99–008

107TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 1st Session 107–252

PROVIDING FOR CONSIDERATION OF H.R. 3090, ECONOMIC

SECURITY AND RECOVERY ACT OF 2001

OCTOBER 23, 2001.—Referred to the House Calendar and ordered to be printed

Mr. LINDER, from the Committee on Rules,

submitted the following

REPORT

[To accompany H. Res. 270]

The Committee on Rules, having had under consideration House

Resolution 270, by a nonrecord vote, report the same to the House

with the recommendation that the resolution be adopted.

SUMMARY OF PROVISIONS OF THE RESOLUTION

The resolution provides for consideration in the House of H.R.

3090, the Economic Security and Recovery Act of 2001, under a

modified closed rule. The rule provides one hour of debate equally

divided and controlled by the chairman and ranking minority member of the Committee on Ways and Means. The rule waives all

points of order against consideration of the bill.

The rule provides that the amendment recommended by the

Committee on Ways and Means now printed in the bill shall be

considered as adopted. The rule further provides for consideration

of the amendment in the nature of a substitute printed in this report, if offered by Representative Rangel or his designee, which

shall be considered as read and shall be separately debatable for

one hour equally divided and controlled by the proponent and an

opponent. The rule waives all points of order against the amendment in the nature of a substitute. Finally, the rule provides one

motion to recommit with or without instructions.

The waiver of all points of order includes a waiver of section 302

of the Congressional Budget Act of 1974 (prohibiting consideration

of legislation providing new budget authority in excess of a committee’s allocation of such authority) and section 401(b) of the Congressional Budget Act of 1974 (prohibiting consideration of legislation,

as reported, providing new entitlement authority which becomes effective during the current fiscal year).

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The waivers of section 302 and 401 are necessary because Title

V of the bill not only expands health benefits to the unemployed,

thus providing new entitlement authority for the current fiscal

year, but it does so in excess of the Committee’s budget authority

for the current fiscal year.

SUMMARY OF AMENDMENT MADE IN ORDER UNDER THE RULE

(Summary derived from information provided by sponsor.)

Rangel—Democratic Substitute. Provides a rebate of $600 for

joint filers ($500 for heads-of-household, $300 for single filers), reduced by any rebate already received, to individuals who filed tax

returns for taxable year 2000 and who did not receive the maximum rebate from the recently-enacted bill. Dependent and nonresident aliens would not be eligible. Extends for one year all tax

provisions that expire this year. Provides tax provisions to create

$11 billion in interest-free financing for school construction and repair. Provides a five-year carryback of NOLs for taxable years 2001

or 2002 and waives the 90% AMT limitations in determining the

portion of those losses allowed during the carryback period. Increases § 179 expensing for taxable years 2001 and 2002 from

$25,000 to $50,000 and increases the point at which the phaseout

of § 197 expensing begins from $200,000 to $400,000 for those taxable years. Waives, for taxable years 2001 and 2002, the 90% AMT

limitations on loss carryovers for those years and on the allowance

of the foreign tax credit. Provides assistance to individuals suffering disproportionately large tax liabilities due to the exercise of

incentive stock options. Provides a one-year expansion of unemployment benefits that would provide up to an additional 26 weeks of

benefits to those exhausting their rights to regular benefits, provides coverage to certain unemployed workers not currently covered by the system, and increases all unemployment benefits to the

greater of 25% or $65 per week. Creates a temporary one-year program providing federal payment of 75% of COBRA continuation

costs, and provides states with an enhanced match to offer Medicaid coverage to certain low-income unemployed individuals and

their families. Provides a revenue offset freezing the top rate at

38.6%. Creates a trust fund setting aside resources for the portions

of the Task Force recommendations that are outside the jurisdiction of the Committee on Ways and Means, such as community redevelopment efforts and public security and infrastructure improvements.

TEXT OF AMENDMENT MADE IN ORDER UNDER THE RULE

AN AMENDMENT TO BE OFFERED BY REPRESENTATIVE RANGEL OF

NEW YORK, OR A DESIGNEE; DEBATABLE FOR 60 MINUTES

Strike all after the enacting clause and insert the following:

SECTION 1. SHORT TITLE, ETC.

(a) SHORT TITLE.—This Act may be cited as the ‘‘Fiscal Stimulus

and Worker Relief Act of 2001’’.

(b) REFERENCES TO INTERNAL REVENUE CODE OF 1986.—Except

as otherwise expressly provided, whenever in this Act 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

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be made to a section or other provision of the Internal Revenue

Code of 1986.

(c) TABLE OF CONTENTS.—The table of contents for this Act is as

follows:

Sec. 1. Short title, etc.

TITLE I—TAX PROVISIONS

Subtitle A—Supplemental Rebate

Sec. 101. Supplemental rebate.

Subtitle B—Extensions of Certain Expiring Provisions

Sec. 111. Allowance of nonrefundable personal credits against regular and minimum tax liability.

Sec. 112. Credit for qualified electric vehicles.

Sec. 113. Credit for electricity produced from renewable resources.

Sec. 114. Work Opportunity Credit.

Sec. 115. Welfare-to-Work credit.

Sec. 116. Deduction for clean-fuel vehicles and certain refueling property.

Sec. 117. Taxable income limit on percentage depletion for oil and natural gas produced from marginal properties.

Sec. 118. Qualified zone academy bonds.

Sec. 119. Cover over of tax on distilled spirits.

Sec. 120. Parity in the application of certain limits to mental health benefits.

Sec. 121. Delay in effective date of requirement for approved diesel or kerosene terminals.

Subtitle C—Other Provisions

Sec. 131. Alternative minimum tax relief with respect to incentive stock options exercised during 2000.

Sec. 132. Carryback for 2001 and 2002 net operating losses allowed for 5 years.

Sec. 133. Temporary increase in expensing under section 179.

Sec. 134. Temporary waiver of 90 percent AMT limitations.

Sec. 135. Expansion of incentives for public schools.

TITLE II—WORKER RELIEF

Subtitle A—Temporary Unemployment Compensation

Sec. 201. Short title.

Sec. 202. Federal-State agreements.

Sec. 203. Temporary Supplemental Unemployment Compensation Account.

Sec. 204. Payments to States having agreements under this subtitle.

Sec. 205. Financing provisions.

Sec. 206. Fraud and overpayments.

