in this paragraph shall require a real estate in-
vestment trust to value its assets more fre-
quently than once each 36 months (except
where such trust ceases to exist). The ratio
under subparagraph (A) for any calendar
month for which there is no valuation shall be
the trustee’s good faith judgment as to such
valuation.
‘‘(3) QUALIFIED
INVESTMENT
ENTITY.—For
purposes of this subsection, the term ‘qualified in-
vestment entity’ means—
‘‘(A) a regulated investment company
(within the meaning of section 851), and
‘‘(B) a real estate investment trust (within
the meaning of section 856).
‘‘(f) OTHER PASS-THRU ENTITIES.—
‘‘(1) PARTNERSHIPS.—In the case of a partner-
ship, the adjustment made under subsection (a) at
the partnership level shall be passed through to the
partners.
‘‘(2) S CORPORATIONS.—In the case of an S
corporation, the adjustment made under subsection
(a) at the corporate level shall be passed through to
the shareholders.
‘‘(3) COMMON TRUST FUNDS.—In the case of a
common trust fund, the adjustment made under sub-
section (a) at the trust level shall be passed through
to the participants.
‘‘(g) DISPOSITIONS BETWEEN RELATED PERSONS.—
‘‘(1) IN GENERAL.—This section shall not apply
to any sale or other disposition of property between
related persons except to the extent that the basis
of such property in the hands of the transferee is a
substituted basis.
‘‘(2) RELATED PERSONS DEFINED.—For pur-
poses of this section, the term ‘related persons’
means—
‘‘(A) persons bearing a relationship set
forth in section 267(b), and
‘‘(B) persons treated as single employer
under subsection (b) or (c) of section 414.
‘‘(h) TRANSFERS TO INCREASE INDEXING ADJUST-
MENT.—If any person transfers cash, debt, or any other
property to another person and the principal purpose of
such transfer is to secure or increase an adjustment under
subsection (a), the Secretary may disallow part or all of
such adjustment or increase.
‘‘(i) SPECIAL RULES.—For purposes of this section:
‘‘(1) TREATMENT AS SEPARATE ASSET.—In the
case of any asset, the following shall be treated as
a separate asset:
‘‘(A) A substantial improvement to prop-
erty.
‘‘(B) In the case of stock of a corporation,
a substantial contribution to capital.
‘‘(C) Any other portion of an asset to the
extent that separate treatment of such portion
is appropriate to carry out the purposes of this
section.
‘‘(2) ASSETS WHICH ARE NOT INDEXED ASSETS
THROUGHOUT HOLDING PERIOD.—The applicable in-
flation ratio shall be appropriately reduced for peri-
ods during which the asset was not an indexed asset.
‘‘(3) NET
LEASE
PROPERTY
DEFINED.—The
term ‘net lease property’ means leased property
where—
‘‘(A) the term of the lease (taking into ac-
count options to renew) was 50 percent or more
of the useful life of the property, and
‘‘(B) for the period of the lease, the sum
of the deductions with respect to such property
which are allowable to the lessor solely by rea-
son of section 162 (other than rents and reim-
bursed amounts with respect to such property)
is 15 percent or less of the rental income pro-
duced by such property.
‘‘(4) TREATMENT
OF
CERTAIN
DISTRIBU-
TIONS.—A distribution with respect to stock in a
corporation which is not a dividend shall be treated
as a disposition.
‘‘(5) SECTION
CANNOT
INCREASE
ORDINARY
LOSS.—To the extent that (but for this paragraph)
this section would create or increase a net ordinary
loss to which section 1231(a)(2) applies or an ordi-
nary loss to which any other provision of this title
applies, such provision shall not apply. The taxpayer
shall be treated as having a long-term capital loss in
an amount equal to the amount of the ordinary loss
to which the preceding sentence applies.
‘‘(6) ACQUISITION
DATE
WHERE
THERE
HAS
BEEN
PRIOR
APPLICATION
OF
SUBSECTION
(a)(1)
WITH RESPECT TO THE TAXPAYER.—If there has
been a prior application of subsection (a)(1) to an
asset while such asset was held by the taxpayer, the
date of acquisition of such asset by the taxpayer
shall be treated as not earlier than the date of the
most recent such prior application.
