOPMENT
COSTS.—Section 263(c) is hereby repealed.
(b) DEVELOPMENT EXPENDITURES.—Section 616
(relating to development expenditures) is hereby repealed.
(c) EXPLORATION EXPENDITURES.—Subsection (i)
of section 617 is amended to read as follows:
‘‘(i) TERMINATION.—No deduction shall be allowed
under this section for any expenditure paid or incurred
in a taxable year beginning after the date of the enactment
of this subsection.’’
(d) CONFORMING AMENDMENTS.—
(1) Paragraph (2) of section 56(a) is hereby re-
pealed.
(2) Subsection (a) of section 57 is amended by
striking paragraph (2).
(3) Paragraph (2) of section 59(e) is amended
by adding ‘‘and’’ at the end of subparagraph (A), by
striking the comma at the end of subparagraph (B)
and inserting a period, and by striking subpara-
graphs (C), (D), and (E).
(4) Subparagraph (A) of section 59(e)(5) is
amended by inserting before the period ‘‘, as in ef-
fect before the Termination of Energy and Natural
Resource Tax Subsidies Act of 1999’’.
(5) Subsection (c) of section 193 is amended to
read as follows:
‘‘(c) APPLICATION WITH OTHER DEDUCTIONS.—No
deduction shall be allowed under subsection (a) with re-
spect to any expenditure with respect to which a deduction
is allowed or allowable to the taxpayer under any other
provision of this chapter.’’
(6) Paragraph (1) of section 263(a) is amended
by striking subparagraph (A) and by redesignating
the succeeding subparagraphs accordingly.
(7) Section 263 is amended by striking sub-
section (i).
(8) Subsection (c) of section 263A is amended
by striking paragraph (3) and by redesignating the
succeeding paragraphs accordingly.
(9) Paragraph (5) of section 263A(c), as redes-
ignated by paragraph (8), is amended by striking
‘‘subparagraphs (B), (C), (D), and (E)’’ and insert-
ing ‘‘subparagraph (B)’’.
(10) Section 291 is amended by striking sub-
section (b).
(11) Subsection (n) of section 312 is amended
by striking paragraph (2).
(12) Paragraph (1) of section 1254(a) is
amended—
(A) by inserting ‘‘(as in effect before the
Termination of Energy and Natural Resource
Tax Subsidies Act of 1999)’’ after ‘‘617’’ in
subparagraph (A)(i), and
(B) by adding at the end the following:
‘‘For purposes of clause (i), any deduction
under section 291(b)(2) (as in effect before the
Termination of Energy and Natural Resource
Tax Subsidies Act of 1999) shall be treated as
a deduction allowable under section 263, 616,
or 617 (whichever is appropriate).’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to amounts paid or incurred in tax-
able years beginning after the date of the enactment of
this Act.
SEC. 103. TERMINATION OF CREDIT FOR PRODUCING FUEL
FROM NONCONVENTIONAL SOURCE.
Section 29 is amended by adding at the end the fol-
lowing new subsection:
‘‘(h) TERMINATION.—Notwithstanding any other
provision of this section, no credit shall be allowed under
this section with respect to any qualified fuels produced
by a facility placed in service after December 31, 1999.’’
SEC. 104. REPEAL OF PERCENTAGE DEPLETION.
(a) IN GENERAL.—Section 613 (relating to limita-
tions on percentage depletion in case of oil and gas wells)
is amended by adding at the end the following new sub-
section:
‘‘(f) TERMINATION.—The allowance under section
611 shall be determined without regard to this section for
taxable years beginning after the date of the enactment
of this subsection.’’
(b) TERMINATION OF SECTION 613A.—Section 613A
is amended by adding at the end the following new sub-
section:
‘‘(f) TERMINATION.—The allowance under section
611 shall be determined without regard to this section for
taxable years beginning after the date of the enactment
of this subsection.’’
SEC. 105. REPEAL OF TAX BENEFITS FOR ALCOHOL FUELS.
(a) REPEAL OF ALCOHOL FUELS CREDIT.—
(1) IN GENERAL.—Section 40 (relating to alco-
hol used as fuel) is hereby repealed.
(2) CONFORMING AMENDMENTS.—
(A) Subsection (b) of section 38 is amend-
ed by striking paragraph (3) and by redesig-
nating the following paragraphs accordingly.
(B) Section 87 is hereby repealed.
(C) Subsection (c) of section 196 is
amended by striking paragraph (3) and by re-
designating the following paragraphs accord-
ingly.
(D) Subsection (m) of section 6501 is
amended by striking ‘‘40(f)’’.
(E) The table of sections for subpart D of
part IV of subchapter A of chapter 1 is amend-
ed by striking the item relating to section 40.
(F) The table of sections for part II of
subchapter B of chapter 1 is amended by strik-
ing the item relating to section 87.
(3) EFFECTIVE DATE.—The amendments made
by this subsection shall apply to taxable years begin-
ning after the date of the enactment of this Act.
(b) REPEAL OF REDUCED FUEL TAX RATES.—
(1) GASOLINE
AND
DIESEL
FUEL.—Section
4081 is amended by striking subsection (c) and by
redesignating subsections (d) and (e) as subsections
(c) and (d), respectively.
(2) AVIATION FUEL.—Section 4091 is amended
by striking subsection (c).
(3) SPECIAL MOTOR FUELS.—
(A) Section 4041 is amended by striking
subsections (k) and (m).
(B) Subsection (b) of section 4041 is
amended by striking paragraph (2).
(4) CONFORMING AMENDMENTS.—
(A) Section 6427 is amended by striking
subsection (f).
(B) Subsection (i) of section 6427 is
amended by striking paragraph (3) and by re-
designating paragraph (4) as paragraph (3).
(C) Paragraph (3) of section 6427(i), as
redesignated by subparagraph (B), is amended
by striking the last sentence of subparagraph
(A) and inserting the following new flush sen-
tence:
‘‘Notwithstanding subsection (l)(1), if the Sec-
retary has not paid pursuant to a claim filed
under the preceding sentence within 20 days of
the date of the filing of such claim, the claim
shall be paid with interest from such date de-
termined by using the overpayment rate and
method under section 6621.’’
(D) Section 9502 is amended by striking
subsection (e).
(E) Subsection (b) of section 9503 is
amended by striking paragraph (5).
(5) EFFECTIVE DATE.—The amendments made
by this subsection shall take effect on the date of the
enactment of this Act.
SEC. 106. REPEAL OF ENHANCED OIL RECOVERY CREDIT.
(a) IN GENERAL.—Section 43 is hereby repealed.
(b) CONFORMING AMENDMENTS.—
(1) Subsection (b) of section 38 is amended by
striking paragraph (5), as redesignated by section
105, and by redesignating the succeeding para-
graphs accordingly.
(2) The table of sections for subpart D of part
IV of subchapter A of chapter 1 is amended by
striking the item relating to section 43.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1999.
SEC. 107. REPEAL OF CREDIT AND DEDUCTION FOR ELEC-
TRIC VEHICLES, CLEAN-FUEL VEHICLES, AND
CERTAIN REFUELING PROPERTY.
(a) REPEAL OF CREDIT FOR QUALIFIED ELECTRIC
VEHICLES.—Section 30 is hereby repealed.
(b) REPEAL OF DEDUCTION FOR CLEAN-FUEL VEHI-
CLES
AND CERTAIN REFUELING PROPERTY.—Section
179A is hereby repealed.
(c) CONFORMING AMENDMENTS.—
(1) Paragraph (24) of section 1016(a) is
amended by inserting ‘‘(as in effect on the day be-
fore the date of the enactment of the Corporate Wel-
fare Elimination Act of 1999)’’ after ‘‘section
179A(e)(6)(A)’’.
(2) Paragraph (25) of section 1016(a) is
amended by inserting ‘‘(as in effect on the day be-
fore the date of the enactment of the Corporate Wel-
fare Elimination Act of 1999)’’ after ‘‘section
30(d)(1)’’.
(3) The table of sections for subpart B of part
IV of subchapter A of chapter 1 is amended by
striking the item relating to section 30.
(4) The table of sections for part VI of sub-
chapter B of chapter 1 is amended by striking the
item relating to section 179A.
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1999.
SEC. 
108. 
REPEAL 
OF 
DEDUCTION 
FOR 
TERTIARY
INJECTANTS.
(a) IN GENERAL.—Section 193 (relating to tertiary
injectants) is hereby repealed.
(b) CLERICAL AMENDMENT.—The table of sections
for part VI of subchapter B of chapter 1 is amended by
striking the item relating to section 193.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1999.
SEC. 109. REPEAL OF REHABILITATION CREDIT FOR NON-
HISTORIC STRUCTURES; REDUCTION OF RE-
HABILITATION CREDIT FOR CERTIFIED HIS-
TORIC STRUCTURES.
(a) IN GENERAL.—Subsection (a) of section 47 is
amended to read as follows:
‘‘(a) GENERAL RULE.—For purposes of section 46,
the rehabilitation credit for any taxable year is 15 percent
of the qualified rehabilitation expenditures with respect to
any certified historic structure.’’
(b) CONFORMING AMENDMENTS.—
(1) Subparagraph (A) of section 47(c)(1) is
amended by adding ‘‘and’’ at the end of clause (ii),
by striking clause (iii) and by redesignating clause
(iv) as clause (iii).
(2) Paragraph (1) of section 47(c) is amended
by striking subparagraph (B) and by redesignating
subparagraphs (C) and (D) as subparagraphs (B)
and (C), respectively.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to property placed in service after
December 31, 1999.
SEC. 110. REPEAL OF TREATMENT OF BLUE CROSS AND
BLUE SHIELD ORGANIZATIONS, ETC.
(a) IN GENERAL.—Section 833 (relating to treat-
ment of Blue Cross and Blue Shield organizations, etc.)
is hereby repealed.
(b) CLERICAL AMENDMENT.—The table of sections
for part II of subchapter L of chapter 1 is amended by
striking the item relating to section 833.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1999.
SEC. 111. REPEAL OF SMALL LIFE INSURANCE COMPANY
DEDUCTION.
(a) IN GENERAL.—Section 806 is hereby repealed.
(b) CONFORMING AMENDMENTS.—
(1) The text of section 804 is amended to read
as follows:
‘‘For purposes of this part, the term ‘life insurance
deductions’ means the general deductions provided in sec-
tion 805.’’
(2) Subparagraph (A) of section 815(c)(2) is
amended by adding ‘‘and’’ at the end of clause (i),
by striking clause (ii), and by redesignating clause
(iii) as clause (ii).
(3) Subparagraph (B) of section 453B(e)(2) is
amended by striking ‘‘(as defined in section
806(b)(3))’’.
(4) Subsection (e) of section 453B is amended
by adding at the end the following new paragraph:
‘‘(3) NONINSURANCE BUSINESS.—For purposes
of paragraph (2)—
‘‘(A) IN GENERAL.—The term ‘noninsur-
ance business’ means any activity which is not
an insurance business.
‘‘(B) CERTAIN ACTIVITIES TREATED AS IN-
SURANCE BUSINESSES.—For purposes of sub-
paragraph (A), any activity which is not an in-
surance business shall be treated as an insur-
ance business if—
‘‘(i) it is of a type traditionally carried
on by life insurance companies for invest-
ment purposes, but only if the carrying on
of such activity (other than in the case of
real estate) does not constitute the active
conduct of a trade or business, or
‘‘(ii) it involves the performance of ad-
ministrative services in connection with
plans providing life insurance, pension, or
accident and health benefits.’’