Sec. 207. Definitions.

Sec. 208. Applicability.

Subtitle B—Premium Assistance For COBRA Continuation Coverage

Sec. 211. Premium assistance for COBRA continuation coverage.

Subtitle C—Additional Assistance for Temporary Health Insurance Coverage

Sec. 221. Optional temporary medicaid coverage for certain uninsured employees.

Sec. 222. Optional temporary coverage for unsubsidized portion of COBRA continuation premiums.

TITLE III—FREEZE OF TOP INDIVIDUAL INCOME TAX RATE AND

DOMESTIC SECURITY TRUST FUND

Sec. 301. Freeze of top individual income tax rate and domestic security trust fund.

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TITLE I—TAX PROVISIONS

Subtitle A—Supplemental Rebate

SEC. 101. SUPPLEMENTAL REBATE.

(a) IN GENERAL.—Section 6428 (relating to acceleration of 10 percent income tax rate bracket benefit for 2001) is amended by adding at the end the following new subsection:

‘‘(f) SUPPLEMENTAL REBATE.—

‘‘(1) IN GENERAL.—Each individual who was an eligible individual for such individual’s first taxable year beginning in

2000 and who, before October 12, 2001, filed a return of tax

imposed by subtitle A for such taxable year shall be treated as

having made a payment against the tax imposed by chapter 1

for such first taxable year in an amount equal to the supplemental refund amount for such taxable year.

‘‘(2) SUPPLEMENTAL REFUND AMOUNT.—For purposes of this

subsection, the supplemental refund amount is an amount

equal to the excess (if any) of—

‘‘(A)(i) $600 in the case of taxpayers to whom section 1(a)

applies,

‘‘(ii) $500 in the case of taxpayers to whom section 1(b)

applies, and

‘‘(iii) $300 in the case of taxpayers to whom subsections

(c) or (d) of section 1 applies, over

‘‘(B) the taxpayer’s advance refund amount under subsection (e).

‘‘(3) TIMING OF PAYMENTS.—In the case of any overpayment

attributable to this subsection, the Secretary shall, to the maximum extent practicable, refund or credit such overpayment

before December 31, 2001.

‘‘(4) NO INTEREST.—No interest shall be allowed on any overpayment attributable to this subsection.’’

(b) CONFORMING AMENDMENTS.—

(1) Paragraph (1) of section 6428(d) is amended by adding at

the end the following new subparagraph:

‘‘(C) COORDINATION WITH SUPPLEMENTAL REBATE.—No

credit shall be allowed under subsection (a) to any individual who is entitled to a supplemental rebate amount

under subsection (f).’’

(2) Paragraph (3) of section 6428(e) is amended by striking

‘‘December 31, 2001’’ and inserting ‘‘the date of the enactment

of the Fiscal Stimulus and Worker Relief Act of 2001’’.

(c) EFFECTIVE DATE.—The amendments made by this section

shall take effect on the date of the enactment of this Act.

Subtitle B—Extensions of Certain Expiring

Provisions

SEC. 111. ALLOWANCE OF NONREFUNDABLE PERSONAL CREDITS

AGAINST REGULAR AND MINIMUM TAX LIABILITY.

(a) IN GENERAL.—Paragraph (2) of section 26(a) is amended—

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(1) by striking ‘‘RULE FOR 2000 AND 2001.—’’ and inserting

‘‘RULE FOR 2000, 2001, AND 2002.—’’, and

(2) by striking ‘‘during 2000 or 2001,’’ and inserting ‘‘during

2000, 2001, or 2002,’’.

(b) CONFORMING AMENDMENTS.—

(1) Section 904(h) is amended by striking ‘‘during 2000 or

2001’’ and inserting ‘‘during 2000, 2001, or 2002’’.

(2) The amendments made by sections 201(b), 202(f), and

618(f) of the Economic Growth and Tax Relief Reconciliation

Act of 2001 shall not apply to taxable years beginning during

2002.

(c) TECHNICAL CORRECTION.—Section 24(d)(1)(B) is amended by

striking ‘‘amount of credit allowed by this section’’ and inserting

‘‘aggregate amount of credits allowed by this subpart.’’.

(d) EFFECTIVE DATES.—

(1) The amendments made by subsections (a) and (b) shall

apply to taxable years beginning after December 31, 2001.

(2) The amendment made by subsection (c) shall apply to

taxable years beginning after December 31, 2000.

SEC. 112. CREDIT FOR QUALIFIED ELECTRIC VEHICLES.

(a) IN GENERAL.—Section 30 is amended—

(1) in subsection (b)(2)—

(A) by striking ‘‘December 31, 2001,’’ and inserting ‘‘December 31, 2002,’’, and

(B) in subparagraphs (A), (B), and (C), by striking

‘‘2002’’, ‘‘2003’’, and ‘‘2004’’, respectively, and inserting

‘‘2003’’, ‘‘2004’’, and ‘‘2005’’, respectively, and

(2) in subsection (e), by striking ‘‘December 31, 2004’’ and inserting ‘‘December 31, 2005’’.

(b) EFFECTIVE DATE.—The amendments made by subsection (a)

shall apply to taxable years beginning after December 31, 2001.

SEC. 113. CREDIT FOR ELECTRICITY PRODUCED FROM RENEWABLE

RESOURCES.

(a) IN GENERAL.—Subparagraphs (A), (B), and (C) of section

45(c)(3) are each amended by striking ‘‘2002’’ and inserting ‘‘2003’’.

(b) EFFECTIVE DATE.—The amendments made by subsection (a)

shall apply to taxable years beginning after December 31, 2001.

SEC. 114. WORK OPPORTUNITY CREDIT.

(a) IN GENERAL.—Subparagraph (B) of section 51(c)(4) is amended by striking ‘‘2001’’ and inserting ‘‘2002’’.

(b) EFFECTIVE DATE.—The amendment made by subsection (a)

shall apply to individuals who begin work for the employer after

December 31, 2001.

SEC. 115. WELFARE-TO-WORK CREDIT.

(a) IN GENERAL.—Subsection (f) of section 51A is amended by

striking ‘‘2001’’ and inserting ‘‘2002’’.

(b) EFFECTIVE DATE.—The amendment made by subsection (a)

shall apply to individuals who begin work for the employer after

December 31, 2001.

