To eliminate corporate welfare.

To eliminate corporate welfare.

Be it enacted by the Senate and House of Representatives 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 2001'.

(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 qualifying foreign trade income.

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 2001.

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. 231. Annual domestic livestock grazing fee.

Sec. 232. Elimination of below-cost sales of timber from National Forest System lands.

Sec. 233. Timberland suitability.

Sec. 234. Reduction in maximum amount of payments under agricultural assistance programs to reflect receipt of Federal irrigation water.

Sec. 235. Elimination of off budget expenditures.

Sec. 236. Deposit of Taylor Grazing Act receipts in Treasury.

Sec. 237. Repeal of livestock feed assistance program.

Sec. 238. Oil and gas rentals.

Sec. 239. Communication permits.

SEC. 101. SHORT TITLE; REFERENCES TO INTERNAL REVENUE CODE OF 1986.

(a) SHORT TITLE- This title may be cited as the `Termination of Energy and Natural Resource Tax Subsidies Act of 2001'.

(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 provision, 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 DRILLING AND DEVELOPMENT COSTS AND OF MINING 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 repealed.

(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 subparagraphs (C), (D), and (E).

(4) Subparagraph (A) of section 59(e)(5) is amended by inserting before the period `, as in effect before the Termination of Energy and Natural Resource Tax Subsidies Act of 2001'.

(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 respect 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 subsection (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 redesignated by paragraph (8), is amended by striking `subparagraphs (B), (C), (D), and (E)' and inserting `subparagraph (B)'.

(10) Section 291 is amended by striking subsection (b).

(11) Subsection (n) of section 312 is amended by striking paragraph (2).

(12) The table of sections for part I of subchapter I of chapter 1 is amended by striking the item relating to section 616.

(13) 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 2001)' 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 2001) shall be treated as a deduction allowable under section 263, 616, or 617 (whichever is appropriate).'

(e) EFFECTIVE DATE- The amendments made by this section shall apply to amounts paid or incurred in taxable 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 following 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, 2001.'

SEC. 104. REPEAL OF PERCENTAGE DEPLETION.

(a) IN GENERAL- Section 613 (relating to limitations on percentage depletion in case of oil and gas wells) is amended by adding at the end the following new subsection:

`(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 subsection:

`(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 alcohol used as fuel) is hereby repealed.

(2) CONFORMING AMENDMENTS-

(A) Subsection (b) of section 38 is amended by striking paragraph (3) and by redesignating the following paragraphs accordingly.

(B) Section 87 is hereby repealed.

(C) Subsection (c) of section 196 is amended by striking paragraph (3) and by redesignating the following paragraphs accordingly.

(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 amended 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 striking the item relating to section 87.

(3) EFFECTIVE DATE- The amendments made by this subsection shall apply to taxable years beginning 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 redesignating 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 sentence:

`Notwithstanding subsection (l)(1), if the Secretary 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 determined 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 paragraphs 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, 2001.

SEC. 107. REPEAL OF CREDIT AND DEDUCTION FOR ELECTRIC 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 VEHICLES 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 before the date of the enactment of the Corporate Welfare Elimination Act of 2001)' after `section 179A(e)(6)(A)'.

(2) Paragraph (25) of section 1016(a) is amended by inserting `(as in effect on the day before the date of the enactment of the Corporate Welfare Elimination Act of 2001)' 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 subchapter 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, 2001.

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, 2001.

SEC. 109. REPEAL OF REHABILITATION CREDIT FOR NONHISTORIC STRUCTURES; REDUCTION OF REHABILITATION CREDIT FOR CERTIFIED HISTORIC 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, 2001.

SEC. 110. REPEAL OF TREATMENT OF BLUE CROSS AND BLUE SHIELD ORGANIZATIONS, ETC.

(a) IN GENERAL- Section 833 (relating to treatment 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, 2001.

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 section 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 `noninsurance business' means any activity which is not an insurance business.

`(B) CERTAIN ACTIVITIES TREATED AS INSURANCE BUSINESSES- For purposes of subparagraph (A), any activity which is not an insurance business shall be treated as an insurance business if--

`(i) it is of a type traditionally carried on by life insurance companies for investment 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 administrative services in connection with

(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 striking the item relating to section 806.

(c) EFFECTIVE DATE- The amendments made by this section shall apply to taxable years beginning after December 31, 2001.