‘‘(7) COLLAPSIBLE CORPORATIONS.—The appli-
cation of section 341(a) (relating to collapsible cor-
porations) shall be determined without regard to this
section.
‘‘(j) REGULATIONS.—The Secretary shall prescribe
such regulations as may be necessary or appropriate to
carry out the purposes of this section.’’
(b) CLERICAL AMENDMENT.—The table of sections
for part II of subchapter O of chapter 1 of such Code
is amended by inserting after the item relating to section
1021 the following new item:
‘‘Sec. 1022. Indexing of certain assets for purposes of determining
gain or loss.’’
(c) ADJUSTMENT TO APPLY FOR PURPOSES OF DE-
TERMINING EARNINGS AND PROFITS.—Subsection (f) of
section 312 of such Code (relating to effect on earnings
and profits of gain or loss and of receipt of tax-free dis-
tributions) is amended by adding at the end thereof the
following new paragraph:
‘‘(3) EFFECT ON EARNINGS AND PROFITS OF
INDEXED BASIS.—
For substitution of indexed basis for adjusted
basis in the case of the disposition of certain assets,
see section 1022(a)(1).’’
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to dispositions after December 31,
1994, in taxable years ending after such date.
SEC. 1003. CAPITAL LOSS DEDUCTION ALLOWED WITH RE-
SPECT TO SALE OR EXCHANGE OF PRINCIPAL
RESIDENCE.
(a) IN GENERAL.—Subsection (c) of section 165 of
the Internal Revenue Code of 1986 (relating to limitation
on losses of individuals) is amended by striking ‘‘and’’ at
the end of paragraph (2), by striking the period at the
end of paragraph (3) and inserting ‘‘; and’’, and by adding
at the end the following new paragraph:
‘‘(4) losses arising from the sale or exchange of
the principal residence (within the meaning of sec-
tion 1034) of the taxpayer.’’
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to sales and exchanges after De-
cember 31, 1994, in taxable years ending after such date.
TITLE II—NEUTRAL COST
RECOVERY
SEC. 2001. DEPRECIATION ADJUSTMENT FOR CERTAIN
PROPERTY PLACED IN SERVICE AFTER DE-
CEMBER 31, 1994.
(a) IN GENERAL.—Section 168 of the Internal Reve-
nue Code of 1986 (relating to accelerated cost recovery
system) is amended by adding at the end thereof the fol-
lowing new subsection:
‘‘(k) DEDUCTION ADJUSTMENT TO ALLOW EQUIVA-
LENT OF EXPENSING FOR CERTAIN PROPERTY PLACED
IN SERVICE AFTER DECEMBER 31, 1994.—
‘‘(1) IN
GENERAL.—In the case of tangible
property placed in service after December 31, 1994,
the deduction under this section with respect to such
property—
‘‘(A) shall be determined by substituting
‘150 percent’ for ‘200 percent’ in subsection
(b)(1) in the case of property to which the 200
percent declining balance method would other-
wise apply, and
‘‘(B) for any taxable year after the taxable
year during which the property is placed in
service shall be—
‘‘(i) the amount determined under this
section for such taxable year without re-
gard to this subparagraph, multiplied by
‘‘(ii) the applicable neutral cost recov-
ery ratio for such taxable year.
‘‘(2) APPLICABLE
NEUTRAL
COST
RECOVERY
RATIO.—For purposes of paragraph (1)—
‘‘(A) IN GENERAL.—The applicable neutral
cost recovery ratio for the property for any tax-
able year is the number determined by—
‘‘(i) dividing—
‘‘(I) the gross domestic product
deflator for the calendar quarter end-
ing in such taxable year which cor-
responds to the calendar quarter dur-
ing which the property was placed in
service by the taxpayer, by
‘‘(II) the gross domestic product
deflator for the calendar quarter dur-
ing which the property was placed in
service by the taxpayer, and
‘‘(ii) then multiplying the number de-
termined under clause (i) by the number
equal to 1.035 to the nth power where ‘n’
is the number of full years in the period
beginning on the 1st day of the calendar
quarter during which the property was
placed in service by the taxpayer and end-
ing on the day before the beginning of the
corresponding calendar quarter ending
during such taxable year.