SEC. 116. DEDUCTION FOR CLEAN-FUEL VEHICLES AND CERTAIN REFUELING PROPERTY.

(a) IN GENERAL.—Section 179A is amended—

(1) in subsection (b)(1)(B)—

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(A) by striking ‘‘December 31, 2001,’’ and inserting ‘‘December 31, 2002,’’, and

(B) in clauses (i), (ii), and (iii), by striking ‘‘2002’’,

‘‘2003’’, and ‘‘2004’’, respectively, and inserting ‘‘2003’’,

‘‘2004’’, and ‘‘2005’’, respectively, and

(2) in subsection (f), by striking ‘‘December 31, 2004’’ and inserting ‘‘December 31, 2005’’.

(b) EFFECTIVE DATE.—The amendments made by subsection (a)

shall apply to taxable years beginning after December 31, 2001.

SEC. 117. TAXABLE INCOME LIMIT ON PERCENTAGE DEPLETION FOR

OIL AND NATURAL GAS PRODUCED FROM MARGINAL

PROPERTIES.

(a) IN GENERAL.—Subparagraph (H) of section 613A(c)(6) is

amended by striking ‘‘2002’’ and inserting ‘‘2003’’.

(b) EFFECTIVE DATE.—The amendment made by subsection (a)

shall apply to taxable years beginning after December 31, 2001.

SEC. 118. QUALIFIED ZONE ACADEMY BONDS.

(a) IN GENERAL.—Paragraph (1) of section 1397E(e) is amended

by striking ‘‘2000, and 2001’’ and inserting ‘‘2000, 2001, and 2002’’.

(b) EXTENSION OF CARRYOVER OF UNUSED LIMITATION FROM

1998.—Paragraph (4) of section 1397E(e) is amended by striking ‘‘3

years for carryforwards from 1998 or 1999’’ and inserting ‘‘4 years

for carryforwards from 1998 and 3 years for carryforwards from

1999’’.

(c) EFFECTIVE DATE.—The amendments made by this section

shall take effect on the date of enactment of this Act.

SEC. 119. COVER OVER OF TAX ON DISTILLED SPIRITS.

(a) IN GENERAL.—Paragraph (1) of section 7652(f) is amended by

striking ‘‘January 1, 2002’’ and inserting ‘‘January 1, 2003’’.

(b) EFFECTIVE DATE.—The amendment made by subsection (a)

shall take effect on the date of the enactment of this Act.

SEC. 120. PARITY IN THE APPLICATION OF CERTAIN LIMITS TO MENTAL HEALTH BENEFITS.

(a) IN GENERAL.—Subsection (f) of section 9812 is amended by

striking ‘‘2001’’ and inserting ‘‘2002’’.

(b) EFFECTIVE DATE.—The amendment made by subsection (a)

shall apply to plan years beginning after December 31, 2001.

SEC. 121. DELAY IN EFFECTIVE DATE OF REQUIREMENT FOR APPROVED DIESEL OR KEROSENE TERMINALS.

Paragraph (2) of section 1032(f) of the Taxpayer Relief Act of

1997 (Public Law 105–34) is amended by striking ‘‘January 1,

2002’’ and inserting ‘‘January 1, 2003’’.

Subtitle C—Other Provisions

SEC. 131. ALTERNATIVE MINIMUM TAX RELIEF WITH RESPECT TO INCENTIVE STOCK OPTIONS EXERCISED DURING 2000.

In the case of an incentive stock option (as defined in section 422

of the Internal Revenue Code of 1986) exercised during calendar

year 2000 or 2001, the amount taken into account under section

56(b)(3) of such Code by reason of such exercise shall not exceed

the amount that would have been taken into account if, on the date

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of such exercise, the fair market value of the stock acquired pursuant to such option had been— (1) its fair market value as of— (A) April 15, 2001, in the case of options exercised during 2000, and

(B) December 31, 2001, in the case of options exercised

during 2001, or

(2) if such stock is sold or exchanged on or before the applicable date under paragraph (1), the amount realized on such

sale or exchange.

SEC. 132. CARRYBACK FOR 2001 AND 2002 NET OPERATING LOSSES ALLOWED FOR 5 YEARS.

(a) IN GENERAL.—Paragraph (1) of section 172(b) (relating to

years to which loss may be carried) is amended by adding at the

end the following new subparagraph: ‘‘(H) In the case of a taxpayer which has a net operating

loss for any taxable year beginning in 2001 or 2002, subparagraph (A)(i) shall be applied by substituting ‘5’ for ‘2’ and subparagraph (F) shall not apply.’’. (b) ELECTION TO DISREGARD 5-YEAR CARRYBACK FOR NET OPER- ATING LOSS ARISING IN 2001 OR 2002.—Section 172 of such Code

(relating to net operating loss deduction) is amended by redesignating subsection (j) as subsection (k) and by inserting after subjection (i) the following new subsection: ‘‘(j) ELECTION TO DISREGARD 5-YEAR CARRYBACK FOR NET OPER- ATING LOSS ARISING IN 2001 OR 2002.—Any taxpayer entitled to a

5-year carryback under subsection (b)(1)(H) from any loss year may

elect to have the carryback period with respect to such loss year

determined without regard to subsection (b)(1)(H). Such election

shall be made in such manner as may be prescribed by the Secretary and shall be made by the due date (including extensions of

time) for filing the taxpayer’s return for the taxable year of the net

operating loss. Such election, once made for any taxable year, shall

be irrevocable for such taxable year.’’.

(c) SUSPENSION OF 90 PERCENT AMT LIMIT ON 2001 AND 2002

NOL CARRYBACKS.—Subparagraph (A) of section 56(d)(1) (relating

to general rule defining alternative tax net operating loss deduction) is amended to read as follows:

‘‘(A) the amount of such deduction shall not exceed the

sum of—

‘‘(i) the lesser of—

‘‘(I) the amount of such deduction attributable to

net operating losses (other than the deduction attributable to carrybacks of net operating losses for

taxable years beginning in 2001 or 2002), or

‘‘(II) 90 percent of alternate minimum taxable

income determined without regard to such deduction, plus

‘‘(ii) the lesser of—

‘‘(I) the amount of such deduction attributable to

carrybacks of net operating losses for taxable

years beginning in 2001 or 2002, or

‘‘(II) alternate minimum taxable income determined without regard to such deduction reduced

by the amount determined under clause (i), and’’.