(5) Subclause (II) of section 465(c)(7)(D)(v) is
amended by striking ‘‘(within the meaning of section
806(b)(3))’’ and inserting ‘‘(within the meaning of
section 453B(e)(3))’’.
(6) The table of sections for subpart C of part
I of subchapter L of chapter 1 is amended by strik-
ing the item relating to section 806.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1999.
SEC. 112. REPEAL OF ALTERNATIVE TAX ON SMALL PROP-
ERTY AND CASUALTY INSURANCE COMPA-
NIES.
(a) IN GENERAL.—Section 831 (relating to tax on
insurance companies other than life insurance companies)
is amended by striking subsection (b) and by redesig-
nating subsection (c) as subsection (b).
(b) CONFORMING AMENDMENTS.—
(1) Subparagraph (C) of section 501(c)(15) is
amended to read as follows:
‘‘(C) For purposes of subparagraph (B),
the term ‘controlled group’ means any con-
trolled group of corporations (as defined in sec-
tion 1563(a)); except that—
‘‘(i) ‘more than 50 percent’ shall be
substituted for ‘at least 80 percent’ each
place it appears in section 1563(a), and
‘‘(ii) subsections (a)(4) and (b)(2)(D)
of section 1563 shall not apply.’’
(2) Sections 832(b)(7)(D)(ii) and 834(a) are
each amended by inserting ‘‘(as in effect on the day
before the date of the enactment of the Corporate
Welfare Elimination Act of 1999)’’ after ‘‘831(b)’’.
(3) Sections 904(b)(3)(D) and 1201(a) are each
amended by striking ‘‘831(a) or (b)’’ and inserting
‘‘831(a)’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1999.
SEC. 113. CASH ACCOUNTING AND EXPENSING FOR AGRI-
CULTURE.
(a) REPEAL OF PROVISIONS PERMITTING FARMING
BUSINESSES TO USE CASH METHOD OF ACCOUNTING.—
(1) Section 447 is amended by striking sub-
sections (g), (h), and (i).
(2) Subsection (b) of section 448 is amended by
striking paragraph (1).
(b) REPEAL OF DEDUCTION FOR SOIL AND WATER
CONSERVATION EXPENDITURES.—
(1) IN GENERAL.—Section 175 (relating to soil
and water conservation expenditures) is hereby re-
pealed.
(2) CLERICAL AMENDMENT.—The table of sec-
tions for part VI of subchapter B of chapter 1 is
amended by striking the item relating to section
175.
(c) REPEAL OF DEDUCTION FOR EXPENDITURES BY
FARMERS FOR FERTILIZER, ETC.—
(1) IN GENERAL.—Section 180 (relating to ex-
penditures by farmers for fertilizer, etc) is hereby re-
pealed.
(2) CLERICAL AMENDMENT.—The table of sec-
tions for part VI of subchapter B of chapter 1 is
amended by striking the item relating to section
180.
(d) REPEAL OF CERTAIN EXCEPTIONS PERMITTING
CERTAIN FARM BUSINESS TO USE CASH METHOD OF AC-
COUNTING.—Section 447 (relating to method of account-
ing for corporations engaged in farming) is amended by
striking subsections (d)(2), (e), (g), (h), and (i).
(e) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1999.
SEC. 114. REPEAL OF EXCLUSION FOR CANCELLATION OF
QUALIFIED FARM INDEBTEDNESS.
(a) IN GENERAL.—Paragraph (1) of section 108(a)
is amended by inserting ‘‘or’’ at the end of subparagraph
(B), by striking subparagraph (C), and by redesignating
subparagraph (D) as subparagraph (C).
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to taxable years beginning after
December 31, 1999.
SEC. 115. REPEAL OF EXCLUSION FOR CERTAIN COST-
SHARING PAYMENTS.
(a) IN GENERAL.—Section 126 (relating to certain
cost-sharing payments) is hereby repealed.
(b) CLERICAL AMENDMENT.—The table of sections
for part III of subchapter B of chapter 1 is amended by
striking the item relating to section 126.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1999.
SEC. 116. REDUCTION OF EXPENSING OF TIMBER-GROWING
COSTS.
(a) IN GENERAL.—Paragraph (5) of section 263A(c)
(relating to general exceptions) is amended by striking
‘‘This section shall not apply to’’ and inserting ‘‘This sec-
tion shall not apply to 2⁄3 of the costs described in sub-
section (a)(2) with respect to’’.
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to taxable years beginning after
December 31, 1999.
SEC. 117. REPEAL OF REFORESTATION CREDIT.
(a) IN GENERAL.—Subsection (b) of section 48 is
hereby repealed.
(b) CONFORMING AMENDMENTS.—
(1) The heading of section 48 is amended to
read as follows:
‘‘SEC. 48. ENERGY CREDIT.’’
(2) The table of sections for subpart E of part
IV of subchapter A of chapter 1 is amended by
amending the item relating to section 48 to read as
follows:
‘‘Sec. 48. Energy credit.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1999.
SEC. 118. REPEAL OF RAPID AMORTIZATION OF REFOREST-
ATION EXPENDITURES.
(a) IN GENERAL.—Section 194 is hereby repealed.
(b) CONFORMING AMENDMENTS.—
(1) Subsection (a) of section 62 is amended by
striking paragraph (11).
(2) Subsections (a)(3)(C) and (b)(8) of section
1245 are each amended by inserting ‘‘(as in effect
before its repeal by the Corporate Welfare Elimi-
nation Act of 1999)’’ after ‘‘section 194’’.
(3) The table of sections for part VI of sub-
chapter B of chapter 1 is amended by striking the
item relating to section 194.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1999.
SEC. 119. TERMINATION OF EXCLUSION OF CERTAIN IN-
COME 
OF 
CITIZENS 
OR 
RESIDENTS 
OF
UNITED STATES LIVING ABROAD.
(a) IN GENERAL.—Section 911 (relating to citizens
or residents of the United States living abroad) is amend-
ed by redesignating subsection (f) as subsection (g) and
by inserting after subsection (e) the following new sub-
section:
‘‘(f) TERMINATION.—This section shall not apply to
any taxable year beginning after December 31, 1999.’’
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to taxable years beginning after
December 31, 1999.
SEC. 120. REPEAL OF EXCLUSION FOR INCOME OF FOR-
EIGN SALES CORPORATIONS.
(a) IN GENERAL.—Subpart C of part III of sub-
chapter N of chapter 1 (relating to taxation of foreign
sales corporations) is hereby repealed.
(b) CLERICAL AMENDMENT.—The table of subparts
for such part III is amended by striking the item relating
to subpart C.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1999.
SEC. 121. REPEAL OF DEFERRAL OF INCOME OF CON-
TROLLED FOREIGN CORPORATIONS.
(a) GENERAL RULE.—Subpart F of part III of sub-
chapter N of chapter 1 is amended by striking sections
952, 953, and 954 and inserting the following new sec-
tions:
‘‘SEC. 952. SUBPART F INCOME.
‘‘(a) GENERAL RULE.—For purposes of this subpart,
the term ‘subpart F income’ means the earnings and prof-
its of the controlled foreign corporation for the taxable
year computed with the following adjustments:
‘‘(1) There shall be excluded the amount of the
earnings and profits which are attributable to in-
come from sources within the United States which
is effectively connected with the conduct by the con-
trolled foreign corporation of a trade or business
within the United States, except to the extent such
income is exempt from taxation (or subject to a re-
duced rate of tax) pursuant to a treaty obligation of
the United States. For purposes of the preceding
sentence, income described in paragraph (2) or (3)
of section 921(d) shall be treated as derived from
sources within the United States.
‘‘(2) In determining earnings and profits (or
the deficit in earnings and profits), the amount of
any illegal bribe, kickback, or other payment (within
the meaning of section 162(c), except as otherwise
provided in this paragraph) shall not be taken into
account to decrease such earnings and profits or to
increase such deficit. The payments referred to in
the preceding sentence include payments which
would be unlawful under the Foreign Corrupt Prac-
tices Act of 1977 if the payor were a United States
person.
‘‘(3) Under regulations prescribed by the Sec-
retary, there shall be excluded any part of any earn-
ings and profits if it is established to the satisfaction
of the Secretary that such part could not have been
distributed by the controlled foreign corporation to
United States shareholders who own (within the
meaning of section 958(a)) stock of such controlled
foreign corporation because of currency or other re-
strictions or limitations imposed under the laws of
any foreign country.
‘‘(4) Earnings and profits shall be determined
without regard to paragraphs (4), (5), and (6) of
section 312(n). Under regulations, the preceding
sentence shall not apply to the extent it would in-
crease earnings and profits by an amount which was
previously distributed by the controlled foreign cor-
poration.
Except as provided in this subsection and section
312(k)(4), the earnings and profits of any foreign corpora-
tion, and the deficit and earnings and profits of any for-
eign corporation for any taxable year shall be determined
according to rules similar to those applicable to domestic
corporations, under regulations prescribed by the Sec-
retary.
‘‘(b) CERTAIN DEFICITS MAY BE TAKEN INTO AC-
COUNT.—
‘‘(1) TREATMENT
OF
CERTAIN
PRIOR
YEAR
DEFICITS.—
‘‘(A) IN GENERAL.—The amount included
in the gross income of any United States share-
holder under section 951(a)(1)(A)(i) for any
taxable year with respect to any controlled for-
eign corporation shall be reduced by the amount
of such shareholder’s pro rata share of any
qualified deficit of such controlled foreign cor-
poration.
‘‘(B) QUALIFIED DEFICIT.—For purposes
of this paragraph—
‘‘(i) IN GENERAL.—The term ‘quali-
fied deficit’ means any deficit in the earn-
ings and profits of the controlled foreign
corporation for any prior taxable year
which began after December 31, 1999, and
for which such corporation was a con-
trolled foreign corporation, but only to the
extent such deficit has not previously been
taken into account under this paragraph.
‘‘(ii) SPECIAL
RULE
FOR
DEFICITS
BEFORE 2000.—The term ‘qualified deficit’
includes any deficit in earnings and profits
for any taxable year beginning before Jan-
uary 1, 2000, to the extent that such def-
icit qualified as a qualified deficit under
subsection (c)(1)(B) of this section (as in
effect on the day before the date of the en-
actment of this subsection); except that
any such deficit may be taken into account
under this paragraph only to offset
amounts attributable to the same activity
as the activity giving rise to such deficit.
‘‘(C) PRO RATA SHARE.—For purposes of
this paragraph, the shareholder’s pro rata share
of any deficit shall be determined under rules
similar to the rules of section 951(a)(2) for
whichever of the following yields the smallest
share:
‘‘(i) the close of the taxable year, or
‘‘(ii) the close of the taxable year in
which the deficit arose.
‘‘(2) CERTAIN DEFICITS OF MEMBER OF THE
SAME
CHAIN
OF
CORPORATIONS
MAY
BE
TAKEN
INTO ACCOUNT.—
‘‘(A) IN GENERAL.—A controlled foreign
corporation may elect to reduce the amount of
its subpart F income for any taxable year by
the amount of any deficit in earnings and prof-
its of a qualified chain member for a taxable
year ending with (or within) the taxable year of
such controlled foreign corporation. To the ex-
tent any deficit reduces subpart F income
under the preceding sentence, such deficit shall
not be taken into account under paragraph (1).
