[Congressional Record (Bound Edition), Volume 156 (2010), Part 5] [Senate] [Pages 6503-6508] [From the U.S. Government Publishing Office, www.gpo.gov]STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS By Mrs. BOXER: S. 3268. A bill to amend title 49, United States Code, to prohibit individuals who have worked on motor vehicle safety issues at NHTSA from assisting motor vehicles manufacturers with NHTSA compliance matters for a period of 3 years after terminating employment at NHTSA, and for other purposes; to the Committee on Commerce, Science, and Transportation. Mrs. BOXER. Mr. President, last August, California Highway Patrol Officer Mark Saylor, his wife, 13 year old daughter, and brother-in-law were killed in a tragic car accident that shocked the community of San Diego and the nation. Their vehicle, a rental Lexus ES350, reached speeds of 120 mph as the family desperately called 911 in vain for help. This tragedy should not have occurred, and sadly, it is just one of many examples across California and the country of accidents involving Toyota and Lexus vehicles. These accidents raise serious questions about the effectiveness of the recalls and whether Toyota and federal regulators at the National Highway Traffic Safety Administration, NHTSA, took appropriate and timely action to protect the public. At the Senate Commerce Committee hearing on the Toyota recalls this past March, I called attention to reports that former NHTSA employees now employed by Toyota worked to limit Toyota's recall. In fact, Toyota's own internal documents stated that the company had achieved a ``win'' by ``negotiating an equipment recall'' on the Camry and Lexus ES vehicles that saved Toyota $100 million. It is a shocking example of a company counting profit wins at the expense of the public's health and safety. The revolving door that exists between government regulators at NHTSA and the auto industry is unacceptable, and it puts consumers at risk. In fact, the Washington Post reported that as many as 33 former NHTSA and Department of Transportation, DOT, employees continue to work on vehicle recalls and safety compliance, capacities that deal directly with NHTSA's oversight authority over the industry. That is why I am introducing the Motor Vehicle Safety Integrity Employment Act, to end the revolving door that exists between our vehicle safety regulatory agency--NHTSA--and the auto industry. My bill prohibits NHTSA employees from working for auto manufacturers for three years in any job that involves written or oral communication with NHTSA, representing or advising a manufacturer with respect to motor vehicle safety, or assisting a manufacturer with responding to a request for information from NHTSA. This restriction applies to high ranking NHTSA officials, as well as any individual whose responsibilities during the last 12 months at NHTSA included administrative, managerial, legal, supervisory, or senior technical responsibility for any motor vehicle safety-related program. My legislation provides penalties for individuals and manufacturers who violate the law. Manufacturers are subject to fines not less than $100,000 and the amount equal to 90 percent annual compensation paid to that employee. Finally, our bill requires the Inspector General to conduct a comprehensive study of DOT's policies related to post-employment restrictions for employees who handle motor vehicle safety related work beyond NHTSA at DOT, and DOT employees who handle all safety related work across all transportation modes. My legislation gives DOT the authority to take appropriate action as warranted. We need to ensure that consumer safety is not compromised by cozy relationships between government regulators and industry. I am proud to introduce this bill to protect the public and look forward to working with my colleagues to enact this legislation as quickly as possible. Mr. President, I ask unanimous consent that a letter of support be printed in the Record. There being no objection, the material was ordered to be printed in the Record, as follows: [[Page 6504]] April 27, 2010. Hon. Barbara Boxer, U.S. Senate, Washington, DC. Dear Senator Boxer; We are writing to strongly endorse the Motor Vehicle Safety Integrity Employment Act you are sponsoring that will close a legal loophole concerning post- government employment in the auto industry by former government personnel of the National Highway Traffic Safety Administration (NHTSA). Congressional hearings and media investigations into high speed crashes and deaths caused by unintended acceleration, the premature closure of agency defect investigations and the subsequent recall of ten million vehicles by Toyota Motor Corporation exposed a revolving door of former NHTSA regulators representing the automaker in safety matters before the agency. Activities by former NHTSA employees who are subsequently hired by automakers have the potential to