(Senate - October 22, 2003)

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[Pages S13055-S13056]
From the Congressional Record Online through the Government Publishing Office []


      By Mr. SANTORUM (for himself and Mr. Carper):
  S. 1773. A bill to permit biomedical research corporations to engage 
in certain equity financings without incurring limitations on net 
operating loss carryforwards and certain built-in losses, and for other 
purposes; to the Committee on Finance.
  Mr. SANTORUM. Mr. President, today, I am introducing the 
Biotechnology Future Investment Expansion Act of 2003. I am pleased 
that Senator Carper is cosponsoring this important, bipartisan bill.
  Biotechnology holds great promise for breakthroughs in health care, 
agriculture and defense against bioterrorism. However, recent years 
have seen promising biotech medical therapies endangered due to flawed 
tax treatment and a lack of willing capital. This legislation will 
level the playing field to encourage further investment and innovation 
in this vital sector of our economy.
  The nearly 1,500 biotechnology companies in the U.S. have produced 
130 FDA-approved products while another 350 biotech drug products and 
vaccines are currently in clinical trials. Most biotechnology 
researchers work in promising, but relatively narrow fields, and only a 
small number of their peers are qualified to evaluate the theoretical 
promise of any new idea. On average, it takes these researchers more 
than 10 years and $500 million to develop a new biotech therapy, and 
this highly capital-intensive research is more often done at small-to-
medium-sized companies that are yet to market a saleable product.
  These factors combine to create an industry structure that is unique 
in our economic history. Unfortunately, this unique structure prevents 
the biotechnology industry from utilizing research incentives intended 
to promote just the kind of research it engages in. Specifically, net 
operating loss carryforwards (NOLs), which are meant to allow research-
intensive industries like biotechnology to apply current losses against 
future profits for tax purposes, are routinely made worthless to 
biotech companies due to an unintended consequence of the tax code. In 
fact, the current tax treatment of NOLs impairs, rather than fosters, 
biotechnology research. This is because rules designed to prevent abuse 
of NOLs through acquisition often inadvertently trigger restrictions on 
the use of a biotech firm's NOLs, rendering them useless in many cases, 
when all the company has done is raise more capital.
  Section 382, which for the most part has proven to be an effective 
guard against tax abusive NOL trafficking, describes the many 
circumstances that can be classified as an ownership change. 
Unfortunately, those circumstances apply to and penalize the frequent 
biotech practice of raising equity in successive financing rounds. This 
practice is essential to successfully negotiating the long product 
development and Food and Drug Administration approval processes.
  These limitations unintentionally discourage biotechnology research 
and leave the firms that would otherwise conduct that research in dire 
financial straits. Without these firms, the money that is being poured 
into research at the National Institutes of Health (NIH) and elsewhere 
to combat diseases such as cancer, AIDS, hepatitis, cardiovascular 
ailments, diabetes, and central nervous system disorders, as well as 
many rare diseases, will have a significantly reduced potential to lead 
to new cures. We may never know what cures will be lost without action.
  Recognizing the unique structure of the biotech industry--a structure 
that the architects and stewards of the Tax Code likely never 
imagined--this legislation is narrowly drafted to exempt certain 
qualified investments in biotechnology from Section 382 restrictions. 
This change will spur investment in biotechnology, so we can continue 
the pursuit of innovative and life-saving therapies, all while 
continuing to prevent the fraudulent use of NOLs, as Section 382 
  I encourage all of my colleagues to join us in supporting this bill.
      By Mr. KENNEDY (for himself, Mrs. Clinton, Mr. Corzine, Mrs. 
        Feinstein, Mr. Lautenberg, Mr. Levin, Mr. Reed, and Mr. 
  S. 1774. A bill to repeal the sunset provisions in the Undetectable 
Firearms Act of 1988; to the Committee on the Judiciary.
  Mr. KENNEDY. Mr. President, it's a privilege to join my colleagues in 
introducing the Terrorist Firearms Detection Act of 2003.
  Since the atrocities of September 11, Congress has acted with strong 
bipartisan support to win the war on terrorism and protect the country 
from future attacks. We've improved the security of our airports and 
our borders, strengthened our defenses against bioterrorism, and given 
law enforcement new powers to investigate terrorist threats and prevent 
  But Congress has not yet acted to renew one of the Nation's most 
essential protections against terrorism. The Undetectable Firearms 
Act--also known as the ``plastic gun'' law--makes it illegal to 
manufacture, import, possess, or transfer a firearm that is not 
detectable by walk-through metal detectors or airport x-ray machines. 
Only firearms necessary for certain military and intelligence uses are 
  This law was first enacted in 1988, long before the attacks on 9/11, 
and it is more important than ever now. It has been extended once since 
it was first enacted, but it is now scheduled to expire on December 10. 
The administration has made no public statements on the need to renew 
it, and neither has the Republican leadership of the House or Senate. 
Unless Congress and the President act soon, Americans will find 
themselves needlessly vulnerable to terrorist attacks and other gun 
violence in airlines, airports, schools, and office buildings.
  The gun industry clearly has the technology to manufacture firearms 
that cannot be detected by metal detectors and x-ray machines.
  As early as 1986, Congress's Office of Technology Assessment found 
that ``technology does exist to manufacture certain firearms which 
would be completely or almost completely non-metallic,'' and that 
``plastic handguns may be available on the commercial market quite 
  A 1985 report by the American Firearms Industry emphasized the 
profitability of plastic guns for the industry: ``The American plastic 
gun will shortly make its appearance. Plastic is the `common' word, but 
it's really liquid crystal polymer. . . . [I]n the long run, if a 100% 
plastic gun works, this would be great for sales. What this does is 
make everything that has been produced in this century obsolete. That 
is exactly what our industry desperately needs. This will give us a 
whole new, and real reason to resell every hunter and shooter in 
  In 1986, Libyan dictator Muammar Qaddafi tried to purchase more than 
100 handguns produced in Austria and made almost entirely of hardened 
  The technology of gun manufacturers has clearly improved since the 
1980's--and the desire of terrorists to attack Americans has soared. We 
know that terrorists are exploiting the weaknesses and loopholes in 
U.S. gun laws.
  In 2000, a member of the Middle East terrorist group Hezbollah was 
convicted in Detroit on gun charges and conspiracy to ship guns and 
ammunition to Lebanon. He had bought many of those guns at gun shows in 
  In 2001, American soldiers found a terrorist training manual entitled 
``How Can I Train Myself for Jihad'' in a house in Afghanistan. It 
stated: ``In other countries, e.g., some states of USA. . . . it is 
perfectly legal for members of the public to own certain types of 
firearms. If you live in such a country, obtain an assault rifle 
legally . . . learn how to use it properly and go and practice in the 
areas allowed for such training.''
  What could be clearer? We know what's coming. Terrorists are eager to 
exploit weaknesses in our gun laws, and there is no doubt that 
Americans will be at much greater risk if Congress fails to renew the 
Undetectable Firearms Act.
  Just last week, Admiral James M. Loy of the Transportation Security 
Administration testified that, according to U.S. intelligence, 
terrorists are more likely to try to hijack a commercial airliner than 
attempt to shoot