SEC. 112. REPEAL OF ALTERNATIVE TAX ON SMALL PROPERTY AND CASUALTY INSURANCE COMPANIES.

(a) IN GENERAL- Section 831 (relating to tax on insurance companies other than life insurance companies) is amended by striking subsection (b) and by redesignating 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 controlled group of corporations (as defined in section 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 2001)' 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, 2001.

SEC. 113. CASH ACCOUNTING AND EXPENSING FOR AGRICULTURE.

(a) REPEAL OF CERTAIN EXCEPTIONS PERMITTING CERTAIN FARM BUSINESS TO USE CASH METHOD OF ACCOUNTING-

(1) Section 447 (relating to method of accounting for corporations engaged in farming) is amended by striking subsections (d)(2), (e), (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 repealed.

(2) CLERICAL AMENDMENT- The table of sections 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 expenditures by farmers for fertilizer, etc) is hereby repealed.

(2) CLERICAL AMENDMENT- The table of sections for part VI of subchapter B of chapter 1 is amended by striking the item relating to section 180.

(d) EFFECTIVE DATE- The amendments made by this section shall apply to taxable years beginning after December 31, 2001.

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, 2001.

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, 2001.

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 section shall not apply to 2/3 of the costs described in subsection (a)(2) with respect to'.

(b) EFFECTIVE DATE- The amendment made by this section shall apply to taxable years beginning after December 31, 2001.

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:

(c) EFFECTIVE DATE- The amendments made by this section shall apply to taxable years beginning after December 31, 2001.

SEC. 118. REPEAL OF RAPID AMORTIZATION OF REFORESTATION 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

(3) The table of sections for part VI of subchapter 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, 2001.

SEC. 119. TERMINATION OF EXCLUSION OF CERTAIN INCOME 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 amended by redesignating subsection (f) as subsection (g) and by inserting after subsection (e) the following new subsection:

`(f) TERMINATION- This section shall not apply to any taxable year beginning after December 31, 2001.'

(b) EFFECTIVE DATE- The amendment made by this section shall apply to taxable years beginning after December 31, 2001.

SEC. 120. REPEAL OF EXCLUSION FOR QUALIFYING FOREIGN TRADE INCOME.

(a) IN GENERAL-

(1) Section 114 (relating to extraterritorial income) is hereby repealed.

(2) Subpart E of part III of subchapter N of chapter 1 (relating to qualifying foreign trade income) is hereby repealed.

(b) CONFORMING AMENDMENTS-

(1) The second sentence of section 56(g)(4)(B)(i) is amended by striking `or under section 114'.

(2) Section 275(a) is amended--

(A) by inserting `or' at the end of paragraph (4)(A), by striking `, or' at the end of paragraph (4)(B) and inserting a period, and by striking subparagraph (C), and

(B) by striking the following: `A rule similar to the rule of section 943(d) shall apply for purposes of paragraph (4)(C).'.

(3) Paragraph (3) of section 864(e) is amended by striking subparagraph (B).

(4) Section 903 is amended by striking `114, 164(a),' and inserting `164(a)'.

(5) Section 999(c)(1) is amended by striking `941(a)(5),'.

(6) The table of sections for part III of subchapter B of chapter 1 is amended by striking the item relating to section 114.

(7) The table of subparts for such part III is amended by striking the item relating to subpart E.

(c) EFFECTIVE DATE- The amendments made by this section shall apply to transactions after December 31, 2001.

SEC. 121. REPEAL OF DEFERRAL OF INCOME OF CONTROLLED FOREIGN CORPORATIONS.

(a) GENERAL RULE- Subpart F of part III of subchapter N of chapter 1 is amended by striking sections 952, 953, and 954 and inserting the following new sections:

`SEC. 952. SUBPART F INCOME.

`(a) GENERAL RULE- For purposes of this subpart, the term `subpart F income' means the earnings and profits 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 income from sources within the United States which is effectively connected with the conduct by the controlled 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 reduced 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 Practices Act of 1977 if the payor were a United States person.

`(3) Under regulations prescribed by the Secretary, there shall be excluded any part of any earnings 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 restrictions 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 increase earnings and profits by an amount which was previously distributed by the controlled foreign corporation.