jeopardize the agency's investigations, rulemakings, and oversight functions. These ethics issues need to be corrected and addressed in legislation. It is essential and expected that NHTSA conducts impartial analyses of all vehicle safety issues. It is critical to protect the integrity of the agency's investigatory and enforcement role, as well as to ensure public safety when the agency sets safety standards. Your legislation is needed in order to restore the trust of the American public in our government regulators and ensure the safety of millions of vehicles that families depend on to travel to work, transport children to school and to bring us home safely. Your legislation, when enacted, will prevent undue industry influence in the agency's enforcement and regulatory decision-making and address an unacceptable defect in current ethics restrictions for former NHTSA employees. Thank you for your leadership. Sincerely, Joan Claybrook, President Emeritus, Public Citizen; Clarence Ditlow, Executive Director, Center for Auto Safety; Janette Fennell, Founder & President, KIDS AND CARS; Rosemary Shahan, President, Consumers for Auto Reliability and Safety; Ami Gadhia, Policy Counsel, Consumers Union; Jacqueline S. Gillan, Vice President, Advocates for Highway and Auto Safety; Jack Gillis, Director of Public Affairs, Consumer Federation of America; Andrew McGuire, Executive Director, Trauma Foundation; Ellen Bloom, Director, Federal Policy and Washington Office, Consumers Union. ______ By Mr. McCAIN: S. 3270. A bill to include the county of Mohave, in the State of Arizona, as an affected area for purposes of making claims under the Radiation Exposure Compensation Act based on exposure to atmospheric nuclear testing; to the Committee on the Judiciary. Mr. McCAIN. Mr. President, I am pleased to introduce legislation that would amend the Radiation Exposure Compensation Act, RECA, by adding Mohave County, AZ, to the list of counties eligible for downwinder compensation. A similar proposal was introduced in the House of Representatives by Congressman Trent Franks. I'm hopeful this bill will help close a painful chapter for those Arizonans who were arguably the most affected by nuclear weapons testing during the Cold War. In 1990, Congress enacted the Radiation Exposure Compensation Act to compensate victims or their survivors who suffered certain illnesses caused by fallout exposure ``down wind'' of atmospheric nuclear weapons testing in the 1940's and lasting into the 1960's. Among various requirements, compensation eligibility is limited to certain affected counties which are specifically listed in the law. Astonishingly, despite its close proximity to the Nevada Test Site, the original RECA law and its subsequent amendments never listed Mohave County proper as an affected area. I believe the people of Mohave County deserve to see righted this unjust policy which has obstructed their ability to qualify for compensation. I understand that several of my colleagues have proposed similar RECA amendments based on data suggesting that their home states were also ``down wind'' of nuclear weapons testing. In addition, my colleague, Senator Tom Udall, has introduced a far reaching legislative proposal to vastly expand the RECA program. I would hope that as these various RECA proposals advance through the legislative process, Congress gives thorough consideration to an April 2005 report by the National Academy of Sciences, NAS, that assessed, among other things, whether additional geographic areas should be added to the RECA program. The NAS study revealed a much wider area of radioactive fallout then originally identified when the RECA law was first written. The report also recommended replacing the geographic area criteria with a new science- based process for determining compensation eligibility, a method similar to what's used in the Radiation Exposed-Veterans Compensation Act and the Energy Employees Occupational Illness Compensation Program Act. I believe it is worthwhile for policy makers to consider the recommendations of the NAS report. In the meantime and until a comprehensive overhaul of RECA is developed, I will work within the parameters of the existing RECA law in my efforts to ensure that the people of Mohave County are treated fairly in this matter. I encourage my colleagues to support this bill. ______ By Mr. UDALL of New Mexico: S. 3271. A bill to amend section 30166 of title 49, United States Code, to require the installation of event data recorders in all motor vehicles manufactured for sale in the United States, and for other purposes; to the Committee on Commerce, Science, and Transportation. Mr. UDALL of New Mexico. Mr. President, I rise today to introduce legislation that I believe will help improve the safety of automobile drivers and passengers. The legislation, the Vehicle Safety Improvements Act, would, among other things, require all automobiles