‘‘(B) QUALIFIED
CHAIN
MEMBER.—For
purposes of this paragraph, the term ‘qualified
chain member’ means, with respect to any con-
trolled foreign corporation, any other corpora-
tion which is created or organized under the
laws of the same foreign country as the con-
trolled foreign corporation but only if—
‘‘(i) all the stock of such other cor-
poration (other than directors’ qualifying
shares) is owned at all times during the
taxable year in which the deficit arose (di-
rectly or through 1 or more corporations
other than the common parent) by such
controlled foreign corporation, or
‘‘(ii) all the stock of such controlled
foreign corporation (other than directors’
qualifying shares) is owned at all times
during the taxable year in which the deficit
arose (directly or through 1 or more cor-
porations other than the common parent)
by such other corporation.
‘‘(C) 
COORDINATION.—This 
paragraph
shall be applied after paragraph (1).
‘‘(3) DETERMINATION OF DEFICIT.—In deter-
mining the amount of any deficit in earnings and
profits, the adjustments set forth in subsection (a)
shall apply.
‘‘SEC. 953. SPECIAL RULES FOR CERTAIN INSURANCE COM-
PANIES.
‘‘(a) SPECIAL RULE FOR CERTAIN CAPTIVE INSUR-
ANCE COMPANIES.—
‘‘(1) IN GENERAL.—For purposes only of tak-
ing into account subpart F income which is attrib-
utable to related person insurance income—
‘‘(A) the term ‘United States shareholder’
means, with respect to any foreign corporation,
a United States person (as defined in section
957(c)) who owns (within the meaning of sec-
tion 958(a)) any stock of the foreign corpora-
tion,
‘‘(B) the term ‘controlled foreign corpora-
tion’ has the meaning given to such term by
section 957(a) determined by substituting ‘25
percent or more’ for ‘more than 50 percent’,
and
‘‘(C) the pro rata share referred to in sec-
tion 951(a)(1)(A)(i) shall be determined under
paragraph (5) of this subsection.
‘‘(2) RELATED PERSON INSURANCE INCOME.—
For purposes of this subsection, the term ‘related
person insurance income’ means any insurance in-
come (within the meaning of subsection (c)) attrib-
utable to a policy of insurance or reinsurance with
respect to which the person (directly or indirectly)
insured is a United States shareholder in the foreign
corporation or a related person to such a share-
holder.
‘‘(3) EXCEPTIONS.—
‘‘(A) CORPORATIONS
NOT
HELD
BY
IN-
SUREDS.—Paragraph (1) shall not apply to any
foreign corporation if at all times during the
taxable year of such foreign corporation—
‘‘(i) less than 20 percent of the total
combined voting power of all classes of
stock of such corporation entitled to vote,
and
‘‘(ii) less than 20 percent of the total
value of such corporation,
is owned (directly or indirectly) under the prin-
ciples of section 883(c)(4) by persons who are
(directly or indirectly) insured under any policy
of insurance or reinsurance issued by such cor-
poration or who are related persons to any such
person.
‘‘(B) DE MINIMIS EXCEPTION.—Paragraph
(1) shall not apply to any foreign corporation
for a taxable year of such corporation if the re-
lated person insurance income (determined on a
gross basis) of such corporation for such tax-
able year is less than 20 percent of its insur-
ance income (as so determined) for such taxable
year determined without regard to those provi-
sions of subsection (c)(1) which limit insurance
income to income from countries other than the
country in which the corporation was created or
organized.
‘‘(C) ELECTION TO TREAT INCOME AS EF-
FECTIVELY CONNECTED.—Paragraph (1) shall
not apply to any foreign corporation for any
taxable year if—
‘‘(i) such corporation elects (at such
time and in such manner as the Secretary
may prescribe)—
‘‘(I) to treat its related person in-
surance income for such taxable year
as income effectively connected with
the conduct of a trade or business in
the United States, and
‘‘(II) to waive all benefits (other
than with respect to section 884) with
respect to related person insurance in-
come granted by the United States
under any treaty between the United
States and any foreign country, and
‘‘(ii) such corporation meets such re-
quirements as the Secretary shall prescribe
to ensure that the tax imposed by this
chapter on such income is paid.
An election under this subparagraph made for
any taxable year shall not be effective if the
corporation (or any predecessor thereof) was a
disqualified corporation for the taxable year for
which the election was made or for any prior
taxable year beginning after 1986.
‘‘(D) SPECIAL RULES FOR SUBPARAGRAPH
(C).—
‘‘(i) PERIOD
DURING
WHICH
ELEC-
TION IN EFFECT.—
‘‘(I) IN
GENERAL.—Except as
provided in subclause (II), any elec-
tion under subparagraph (C) shall
apply to the taxable year for which
made and all subsequent taxable years
unless revoked with the consent of the
Secretary.
‘‘(II) TERMINATION.—If a for-
eign corporation which made an elec-
tion under subparagraph (C) for any
taxable year is a disqualified corpora-
tion for any subsequent taxable year,
such election shall not apply to any
taxable year beginning after such sub-
sequent taxable year.
‘‘(ii) EXEMPTION FROM TAX IMPOSED
BY
SECTION
4371.—The tax imposed by
section 4371 shall not apply with respect
to any related person insurance income
treated as effectively connected with the
conduct of a trade or business within the
United States under subparagraph (C).
‘‘(E) DISQUALIFIED
CORPORATION.—For
purposes of this paragraph the term ‘disquali-
fied corporation’ means, with respect to any
taxable year, any foreign corporation which is a
controlled foreign corporation for an uninter-
rupted period of 30 days or more during such
taxable year (determined without regard to this
subsection) but only if a United States share-
holder (determined without regard to this sub-
section) owns (within the meaning of section
958(a)) stock in such corporation at some time
during such taxable year.
‘‘(4) TREATMENT OF MUTUAL INSURANCE COM-
PANIES.—In the case of a mutual insurance
company—
‘‘(A) this subsection shall apply,
‘‘(B) policyholders of such company shall
be treated as shareholders, and
‘‘(C) appropriate adjustments in the appli-
cation of this subpart shall be made under reg-
ulations prescribed by the Secretary.
‘‘(5) DETERMINATION OF PRO RATA SHARE.—
‘‘(A) IN
GENERAL.—The pro rata share
determined under this paragraph for any
United States shareholder is the lesser of—
‘‘(i) the amount which would be deter-
mined under paragraph (2) of section
951(a) if—
‘‘(I) only related person insur-
ance income were taken into account,
‘‘(II) stock owned (within the
meaning of section 958(a)) by United
States shareholders on the last day of
the taxable year were the only stock
in the foreign corporation, and
‘‘(III) only distributions received
by United States shareholders were
taken into account under subpara-
graph (B) of such paragraph (2), or
‘‘(ii) the amount which would be de-
termined under paragraph (2) of section
951(a) on the basis of the entire subpart
F income of the foreign corporation for the
taxable year.
‘‘(B) COORDINATION WITH OTHER PROVI-
SIONS.—The Secretary shall prescribe regula-
tions providing for such modifications to the
provisions of this subpart as may be necessary
or appropriate by reason of subparagraph (A).
‘‘(6) RELATED PERSON.—For purposes of this
subsection—
‘‘(A) IN GENERAL.—Except as provided in
subparagraph (B), the term ‘related person’ has
the meaning given such term by section 964(a).
‘‘(B) TREATMENT OF CERTAIN LIABILITY
INSURANCE POLICIES.—In the case of any pol-
icy of insurance covering liability arising from
services performed as a director, officer, or em-
ployee of a corporation or as a partner or em-
ployee of a partnership, the person performing
such services and the entity for which such
services are performed shall be treated as re-
lated persons.
‘‘(7) COORDINATION WITH SECTION 1248.—For
purposes of section 1248, if any person is (or would
be but for paragraph (3)) treated under paragraph
(1) as a United States shareholder with respect to
any foreign corporation which would be taxed under
subchapter L if it were a domestic corporation and
which is (or would be but for paragraph (3)) treated
under paragraph (1) as a controlled foreign
corporation—
‘‘(A) such person shall be treated as meet-
ing the stock ownership requirements of section
1248(a)(2) with respect to such foreign cor-
poration, and
‘‘(B) such foreign corporation shall be
treated as a controlled foreign corporation.
‘‘(8) REGULATIONS.—The Secretary shall pre-
scribe such regulations as may be necessary to carry
out the purposes of this subsection, including—
‘‘(A) regulations preventing the avoidance
of this subsection through cross insurance ar-
rangements or otherwise, and
‘‘(B) regulations which may provide that a
person will not be treated as a United States
shareholder under paragraph (1) with respect
to any foreign corporation if neither such per-
son (nor any related person to such person) is
(directly or indirectly) insured under any policy
of insurance or reinsurance issued by such for-
eign corporation.
‘‘(b) ELECTION BY FOREIGN INSURANCE COMPANY
TO BE TREATED AS DOMESTIC CORPORATION.—
‘‘(1) IN GENERAL.—If—
‘‘(A) a foreign corporation is a controlled
foreign corporation (as defined in section
957(a) by substituting ‘25 percent or more’ for
‘more than 50 percent’ and by using the defini-
tion of United States shareholder under sub-
section (a)(1)(A) of this section),
‘‘(B) such foreign corporation would qual-
ify under part I or II of subchapter L for the
taxable year if it were a domestic corporation,
‘‘(C) such foreign corporation meets such
requirements as the Secretary shall prescribe to
ensure that the taxes imposed by this chapter
on such foreign corporation are paid, and
‘‘(D) such foreign corporation makes an
election to have this paragraph apply and
waives all benefits to such corporation granted
by the United States under any treaty,
for purposes of this title, such corporation shall be
treated as a domestic corporation.
‘‘(2) PERIOD DURING WHICH ELECTION IS IN
EFFECT.—
‘‘(A) IN GENERAL.—Except as provided in
subparagraph (B), an election under paragraph
(1) shall apply to the taxable year for which
made and all subsequent taxable years unless
revoked with the consent of the Secretary.
‘‘(B) TERMINATION.—If a corporation
which made an election under paragraph (1) for
any taxable year fails to meet the requirements
of subparagraph (A), (B), or (C) of paragraph
(1) for any subsequent taxable year, such elec-
tion shall not apply to any taxable year begin-
ning after such subsequent taxable year.
‘‘(3) TREATMENT OF LOSSES.—If any corpora-
tion treated as a domestic corporation under this
subsection is treated as a member of an affiliated
group for purposes of chapter 6 (relating to consoli-
dated returns), any loss of such corporation shall be
treated as a dual consolidated loss for purposes of
section 1503(d) without regard to paragraph (2)(B)
thereof.
‘‘(4) EFFECT OF ELECTION.—
‘‘(A) IN GENERAL.—For purposes of sec-
tion 367, any foreign corporation making an
election under paragraph (1) shall be treated as
transferring (as the 1st day of the 1st taxable
year to which such election applies) all of its as-
sets to a domestic corporation in connection
with an exchange to which section 354 applies.
‘‘(B) EXCEPTION FOR PRE-1988 EARNINGS
AND PROFIT.—
‘‘(i) IN
GENERAL.—Earnings and
profits of the foreign corporation accumu-
lated in taxable years beginning before
January 1, 1988, shall not be included in
the gross income of the persons holding
stock in such corporation by reason of sub-
paragraph (A).