The applicable neutral cost recovery ratio shall
never be less than 1. The applicable neutral
cost recovery ratio shall be rounded to the near-
est 1⁄1000.
‘‘(B) SPECIAL RULE FOR CERTAIN PROP-
ERTY.—In the case of property described in
paragraph (2) or (3) of subsection (b) or in
subsection (g), the applicable neutral cost recov-
ery ratio shall be determined without regard to
subparagraph (A)(ii).
‘‘(3) GROSS DOMESTIC PRODUCT DEFLATOR.—
For purposes of paragraph (2), the gross domestic
product deflator for any calendar quarter is the im-
plicit price deflator for the gross domestic product
for such quarter (as shown in the first revision
thereof).
‘‘(4) COORDINATION WITH INDEXING OF BASIS
FOR PURPOSES OF DETERMINING GAIN OR LOSS.—
Section 1022 shall not apply to any property to
which this subsection applies.
‘‘(5) ELECTION
NOT
TO
HAVE
SUBSECTION
APPLY.—This subsection shall not apply to any
property if the taxpayer elects not to have this sub-
section apply to such property. Such an election,
once made, shall be irrevocable.
‘‘(6) CHURNING
TRANSACTIONS.—This sub-
section shall not apply to any property if this section
would not apply to such property were subsection
(f)(5)(A)(ii) applied by substituting ‘1995’ for
‘1981’ and ‘1994’ for ‘1980’.
‘‘(7) ADDITIONAL DEDUCTION NOT TO AFFECT
BASIS OR RECAPTURE.—The additional amount de-
termined under this section by reason of this sub-
section shall not be taken into account in determin-
ing the adjusted basis of any property or of any in-
terest in a pass-thru entity (as defined in section
1201(d)(2)) which holds such property and shall not
be treated as a deduction for depreciation for pur-
poses of sections 1245 and 1250.’’
(b) MINIMUM TAX TREATMENT.—
(1) Paragraph (1) of section 56(a) of such Code
is amended by adding at the end thereof the follow-
ing new subparagraph:
‘‘(E) USE OF NEUTRAL COST RECOVERY
RATIO.—In the case of property to which sec-
tion 168(k) applies and which is placed in serv-
ice after December 31, 1994, the deduction al-
lowable under this paragraph with respect to
such property for any taxable year (after the
taxable year during which the property is
placed in service) shall be—
‘‘(i) the amount so allowable for such
taxable year without regard to this sub-
paragraph, multiplied by
‘‘(ii) the applicable neutral cost recov-
ery ratio for such taxable year (as deter-
mined under section 168(k)).
This subparagraph shall not apply to any prop-
erty with respect to which there is an election
in effect not to have section 168(k)) apply.’’
(2) Subparagraph (C) of section 56(g)(4) of
such Code is amended by adding at the end the fol-
lowing new clause:
‘‘(v) NEUTRAL COST RECOVERY DE-
DUCTION.—Clause (i) shall not apply to
the additional deduction allowable by rea-
son of section 168(k).’’
(c) COORDINATION WITH DEPRECIATION LIMITA-
TION ON CERTAIN AUTOMOBILES.—Clause (i) of section
280F(a)(1)(B) of such Code is amended by adding at the
end the following new sentence: ‘‘For purposes of this
clause, the unrecovered basis of any passenger automobile
shall be treated as including the additional amount deter-
mined under section 168 by reason of subsection (k) there-
of to the extent not allowed as a deduction by reason of
this paragraph for any taxable year in the recovery pe-
riod.’’
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years ending after De-
cember 31, 1994.
TITLE 
III—RISK 
ASSESSMENT
AND COST/BENEFIT ANALYSIS
FOR NEW REGULATIONS
SEC. 3001. FINDINGS.
The Congress finds that:
(1) Environmental, health, and safety regula-
tions have led to dramatic improvements in the envi-
ronment and have significantly reduced human
health risk; however, the Federal regulations that
have led to these improvements have been more cost-
ly and less effective than they could have been; too
often, regulatory priorities have not been based upon
a realistic consideration of risk, risk reduction op-
portunities, and costs.