sold in the United States be equipped with an event data recorder, an EDR. Event data recorders provide a report of a vehicle's operating statistics--things like the throttle position and speed of the vehicle--during the last seconds before and immediately after a crash. They serve a similar function as the black boxes that are in each airplane by documenting critical information leading up to an incident. Unlike black boxes, an EDR doesn't record the voices of the vehicle occupants. It simply preserves the vehicle's internal operating data. The information stored by an EDR can be crucial in determining what happened in the last few seconds prior to a crash and the moments immediately after. If a vehicle doesn't have a recorder, or if the data is not easily accessible, this information can be lost. That leaves local and Federal investigators little to work with as they try to determine whether a vehicle malfunction was to blame. Unfortunately, while the majority of vehicles in the United States are currently equipped with these recorders, many still do not have them. In 2006, the National Highway Traffic Safety Administration, NHTSA, created a framework for the type of information to be recorded by event data recorders in light-duty vehicles, but it stopped short of requiring the recorders. If the vehicle manufacturer installs an event data recorder in a car, it must comply with the rule. But there is no requirement that the manufacturer install the recorder in the first place. NHTSA's 2006 rule further requires the manufacturers to ensure that a tool to read the recorder is commercially available. Today, while there are tools commercially available, there is no one universal tool-- creating a challenge for investigators who must carry a suitcase of readers with them on investigations. This is an unnecessary burden that can be easily addressed. This particular burden came to light recently in the context of the tragic Toyota crashes. During hearings held by Chairman Rockefeller in the Commerce Committee, we learned that although Toyotas were equipped with EDRs, until recently they were only able to be read by one computer in the entire United States. That is why, in addition to requiring recorders in all vehicles for sale in the United States, the Vehicle Safety Improvements Act will also require that recorders be easily read by a universal tool regardless of make or model of the vehicle. [[Page 6505]] In addition, NHTSA's rule also fails to address medium- and heavy- duty vehicles. My legislation would require NHTSA to issue a rule addressing those vehicles as well. While they comprise a small percentage of the vehicle miles traveled on an annual basis, medium- and heavy-duty vehicles are overrepresented in crashes resulting in fatalities. In these crashes, an event data recorder would be a useful tool during the crash investigation in determining the cause of the crash. Finally, my bill protects privacy by ensuring that the data can only be accessed with the vehicle owner's permission when authorized by a court or a legal proceeding or by a government motor vehicle safety agency. Adding these recorders would not cost much. In their rulemaking, NHTSA estimated the cost for the manufacturer to install an event data recorder at just over $2 per vehicle. That is a small price to pay for the critical information that can ultimately be used to save lives in the future. Vehicle crashes are horrible and oftentimes tragic. They result in damage, injuries, and too often fatalities. They create congestion and cost our economy billions of dollars each year. Event data recorders will not prevent crashes, but they will help to determine what caused the crash and, in the case of a vehicle malfunction, help to identify solutions to improve vehicle performance. In the end, the data they provide will serve to ensure a safer travel environment for all. I urge my Senate colleagues to join me in this important effort to improve vehicle safety. I look forward to working with them and my chairman, Chairman Rockefeller, who has been a champion on issues of transportation safety, to pass the Vehicle Safety Improvements Act this year. ______ By Mr. BAUCUS (for himself and Mr. GRASSLEY): S. 3275. A bill to extend the Caribbean Basin Economic Recovery Act, to provide customs support services to Haiti, and for other purposes; to the Committee on Finance. Mr. BAUCUS. Mr. President, one of Aesop's Fables teaches us, ``In union there is strength.'' In 2009, Haiti's future was beginning to strengthen. A U.S. trade preference program, known as the Haitian Hemispheric Opportunity through Partnership Encouragement Act, or HOPE II, created incentives to increase textile and apparel production in Haiti. As a result, Haiti's textile and apparel sector was growing, creating new jobs and a viable economic future. But on January 12, 2010, Haiti was struck by a 7.0 magnitude earthquake that took