‘‘(ii) 
TREATMENT
OF
DISTRIBU-
TIONS.—For purposes of this title, any dis-
tribution made by a corporation to which
an election under paragraph (1) applies
out of earnings and profits accumulated in
taxable years beginning before January 1,
1988, shall be treated as a distribution
made by a foreign corporation.
‘‘(iii) CERTAIN RULES TO CONTINUE
TO
APPLY
TO
PRE-1988
EARNINGS.—The
provisions specified in clause (iv) shall be
applied without regard to paragraph (1),
except that, in the case of a corporation to
which an election under paragraph (1) ap-
plies, only earnings and profits accumu-
lated in taxable years beginning before
January 1, 1988, shall be taken into ac-
count.
‘‘(iv) SPECIFIED
PROVISIONS.—The
provisions specified in this clause are:
‘‘(I) Section 1248 (relating to
gain from certain sales or exchanges
of stock in certain foreign corpora-
tions).
‘‘(II) This subpart to the extent
such subpart relates to earnings in-
vested in United States property or
amounts referred to in clause (ii) or
(iii) of section 951(a)(1)(A).
‘‘(III) Section 884 to the extent
the foreign corporation reinvested
1987 earnings and profits in United
States assets.
‘‘(5) EFFECT OF TERMINATION.—For purposes
of section 367, if—
‘‘(A) an election is made by a corporation
under paragraph (1) for any taxable year, and
‘‘(B) such election ceases to apply for any
subsequent taxable year,
such corporation shall be treated as a domestic cor-
poration transferring (as of the 1st day of such sub-
sequent taxable year) all of its property to a foreign
corporation in connection with an exchange to which
section 354 applies.
‘‘(6) ADDITIONAL TAX ON CORPORATION MAK-
ING ELECTION.—
‘‘(A) IN
GENERAL.—If a corporation
makes an election under paragraph (1), the
amount of tax imposed by this chapter for the
1st taxable year to which such election applies
shall be increased by the amount determined
under subparagraph (B).
‘‘(B) AMOUNT OF TAX.—The amount of
tax determined under this paragraph shall be
equal to the lesser of—
‘‘(i) 3⁄4 of 1 percent of the aggregate
amount of capital and accumulated surplus
of the corporation as of December 31,
1987, or
‘‘(ii) $1,500,000.
‘‘(c) INSURANCE INCOME DEFINED.—For purposes
of this section, the term ‘insurance income’ means any in-
come which—
‘‘(1) is attributable to the issuing (or rein-
suring) of any insurance or annuity contract—
‘‘(A) in connection with property in, liabil-
ity arising out of activity in, or in connection
with the lives or health of residents of, a coun-
try other than the country under the laws of
which the controlled foreign corporation is cre-
ated or organized, or
‘‘(B) in connection with risks not described
in subparagraph (A) as the result of any ar-
rangement whereby another corporation receives
a substantially equal amount of premiums or
other consideration in respect of issuing (or re-
insuring) a contract described in subparagraph
(A), and
‘‘(2) would (subject to the modifications pro-
vided by paragraphs (1) and (2) of subsection (d))
be taxed under subchapter L of this chapter if such
income were the income of a domestic insurance
company.
‘‘(d) SPECIAL RULES.—In determining the amount
of insurance income—
‘‘(1) The following provisions of subchapter L
shall not apply:
‘‘(A) The small life insurance company de-
duction.
‘‘(B) Section 805(a)(5) (relating to oper-
ations loss deduction).
‘‘(C) Section 832(c)(5) (relating to certain
capital losses).
‘‘(2) The items referred to in—
‘‘(A) section 803(a)(1) (relating to gross
amount of premiums and other considerations),
‘‘(B) section 803(a)(2) (relating to net de-
crease in reserves),
‘‘(C) section 805(a)(2) (relating to net in-
crease in reserves), and
‘‘(D) section 832(b)(4) (relating to pre-
miums earned on insurance contracts),
shall be taken into account only to the extent they
are in respect of any reinsurance or the issuing of
any insurance or annuity contract described in sub-
section (a)(1).
‘‘(3) All items of income, expenses, losses, and
deductions shall be properly allocated or apportioned
under regulations prescribed by the Secretary.’’
(b) REPEAL OF EXPORT TRADE CORPORATION PRO-
VISIONS.—Subpart G of part III of subchapter N of chap-
ter 1 (relating to export trade corporations) is hereby re-
pealed.
(c) CONFORMING AMENDMENTS TO SUBPART F.—
(1) Subparagraph (A) of section 955(a)(1) is
amended by inserting ‘‘(as in effect for taxable years
beginning before 1987)’’ after ‘‘section 954(b)(2)’’.
(2) Subsection (b) of section 955 is amended by
striking ‘‘within the meaning of section 954(d)(3)’’
and inserting ‘‘within the meaning of section
964(a)’’.
(3) Paragraph (2) of section 956(c) is
amended—
(A) by striking ‘‘section 953(a)(1)’’ in sub-
paragraph 
(E) 
and 
inserting 
‘‘section
953(c)(1)’’, and
(B) by inserting ‘‘(as in effect on the day
before the date of the enactment of this par-
enthetical) or under section 952(a)(1)’’ after
‘‘section 952(b)’’ in subparagraph (H).
(4) Subsection (b) of section 957 is amended—
(A) by striking ‘‘income described in sec-
tion 953(a)’’ and inserting ‘‘subpart F income
attributable to income described in section
953(c)’’, and
(B) by striking ‘‘section 953(a)(1)’’ and in-
serting ‘‘section 953(c)(1)’’.
(5) Subsection (b) of section 958 is amended—
(A) by striking ‘‘954(d)(3), 956(b)(2), and
957’’ and inserting ‘‘956(b)(2), 957, and
964(a)’’, and
(B) by striking ‘‘954(d)(3)’’ the second
place it appears and inserting ‘‘964(a)’’.
(6) Subsection (b) of section 959 is amended by
striking ‘‘be also included in the gross income’’ and
inserting ‘‘be also included in the subpart F in-
come’’.
(7) Subsection (a) of section 964 is amended to
read as follows:
‘‘(a) RELATED PERSON.—For purposes of this part,
a person is a related person with respect to a controlled
foreign corporation, if—
‘‘(1) such person is an individual, corporation,
partnership, trust, or estate which controls, or is
controlled by, the controlled foreign corporation, or
‘‘(2) such person is a corporation, partnership,
trust, or estate which is controlled by the same per-
son or persons which control the controlled foreign
corporation.
For purposes of the preceding sentence, control means,
with respect to a corporation, the ownership, directly or
indirectly, of stock possessing more than 50 percent of the
total voting power of all classes of stock entitled to vote
or of the total value of stock of such corporation. In the
case of a partnership, trust, or estate, control means the
ownership, directly or indirectly, more than 50 percent (by
value) of the beneficial interests in such partnership, trust,
or estate. For purposes of this paragraph, rules similar
to the rules of section 958 shall apply.’’
(8) Section 964 is amended by striking sub-
section (b).
(9) The table of sections for subpart F of part
III of subchapter N of chapter 1 is amended by
striking the items relating to sections 952, 953 and
954 and inserting the following:
‘‘Sec. 952. Subpart F income.
‘‘Sec. 953. Special rules for certain insurance companies.’’
(d) OTHER CONFORMING AMENDMENTS.—
(1) Paragraph (2) of section 552(c) is
amended—
(A) by amending subparagraph (A) to read
as follows:
‘‘(A) is received from a related person
which (i) is a corporation created or organized
under the laws of the same foreign country
under the laws of which the foreign corporation
involved was created or organized, and (ii) has
a substantial part of its assets used in its trade
or business located in such same foreign coun-
try, and’’, and
(B) by striking ‘‘954(d)(3)’’ and inserting
‘‘964(a)’’.
(2) Subparagraph (B) of section 861(c)(2) is
amended by striking ‘‘954(d)(3)’’ and inserting
‘‘964(a)’’.
(3) Subparagraph (A) of section 864(d)(5) is
amended by striking clauses (ii), (iii), and (iv).
(4) Subparagraph (A) of section 881(c)(5) is
hereby repealed.
(5) Subparagraph (D) of section 884(d)(2) is
amended by striking ‘‘953(c)(3)(C)’’ and inserting
‘‘953(a)(3)(C)’’.
(6) Subparagraph (A) of section 898(b)(3) is
amended—
(A) by striking ‘‘953(c)(2)’’ and inserting
‘‘953(a)(2)’’, and
(B) by striking ‘‘953(c)(1) and inserting
‘‘953(a)(1)’’.
(7) Clause (i) of section 904(d)(2)(A) is amend-
ed by inserting ‘‘, as in effect on the day before the
date of the repeal of such section’’ after ‘‘section
954(c)’’.
(8) Subclause (III) of section 904(d)(2)(C)(ii)
is amended by striking ‘‘953(a)’’ and inserting
‘‘953(c)’’.
(9) Subparagraph (D) of section 904(d)(2) is
amended—
(A) by inserting ‘‘, as in effect on the day
before the date of the repeal of such section’’
after ‘‘954(f)’’, and
(B) by inserting ‘‘or passive income’’ be-
fore the period at the end thereof.
(10) Subparagraph (H) of section 904(d)(2) is
amended by striking ‘‘954(d)(3)’’ and inserting
‘‘964(a)’’.
(11) Subparagraph (E) of section 904(d)(3) is
hereby repealed.
(12) Subparagraph (C) of section 988(a)(3) is
amended by striking ‘‘954(d)(3)’’ and inserting
‘‘964(a)’’.
(13) 
Subsection 
(c) 
of 
section 
999 
is
amended—
(A) by striking ‘‘, 952(a)(3),’’ in para-
graph (1), and
(B) by striking ‘‘, the addition to subpart
F income under section 952(a)(3),’’ in para-
graph (2).
(14) Subsection (a) of section 6046 is amended
by striking ‘‘953(c)’’ and inserting ‘‘953(a)’’.
(15) The table of subparts for part III of sub-
chapter M of chapter 1 is amended by striking the
item relating to subpart G.
(e) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years of controlled for-
eign corporations beginning after December 31, 1999, and
to the taxable years of United States shareholders with
which (or in which) such taxable years of controlled for-
eign corporations end.
SEC. 122. REPEAL OF DEFERRAL OF TAX UNDER MER-
CHANT MARINE CAPITAL CONSTRUCTIONS
FUNDS.
(a) IN GENERAL.—Subsection (c) of section 7518
(relating to tax incentives relating to Merchant Marine
Capital Construction Fund) is amended by adding at the
end the following new paragraph:
‘‘(3) TERMINATION.—Subparagraphs (A), (B),
and (C) of paragraph (1) shall not apply to any tax-
able year beginning after December 31, 1999.’’
(b) CONFORMING AMENDMENT TO MERCHANT MA-
RINE ACT, 1936.—Subsection (d) of section 607 of the
Merchant Marine Act, 1936, is amended by adding at the
end the following new paragraph:
‘‘(3) TERMINATION.—Subparagraphs (A), (B),
and (C) of paragraph (1) shall not apply to any tax-
able year beginning after December 31, 1999.’’
SEC. 123. REPEAL OF SPECIAL TREATMENT FOR MAGAZINE
CIRCULATION EXPENDITURES.
(a) IN GENERAL.—Section 173 (relating to circula-
tion expenditures) is hereby repealed.