(2) The public and private resources available
to address health, safety, and environmental con-
cerns are not unlimited; those resources need to be
allocated to address the greatest needs in the most
cost-effective manner and so that the incremental
costs of regulatory options are reasonably related to
the incremental benefits.
(3) To provide more cost-effective and cost-
reasonable protection to human health and the envi-
ronment, regulatory priorities should be based upon
realistic consideration of risk; the priority setting
process must include scientifically sound, objective,
and unbiased risk assessments, comparative risk
analysis, and risk management choices that are
grounded in cost-benefit principles.
(4) Risk assessment has proven to be a useful
decision making tool; however, improvements are
needed in both the quality of assessments and the
characterization and communication of findings; sci-
entific and other data must be better collected, orga-
nized, and evaluated; most importantly, the critical
information resulting from a risk assessment must
be effectively communicated in an objective and un-
biased manner to decision makers, and from decision
makers to the public.
(5) The public stake holders must be fully in-
volved in the risk-decision making process. They
have the right-to-know about the risks addressed by
regulation, the amount of risk to be reduced, the
quality of the science used to support decisions, and
the cost of implementing and complying with regula-
tions. This knowledge will allow for public scrutiny
and promote quality, integrity, and responsiveness of
agency decisions.
Subtitle A—Risk Assessment and
Communication
SEC. 3101. SHORT TITLE.
This subtitle may be cited as the ‘‘Risk Assessment
and Communication Act of 1995’’.
SEC. 3102. PURPOSES.
The purposes of this subtitle are—
(1) to present the public and executive branch
with the most scientifically objective and unbiased
information concerning the nature and magnitude of
health, safety, and environmental risks in order to
provide for sound regulatory decisions and public
education;
(2) to provide for full consideration and discus-
sion of relevant data and potential methodologies;
(3) to require explanation of significant choices
in the risk assessment process which will allow for
better peer review and public understanding; and
(4) to improve consistency within the executive
branch in preparing risk assessments and risk char-
acterizations.
SEC. 3103. EFFECTIVE DATE; APPLICABILITY; SAVINGS
PROVISIONS.
(a) EFFECTIVE DATE.—Except as otherwise specifi-
cally provided in this subtitle, the provisions of this sub-
title shall take effect 18 months after the date of enact-
ment of this subtitle.
(b) APPLICABILITY.—
(1) IN GENERAL.—Except as provided in para-
graph (2), this title applies to all risk assessments
and risk characterizations prepared by, or on behalf
of, any Federal agency in connection with Federal
regulatory programs designed to protect human
health, safety, or the environment.
(2) EXCEPTIONS.—(A) This title does not apply
to risk assessments or risk characterizations per-
formed with respect to either of the following:
(i) A situation that the head of the agency
considers to be an emergency.
(ii) A screening analysis, including a
screening analysis for purposes of product regu-
lation, 
product 
reregistration, 
or
premanufacturing notices.
(B) No analysis shall be treated as a screening
analysis for purposes of subparagraph (A) if the re-
sults of such analyses are used either—
(i) as the basis for imposing restrictions on
substances or activities, or
(ii) to characterize a positive finding of
risks from substances or activities in any final
agency document made available to the general
public.
(3) LABELS.—This title shall not apply to any
food, drug, or other product label or to any risk
characterization appearing on any such label.
(c) SAVINGS PROVISIONS.—Nothing in this subtitle
shall be construed to modify any statutory standard or re-
quirement designed to protect health, safety, or the envi-
ronment. Nothing in this subtitle shall be interpreted to
preclude the consideration of any data or the calculation
of any estimate to more fully describe risk or provide ex-
amples of scientific uncertainty or variability. Nothing in
this title shall be construed to require the disclosure of
any trade secret or other confidential information.
SEC. 3104. PRINCIPLES FOR RISK ASSESSMENT.