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(d) EFFECTIVE DATE.—The amendments made by this section

shall apply to net operating losses for taxable years beginning after

2000.

SEC. 133. TEMPORARY INCREASE IN EXPENSING UNDER SECTION 179.

(a) IN GENERAL.—The table contained in section 179(b)(1) (relating to dollar limitation) is amended to read as follows:

‘‘If the taxable year The applicable

begins in: amount is:

2001 or 2002 ......................................................................... $50,000

2003 or thereafter ................................................................ 25,000.’’

(b) TEMPORARY INCREASE IN AMOUNT OF PROPERTY TRIGGERING

PHASEOUT OF MAXIMUM BENEFIT.—Paragraph (2) of section 179(b)

of such Code is amended by inserting before the period ‘‘($400,000

in the case of taxable years beginning during 2001 or 2002)’’.

(c) EFFECTIVE DATE.—The amendments made by this section

shall apply to taxable years beginning after December 31, 2000.

SEC. 134. TEMPORARY WAIVER OF 90 PERCENT AMT LIMITATIONS.

Subparagraph (A) of section 56(b)(1) of the Internal Revenue

Code of 1986 and paragraph (2) of section 59(a) of such Code shall

not apply in determining alternative minimum tax liability for taxable years beginning in 2001 or 2002.

SEC. 135. EXPANSION OF INCENTIVES FOR PUBLIC SCHOOLS.

(a) IN GENERAL.—Chapter 1 is amended by adding at the end the

following new subchapter:

‘‘Subchapter Y—Public School Modernization Provisions

‘‘Sec. 1400K. Credit to holders of qualified public school modernization bonds.

‘‘Sec. 1400L. Qualified school construction bonds.

‘‘Sec. 1400M. Qualified zone academy bonds.

‘‘SEC. 1400K. CREDIT TO HOLDERS OF QUALIFIED PUBLIC SCHOOL

MODERNIZATION BONDS.

‘‘(a) ALLOWANCE OF CREDIT.—In the case of a taxpayer who holds

a qualified public school modernization bond on a credit allowance

date of such bond which occurs during the taxable year, there shall

be allowed as a credit against the tax imposed by this chapter for

such taxable year an amount equal to the sum of the credits determined under subsection (b) with respect to credit allowance dates

during such year on which the taxpayer holds such bond.

‘‘(b) AMOUNT OF CREDIT.—

‘‘(1) IN GENERAL.—The amount of the credit determined

under this subsection with respect to any credit allowance date

for a qualified public school modernization bond is 25 percent

of the annual credit determined with respect to such bond.

‘‘(2) ANNUAL CREDIT.—The annual credit determined with respect to any qualified public school modernization bond is the

product of—

‘‘(A) the applicable credit rate, multiplied by

‘‘(B) the outstanding face amount of the bond.

‘‘(3) APPLICABLE CREDIT RATE.—For purposes of paragraph

(1), the applicable credit rate with respect to an issue is the

rate equal to an average market yield (as of the day before the

date of issuance of the issue) on outstanding long-term corVerDate 11-MAY-2000 05:32 Oct 24, 2001 Jkt 099008 PO 00000 Frm 00008 Fmt 6659 Sfmt 6602 E:\HR\OC\HR252.XXX pfrm04 PsN: HR252
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porate debt obligations (determined under regulations prescribed by the Secretary). ‘‘(4) SPECIAL RULE FOR ISSUANCE AND REDEMPTION.—In the

case of a bond which is issued during the 3-month period ending on a credit allowance date, the amount of the credit determined under this subsection with respect to such credit allowance date shall be a ratable portion of the credit otherwise determined based on the portion of the 3-month period during

which the bond is outstanding. A similar rule shall apply when

the bond is redeemed. ‘‘(c) LIMITATION BASED ON AMOUNT OF TAX.— ‘‘(1) IN GENERAL.—The credit allowed under subsection (a) for

any taxable year shall not exceed the excess of— ‘‘(A) the sum of the regular tax liability (as defined in

section 26(b)) plus the tax imposed by section 55, over ‘‘(B) the sum of the credits allowable under part IV of

subchapter A (other than subpart C thereof, relating to refundable credits). ‘‘(2) CARRYOVER OF UNUSED CREDIT.—If the credit allowable

under subsection (a) exceeds the limitation imposed by paragraph (1) for such taxable year, such excess shall be carried to

the succeeding taxable year and added to the credit allowable

under subsection (a) for such taxable year. ‘‘(d) QUALIFIED PUBLIC SCHOOL MODERNIZATION BOND; CREDIT

ALLOWANCE DATE.—For purposes of this section— ‘‘(1) QUALIFIED PUBLIC SCHOOL MODERNIZATION BOND.—The

term ‘qualified public school modernization bond’ means— ‘‘(A) a qualified zone academy bond, and

‘‘(B) a qualified school construction bond. ‘‘(2) CREDIT ALLOWANCE DATE.—The term ‘credit allowance

date’ means— ‘‘(A) March 15,

‘‘(B) June 15,

‘‘(C) September 15, and

‘‘(D) December 15.

Such term includes the last day on which the bond is outstanding.

‘‘(e) OTHER DEFINITIONS.—For purposes of this subchapter— ‘‘(1) LOCAL EDUCATIONAL AGENCY.—The term ‘local educational agency’ has the meaning given to such term by section

14101 of the Elementary and Secondary Education Act of 1965.

Such term includes the local educational agency that serves

the District of Columbia but does not include any other State

agency. ‘‘(2) BOND.—The term ‘bond’ includes any obligation.

‘‘(3) STATE.—The term ‘State’ includes the District of Columbia and any possession of the United States.

‘‘(4) PUBLIC SCHOOL FACILITY.—The term ‘public school facility’ shall not include—

‘‘(A) any stadium or other facility primarily used for athletic contests or exhibitions or other events for which admission is charged to the general public, or

‘‘(B) any facility which is not owned by a State or local

government or any agency or instrumentality of a State or

local government.