hundreds of thousands of lives, left a million people homeless, and shattered Haiti's burgeoning economy. As Haiti recovers from this devastation, we must unite with our neighbor to help provide the strength that it needs to recover and rebuild. Today, Senator Grassley and I introduce the Haiti Economic Lift Program Act of 2010--the HELP Act--to strengthen Haiti's path to economic recovery. Congressmen Levin, Camp, and Rangel are also introducing a companion bill in the House. The HELP Act would build on the success of the HOPE Act by expanding access to the U.S. market for textile and apparel products from Haiti. As a result, it would create incentives for immediate and long-term private investment in Haiti, which would in turn create sustainable jobs and a stable economy. The HELP Act would also extend all of our trade preference programs for Haiti to 2020, ensuring that Haiti could rely on these tariff benefits as it plans its own economic future. As we considered the needs of Haiti, we were also watchful of the needs of our domestic textile industry. We worked closely with the domestic industry for months to craft a bill that would not hurt our own workers, even as we help others. The HELP Act represents a landmark union among the Senate, the House, Democrats, Republicans, and the domestic textile industry to help Haiti recover from its devastation. This union resulted in an unprecedented bill that will help Haiti emerge from the earthquake stronger than ever. I urge my colleagues to join this union and quickly approve this legislation. Mr. GRASSLEY. Mr. President, I have come to the floor to speak about a bill that Senator Baucus and I have introduced today. It's called the Haiti Economic Lift Program Act of 2010. The purpose of our bill is to help Haiti recover from the devastation it suffered in the massive earthquake that struck the country in January. How we respond to natural disasters says a lot about ourselves, whether it's flooding in Iowa or an earthquake in Haiti. The idea behind the bill is simple. First, we extend current trade preferences for Haiti through fiscal year 2020, to provide more certainty for companies doing business either in Haiti or with Haitian partners. Second, we grant additional duty-free access to the U.S. market for targeted categories of textile and apparel products. That will help to draw more investment into Haiti's economy and thereby promote long-term job creation, economic development, and political stability. Our bill is a bipartisan, bicameral compromise. It is the product of 3 months of collaborative negotiations among the chairmen and ranking members of the Senate Finance and House Ways and Means committees and with representatives of the U.S. textile industry and the Haitians themselves. We also reached out to members of Congress who have constituent textile and apparel interests, to ensure that their concerns were addressed. Our ability to reach agreement on the bill is a testament to the good will and good faith of all those involved in our negotiations. The result reflects a careful balancing of interests, including Haiti's interest in spurring more investment in its economy, the interests of our trading partners in Central America in maintaining existing trade relationships, and our own domestic textile interests. We took special care to address the sensitivities of our domestic producers. In fact, I have a letter here from the two leading U.S. textile industry organizations. Their letter expresses support for our bill and encourages the Senate to pass the bill in an expeditious manner by unanimous consent. Finally, I want to make special mention of my colleagues from states with textile interests, and to thank them for their constructive input in developing this legislation. Without their engagement and support, we would not have arrived at the compromise bill that is being introduced today in both the Senate and the House of Representatives. This is a balanced bill that addresses an urgent priority in the Western Hemisphere. I ask my colleagues to give the bill their unanimous support when it comes before the Senate. Mr. President, I ask unanimous consent that a letter of support be printed in the Record. There being no objection, the material was ordered to be printed in the Record, as follows: April 26, 2010. Hon. Max Baucus, Chairman, Committee on Finance, U.S. Senate, Dirksen Senate Office Building, Washington, DC. Hon. Charles Grassley, Ranking Member, Committee on Finance, U.S. Senate, Dirksen Senate Office Building, Washington, DC. Dear Chairman Baucus and Ranking Member Grassley: As representatives of the United States textile industry, we are writing in regard to the Haiti Economic Lift Program Act of 2010, a bill to provide enhanced market access for apparel products manufactured in Haiti. After lengthy negotiations with your staffs, we are pleased that we were able to reach an acceptable