(b) CONFORMING AMENDMENTS.—
(1) Subparagraph (A) of section 56(b)(2) is
amended to read as follows:
‘‘(A) IN GENERAL.—The amount allowable
as a deduction under section 174(a) in com-
puting the regular tax for amounts paid or in-
curred after December 31, 1986, shall be cap-
italized and shall be amortized ratably over the
10-year period beginning with the taxable year
in which the expenditures were made.’’
(2) Paragraph (2) of section 56(c) is amended
by striking subparagraph (C).
(3) Clause (ii) of section 56(g)(4)(D) is amend-
ed to read as follows:
‘‘(ii) AMORTIZATION
OF
ORGANIZA-
TION
EXPENDITURES
NOT
TO
APPLY.—
Section 248 shall not apply to expenditures
paid or incurred in taxable year beginning
after December 31, 1989.’’
(4) Paragraph (1) of section 59(e) is amended
by striking ‘‘(3-year period in the case of circulation
expenditures described in section 173)’’.
(5) Paragraph (2) of section 59(e) is amended
by striking subparagraph (A) and by redesignating
the following subparagraphs accordingly.
(6) Paragraph (3) of section 312(n) is amended
to read as follows:
‘‘(3) AMORTIZATION
OF
ORGANIZATION
EX-
PENDITURES NOT TO APPLY.—Section 248 shall not
apply.’’
(7) Subparagraph (B) of section 1016(a)(1) is
amended by striking ‘‘expenditures’’ and inserting
‘‘expenditures, as in effect on the day before the
date of the enactment of the Corporate Welfare
Elimination Act of 1999’’.
(8) The table of sections for part VI of sub-
chapter B of chapter 1 is amended by striking the
item relating to section 173.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to amounts paid or incurred after
December 31, 1999.
SEC. 124. REPEAL OF SPECIAL TREATMENT FOR RETURNS
OF MAGAZINES, PAPERBACKS, AND RECORDS.
(a) IN GENERAL.—Section 458 (relating to maga-
zines, paperbacks, and records returned after the close of
the taxable year) is hereby repealed.
(b) CLERICAL AMENDMENT.—The table of sections
for subpart B of part II of subchapter E of chapter 1
is amended by striking the item relating to section 458.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1999.
TITLE II—NATURAL RESOURCES
SEC. 201. PUBLIC RESOURCES DEFICIT REDUCTION ACT OF
1999.
This title may be cited as the ‘‘Public Resources Def-
icit Reduction Act of 1999’’.
Subtitle A—General Provisions
SEC. 211. FAIR MARKET VALUE FOR RESOURCE DISPOSAL.
(a) IN GENERAL.—Notwithstanding any other provi-
sion of law, no timber, minerals, forage, or other natural
resource owned by the United States, no Federally owned
water, and no hydroelectric energy generated at a Federal
facility may be sold, leased, or otherwise disposed of by
any department, agency, or instrumentality of the United
States for an amount less than fair market value, as deter-
mined by such department, agency, or instrumentality.
(b) STAGGERED EFFECTIVE DATES.—
(1) 
EXISTING
CONTRACTS, 
LEASES, 
AND
AGREEMENTS.—Subsection (a) shall not apply to
any existing contract, lease, or other binding ar-
rangement entered into before the date of the enact-
ment of this title unless such contract, lease, or
other arrangement is renewed or extended after such
date.
(2) CONTRACTS, LEASES, AND
AGREEMENTS
ENTERED INTO IN 5-YEAR PERIOD.—In the case of
any contract, lease, or other binding arrangement
entered into or renewed or extended during the 5-
year period beginning on the date of the enactment
of this title, subsection (a) shall apply immediately
upon the expiration of such period.
(3) CONTRACTS, LEASES, AND
AGREEMENTS
ENTERED INTO AFTER 5-YEAR PERIOD.—Subsection
(a) shall apply immediately to all contracts, leases,
or other binding arrangements entered into or re-
newed or extended after the end of the 5-year period
beginning on the date of the enactment of this title.
(c) WAIVER.—The President may waive the require-
ments of subsection (a) whenever the President deter-
mines that such waiver is in the national interest. The
President shall submit a notice to Congress containing an
explanation of the reasons for any such determination
within 60 days after the date of the determination.
SEC. 212. FEES FROM PROGRAM BENEFICIARIES.
(a) GENERAL AUTHORITY.—The Secretary of the In-
terior and the Secretary of Agriculture are each author-
ized to establish and collect from persons subject to pro-
grams administered by each such Secretary such user fees
as may be necessary to reimburse the United States for
the expenses incurred in administering such programs.
The aggregate amount of fees that may be assessed and
collected under this section by each such Secretary in any
fiscal year from persons subject to any such program shall
not exceed the aggregate amount of expenses incurred in
administering such program in such fiscal year.
(b) EFFECTIVE DATE; OIL AND GAS LEASE TRANS-
FERS.—The Secretary of the Interior and the Secretary
of Agriculture may, by rule, establish the applicable effec-
tive date of any fee to be imposed under this section, ex-
cept that fees shall be established and collected under this
section from each person receiving a transfer of a Federal
onshore oil and gas lease after the date of the enactment
of this title.
SEC. 213. REVENUES FROM SALE, LEASE, AND TRANSFER
OF ASSETS.
(a) IN GENERAL.—Section 1105(a) of chapter 11 of
title 31, United States Code, is amended by inserting after
paragraph (30) the following new paragraph:
‘‘(31) a separate statement, asset by asset and
aggregated by major functional category, of—
‘‘(A) projected revenues during the fiscal
year for which the budget is submitted from the
anticipated sale, lease, or transfer of any phys-
ical asset; and
‘‘(B) the estimated price at which this
asset or a comparable asset would be sold in an
arms length transaction in the private sector.’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall become effective for fiscal year 2001
and shall be fully reflected in the fiscal year 2001 budget
submitted by the President in February 2000 under sec-
tion 1105(a) of title 31, United States Code.
Subtitle B—Revenue From Mining
Claims
SEC. 221. DEFINITIONS.
(a) DEFINITIONS.—As used in this subtitle:
(1) The term ‘‘locatable mineral’’ means any
mineral not subject to disposition under any of the
following:
(A) The Mineral Leasing Act (30 U.S.C.
181 et seq.).
(B) The Geothermal Steam Act of 1970
(30 U.S.C. 1001 et seq.).
(C) The Act of July 31, 1947, commonly
known as the Materials Act of 1947 (30 U.S.C.
601 et seq.).
(D) The Mineral Leasing Act for Acquired
Lands (30 U.S.C. 351 et seq.).
(2) The term ‘‘mineral activities’’ means any
activity for, related to, or incidental to mineral ex-
ploration, mining, beneficiation, and processing ac-
tivities for any locatable mineral, including access.
When used with respect to this term:
(A) The term ‘‘exploration’’ means those
techniques employed to locate the presence of a
locatable mineral deposit and to establish its
nature, position, size, shape, grade, and value.
(B) The term ‘‘mining’’ means the proc-
esses employed for the extraction of a locatable
mineral from the earth.
(C) The term ‘‘beneficiation’’ means the
crushing and grinding of locatable mineral ore
and such processes as are employed to free the
mineral from other constituents, including but
not necessarily limited to, physical and chemical
separation techniques.
(D) The term ‘‘processing’’ means proc-
esses downstream of beneficiation employed to
prepare locatable mineral ore into the final
marketable product, including but not limited
to, smelting and electrolytic refining.
(3) The term ‘‘mining claim’’ means a claim for
the purposes of mineral activities.
(4) The term ‘‘Secretary’’ means, unless other-
wise provided in this subtitle, the Secretary of the
Interior acting through the Director of the Minerals
Management Service.
SEC. 222. MINING CLAIM MAINTENANCE REQUIREMENTS.
(a) IN GENERAL.—The holder of each mining claim
located on lands open to location shall pay to the Secretary
an annual claim maintenance fee of $100 per claim per
calendar year.
(b) TIME OF PAYMENT.—The claim maintenance fee
payable pursuant to subsection (a) for any year shall be
paid on or before August 31 of each year, except that for
the initial calendar year in which the location is made,
the locator shall pay the initial claim maintenance fee at
the time the location notice is recorded with the Bureau
of Land Management.
(c) OIL SHALE CLAIMS SUBJECT TO CLAIM MAINTE-
NANCE FEES UNDER ENERGY POLICY ACT OF 1992.—
This section shall not apply to any oil shale claims for
which a fee is required to be paid under section 2511(e)(2)
of the Energy Policy Act of 1992 (106 Stat. 3111; 30
U.S.C. 242).
(d) CLAIM MAINTENANCE FEES PAYABLE UNDER
1993 ACT.—The claim maintenance fees payable under
this section for any period with respect to any claim shall
be reduced by the amount of the claim maintenance fees
paid under section 10101 of the Omnibus Budget Rec-
onciliation Act of 1993 (30 U.S.C. 28f) with respect to
that claim and with respect to the same period.
(e) WAIVER.—(1) The claim maintenance fee re-
quired under this section may be waived for a claim holder
who certifies in writing to the Secretary that on the date
the payment was due, the claim holder and all related par-
ties held not more than 10 mining claims on lands open
to location. Such certification shall be made on or before
the date on which payment is due.
(2) For purposes of paragraph (1), with respect to
any claim holder, the term ‘‘related party’’ means each
of the following:
(A) The spouse and dependent children (as de-
fined in section 152 of the Internal Revenue Code of
1986) of the claim holder.
(B) Any affiliate of the claim holder.
(f) CO-OWNERSHIP.—Upon the failure of any one or
more of several co-owners to contribute such co-owner or
owners’ portion of the fee under this section, any co-owner
who has paid such fee may, after the payment due date,
give the delinquent co-owner or owners notice of such fail-
ure in writing (or by publication in the newspaper nearest
the claim for at least once a week for at least 90 days).
If at the expiration of 90 days after such notice in writing
or by publication, any delinquent co-owner fails or refuses
to contribute his portion, his interest in the claim shall
become the property of the co-owners who have paid the
required fee.
SEC. 223. ROYALTY.
(a) RESERVATION OF ROYALTY.—Production of all
locatable minerals from any mining claim located under
the general mining laws, or mineral concentrates or prod-
ucts derived from locatable minerals from any mining
claim located under the general mining laws, as the case
may be, shall be subject to a royalty of 8 percent of the
gross income from such production. The claimholder and
any operator to whom the claimholder has assigned the
obligation to make royalty payments under the claim and
any person who controls such claimholder or operator shall
be jointly and severally liable for payment of such royal-
ties.
(b) DUTIES OF CLAIM HOLDERS, OPERATORS, AND
TRANSPORTERS.—(1) A person—
(A) who is required to make any royalty pay-
ment under this section shall make such payments
to the United States at such times and in such man-
ner as the Secretary may by rule prescribe; and
(B) shall notify the Secretary, in the time and
manner as may be specified by the Secretary, of any
assignment that such person may have made of the
obligation to make any royalty or other payment
under a mining claim.
(2) Any person paying royalties under this section
shall file a written instrument, together with the first roy-
alty payment, affirming that such person is liable to the
Secretary for making proper payments for all amounts due
for all time periods for which such person has a payment
responsibility. Such liability for the period referred to in
the preceding sentence shall include any and all additional
amounts billed by the Secretary and determined to be due
by final agency or judicial action. Any person liable for
royalty payments under this section who assigns any pay-
ment obligation shall remain jointly and severally liable
for all royalty payments due for the claim for the period.