Except as provided in this subsection and section 312(k)(4), the earnings and profits of any foreign corporation, and the deficit and earnings and profits of any foreign corporation for any taxable year shall be determined according to rules similar to those applicable to domestic corporations, under regulations prescribed by the Secretary.

`(b) CERTAIN DEFICITS MAY BE TAKEN INTO ACCOUNT-

`(1) TREATMENT OF CERTAIN PRIOR YEAR DEFICITS-

`(A) IN GENERAL- The amount included in the gross income of any United States shareholder under section 951(a)(1)(A)(i) for any taxable year with respect to any controlled foreign corporation shall be reduced by the amount

`(B) QUALIFIED DEFICIT- For purposes of this paragraph--

`(i) IN GENERAL- The term `qualified deficit' means any deficit in the earnings and profits of the controlled foreign corporation for any prior taxable year which began after December 31, 2001, and for which such corporation was a controlled 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 2002- The term `qualified deficit' includes any deficit in earnings and profits for any taxable year beginning before January 1, 2002, to the extent that such deficit qualified as a qualified deficit under subsection (c)(1)(B) of this section (as in effect on the day before the date of the enactment 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 profits of a qualified chain member for a taxable year ending with (or within) the taxable year of such controlled foreign corporation. To the extent 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 controlled foreign corporation, any other corporation which is created or organized under the laws of the same foreign country as the controlled foreign corporation but only if--

`(i) all the stock of such other 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 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 corporations other than the common parent) by such other corporation.

`(C) COORDINATION- This paragraph shall be applied after paragraph (1).

`(3) DETERMINATION OF DEFICIT- In determining 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 COMPANIES.

`(a) SPECIAL RULE FOR CERTAIN CAPTIVE INSURANCE COMPANIES-

`(1) IN GENERAL- For purposes only of taking into account subpart F income which is attributable 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 section 958(a)) any stock of the foreign corporation,

`(B) the term `controlled foreign corporation' 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 section 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 income (within the meaning of subsection (c)) attributable 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 shareholder.

`(3) EXCEPTIONS-

`(A) CORPORATIONS NOT HELD BY INSUREDS- 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 principles of section 883(c)(4) by persons who are (directly or indirectly) insured under any policy of insurance or reinsurance issued by such corporation 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 related person insurance income (determined on a gross basis) of such corporation for such taxable year is less than 20 percent of its insurance income (as so determined) for such taxable year determined without regard to those provisions 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 EFFECTIVELY 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 insurance 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 income granted by the United States under any treaty between the United States and any foreign country, and

`(ii) such corporation meets such requirements 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 ELECTION IN EFFECT-

`(I) IN GENERAL- Except as provided in subclause (II), any election 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 foreign corporation which made an election under subparagraph (C) for any taxable year is a disqualified corporation for any subsequent taxable year, such election shall not apply to any taxable year beginning after such subsequent 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 `disqualified corporation' means, with respect to any taxable year, any foreign corporation which is a controlled foreign corporation for an uninterrupted period of 30 days or more during such taxable year (determined without regard to this subsection) but only if a United States shareholder (determined without regard to this subsection) owns (within the meaning of section 958(a)) stock in such corporation at some time during such taxable year.

`(4) TREATMENT OF MUTUAL INSURANCE COMPANIES- 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 application of this subpart shall be made under regulations 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 determined under paragraph (2) of section 951(a) if--

`(I) only related person insurance income were taken into account,

`(II) stock owned (within the meaning of section 958(a)) by United States shareholders on the last day of

`(III) only distributions received by United States shareholders were taken into account under subparagraph (B) of such paragraph (2), or

`(ii) the amount which would be determined 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 PROVISIONS- The Secretary shall prescribe regulations 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 policy of insurance covering liability arising from services performed as a director, officer, or employee of a corporation or as a partner or employee of a partnership, the person performing such services and the entity for which such services are performed shall be treated as related 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 meeting the stock ownership requirements of section 1248(a)(2) with respect to such foreign corporation, and

`(B) such foreign corporation shall be treated as a controlled foreign corporation.

`(8) REGULATIONS- The Secretary shall prescribe 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 arrangements 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 person (nor any related person to such person) is (directly or indirectly) insured under any policy of insurance or reinsurance issued by such foreign 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 definition of United States shareholder under subsection (a)(1)(A) of this section),

`(B) such foreign corporation would qualify 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 election shall not apply to any taxable year beginning after such subsequent taxable year.