compromise on this important legislation. While the bill provides Haiti with a path forward for long-term economic recovery in the wake of its devastating earthquake, it also takes into account various sensitivities from the perspective of the U.S. textile industry. For example, the bill grants significant increases in duty free treatment through a system of Tariff Preference Levels (TPLs) but also institutes sub-limits on highly sensitive products that can be exported under the [[Page 6506]] TPLs. The sub-limits were a key priority for the domestic industry and will prevent over concentration of exports in one or two key areas that could be particularly damaging to U.S. producers. In addition, the bill extends the current Caribbean Basin Trade Partnership Act (CBTPA) through 2020. This extension will help to provide long-term certainty for a program that is of significant value for U.S. and Western Hemispheric trading partners. Obviously, we take very seriously the impact that additional duty free imports may have on U.S. producers and workers as well as our Western Hemispheric customers. Noting those concerns, we also recognize that the devastating circumstances in Haiti produced an exceptional case that motivated Congress to develop a quick response and have worked with the Committee to develop a package that strikes an acceptable balance. We must stress, however, that this package does not set a precedent for Any future trade preference legislation. For all these reasons, we are encouraging our Congressional members that represent the nearly 500,000 U.S. textile and apparel workers to approve this legislation in an expeditious manner under suspension of the rules in the House and by unanimous consent in the Senate. Sincerely, Augustine D. Tantillo, Executive Director, American Manufacturing Trade Action Coalition (AMTAC). Cass M. Johnson, President, National Council of Textile Organizations (NCTO). ______ Mr. WYDEN (for himself and Ms. Murkowski): S. 3276. A bill to provide an election to terminate certain capital construction funds without penalties; to the Committee on Finance. Mr. WYDEN. Mr. President, today I am introducing a bill to reform the Capital Construction Fund to address major changes in the Nation's fisheries and to allow the Nation's fishers to have access to needed funds, to prevent over-fishing and to help create jobs. The Capital Construction Fund, CCF, program was originally developed at a time when American fishes were having a hard time competing with highly efficient foreign fishing vessels--modern boats that often harvested US fishery resources within sight of our own shores. The initial idea behind the CCF Program was to enable US fishers to accumulate the funds necessary to develop a modern fishing fleet by allowing them to deposit a portion of their fishing-related earnings into a CCF savings account on a tax-deferred basis. Under the CCF program, monies subsequently withdrawn from the CCF accounts would remain tax free as long as they were invested in new or rebuilt fishing vessels. At the same time, any unauthorized withdrawals from CCF accounts were subject to severe interest and other penalties. The program was a success--the CCF program helped the U.S. industry build a modern state-of-the-art fishing fleet. Unfortunately, that fleet has now become overcapitalized--a problem that has been exacerbated as managers have become more and more concerned about potential overfishing and have begun to reduce the amount of fish that they allow fishers to catch each year. As a result, the U.S. commercial fishing fleet now has more harvesting capacity than the U.S. fishery resource can sustainably support. The problem now is that the monies that remain on deposit in CCF accounts represent a potential for further overcapitalization at a time when less capitalization is needed. Yet the CCF regulations currently penalize withdrawals made for anything other than a bigger or better boat. The issue now is what to do about the money that remains ``stranded'' in existing CCF accounts. Ironically, just as the current generation of fishers is getting ready to retire, the program puts heavy penalties on them if they take money out of their CCF accounts without using it for anything other than to further capitalize an already overcapitalized fleet. The resulting situation is problematic for the fishers, the industry and the resource. That's why I am introducing legislation today along with my colleague Senator Murkowski--to address the problem of stranded capital still on deposit in various CCF accounts and to relieve the pressure to increase further capitalization of the fishing fleet. My legislation will enable CCF fund-holders to make a one-time withdrawal from their CCF accounts without requiring them to re-invest it in the fishing industry. Instead, they will be required to pay the taxes due on the monies withdrawn, but without having to pay