(3) A person conducting mineral activities shall—
(A) develop and comply with the site security
provisions in operations permit designed to protect
from theft the locatable minerals, concentrates, or
products derived therefrom which are produced or
stored on a mining claim, and such provisions shall
conform with such minimum standards as the Sec-
retary may prescribe by rule, taking into account the
variety of circumstances on mining claims; and
(B) not later than the 5th business day after
production begins anywhere on a mining claim, or
production resumes after more than 90 days after
production was suspended, notify the Secretary, in
the manner prescribed by the Secretary, of the date
on which such production has begun or resumed.
(4) The Secretary may by rule require any person en-
gaged in transporting a locatable mineral, concentrate, or
product derived therefrom to carry on his or her person,
in his or her vehicle, or in his or her immediate control,
documentation showing, at a minimum, the amount, ori-
gin, and intended destination of the locatable mineral, con-
centrate, or product derived therefrom in such cir-
cumstances as the Secretary determines is appropriate.
(c) RECORDKEEPING
AND REPORTING REQUIRE-
MENTS.—(1) A claim holder, operator, or other person di-
rectly involved in developing, producing, processing, trans-
porting, purchasing, or selling locatable minerals, con-
centrates, or products derived therefrom, subject to this
title, through the point of royalty computation shall estab-
lish and maintain any records, make any reports, and pro-
vide any information that the Secretary may reasonably
require for the purposes of implementing this section or
determining compliance with rules or orders under this
section. Such records shall include, but not be limited to,
periodic reports, records, documents, and other data. Such
reports may also include, but not be limited to, pertinent
technical and financial data relating to the quantity, qual-
ity, composition volume, weight, and assay of all minerals
extracted from the mining claim. Upon the request of any
officer or employee duly designated by the Secretary or
any State conducting an audit or investigation pursuant
to this section, the appropriate records, reports, or infor-
mation which may be required by this section shall be
made available for inspection and duplication by such offi-
cer or employee or State.
(2) Records required by the Secretary under this sec-
tion shall be maintained for 6 years after cessation of all
mining activity at the claim concerned unless the Sec-
retary notifies the operator that he or she has initiated
an audit or investigation involving such records and that
such records must be maintained for a longer period. In
any case when an audit or investigation is underway,
records shall be maintained until the Secretary releases
the operator of the obligation to maintain such records.
(d) AUDITS.—The Secretary is authorized to conduct
such audits of all claim holders, operators, transporters,
purchasers, processors, or other persons directly or indi-
rectly involved in the production or sales of minerals cov-
ered by this subtitle, as the Secretary deems necessary for
the purposes of ensuring compliance with the require-
ments of this section. For purposes of performing such
audits, the Secretary shall, at reasonable times and upon
request, have access to, and may copy, all books, papers
and other documents that relate to compliance with any
provision of this section by any person.
(e) COOPERATIVE AGREEMENTS.—(1) The Secretary
is authorized to enter into cooperative agreements with the
Secretary of Agriculture to share information concerning
the royalty management of locatable minerals, con-
centrates, or products derived therefrom, to carry out in-
spection, auditing, investigation, or enforcement (not in-
cluding the collection of royalties, civil or criminal pen-
alties, or other payments) activities under this section in
cooperation with the Secretary, and to carry out any other
activity described in this section.
(2) Except as provided in paragraph (4)(A) of this
subsection (relating to trade secrets), and pursuant to a
cooperative agreement, the Secretary of Agriculture shall,
upon request, have access to all royalty accounting infor-
mation in the possession of the Secretary respecting the
production, removal, or sale of locatable minerals, con-
centrates, or products derived therefrom from claims on
lands open to location under the general mining laws.
(3) Trade secrets, proprietary, and other confidential
information shall be made available by the Secretary pur-
suant to a cooperative agreement under this subsection to
the Secretary of Agriculture upon request only if—
(A) the Secretary of Agriculture consents in
writing to restrict the dissemination of the informa-
tion to those who are directly involved in an audit
or investigation under this section and who have a
need to know;
(B) the Secretary of Agriculture accepts liabil-
ity for wrongful disclosure; and
(C) the Secretary of Agriculture demonstrates
that such information is essential to the conduct of
an audit or investigation under this subsection.
(f) INTEREST AND SUBSTANTIAL UNDERREPORTING
ASSESSMENTS.—(1) In the case of mining claims where
royalty payments are not received by the Secretary on the
date that such payments are due, the Secretary shall
charge interest on such under payments at the same inter-
est rate as is applicable under section 6621(a)(2) of the
Internal Revenue Code of 1986. In the case of an under-
payment, interest shall be computed and charged only on
the amount of the deficiency and not on the total amount.
(2) If there is any underreporting of royalty owed on
production from a claim for any production month by any
person liable for royalty payments under this section, the
Secretary may assess a penalty of 10 percent of the
amount of that underreporting.
(3) If there is a substantial underreporting of royalty
owed on production from a claim for any production
month by any person responsible for paying the royalty,
the Secretary may assess an additional penalty of 10 per-
cent of the amount of that underreporting.
(4) For the purposes of this subsection, the term
‘‘underreporting’’ means the difference between the roy-
alty on the value of the production which should have been
reported and the royalty on the value of the production
which was reported, if the value which should have been
reported is greater than the value which was reported. An
underreporting constitutes a ‘‘substantial underreporting’’
if such difference exceeds 10 percent of the royalty on the
value of production which should have been reported.
(5) The Secretary shall not impose the assessment
provided in paragraph (2) or (3) of this subsection if the
person liable for royalty payments under this section cor-
rects the underreporting before the date such person re-
ceives notice from the Secretary that an underreporting
may have occurred, or before 90 days after the date of
the enactment of this section, whichever is later.
(6) The Secretary shall waive any portion of an as-
sessment under paragraph (2) or (3) of this subsection
attributable to that portion of the underreporting for
which the person responsible for paying the royalty dem-
onstrates that—
(A) such person had written authorization from
the Secretary to report royalty on the value of the
production on the basis on which it was reported,
(B) such person had substantial authority for
reporting royalty on the value of the production on
the basis on which it was reported,
(C) such person previously had notified the Sec-
retary, in such manner as the Secretary may by rule
prescribe, of relevant reasons or facts affecting the
royalty treatment of specific production which led to
the underreporting, or
(D) such person meets any other exception
which the Secretary may, by rule, establish.
(7) All penalties collected under this subsection shall
be deposited in the Treasury.
(g) EXPANDED ROYALTY OBLIGATIONS.—Each per-
son liable for royalty payments under this section shall
be jointly and severally liable for royalty on all locatable
minerals, concentrates, or products derived therefrom lost
or wasted from a mining claim located or converted under
this section when such loss or waste is due to negligence
on the part of any person or due to the failure to comply
with any rule, regulation, or order issued under this sec-
tion.
(h) EXCEPTION.—No royalty shall be payable under
subsection (a) with respect to minerals processed at a fa-
cility by the same person or entity which extracted the
minerals if an urban development action grant has been
made under section 119 of the Housing and Community
Development Act of 1974 with respect to any portion of
such facility.
(i) EFFECTIVE DATE.—The royalty under this sec-
tion shall take effect with respect to the production of
locatable minerals after the enactment of this title, but
any royalty payments attributable to production during
the first 12 calendar months after the enactment of this
title shall be payable at the expiration of such 12-month
period.
SEC. 224. SEVERANCE TAX.
(a) SEVERANCE TAX ON MINERALS.—Chapter 36 of
the Internal Revenue Code of 1986 (relating to certain
other excise taxes) is amended by adding at the end the
following new subchapter:
‘‘Subchapter G—Tax on Severance of
Locatable Minerals
‘‘SEC. 4500. TAX ON SEVERANCE OF LOCATABLE MINERALS.
‘‘(a) IN GENERAL.—There is hereby imposed a tax
on gross income resulting from the severance of any
locatable mineral, or mineral concentrates or products,
from a mine or other natural deposit located within the
United States.
‘‘(b) AMOUNT OF TAX.—The amount of the tax im-
posed by subsection (a) shall be 8 percent of the gross
income derived from the locatable mineral, or from the
mineral concentrates or products, severed as described in
such subsection.
‘‘(c) EXCEPTION IF ROYALTY IMPOSED.—Subsection
(a) shall not apply to gross income with respect to which
a royalty is imposed by section 203 of the Public Re-
sources Deficit Reduction Act of 1999.’’.
(b) CONFORMING AMENDMENT.—The table of sub-
chapters for chapter 36 of such Code (relating to certain
other excise taxes) is amended by adding at the end the
following new item:
‘‘SUBCHAPTER G. Tax on severance of locatable minerals.’’.
SEC. 225. FUND FOR ABANDONED LOCATABLE MINERALS
MINE RECLAMATION.
(a) ESTABLISHMENT OF FUND.—(1) There is estab-
lished on the books of the Treasury of the United States
a trust fund to be known as the Abandoned Locatable
Minerals Mine Reclamation Fund (hereinafter in this sub-
title referred to as the ‘Fund’). The Fund shall be admin-
istered by the Secretary acting through the Director of
the Office of Surface Mining Reclamation and Enforce-
ment.
(2) The Secretary shall notify the Secretary of the
Treasury as to what portion of the Fund is not, in the
Secretary’s judgment, required to meet current with-
drawals. The Secretary of the Treasury shall invest such
portion of the Fund in public debt securities with matu-
rities suitable for the needs of such Fund and bearing in-
terest at rates determined by the Secretary of the Treas-
ury, taking into consideration current market yields on
outstanding marketplace obligations of the United States
of comparable maturities. The income on such investments
shall be credited to, and form a part of, the Fund.
(b) AMOUNTS.—The following amounts shall be cred-
ited to the Fund:
(1) All moneys received from royalties under
section 223.
(2) All taxes collected under section 4500 of the
Internal Revenue Code of 1986.
(3) All donations by persons, corporations, as-
sociations, and foundations for the purposes of this
section.
(c) USE AND OBJECTIVES OF THE FUND.—The Sec-
retary is authorized, subject to appropriations, to use
moneys in the Fund for the reclamation and restoration
of land and water resources adversely affected by past
mineral activities on lands the legal and beneficial title to
which resides in the United States, and of land within the
exterior boundary of any National Forest System unit.
(d) SPECIFIC SITES AND AREAS NOT ELIGIBLE.—
The provisions of section 411(d) of the Surface Mining
Control and Reclamation Act of 1977 (30 U.S.C.
1240a(d)) shall apply to expenditures made from the
Fund established under this section.
(e) FUND EXPENDITURES.—Moneys available from
the Fund may be expended for the purposes specified in
subsection (c) directly by the Director of the Office of Sur-
face Mining Reclamation and Enforcement. The Director
may also make such money available for such purposes
to the Director of the Bureau of Land Management, to
the Chief of the United States Forest Service, to the Di-
rector of the National Park Service, to the Director of the
United States Fish and Wildlife Service, to any other
agency of the United States, to an Indian tribe, or to any
public entity that volunteers to develop and implement,
and that has the ability to carry out, all or a significant
portion of a reclamation program under this subtitle.
(f) AUTHORIZATION OF APPROPRIATIONS.—Amounts
credited to the Fund are authorized to be appropriated
for the purpose of this section without fiscal year limita-
tion.
SEC. 226. LIMITATION ON PATENT ISSUANCE.