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‘‘(f) CREDIT INCLUDED IN GROSS INCOME.—Gross income includes

the amount of the credit allowed to the taxpayer under this section

(determined without regard to subsection (c)) and the amount so included shall be treated as interest income. ‘‘(g) RECAPTURE OF PORTION OF CREDIT WHERE CESSATION OF

COMPLIANCE.— ‘‘(1) IN GENERAL.—If any bond which when issued purported

to be a qualified public school modernization bond ceases to be

a qualified public school modernization bond, the issuer shall

pay to the United States (at the time required by the Secretary) an amount equal to the sum of— ‘‘(A) the aggregate of the credits allowable under this

section with respect to such bond (determined without regard to subsection (c)) for taxable years ending during the

calendar year in which such cessation occurs and the 2

preceding calendar years, and ‘‘(B) interest at the underpayment rate under section

6621 on the amount determined under subparagraph (A)

for each calendar year for the period beginning on the first

day of such calendar year. ‘‘(2) FAILURE TO PAY.—If the issuer fails to timely pay the

amount required by paragraph (1) with respect to such bond,

the tax imposed by this chapter on each holder of any such

bond which is part of such issue shall be increased (for the taxable year of the holder in which such cessation occurs) by the

aggregate decrease in the credits allowed under this section to

such holder for taxable years beginning in such 3 calendar

years which would have resulted solely from denying any credit under this section with respect to such issue for such taxable

years. ‘‘(3) SPECIAL RULES.— ‘‘(A) TAX BENEFIT RULE.—The tax for the taxable year

shall be increased under paragraph (2) only with respect

to credits allowed by reason of this section which were

used to reduce tax liability. In the case of credits not so

used to reduce tax liability, the carryforwards and

carrybacks under section 39 shall be appropriately adjusted. ‘‘(B) NO CREDITS AGAINST TAX.—Any increase in tax

under paragraph (2) shall not be treated as a tax imposed

by this chapter for purposes of determining— ‘‘(i) the amount of any credit allowable under this

part, or ‘‘(ii) the amount of the tax imposed by section 55. ‘‘(h) BONDS HELD BY REGULATED INVESTMENT COMPANIES.—If

any qualified public school modernization bond is held by a regulated investment company, the credit determined under subsection

(a) shall be allowed to shareholders of such company under procedures prescribed by the Secretary. ‘‘(i) CREDITS MAY BE STRIPPED.—Under regulations prescribed by

the Secretary— ‘‘(1) IN GENERAL.—There may be a separation (including at

issuance) of the ownership of a qualified public school modernization bond and the entitlement to the credit under this

section with respect to such bond. In case of any such separaVerDate 11-MAY-2000 05:32 Oct 24, 2001 Jkt 099008 PO 00000 Frm 00010 Fmt 6659 Sfmt 6602 E:\HR\OC\HR252.XXX pfrm04 PsN: HR252
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tion, the credit under this section shall be allowed to the person who on the credit allowance date holds the instrument evidencing the entitlement to the credit and not to the holder of

the bond. ‘‘(2) CERTAIN RULES TO APPLY.—In the case of a separation

described in paragraph (1), the rules of section 1286 shall

apply to the qualified public school modernization bond as if it

were a stripped bond and to the credit under this section as

if it were a stripped coupon. ‘‘(j) TREATMENT FOR ESTIMATED TAX PURPOSES.—Solely for purposes of sections 6654 and 6655, the credit allowed by this section

to a taxpayer by reason of holding a qualified public school modernization bonds on a credit allowance date shall be treated as if

it were a payment of estimated tax made by the taxpayer on such

date. ‘‘(k) CREDIT MAY BE TRANSFERRED.—Nothing in any law or rule

of law shall be construed to limit the transferability of the credit

allowed by this section through sale and repurchase agreements. ‘‘(k) REPORTING.—Issuers of qualified public school modernization

bonds shall submit reports similar to the reports required under

section 149(e). ‘‘(l) PENALTY ON CONTRACTORS FAILING TO PAY PREVAILING

WAGE.—

‘‘(1) IN GENERAL.—If the Secretary of Labor certifies to the

Secretary that any contractor on any project funded by any

qualified public school modernization bond has failed, during

any portion of such contractor’s taxable year, to pay prevailing

wages as would be required under section 439 of the General

Education Provisions Act if such funding were an applicable

program under such section, the tax imposed by chapter 1 on

such contractor for such taxable year shall be increased by 100

percent of the amount involved in such failure. The preceding

sentence shall not apply to the extent the Secretary of Labor

determines that such failure is due to reasonable cause and not

willful neglect. ‘‘(2) AMOUNT INVOLVED.—For purposes of paragraph (1), the

amount involved with respect to any failure is the excess of the

amount of wages such contractor would be so required to pay

under such section over the amount of wages paid. ‘‘(3) NO CREDITS AGAINST TAX.—The tax imposed by this section shall not be treated as a tax imposed by this chapter for

purposes of determining—

‘‘(A) the amount of any credit allowable under this chapter, or

‘‘(B) the amount of the minimum tax imposed by section

55.

‘‘(m) TERMINATION.—This section shall not apply to any bond

issued after September 30, 2006.

‘‘SEC. 1400L. QUALIFIED SCHOOL CONSTRUCTION BONDS.

‘‘(a) QUALIFIED SCHOOL CONSTRUCTION BOND.—For purposes of

this subchapter, the term ‘qualified school construction bond’

means any bond issued as part of an issue if—

‘‘(1) 95 percent or more of the proceeds of such issue are to

be used for the construction, rehabilitation, or repair of a public school facility or for the acquisition of land on which such

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a facility is to be constructed with part of the proceeds of such

issue, ‘‘(2) the bond is issued by a State or local government within

the jurisdiction of which such school is located, ‘‘(3) the issuer designates such bond for purposes of this section, and ‘‘(4) the term of each bond which is part of such issue does

not exceed 15 years. ‘‘(b) LIMITATION ON AMOUNT OF BONDS DESIGNATED.—The maximum aggregate face amount of bonds issued during any calendar

year which may be designated under subsection (a) by any issuer

shall not exceed the sum of— ‘‘(1) the limitation amount allocated under subsection (d) for

such calendar year to such issuer, and ‘‘(2) if such issuer is a large local educational agency (as defined in subsection (e)(4)) or is issuing on behalf of such an

agency, the limitation amount allocated under subsection (e)

for such calendar year to such agency. ‘‘(c) NATIONAL LIMITATION ON AMOUNT OF BONDS DESIGNATED.— There is a national qualified school construction bond limitation for

each calendar year. Such limitation is— ‘‘(1) $11,000,000,000 for 2002, and

‘‘(2) except as provided in subsection (f), zero after 2002. ‘‘(d) 60 PERCENT OF LIMITATION ALLOCATED AMONG STATES.— ‘‘(1) IN GENERAL.—60 percent of the limitation applicable

under subsection (c) for any calendar year shall be allocated by

the Secretary among the States in proportion to the respective

numbers of children in each State who have attained age 5 but

not age 18 for the most recent fiscal year ending before such

calendar year. The limitation amount allocated to a State

under the preceding sentence shall be allocated by the State to

issuers within such State. ‘‘(2) MINIMUM ALLOCATIONS TO STATES.— ‘‘(A) IN GENERAL.—The Secretary shall adjust the allocations under this subsection for any calendar year for each