interest or other penalties on such withdrawals. Those funds would be freed up for other purposes, including starting a new business and finding other ways to support and create jobs. An income-averaging formula would be applied to the withdrawals so as to avoid an excessive tax rate on the one-time withdrawal. The fishers taking advantage of such an opportunity to take money out of their CCF accounts penalty free would then be required to close their CCF accounts and would be prohibited from further participation in the program. This is a win-win-win situation. The fisher gets to take the money out of his CCF without having to pay penalties and interest, but still pays the taxes when due; the Government gets taxes on the withdrawals; and the resource and the fishers who remain in the fishery avoid further capitalization of an already over-capitalized industry. I look forward to working with Senator Murkowski, the fishing community and the bill's other supporters to advance this legislation to the President's desk. Mr. President, I ask unanimous consent that the text of the bill be printed in the Record. There being no objection, the text of the bill was ordered to be printed in the Record, as follows: S. 3276 Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. ELECTION TO TERMINATE CERTAIN CAPITAL CONSTRUCTION FUNDS. (a) Amendments to Chapter 535 of Title 46, United States Code.-- (1) In general.--Chapter 535 of title 46, United States Code, is amended by adding at the end the following new section: ``Sec. 53518. Election to terminate ``(a) In General.-- ``(1) Election.--Any person who has entered into an agreement under this chapter with respect to a vessel operated in the fisheries of the United States may make an election under this paragraph to terminate the capital construction fund established under such agreement. ``(2) Effect of election on individuals.--In the case of an individual who makes an election under paragraph (1) with respect to a capital construction fund-- ``(A) any amount remaining in such capital construction fund on the applicable date shall be distributed to such individual as a nonqualified withdrawal, except that-- ``(i) in computing the tax on such withdrawal, except as provided in paragraph (4), subsections (c)(3)(B) and (f) of section 53511 shall not apply; and ``(ii) the taxpayer may elect to average the income from such withdrawal as provided in subsection (b); and ``(B) such individual shall not be eligible to enter into, directly or indirectly, any future agreement to establish a capital construction fund under this chapter with respect to a vessel operated in the fisheries of the United States. ``(3) Effect of election for entities.-- ``(A) In general.--In the case of a person (other than an individual) who makes an election under paragraph (1)-- ``(i) the total amount in the capital construction fund on the applicable date shall be distributed to the shareholders, partners, or members of such person in accordance with the terms of the instruments setting forth the ownership interests of such shareholders, partners, or members; ``(ii) each shareholder, partner, or member shall be treated as having established a special temporary capital construction fund and having deposited amounts received in the distribution into such special temporary capital construction fund; ``(iii) no gain or loss shall be recognized with respect to such distribution; ``(iv) the basis of any shareholder, partner, or member in the person shall not be reduced as a result of such distribution; ``(v) any amounts not distributed pursuant to clause (i) shall be distributed in a nonqualified withdrawal; and ``(vi) such person shall not be eligible to enter into, directly or indirectly, any future agreement to establish a capital construction fund under this chapter with respect to a vessel operated in the fisheries of the United States. ``(B) Special temporary capital construction funds.--For purposes of this chapter, a special temporary capital construction fund shall be treated in the same manner as a capital construction fund established under [[Page 6507]] section 53503, except that the following rules shall apply: ``(i) A special temporary capital construction fund shall be established without regard to any agreement under section 53503 and without regard to any eligible or qualified vessel. ``(ii) Section 53505 shall not apply and no amounts may be deposited into a special temporary capital construction fund other than amounts received pursuant to a distribution described in subparagraph (A)(i). ``(iii) In the case of any amounts distributed from a special temporary capital construction fund directly to a capital construction fund of the taxpayer established under section 53505-- ``(I) no gain or loss shall be recognized; ``(II) the limitation under section 53505 shall not apply with respect to any amount so transferred; ``(III) such amounts shall