(a) MINING CLAIMS.—After the date of enactment of
this title, no patent shall be issued by the United States
for any mining claim located under the general mining
laws unless the Secretary determines that, for the claim
concerned—
(1) a patent application was filed with the Sec-
retary on or before January 27, 1995; and
(2) all requirements established under sections
2325 and 2326 of the Revised Statutes (30 U.S.C.
29 and 30) for vein or lode claims and sections
2329, 2330, 2331, and 2333 of the Revised Statutes
(30 U.S.C. 35, 36, and 37) for placer claims were
fully complied with by that date.
If the Secretary makes the determinations referred to in
paragraphs (1) and (2) for any mining claim, the holder
of the claim shall be entitled to the issuance of a patent
in the same manner and degree to which such claim holder
would have been entitled to prior to the enactment of this
title, unless and until such determinations are withdrawn
or invalidated by the Secretary or by a court of the United
States.
(b) MILL SITES.—After the date of enactment of this
title, no patent shall be issued by the United States for
any mill site claim located under the general mining laws
unless the Secretary determines that for the mill site
concerned—
(1) a patent application for such land was filed
with the Secretary on or before January 27, 1999;
and
(2) all requirements applicable to such patent
application were fully complied with by that date.
If the Secretary makes the determinations referred to in
paragraphs (1) and (2) for any mill site claim, the holder
of the claim shall be entitled to the issuance of a patent
in the same manner and degree to which such claim holder
would have been entitled to prior to the enactment of this
title, unless and until such determinations are withdrawn
or invalidated by the Secretary or by a court of the United
States.
SEC. 227. PURCHASING POWER ADJUSTMENT.
The Secretary shall adjust all dollar amounts estab-
lished in this subtitle for changes in the purchasing power
of the dollar every 10 years following the date of enact-
ment of this title, employing the Consumer Price Index
for all-urban consumers published by the Department of
Labor as the basis for adjustment, and rounding accord-
ing to the adjustment process of conditions of the Federal
Civil Penalties Inflation Adjustment Act of 1990 (104
Stat. 890).
SEC. 228. SAVINGS CLAUSE.
Nothing in this title shall be construed as repealing
or modifying any Federal law, regulation, order, or land
use plan, in effect prior to the effective date of this title,
that prohibits or restricts the application of the general
mining laws, including such laws that provide for special
management criteria for operations under the general
mining laws as in effect prior to the effective date of this
title, to the extent such laws provide environmental protec-
tion greater than required under this subtitle.
SEC. 229. EFFECTIVE DATE.
Except as otherwise provided in section 226 (relating
to limitation on patent issuance), this subtitle shall take
effect on the date 1 year after the date of enactment of
this title.
Subtitle C—Use or Disposal of
Federal Natural Resources
SEC. 231. ANNUAL DOMESTIC LIVESTOCK GRAZING FEE.
The Federal Land Policy and Management Act of
1976 is amended by inserting after section 401 (43 U.S.C.
1751) the following new section:
‘‘SEC. 401A. ESTABLISHMENT OF FAIR MARKET VALUE
GRAZING FEES.
‘‘(a) ESTABLISHMENT OF ANNUAL DOMESTIC LIVE-
STOCK GRAZING FEE.—(1) Notwithstanding any other
provision of law, the Secretary of Agriculture, with respect
to National Forest System lands in the 16 contiguous
Western States (except National Grasslands) administered
by the Forest Service where domestic livestock grazing is
permitted under applicable law, shall establish an annual
domestic livestock grazing fee equal to fair market value.
‘‘(2) Notwithstanding any other provision of law, the
Secretary of the Interior, with respect to public domain
lands administered by the Bureau of Land Management
where domestic livestock grazing is permitted under appli-
cable law, shall establish an annual domestic livestock
grazing fee equal to fair market value.
‘‘(b) CALCULATION OF FAIR MARKET VALUE.—(1)
For purposes of determining the annual domestic livestock
grazing fee under this section, the Secretary concerned
shall calculate fair market value using the following for-
mula:
Fair Market Value=
Appraised Base Value×Forage Value Index
100
‘‘(2) For purposes of the formula in paragraph (1):
‘‘(A) The term ‘Forage Value Index’ means the
Forage Value Index (FVI) computed annually by the
Economic Research Service, United States Depart-
ment of Agriculture, and set with the 1999 FVI
equal to 100; and
‘‘(B) The term ‘Appraised Base Value’ means
the 1983 Appraisal Value conclusions for mature
cattle and horses (expressed in dollars per head or
per month), as determined in the 1986 report pre-
pared jointly by the Secretary of Agriculture and the
Secretary of the Interior entitled ‘Grazing Fee Re-
view and Evaluation’, dated February 1986, on a
west-wide basis using the lowest appraised value of
the pricing areas adjusted for advanced payment
and indexed to 1999.
‘‘(c) LIMITATION
ON FLUCTUATIONS
OF FEES.—
Notwithstanding the amount calculated under subsection
(b) for a year, the domestic livestock grazing fee charged
for any given year shall not increase nor decrease by more
than 33.3 percent from the domestic livestock grazing fee
for the previous year.
‘‘(d) EFFECT
ON EXECUTIVE ORDER.—Executive
Order No. 12548, dated February 14, 1986 (51 Fed. Reg.
5985), shall not apply to grazing fees established pursuant
to this section.
‘‘(e) EFFECT ON GRAZING ADVISORY BOARDS.—The
grazing advisory boards established pursuant to Secre-
tarial action, notice of which was published in the Federal
Register on May 14, 1986 (51 Fed. Reg. 17874), are abol-
ished, effective as of the date of the enactment of this sec-
tion, and the advisory functions exercised by such boards
shall be exercised only by the appropriate councils estab-
lished under section 309 of this Act.
‘‘(f) USE
OF FEES
AND RANGE IMPROVEMENT
FUNDS.—Funds appropriated pursuant to section 5 of the
Public Rangelands Improvement Act of 1978 (43 U.S.C.
1904) or any other provision of law related to disposition
of the Federal share of receipts from fees for grazing on
public domain lands or National Forest lands in the 16
contiguous western States shall be used for restoration
and enhancement of fish and wildlife habitat, for restora-
tion and improved management of riparian areas, and for
implementation and enforcement of applicable land man-
agement plans, allotment plans, and regulations regarding
the use of such lands for domestic livestock grazing. Such
funds shall be distributed as the Secretary concerned con-
siders advisable after consultation and coordination with
the advisory councils established pursuant to section 309
of this Act and other interested parties.
‘‘(g) COMMENCEMENT DATE FOR FEES.—The first
annual domestic livestock grazing fee required by this sec-
tion shall apply with respect to the grazing season com-
mencing on March 1, 2000.’’.
SEC. 232. ELIMINATION OF BELOW-COST SALES OF TIMBER
FROM NATIONAL FOREST SYSTEM LANDS.
(a) IN GENERAL.—The National Forest Management
Act of 1976 is amended by inserting after section 14 (16
U.S.C. 472a) the following new section:
‘‘SEC. 14A. ELIMINATION OF BELOW-COST TIMBER SALES
FROM NATIONAL FOREST SYSTEM LANDS.
‘‘(a) REQUIREMENT THAT SALE REVENUES EXCEED
COSTS.—On and after October 1, 2003, in appraising tim-
ber and setting a minimum bid for trees, portions of trees,
or forest products located on National Forest System
lands proposed for sale under section 14 or any other pro-
vision of law, the Secretary of Agriculture shall ensure
that the estimated cash returns to the United States
Treasury from each sale exceed the estimated costs to be
incurred by the Federal Government in the preparation
of the sale or as a result of the sale.
‘‘(b) COSTS TO BE CONSIDERED.—For purposes of
estimating under this section the costs to be incurred by
the Federal Government from each timber sale, the Sec-
retary shall assign to the sale the following costs:
‘‘(1) The actual appropriated expenses for sale
preparation and harvest administration incurred or
to be incurred by the Federal Government from the
sale and the payments to counties to be made as a
result of the sale.
‘‘(2) A portion of the annual timber resource
planning costs, silvicultural examination costs, other
resource support costs, road design and construction
costs, road maintenance costs, transportation plan-
ning costs, appropriated reforestation costs, timber
stand improvement costs, forest genetics costs, gen-
eral administrative costs (including administrative
costs of the national and regional offices of the For-
est Service), and facilities construction costs of the
Federal Government directly or indirectly related to
the timber harvest program conducted on National
Forest System lands.
‘‘(c) METHOD OF ALLOCATING COSTS.—The Sec-
retary shall allocate the costs referred to in subsection
(b)(2) to each unit of the National Forest System, and
each proposed timber sale in such unit, on the basis of
harvest volume.
‘‘(d) TRANSITIONAL REQUIREMENTS.—To ensure the
elimination of all below-cost timber sales by the date speci-
fied in subsection (a), the Secretary shall progressively re-
duce the number and size of below-cost timber sales on
National Forest System lands as follows:
‘‘(1) In fiscal years 2000 and 2001, the quan-
tity of timber sold in below-cost timber sales on Na-
tional Forest System lands shall not exceed 75 per-
cent of the quantity of timber sold in such sales in
the preceding fiscal year.
‘‘(2) In fiscal year 2002, the quantity of timber
sold in below-cost timber sales on National Forest
System lands shall not exceed 65 percent of the
quantity of timber sold in such sales in fiscal year
2000.
‘‘(3) In fiscal year 2003, the quantity of timber
sold in below-cost timber sales on National Forest
System lands shall not exceed 50 percent of the
quantity of timber sold in such sales in the fiscal
year 2002.
‘‘(e) BELOW-COST TIMBER SALE.—For purposes of
this section, the term ‘below-cost timber sale’ means a sale
of timber in which the costs to be incurred by the Federal
Government exceed the cash returns to the United States
Treasury.’’.
(b) FINDINGS.—Section 2 of the Forest and Range-
land Renewable Resources Planning Act of 1974 (16
U.S.C. 1600) is amended—
(1) by striking ‘‘and’’ at the end of paragraph
(6);
(2) by striking the period at the end of para-
graph (7) and inserting ‘‘; and’’; and
(3) by adding at the end the following new
paragraph:
‘‘(8) the practice of selling timber from Na-
tional Forest System lands for less than the cost to
the Federal Government of growing the timber and
preparing the timber for sale is not in the best inter-
ests of the United States, and such below-cost sales
should be eliminated in an orderly manner to achieve
a more economically and environmentally sound tim-
ber program for the National Forest System.’’.
SEC. 233. TIMBERLAND SUITABILITY.
Subsection (k) of section 6 of the Forest and Range-
land Renewable Resources Planning Act of 1974 (16
U.S.C. 1604) is amended to read as follows:
‘‘(k) DETERMINATION OF SUITABILITY OF LANDS
FOR TIMBER PRODUCTION.—
‘‘(1) DETERMINATION REQUIRED.—In revising
land management plans developed pursuant to this
section, the Secretary shall identify lands within the
management area that are not suited for timber pro-
duction based on physical, economic, or other rel-
evant factors. The Secretary shall review the identi-
fications made under this paragraph during each re-
vision of the forest plan.
‘‘(2) 
EVIDENCE
OF
ECONOMIC
UNSUITABILITY.—The Secretary shall identify lands
as economically unsuitable for timber production
under paragraph (1) if—
‘‘(A) the expected cash returns to the
United States Treasury that would result from
the sale of standing timber on the lands do not
exceed the expected costs that would be in-
curred by the Federal Government in prepara-
tion or as a result of such sales; or
‘‘(B) the expected cash returns to the
United States Treasury that would result from
the sale of subsequent timber stands on the
lands do not exceed the expected costs that
would be incurred by the Federal Government
in preparation or as a result of such sales.