`(3) TREATMENT OF LOSSES- If any corporation treated as a domestic corporation under this subsection is treated as a member of an affiliated group for purposes of chapter 6 (relating to consolidated 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 section 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 assets 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 accumulated 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 subparagraph (A).

`(ii) TREATMENT OF DISTRIBUTIONS- For purposes of this title, any distribution made by a corporation to which

`(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) applies, only earnings and profits accumulated in taxable years beginning before January 1, 1988, shall be taken into account.

`(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 corporations).

`(II) This subpart to the extent such subpart relates to earnings invested 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 corporation transferring (as of the 1st day of such subsequent 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 MAKING 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 income which--

`(1) is attributable to the issuing (or reinsuring) of any insurance or annuity contract--

`(A) in connection with property in, liability arising out of activity in, or in connection with the lives or health of residents of, a country other than the country under the laws of which the controlled foreign corporation is created or organized, or

`(B) in connection with risks not described in subparagraph (A) as the result of any arrangement whereby another corporation receives a substantially equal amount of premiums or other consideration in respect of issuing (or reinsuring) a contract described in subparagraph (A), and

`(2) would (subject to the modifications provided 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 deduction.

`(B) Section 805(a)(5) (relating to operations 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 decrease in reserves),

`(C) section 805(a)(2) (relating to net increase in reserves), and

`(D) section 832(b)(4) (relating to premiums 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 subsection (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 PROVISIONS- Subpart G of part III of subchapter N of chapter 1 (relating to export trade corporations) is hereby repealed.

(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 subparagraph (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 parenthetical) 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 section 953(a)' and inserting `subpart F income attributable to income described in section 953(c)', and

(B) by striking `section 953(a)(1)' and inserting `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 income'.

(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 person 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 subsection (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. 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 country, 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 amended 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' before 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 paragraph (1), and

(B) by striking `, the addition to subpart F income under section 952(a)(3),' in paragraph (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 subchapter 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 foreign corporations beginning after December 31, 2001, and to the taxable years of United States shareholders with

SEC. 122. REPEAL OF DEFERRAL OF TAX UNDER MERCHANT 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 taxable year beginning after December 31, 2001.'

(b) CONFORMING AMENDMENT TO MERCHANT MARINE 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 taxable year beginning after December 31, 2001.'

SEC. 123. REPEAL OF SPECIAL TREATMENT FOR MAGAZINE CIRCULATION EXPENDITURES.

(a) IN GENERAL- Section 173 (relating to circulation 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 computing the regular tax for amounts paid or incurred after December 31, 1986, shall be capitalized 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 amended to read as follows:

`(ii) AMORTIZATION OF ORGANIZATION 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 EXPENDITURES 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 2001'.

(8) The table of sections for part VI of subchapter 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, 2001.

SEC. 124. REPEAL OF SPECIAL TREATMENT FOR RETURNS OF MAGAZINES, PAPERBACKS, AND RECORDS.

(a) IN GENERAL- Section 458 (relating to magazines, 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, 2001.

SEC. 201. PUBLIC RESOURCES DEFICIT REDUCTION ACT OF 2001.

This title may be cited as the `Public Resources Deficit Reduction Act of 2001'.

SEC. 211. FAIR MARKET VALUE FOR RESOURCE DISPOSAL.

(a) IN GENERAL- Notwithstanding any other provision 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 determined 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 arrangement entered into before the date of the enactment of this title unless such contract, lease, or

(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 renewed 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 requirements of subsection (a) whenever the President determines 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 Interior and the Secretary of Agriculture are each authorized to establish and collect from persons subject to programs 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 TRANSFERS- The Secretary of the Interior and the Secretary of Agriculture may, by rule, establish the applicable effective date of any fee to be imposed under this section, except 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 title 31, United States Code, is amended by inserting after paragraph (33) the following new paragraph:

`(34) 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 physical 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 2003 and shall be fully reflected in the fiscal year 2003 budget submitted by the President in February 2001 under section 1105(a) of title 31, United States Code.

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 exploration, mining, beneficiation, and processing activities 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 processes 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 processes 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 otherwise 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 MAINTENANCE 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 (30 U.S.C. 242(e)(2)).

(d) CLAIM MAINTENANCE FEES PAYABLE UNDER 1993 ACT- The claim maintenance fees payable under

(e) WAIVER- (1) The claim maintenance fee required 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 parties 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 defined 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 failure 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 products 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 royalties.