not reduce taxable income under section 53507(a)(1); and ``(IV) for purposes of section 53511(e), such amounts shall be treated as deposited in the capital construction fund on the date that such funds were deposited in the capital construction fund with respect to which the election under paragraph (1) was made. ``(iv) In the case of any amounts distributed from a special temporary capital construction fund pursuant to an election under paragraph (1), clauses (i) and (ii) of paragraph (2)(A) shall not apply to so much of such amounts as are attributable to earnings accrued after the date of the establishment of such special temporary capital construction fund. ``(v) Any amount not distributed from a special temporary capital construction fund before the due date of the tax return (including extension) for the last taxable year of the individual ending before January 1, 2012, shall be treated as distributed to the taxpayer on the day before such due date as if an election under paragraph (1) were made by the taxpayer on such day. ``(C) Regulations.--The joint regulations shall provide rules for-- ``(i) assigning the amounts received by the shareholders, partners, or members in a distribution described in subparagraph (A)(i) to the accounts described in section 53508(a) in special temporary capital construction funds; and ``(ii) preventing the abuse of the purposes of this section. ``(4) Tax benefit rule.--Rules similar to the rules under section 53511(f)(3) shall apply for purposes of determining tax liability on any nonqualified withdrawal under paragraph (2)(A), (3)(A)(v), or (3)(B)(v). ``(5) Applicable date.--For purposes of this subsection, the term `applicable date' means-- ``(A) with respect to any capital construction fund which has a balance of less than $1,000,000 on the date that an election under paragraph (1) was made, the date of such election; and ``(B) with respect to any other capital construction fund, the last day of the taxable year which includes the date of the enactment of this section. ``(6) Election.--Any election under paragraph (1)-- ``(A) may only be made-- ``(i) by a person who maintains a capital construction fund with respect to a vessel operated in the fisheries of the United States on the date of the enactment of this section; or ``(ii) by a person who maintains a capital construction fund which was established pursuant to paragraph (3)(A)(ii) as a result of an election made by an entity in which such person was a shareholder, partner, or member; ``(B) shall be made not later than the due date of the tax return (including extensions) for the person's last taxable year ending on or before December 31, 2012; and ``(C) shall apply to all amounts in the capital construction fund with respect to which the election is made. ``(b) Election to Average Income.--At the election of an individual who has received a distribution described in subsection (a), for purposes of section 1301 of the Internal Revenue Code of 1986-- ``(1) such individual shall be treated as engaged in a fishing business, and ``(A) such distribution shall be treated as income attributable to a fishing business for such taxable year.''. (2) Conforming amendments.-- (A) Section 53511 of title 46, United States Code, is amended by striking ``section 53513'' and inserting ``sections 53513 and 53518''. (B) The table of sections for chapter 535 of title 46, United States Code, is amended by inserting after the item relating to section 53517 the following new item: ``53518. Election to terminate.''. (b) Amendments to the Internal Revenue Code of 1986.-- (1) In general.--Section 7518 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection: ``(j) Election to Terminate Capital Construction Funds.-- ``(1) In general.--Any person who has entered into an agreement under chapter 535 of title 46 of the United States Code, with respect to a vessel operated in the fisheries of the United States may make an election under this paragraph to terminate the capital construction fund established under such agreement. ``(2) Effect of election on individuals.--In the case of an individual who makes an election under paragraph (1) with respect to a capital construction fund, any amount remaining in such capital construction fund on the applicable date shall be distributed to such individual as a nonqualified withdrawal, except that-- ``(A) in computing the tax on such withdrawal, except as provided in paragraph (4), paragraphs (3)(C)(ii) and (6) of subsection (g) shall not apply, and ``(B) the taxpayer may elect to average the income from such withdrawal as provided in paragraph (7). ``(3) Effect of election for entities.-- ``(A) In general.