‘‘(3) COSTS TO BE CONSIDERED.—For purposes
of estimating under paragraph (2) the costs to be in-
curred by the Federal Government from timber sales
conducted on the lands being reviewed, the Secretary
shall assign to sales on such lands the following
costs:
‘‘(A) The appropriated expenses for sale
preparation and harvest administration that
would be incurred by the Federal Government
from such sales and the payments to counties
that would be made as a result of such sales.
‘‘(B) A portion of the annual timber re-
source planning costs, silvicultural examination
costs, other resource support costs, road design
and construction costs, road maintenance costs,
transportation planning costs, appropriated re-
forestation costs, timber stand improvement
costs, forest genetics costs, general administra-
tive costs (including administrative costs of the
national and regional offices of the Forest Serv-
ice), and facilities construction costs of the Fed-
eral Government directly or indirectly related to
the timber harvest program conducted on Na-
tional Forest System lands.
‘‘(4) METHOD
OF
ALLOCATING
COSTS.—The
Secretary shall allocate the costs referred to in para-
graph (3)(B) to each unit of the National Forest
System on the basis of harvest volume.
‘‘(5) PROHIBITION ON TIMBER HARVESTS ON
UNSUITABLE LANDS.—In the case of lands identified
under paragraph (1) as unsuitable for timber pro-
duction, no timber harvesting shall occur on such
lands for a period of 10 years or the life of the plan,
whichever is greater.
‘‘(6) DEFINITIONS.—For purposes of this sub-
section:
‘‘(A) The term ‘standing timber’ means an
existing stand of timber that has not been har-
vested.
‘‘(B) The term ‘subsequent timber stand’
means a regenerated stand of timber produced
on land from which standing timber has been
harvested.’’.
SEC. 234. REDUCTION IN MAXIMUM AMOUNT OF PAYMENTS
UNDER AGRICULTURAL ASSISTANCE PRO-
GRAMS TO REFLECT RECEIPT OF FEDERAL
IRRIGATION WATER.
(a) PRICE SUPPORT PROGRAMS.—Title X of the
Food Security Act of 1985 is amended—
(1) by redesignating sections 1001D (7 U.S.C.
1308–4) and 1001E (7 U.S.C. 1308–5) as sections
1001E and 1001F, respectively; and
(2) by inserting after section 1001C (7 U.S.C.
1308–3) the following new section:
‘‘SEC. 1001D. REDUCTION OF PAYMENT LIMITATIONS TO
REFLECT RECEIPT OF FEDERAL IRRIGATION
WATER.
‘‘(a) REDUCTION
OF PAYMENT LIMITATIONS RE-
QUIRED.—If a person subject to section 1001 receives
Federal irrigation water for agricultural purposes from the
operation of a Federal reclamation project, the payment
limitations specified in paragraphs (1) and (2) of such sec-
tion and applicable to such person shall be reduced for
the year in which such person receives irrigation water.
The amount of the reduction shall be equal to the total
value during that year of the subsidy portion of the con-
tract with such person for the delivery of the irrigation
water.
‘‘(b) DETERMINATION
OF SUBSIDY PORTION
OF
WATER CONTRACT.—The subsidy portion of an irrigation
water delivery contract is equal to the amount by which
full cost for the delivery of the irrigation water exceeds
the actual contract price for the delivery of the water.
‘‘(c) DEFINITIONS.—For purposes of this section, the
terms ‘contract’, ‘full cost’, ‘irrigation water’, and ‘project’
have the meanings given such terms in section 202 of the
Reclamation Reform Act of 1982 (43 U.S.C. 390bb).’’.
(b) NONINSURED CROP DISASTER ASSISTANCE.—
Section 196(i) of the Federal Agriculture Improvement
and Reform Act of 1996 (7 U.S.C. 7333(i)) is amended—
(1) by redesignating paragraph (5) as para-
graph (6); and
(2) by inserting after paragraph (4) the fol-
lowing new paragraph:
‘‘(5) EFFECT
OF
RECEIPT
OF
IRRIGATION
WATER.—
‘‘(A) REDUCTION
OF
PAYMENT
LIMITA-
TION.—If a person who receives payments
under this section also receives, during the
same year, Federal irrigation water for agricul-
tural purposes from the operation of a Federal
reclamation project, the payment limitation
specified in paragraph (2) for such person shall
be reduced for that year. The amount of the
reduction shall be equal to the total value dur-
ing that year of the subsidy portion of the con-
tract with such person for the delivery of the
irrigation water.
‘‘(B) DETERMINATION
OF
SUBSIDY
POR-
TION OF WATER CONTRACT.—The subsidy por-
tion of an irrigation water delivery contract is
equal to the amount by which full cost for the
delivery of the irrigation water exceeds the ac-
tual contract price for the delivery of the water.
‘‘(C) DEFINITIONS.—For purposes of this
paragraph, the terms ‘contract’, ‘full cost’, ‘irri-
gation water’, and ‘project’ have the meanings
given such terms in section 202 of the Reclama-
tion Reform Act of 1982 (43 U.S.C. 390bb).’’.
(c) 
CONFORMING
AMENDMENTS.—Section
1001(5)(A) of the Food Security Act of 1985 (7 U.S.C.
1308(5)(A)) is amended by striking ‘‘through 1001C’’ and
inserting ‘‘through 1001D’’.
SEC. 235. ELIMINATION OF OFF BUDGET EXPENDITURES.
(a) KNUTSON-VANDENBERG FUND.—Section 3 of
the Act of June 9, 1930 (commonly known as the
Knutson-Vandenberg Act; 16 U.S.C. 576b), is amended
by striking ‘‘and shall constitute a special fund, which is
hereby appropriated and made available until expended,’’
in the second sentence and inserting ‘‘and are authorized
to be appropriated’’.
(b) DEPOSITS FROM BRUSH DISPOSAL.—The para-
graph relating to deposits from brush disposal under the
heading ‘‘FOREST SERVICE’’ in the Act of August 11, 1916
(39 Stat. 462; 16 U.S.C. 490), is amended by striking
‘‘and constitute a special fund, which is hereby appro-
priated and shall remain available until expended’’ and in-
serting ‘‘and are authorized to be appropriated for the
purpose of disposing of such brush and other debris’’.
(c) NATIONAL FORESTS ROADS AND TRAILS.—(1)
Section 6 of Public Law 88–657 (commonly known as the
Forest Roads and Trails Act; 16 U.S.C. 537) is amended
by striking ‘‘are hereby made available until expended’’
and inserting ‘‘are authorized to be appropriated’’.
(2) The fourteenth paragraph under the heading
‘‘FOREST SERVICE’’ of the Act of March 4, 1913 (37
Stat. 843; 16 U.S.C. 501), is amended by striking ‘‘shall
be available at the end thereof, to be expended by’’ and
inserting ‘‘are authorized to be appropriated to’’.
(d) REFORESTATION TRUST FUND.—Section 303(d)
of Public Law 96–451 (16 U.S.C. 1606a) is amended by
striking ‘‘The Secretary of Agriculture’’ and inserting ‘‘In
such amounts as are provided in advance in appropriations
Acts, the Secretary of Agriculture’’.
(e) TIMBER SALVAGE SALE FUND.—Section 14(h) of
the National Forest Management Act of 1976 (16 U.S.C.
472a(h) is amended by striking ‘‘are to be available’’ and
inserting ‘‘are authorized to be appropriated’’.
(f) COOPERATIVE WORK–OTHER FUND.—The penul-
timate paragraph under the heading ‘‘FOREST SERV-
ICE’’ in the Act of June 30, 1914 (38 Stat. 430; 16
U.S.C. 498), is amended by striking ‘‘which is hereby ap-
propriated and made available until expended, as the Sec-
retary of Agriculture may direct,’’ and inserting ‘‘from
which funds are authorized to be appropriated to the Sec-
retary of Agriculture’’.
SEC. 236. DEPOSIT OF TAYLOR GRAZING ACT RECEIPTS IN
TREASURY.
Section 10 of the Act of June 28, 1934 (commonly
known as the Taylor Grazing Act; 43 U.S.C. 315i), is
amended by striking all after ‘‘miscellaneous receipts’’ and
inserting a period.
SEC. 237. REPEAL OF LIVESTOCK FEED ASSISTANCE PRO-
GRAM.
The Emergency Livestock Feed Assistance Act of
1988 (title VI of the Agricultural Act of 1949; 7 U.S.C.
1471–1471j) is repealed.
SEC. 238. OIL AND GAS RENTALS.
The Mineral Leasing Act (30 U.S.C. 181 et seq.) is
amended as follows:
(1) In section 14 by striking ‘‘a rental of $1 per
acre’’ and inserting ‘‘a rental established by the Sec-
retary of the Interior’’ and by adding the following
at the end thereof: ‘‘The Secretary shall establish
fair market value rental fees under this section
based upon the rental fees which would be charged
in arm’s length transactions for comparable leases of
oil and gas resources on non-Federal land.’’.
(2) In section 17(d) by striking ‘‘rental of not
less than $1.50 per acre per year for the first
through fifth years of the lease and not less than $2
per acre per year for each year thereafter’’ and in-
serting ‘‘rental established by the Secretary of the
Interior’’ and by adding the following at the end
thereof: ‘‘The Secretary shall establish fair market
value rental fees under this section based upon the
rental fees which would be charged in arms length
transactions for comparable leases of oil and gas re-
sources on non-Federal land.’’.
(3) In section 21(a) by striking ‘‘rental, payable
at the beginning of each year, at the rate of 50 cents
per acre per annum, for the lands included in the
lease,’’ and inserting ‘‘rental established by the Sec-
retary of the Interior’’ and by adding the following
at the end thereof: ‘‘The Secretary shall establish
fair market value rental fees under this section
based upon the rental fees which would be charged
in arms length transactions for comparable leases on
non-Federal land.’’.
(4) In section 31(e)(2) by striking ‘‘rate of not
less than $10 per acre per year, or the inclusion in
a reinstated lease issued pursuant to the provisions
of section 17(c) of this Act of a requirement that fu-
ture rentals shall be at a rate not less than $5 per
acre per year’’ and inserting ‘‘fair market value rate
(but not less than $10 per acre per year)’’.
(5) In section 31(f)(3) by striking ‘‘of not less
than $5 per acre per year’’ and inserting ‘‘estab-
lished by the Secretary at fair market value based
upon the rental fees which would be charged in arms
length transactions for comparable leases on non-
Federal land’’.
SEC. 239. COMMUNICATION PERMITS.
(a) IN GENERAL.—No permit, lease, or authorization
for the use of any area of the public lands or National
Forests for communication uses, including but not limited
to radio and television broadcast, mobile radio, cellular
telephone, or microwave relay facilities, shall remain in
force and effect after October 1, 1999, unless, by such
date, and by October 1 of each year thereafter, the holder
of such permit, lease, or authorization pays to the Sec-
retary of the Interior or the Secretary of Agriculture, as
appropriate, an amount equal to the fair market value,
as determined by such Secretary, of the right to use and
occupy such area for such communication uses.
(b) DEFINITION.—For the purposes of this section,
the term ‘‘public lands’’ shall have the same meaning as
defined in section 103(e) of the Federal Land Policy Man-
agement Act of 1976 (43 U.S.C. 1702(e)).
Æ