(a) IN GENERAL.—The head of each Federal agency
shall apply the principles set forth in subsection (b) when
preparing risk assessments in order to assure that such
risk assessments and all of their components distinguish
scientific findings from other considerations and are, to
the maximum extent feasible, scientifically objective, unbi-
ased, and inclusive of all relevant data. Discussions or ex-
planations required under this section need not be re-
peated in each risk assessment document as long as there
is a reference to the relevant discussion or explanation in
another agency document.
(b) PRINCIPLES.—The principles to be applied when
preparing risk assessments are as follows:
(1) When assessing human health risks, a risk
assessment shall consider and discuss both labora-
tory and epidemiological data of sufficient quality
which finds, or fails to find, a correlation between
health risks and a potential toxin or activity. Where
conflicts among such data appear to exist, or where
animal data is used as a basis to assess human
health, the assessment shall include discussion of
possible reconciliation of conflicting information, and
as appropriate, differences in study designs, com-
parative 
physiology, 
routes 
of 
exposure,
bioavailability, pharmacokinetics, and any other rel-
evant factor.
(2) Where a risk assessment involves selection
of any significant assumption, inference, or model,
the Federal agency preparing the assessment shall—
(A) present a representative list and expla-
nation of plausible and alternative assumptions,
inferences, or models;
(B) explain the basis for any choices;
(C) identify any policy or value judgments;
(D) fully describe any model used in the
risk assessment and make explicit the assump-
tions incorporated in the model; and
(E) indicate the extent to which any sig-
nificant model has been validated by, or con-
flicts with, empirical data.
SEC. 3105. PRINCIPLES FOR RISK CHARACTERIZATION AND
COMMUNICATION.
In characterizing risk in any risk assessment docu-
ment, regulatory proposal or decision, report to Congress,
or other document which is made available to the public,
each Federal agency characterizing the risk shall comply
with each of the following:
(1) ESTIMATES OF RISK.—The head of such
agency shall describe the populations or natural re-
sources which are the subject of the risk character-
ization. If a numerical estimate of risk is provided,
the agency shall, to the extent feasible and scientif-
ically appropriate, provide—
(A) the best estimate or estimates for the
specific populations or natural resources which
are the subject of the characterization (based
on the information available to the department,
agency, or instrumentality); and
(B) a statement of the reasonable range of
scientific uncertainties.
In addition to such best estimate or estimates, the
Federal agency may present plausible upper-bound
or conservative estimates in conjunction with plau-
sible lower bounds estimates. Where appropriate, the
Federal agency may present, in lieu of a single best
estimate, multiple estimates based on assumptions,
inferences, or models which are equally plausible,
given current scientific understanding. To the extent
practical and appropriate, the Federal agency shall
provide descriptions of the distribution and prob-
ability of risk estimates to reflect differences in ex-
posure variability in populations and uncertainties.
(2) EXPOSURE SCENARIOS.—The Federal agen-
cy shall explain the exposure scenarios used in any
risk assessment, and, to the extent feasible, provide
a statement of the size of the corresponding popu-
lation at risk and the likelihood of such exposure
scenarios.
(3) COMPARISONS.—To the extent feasible, the
Federal agency shall provide a statement that places
the nature and magnitude of risks to human health
in context. Such statement shall include appropriate
comparisons with estimates of risks that are familiar
to and routinely encountered by the general public
as well as other risks. The statement shall identify
relevant distinctions among categories of risk and
limitations to comparisons.
(4) SUBSTITUTION
RISKS.—When a Federal
agency provides a risk assessment or risk character-
ization for a proposed or final regulatory action,
such assessment or characterization shall include a
statement of any significant substitution risks to
human health, where information on such risks has
been provided to the agency.
(5) SUMMARIES OF OTHER RISK ESTIMATES.—
If—
(A) a Federal agency provides a public
comment period with respect to a risk assess-
ment or regulation,
(B) a commenter provides a risk assess-
ment, and a summary of results of such risk as-
sessment, and
(C) such risk assessment is consistent with
the principles and the guidance provided under
this subtitle,
the agency shall present such summary in connec-
tion with the presentation of the agency’s risk as-
sessment or the regulation.
SEC. 3106. GUIDELINES, PLAN FOR ASSESSING NEW INFOR-
MATION, AND REPORT.