State to the extent necessary to ensure that the sum of—

‘‘(i) the amount allocated to such State under this

subsection for such year, and

‘‘(ii) the aggregate amounts allocated under subsection (e) to large local educational agencies in such

State for such year,

is not less than an amount equal to such State’s minimum

percentage of the amount to be allocated under paragraph

(1) for the calendar year.

‘‘(B) MINIMUM PERCENTAGE.—A State’s minimum percentage for any calendar year is the minimum percentage

described in section 1124(d) of the Elementary and Secondary Education Act of 1965 (20 U.S.C. 6334(d)) for such

State for the most recent fiscal year ending before such

calendar year. ‘‘(3) ALLOCATIONS TO CERTAIN POSSESSIONS.—The amount to

be allocated under paragraph (1) to any possession of the

United States other than Puerto Rico shall be the amount

which would have been allocated if all allocations under paragraph (1) were made on the basis of respective populations of

13

individuals below the poverty line (as defined by the Office of

Management and Budget). In making other allocations, the

amount to be allocated under paragraph (1) shall be reduced

by the aggregate amount allocated under this paragraph to

possessions of the United States. ‘‘(4) ALLOCATIONS FOR INDIAN SCHOOLS.—In addition to the

amounts otherwise allocated under this subsection,

$200,000,000 for calendar year 2002, and $200,000,000 for calendar year 2003, shall be allocated by the Secretary of the Interior for purposes of the construction, rehabilitation, and repair of schools funded by the Bureau of Indian Affairs. In the

case of amounts allocated under the preceding sentence, Indian

tribal governments (as defined in section 7871) shall be treated

as qualified issuers for purposes of this subchapter. ‘‘(e) 40 PERCENT OF LIMITATION ALLOCATED AMONG LARGEST

SCHOOL DISTRICTS.— ‘‘(1) IN GENERAL.—40 percent of the limitation applicable

under subsection (c) for any calendar year shall be allocated

under paragraph (2) by the Secretary among local educational

agencies which are large local educational agencies for such

year. ‘‘(2) ALLOCATION FORMULA.—The amount to be allocated

under paragraph (1) for any calendar year shall be allocated

among large local educational agencies in proportion to the respective amounts each such agency received for Basic Grants

under subpart 2 of part A of title I of the Elementary and Secondary Education Act of 1965 (20 U.S.C. 6331 et seq.) for the

most recent fiscal year ending before such calendar year. ‘‘(3) ALLOCATION OF UNUSED LIMITATION TO STATE.—The

amount allocated under this subsection to a large local educational agency for any calendar year may be reallocated by

such agency to the State in which such agency is located for

such calendar year. Any amount reallocated to a State under

the preceding sentence may be allocated as provided in subsection (d)(1).

‘‘(4) LARGE LOCAL EDUCATIONAL AGENCY.—For purposes of

this section, the term ‘large local educational agency’ means,

with respect to a calendar year, any local educational agency

if such agency is— ‘‘(A) among the 100 local educational agencies with the

largest numbers of children aged 5 through 17 from families living below the poverty level, as determined by the

Secretary using the most recent data available from the

Department of Commerce that are satisfactory to the Secretary, or ‘‘(B) 1 of not more than 25 local educational agencies

(other than those described in subparagraph (A)) that the

Secretary of Education determines (based on the most recent data available satisfactory to the Secretary) are in

particular need of assistance, based on a low level of resources for school construction, a high level of enrollment

growth, or such other factors as the Secretary deems appropriate.

‘‘(f) CARRYOVER OF UNUSED LIMITATION.—If for any calendar

year—

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‘‘(1) the amount allocated under subsection (d) to any State,

exceeds ‘‘(2) the amount of bonds issued during such year which are

designated under subsection (a) pursuant to such allocation,

the limitation amount under such subsection for such State for the

following calendar year shall be increased by the amount of such

excess. A similar rule shall apply to the amounts allocated under

subsection (d)(4) or (e). ‘‘(g) SPECIAL RULES RELATING TO ARBITRAGE.— ‘‘(1) IN GENERAL.—A bond shall not be treated as failing to

meet the requirement of subsection (a)(1) solely by reason of

the fact that the proceeds of the issue of which such bond is

a part are invested for a temporary period (but not more than

36 months) until such proceeds are needed for the purpose for

which such issue was issued. ‘‘(2) BINDING COMMITMENT REQUIREMENT.—Paragraph (1)

shall apply to an issue only if, as of the date of issuance, there

is a reasonable expectation that— ‘‘(A) at least 10 percent of the proceeds of the issue will

be spent within the 6-month period beginning on such date

for the purpose for which such issue was issued, and ‘‘(B) the remaining proceeds of the issue will be spent

with due diligence for such purpose. ‘‘(3) EARNINGS ON PROCEEDS.—Any earnings on proceeds during the temporary period shall be treated as proceeds of the

issue for purposes of applying subsection (a)(1) and paragraph

(1) of this subsection.

‘‘SEC. 1400M. QUALIFIED ZONE ACADEMY BONDS.

‘‘(a) QUALIFIED ZONE ACADEMY BOND.—For purposes of this

subchapter— ‘‘(1) IN GENERAL.—The term ‘qualified zone academy bond’ means any bond issued as part of an issue if— ‘‘(A) 95 percent or more of the proceeds of such issue are

to be used for a qualified purpose with respect to a qualified zone academy established by a local educational agency,‘‘(B) the bond is issued by a State or local government

within the jurisdiction of which such academy is located, ‘‘(C) the issuer— ‘‘(i) designates such bond for purposes of this section,

‘‘(ii) certifies that it has written assurances that the

private business contribution requirement of paragraph (2) will be met with respect to such academy,

and‘‘(iii) certifies that it has the written approval of the

local educational agency for such bond issuance, and ‘‘(D) the term of each bond which is part of such issue

does not exceed 15 years.