(b) DUTIES OF CLAIM HOLDERS, OPERATORS, AND TRANSPORTERS- (1) A person--

(A) who is required to make any royalty payment under this section shall make such payments to the United States at such times and in such manner 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 royalty 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 payment 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 Secretary 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 engaged 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, origin, and intended destination of the locatable mineral, concentrate, or product derived therefrom in such circumstances as the Secretary determines is appropriate.

(c) RECORDKEEPING AND REPORTING REQUIREMENTS- (1) A claim holder, operator, or other person directly involved in developing, producing, processing, transporting, purchasing, or selling locatable minerals, concentrates, or products derived therefrom, subject to this title, through the point of royalty computation shall establish and maintain any records, make any reports, and provide any information that the Secretary may reasonably require for the purposes of implementing this section or

(2) Records required by the Secretary under this section shall be maintained for 6 years after cessation of all mining activity at the claim concerned unless the Secretary 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 indirectly involved in the production or sales of minerals covered by this subtitle, as the Secretary deems necessary for the purposes of ensuring compliance with the requirements 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, concentrates, or products derived therefrom, to carry out inspection, auditing, investigation, or enforcement (not including the collection of royalties, civil or criminal penalties, 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 information in the possession of the Secretary respecting the production, removal, or sale of locatable minerals, concentrates, 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 pursuant 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 information 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 liability 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 interest rate as is applicable under section 6621(a)(2) of the Internal Revenue Code of 1986. In the case of an underpayment, 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 percent of the amount of that underreporting.

(4) For the purposes of this subsection, the term `underreporting' means the difference between the royalty 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 corrects the underreporting before the date such person receives 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 assessment under paragraph (2) or (3) of this subsection attributable to that portion of the underreporting for which the person responsible for paying the royalty demonstrates 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 Secretary, 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 person liable for royalty payments under this section shall be jointly and severally liable for royalty on all locatable

(h) EXCEPTION- No royalty shall be payable under subsection (a) with respect to minerals processed at a facility 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 (42 U.S.C. 5318) with respect to any portion of such facility.

(i) EFFECTIVE DATE- The royalty under this section 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 imposed 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 Resources Deficit Reduction Act of 2001.'.

(b) CONFORMING AMENDMENT- The table of subchapters for chapter 36 of such Code (relating to certain other excise taxes) is amended by adding at the end the following new item:

SEC. 225. FUND FOR ABANDONED LOCATABLE MINERALS MINE RECLAMATION.

(a) ESTABLISHMENT OF FUND- (1) There is established 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 subtitle referred to as the `Fund'). The Fund shall be administered by the Secretary acting through the Director of the Office of Surface Mining Reclamation and Enforcement.

(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 withdrawals. The Secretary of the Treasury shall invest such portion of the Fund in public debt securities with maturities suitable for the needs of such Fund and bearing interest at rates determined by the Secretary of the Treasury, 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 credited 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, associations, and foundations for the purposes of this section.

(c) USE AND OBJECTIVES OF THE FUND- The Secretary 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 Surface 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 Director 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 limitation.

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 Secretary on or before January 1, 2001; 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

(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 1, 2001; 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 established in this subtitle for changes in the purchasing power of the dollar every 10 years following the date of enactment 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 according to the adjustment process of conditions of the Federal Civil Penalties Inflation Adjustment Act of 1990 (Public Law 101-410; 28 U.S.C. 2461 note).

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 protection 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.

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 LIVESTOCK 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 applicable 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 formula:

          Fair Market Value=Appraised Base Value x 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 Department of Agriculture, and set with the 2001 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 prepared jointly by the Secretary of Agriculture and the Secretary of the Interior entitled `Grazing Fee Review 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 2001.

`(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 Secretarial action, notice of which was published in the Federal Register on May 14, 1986 (51 Fed. Reg. 17874), are abolished, effective as of the date of the enactment of this section, and the advisory functions exercised by such boards shall be exercised only by the appropriate councils established 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 restoration and improved management of riparian areas, and for implementation and enforcement of applicable land management plans, allotment plans, and regulations regarding

`(g) COMMENCEMENT DATE FOR FEES- The first annual domestic livestock grazing fee required by this section shall apply with respect to the grazing season commencing on March 1, 2002.'.

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.