(a) GUIDELINES.—Within 15 months after the date
of enactment of this subtitle, the President shall issue
guidelines for Federal agencies consistent with the risk as-
sessment and characterization principles set forth in sec-
tions 3104 and 3105 and shall provide a format for sum-
marizing risk assessment results. In addition, such guide-
lines shall include guidance on at least the following sub-
jects: criteria for scaling animal studies to assess risks to
human health; use of different types of dose-response
models; thresholds; definitions, use, and interpretations of
the maximum tolerated dose; weighting of evidence with
respect to extrapolating human health risks from sensitive
species; evaluation of benign tumors, and evaluation of dif-
ferent human health endpoints.
(b) PLAN.—Within 18 months after the date of en-
actment of this subtitle, each Federal agency shall publish
a plan to review and revise any risk assessment published
prior to the expiration of such 18-month period if the
agency determines that significant new information or
methodologies are available that could significantly alter
the results of the prior risk assessment. The plan shall
provide procedures for receiving and considering new in-
formation and risk assessments from the public. The plan
may set priorities for review and revision of risk assess-
ments based on factors such Federal agency considers ap-
propriate.
(c) REPORT.—Within 3 years after the enactment of
this subtitle, each Federal agency shall provide a report
to the Congress evaluating the categories of policy and
value judgments identified under subparagraph (C) of sec-
tion 3104(b)(2).
(d) PUBLIC COMMENT AND CONSULTATION.—The
guidelines, plan and report under this section, shall be de-
veloped after notice and opportunity for public comment,
and after consultation with representatives of appropriate
State agencies and local governments, and such other de-
partments and agencies, offices, organizations, or persons
as may be advisable.
(e) REVIEW.—The President shall review the guide-
lines published under this section at least every 4 years.
SEC. 3107. DEFINITIONS.
For purposes of this subtitle:
(1) RISK ASSESSMENT.—The term ‘‘risk assess-
ment’’ means the process of identifying hazards and
quantifying or describing the degree of toxicity, ex-
posure, or other risk they pose for exposed individ-
uals, populations, or resources. Such term also refers
to the document containing the explanation of how
the assessment process has been applied to an indi-
vidual substance, activity, or condition.
(2) RISK CHARACTERIZATION.—The term ‘‘risk
characterization’’ means that element of a risk as-
sessment that involves presentation of the degree of
risk in any regulatory proposal or decision, report to
Congress, or other document which is made available
to the public. The term includes discussions of un-
certainties, conflicting data, estimates, extrapo-
lations, inferences, and opinions.
(3) BEST
ESTIMATE.—The term ‘‘best esti-
mate’’ means an estimate which, to the extent fea-
sible and scientifically appropriate, is based on one
of the following:
(A) Central estimates of risk using the
most plausible assumptions.
(B) An approach which combines multiple
estimates based on different scenarios and
weighs the probability of each scenario.
second, fourth, and sixth years following the budget year
and then every other year thereafter.
‘‘(2) As soon as practicable after receiving an alloca-
tion under paragraph (1), each committee shall subdivide
its allocation among its subcommittees or among pro-
grams over which it has jurisdiction.
‘‘(c) POINT OF ORDER.—(1) It shall not be in order
in the House of Representatives or the Senate to consider
any bill or resolution, or amendment thereto, which would
cause the appropriate allocation made under subsection
(b) for a fiscal year of regulatory authority to be exceeded.
‘‘(2) WAIVER.—The point of order set forth in para-
graph (1) may only be waived by the affirmative vote of
at least three-fifths of the Members voting, a quorum
being present.
‘‘(d) DETERMINATIONS BY BUDGET COMMITTEES.—
For purposes of this section, the level of regulatory au-
thority for a fiscal year shall be determined by the Com-
mittee on the Budget of the House of Representatives or
the Senate, as the case may be.
‘‘(e) EXCEEDING ALLOCATION TOTALS.—Whenever
any Committee of the House of Representatives exceeds
its allocation of aggregate 2-year regulatory authority
under subsection (b)(1), any Member of the House of Rep-
resentatives may offer a bill in the House (which shall be