Rules similar to the rules of section 1400L(g) shall apply for

purposes of paragraph (1). ‘‘(2) PRIVATE BUSINESS CONTRIBUTION REQUIREMENT.—

‘‘(A) IN GENERAL.—For purposes of paragraph (1), the

private business contribution requirement of this paragraph is met with respect to any issue if the local eduVerDate 11-MAY-2000 05:32 Oct 24, 2001 Jkt 099008 PO 00000 Frm 00014 Fmt 6659 Sfmt 6602 E:\HR\OC\HR252.XXX pfrm04 PsN: HR252
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cational agency that established the qualified zone academy has written commitments from private entities to

make qualified contributions having a present value (as of

the date of issuance of the issue) of not less than 10 percent of the proceeds of the issue.

‘‘(B) QUALIFIED CONTRIBUTIONS.—For purposes of subparagraph (A), the term ‘qualified contribution’ means any

contribution (of a type and quality acceptable to the local

educational agency) of—

‘‘(i) equipment for use in the qualified zone academy

(including state-of-the-art technology and vocational

equipment),

‘‘(ii) technical assistance in developing curriculum or

in training teachers in order to promote appropriate

market driven technology in the classroom,

‘‘(iii) services of employees as volunteer mentors,

‘‘(iv) internships, field trips, or other educational opportunities outside the academy for students, or

‘‘(v) any other property or service specified by the

local educational agency.

‘‘(3) QUALIFIED ZONE ACADEMY.—The term ‘qualified zone

academy’ means any public school (or academic program within

a public school) which is established by and operated under the

supervision of a local educational agency to provide education

or training below the postsecondary level if—

‘‘(A) such public school or program (as the case may be)

is designed in cooperation with business to enhance the

academic curriculum, increase graduation and employment

rates, and better prepare students for the rigors of college

and the increasingly complex workforce,

‘‘(B) students in such public school or program (as the

case may be) will be subject to the same academic standards and assessments as other students educated by the

local educational agency,

‘‘(C) the comprehensive education plan of such public

school or program is approved by the local educational

agency, and

‘‘(D)(i) such public school is located in an empowerment

zone or enterprise community (including any such zone or

community designated after the date of the enactment of

this section), or

‘‘(ii) there is a reasonable expectation (as of the date of

issuance of the bonds) that at least 35 percent of the students attending such school or participating in such program (as the case may be) will be eligible for free or reduced-cost lunches under the school lunch program established under the National School Lunch Act.

‘‘(4) QUALIFIED PURPOSE.—The term ‘qualified purpose’

means, with respect to any qualified zone academy—

‘‘(A) constructing, rehabilitating, or repairing the public

school facility in which the academy is established,

‘‘(B) acquiring the land on which such facility is to be

constructed with part of the proceeds of such issue,

‘‘(C) providing equipment for use at such academy,

16

‘‘(D) developing course materials for education to be provided at such academy, and ‘‘(E) training teachers and other school personnel in such

academy. ‘‘(b) LIMITATIONS ON AMOUNT OF BONDS DESIGNATED.— ‘‘(1) IN GENERAL.—There is a national zone academy bond

limitation for each calendar year. Such limitation is— ‘‘(A) $400,000,000 for 1998,

‘‘(B) $400,000,000 for 1999,

‘‘(C) $400,000,000 for 2000,

‘‘(D) $400,000,000 for 2001,

‘‘(E) $1,400,000,000 for 2002, and

‘‘(F) except as provided in paragraph (3), zero after 2002. ‘‘(2) ALLOCATION OF LIMITATION.— ‘‘(A) ALLOCATION AMONG STATES.— ‘‘(i) 1998, 1999, 2000, AND 2001 LIMITATIONS.—The national zone academy bond limitations for calendar

years 1998, 1999, 2000, and 2001 shall be allocated by

the Secretary among the States on the basis of their

respective populations of individuals below the poverty

line (as defined by the Office of Management and

Budget). ‘‘(ii) LIMITATION AFTER 2001.—The national zone

academy bond limitation for any calendar year after

2001 shall be allocated by the Secretary among the

States in proportion to the respective amounts each

such State received for Basic Grants under subpart 2

of part A of title I of the Elementary and Secondary

Education Act of 1965 (20 U.S.C. 6331 et seq.) for the

most recent fiscal year ending before such calendar

year. ‘‘(B) ALLOCATION TO LOCAL EDUCATIONAL AGENCIES.—

The limitation amount allocated to a State under subparagraph (A) shall be allocated by the State to qualified zone

academies within such State. ‘‘(C) DESIGNATION SUBJECT TO LIMITATION AMOUNT.—The

maximum aggregate face amount of bonds issued during

any calendar year which may be designated under subsection (a) with respect to any qualified zone academy

shall not exceed the limitation amount allocated to such

academy under subparagraph (B) for such calendar year. ‘‘(3) CARRYOVER OF UNUSED LIMITATION.—If for any calendar

year—

‘‘(A) the limitation amount under this subsection for any

State, exceeds

‘‘(B) the amount of bonds issued during such year which

are designated under subsection (a) (or the corresponding

provisions of prior law) with respect to qualified zone academies within such State,

the limitation amount under this subsection for such State for

the following calendar year shall be increased by the amount

of such excess.’’ (b) REPORTING.—Subsection (d) of section 6049 (relating to returns regarding payments of interest) is amended by adding at the

end the following new paragraph:

17

‘‘(8) REPORTING OF CREDIT ON QUALIFIED PUBLIC SCHOOL

MODERNIZATION BONDS.— ‘‘(A) IN GENERAL.—For purposes of subsection (a), the

term ‘interest’ includes amounts includible in gross income

under section 1400K(f) and such amounts shall be treated

as paid on the credit allowance date (as defined in section

1400K(d)(2)). ‘‘(B) REPORTING TO CORPORATIONS, ETC.—Except as otherwise provided in regulations, in the case of any interest

described in subparagraph (A) of this paragraph, subsection (b)(4) of this section shall be applied without regard to subparagraphs (A), (H), (I), (J), (K), and (L)(i).