[[Page S13056]]

down an aircraft with shoulder-fired missiles. The December 2001 arrest 
of attempted ``shoe bomber'' Richard Reid showed just how committed 
terrorists are to smuggling undetectable plastic explosives onto 
airplanes. Reid was stopped at the last minute by alert passengers and 
crew, not by any detection machinery. The legalization of undetectable 
guns will clearly increase the danger to flight crews, passengers and 
other citizens exponentially.
  The need for action is urgent. The Terrorist Firearms Detection Act 
will renew the Act and make it permanent. The danger to security from 
plastic firearms will not sunset, and the law that bans them shouldn't 
sunset either.
  The Terrorist Firearms Detection Act is supported by Americans for 
Gun Safety, the Brady Campaign to Prevent Gun Violence United with the 
Million Mom March, the Coalition to Stop Gun Violence, and the Violence 
Policy Center. The only organization to have opposed the ban on plastic 
guns in the past is the National Rifle Association, and it's fair to 
ask, ``Whose side are they on?'' If they insist on another sunset, 
perhaps we can sunset the NRA instead.
  The bill we are introducing today is only one of several steps that 
Congress should take to protect our people from gun violence. Senator 
Lautenberg's Homeland Security Gun Safety Act will close the loopholes 
in our gun laws that allow rogue gun dealers to evade the law and sell 
guns illegally to criminals and terrorists. That's how the D.C. snipers 
acquired their Bushmaster rifle.
  Congress should also act to strengthen criminal background checks for 
gun purchases under the Brady Law, renew the assault weapons ban, and 
close the ``gun show loophole'' once and for all. Each of these gun-
safety measures is needed to protect our people in communities across 
the country, and I urge my colleagues to support them.