--In the case of a person (other than an individual) who makes an election under paragraph (1)-- ``(i) the total amount in the capital construction fund on the applicable date shall be distributed to the shareholders, partners, or members of such person in accordance with the terms of the instruments setting forth the ownership interests of such shareholders, partners, or members, ``(ii) each shareholder, partner, or member shall be treated as having established a special temporary capital construction fund and having deposited amounts received in the distribution into such special temporary capital construction fund, ``(iii) no gain or loss shall be recognized with respect to such distribution, ``(iv) the basis of any shareholder, partner, or member in the person shall not be reduced as a result of such distribution, and ``(v) any amounts not distributed pursuant to clause (i) shall be distributed as a nonqualified withdrawal. ``(B) Special temporary capital construction funds.--For purposes of this section, a special temporary capital construction fund shall be treated in the same manner as a capital construction fund established under section 53503 of title 46, United States Code, except that the following rules shall apply: ``(i) Subsection (a) shall not apply and no amounts may be deposited into a special temporary capital construction fund other than amounts received pursuant to a distribution described in subparagraph (A)(i). ``(ii) In the case of any amounts distributed from a special temporary capital construction fund directly to a capital construction fund of the taxpayer established under section 53505 of title 46, United States Code-- ``(I) no gain or loss shall be recognized; ``(II) the limitation under subsection (a) shall not apply with respect to any amount so transferred; ``(III) such amounts shall not reduce taxable income under subsection (c)(1)(A); and ``(IV) for purposes of subsection (g)(5), such amounts shall be treated as deposited in the capital construction fund on the date that such funds were deposited in the capital construction fund with respect to which the election under paragraph (1) was made. ``(iii) In the case of any amounts distributed from a special temporary capital construction fund pursuant to an election under paragraph (1), subparagraphs (A) and (B) of paragraph (2) shall not apply to so much of such amounts as are attributable to earnings accrued after the date of the establishment of such special temporary capital construction fund. ``(iv) Any amount not distributed from a special temporary capital construction fund before the due date of the tax return (including extension) for the last taxable year of the individual ending before January 1, 2012, shall be treated as distributed to the taxpayer on the day before such due date as if an election under paragraph (1) were made by the taxpayer on such day the date. ``(C) Regulations.--The joint regulations shall provide rules for-- ``(i) assigning the amounts received by the shareholders, partners, or members in a distribution described in subparagraph (A)(i) to the accounts described in subsection (d)(1) in special temporary capital construction funds; and ``(ii) preventing the abuse of the purposes of this section. ``(4) Tax benefit rule.--Rules similar to the rules under subsection (g)(6)(B) shall apply for purposes of determining tax liability on any nonqualified withdrawal under paragraph (2), (3)(A)(v), or (3)(B)(iv). ``(5) Applicable date.--For purposes of this subsection, the term `applicable date' means-- ``(A) with respect to any capital construction fund which has a balance of less than $1,000,000 on the date that an election under paragraph (1) was made, the date of such election; and ``(B) with respect to any other capital construction fund, the last day of the taxable year which includes the date of the enactment of this subsection. ``(6) Election.--Any election under paragraph (1)-- ``(A) may only be made-- ``(i) by a person who maintains a capital construction fund with respect to a vessel operated in the fisheries of the United States [[Page 6508]] on the date of the enactment of this subsection, or ``(ii) by a person who maintains a capital construction fund which was established pursuant to subparagraph (3)(A)(ii) as a result of an election made by an entity in which such person was a shareholder, partner, or member, ``(B) shall be made not later than the due date of the tax return (including extensions) for the person's last taxable year ending on or before December 31, 2012, and ``(C) shall apply to all amounts in the capital construction fund with respect to which the election is made. ``(7) Election to average income.--At the election of an individual who has received a distribution described in paragraph (2), for purposes of section 1301-- ``(A) such individual shall be treated as engaged in a fishing business, and ``(B) such distribution shall be treated as income attributable to a fishing business for such taxable year.''. (2) Conforming amendment.--Section 7518(g)(1) of such Code is amended by striking ``subsection (h)'' and inserting ``subsections (h) and (j)''. ____________________