‘‘(C) REGULATORY AUTHORITY.—The Secretary may prescribe such regulations as are necessary or appropriate to

carry out the purposes of this paragraph, including regulations which require more frequent or more detailed reporting.’’

(c) CONFORMING AMENDMENTS.—

(1) Subchapter U of chapter 1 is amended by striking part

IV, by redesignating part V as part IV, and by redesignating

section 1397F as section 1397E.

(2) The table of subchapters for chapter 1 is amended by

adding at the end the following new item:

‘‘Subchapter Y. Public school modernization provisions.’’

(3) The table of parts of subchapter U of chapter 1 is amended by striking the last 2 items and inserting the following item:

‘‘Part IV. Regulations.’’

(e) EFFECTIVE DATES.—

(1) IN GENERAL.—Except as otherwise provided in this subsection, the amendments made by this section shall apply to

obligations issued after December 31, 2001.

(2) REPEAL OF RESTRICTION ON ZONE ACADEMY BOND HOLD- ERS.—In the case of bonds to which section 1397E of the Internal Revenue Code of 1986 (as in effect before the date of the

enactment of this Act) applies, the limitation of such section to

eligible taxpayers (as defined in subsection (d)(6) of such section) shall not apply after the date of the enactment of this

Act.

TITLE II—WORKER RELIEF

Subtitle A—Temporary Unemployment

Compensation

SEC. 201. SHORT TITLE.

This subtitle may be cited as the ‘‘Temporary Unemployment

Compensation Act of 2001’’.

SEC. 202. FEDERAL-STATE AGREEMENTS.

(a) IN GENERAL.—Any State which desires to do so may enter

into and participate in an agreement under this subtitle with the

Secretary of Labor (hereinafter in this subtitle referred to as the

‘‘Secretary’’). Any State which is a party to an agreement under

18

this subtitle may, upon providing 30 days’ written notice to the

Secretary, terminate such agreement.

(b) PROVISIONS OF AGREEMENT.—

(1) IN GENERAL.—Any agreement under subsection (a) shall

provide that the State agency of the State will make—

(A) payments of regular compensation to individuals in

amounts and to the extent that they would be determined

if the State law were applied with the modifications described in paragraph (2), and

(B) payments of temporary supplemental unemployment

compensation to individuals who—

(i) have exhausted all rights to regular compensation under the State law,

(ii) do not, with respect to a week, have any rights

to compensation (excluding extended compensation)

under the State law of any other State (whether one

that has entered into an agreement under this subtitle

or otherwise) nor compensation under any other Federal law (other than under the Federal-State Extended

Unemployment Compensation Act of 1970), and are

not paid or entitled to be paid any additional compensation under any State or Federal law, and

(iii) are not receiving compensation with respect to

such week under the unemployment compensation law

of Canada.

(2) MODIFICATIONS DESCRIBED.—The modifications described

in this paragraph are as follows:

(A) An individual shall be eligible for regular compensation if the individual would be so eligible, determined by

applying—

(i) the base period that would otherwise apply under

the State law if this subtitle had not been enacted, or

(ii) a base period ending at the close of the calendar

quarter most recently completed before the date of the

individual’s application for benefits,

whichever results in the greater amount.

(B) An individual shall not be denied regular compensation under the State law’s provisions relating to availability for work, active search for work, or refusal to accept

work, solely by virtue of the fact that such individual is

seeking, or available for, only part-time (and not full-time)

work.

(C)(i) Subject to clause (ii), the amount of regular compensation (including dependents’ allowances) payable for

any week shall be equal to the amount determined under

the State law (before the application of this subparagraph),

plus an additional—

(I) 25 percent, or

(II) $65,

whichever is greater.

(ii) In no event may the total amount determined under

clause (i) with respect to any individual exceed the average

weekly insured wages of that individual in that calendar

quarter of the base period in which such individual’s inVerDate 11-MAY-2000 05:32 Oct 24, 2001 Jkt 099008 PO 00000 Frm 00018 Fmt 6659 Sfmt 6602 E:\HR\OC\HR252.XXX pfrm04 PsN: HR252
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sured wages were the highest (or one such quarter if his

wages were the same for more than one such quarter).

(c) NONREDUCTION RULE.—Under the agreement, subsection

(b)(2)(C) shall not apply (or shall cease to apply) with respect to a

State upon a determination by the Secretary that the method governing the computation of regular compensation under the State

law of that State has been modified in a way such that— (1) the average weekly amount of regular compensation

which will be payable during the period of the agreement (determined disregarding the modifications described in subsection (b)(2)) will be less than

(2) the average weekly amount of regular compensation

which would otherwise have been payable during such period

under the State law, as in effect on September 11, 2001.

(d) COORDINATION RULES.— (1) REGULAR COMPENSATION PAYABLE UNDER A FEDERAL

LAW.—The modifications described in subsection (b)(2) shall

also apply in determining the amount of benefits payable

under any Federal law to the extent that those benefits are determined by reference to regular compensation payable under

the State law of the State involved.

(2) TSUC TO SERVE AS SECOND-TIER BENEFITS.—Notwithstanding any other provision of law, extended benefits shall not

be payable to any individual for any week for which temporary

supplemental unemployment compensation is payable to such

individual.

(e) EXHAUSTION OF BENEFITS.—For purposes of subsection

(b)(1)(B)(i), an individual shall be considered to have exhausted

such individual’s rights to regular compensation under a State law

when—

(1) no payments of regular compensation can be made under

such law because such individual has received all regular compensation available to such individual based on employment or

wages during such individual’s base period, or

(2) such individual’s rights to such compensation have been

terminated by reason of the expiration of the benefit year with

respect to which such rights existed.

(f) WEEKLY BENEFIT AMOUNT, TERMS AND CONDITIONS, ETC. RE- LATING TO TSUC.—For purposes of any agreement under this

subtitle—

(1) the amount of temporary supplemental unemployment

compensation which shall be payable to an individual for any

week of total unemployment shall be equal to the amount of

regular compensation (including dependents’ allowances) payable to such individual under the State law for a week for total

unemployment during such individual’s benefit year,

(2) the terms and conditions of the State law which apply to

claims for regular compensation and to the payment thereof

shall apply to claims for temporary supplemental unemployment compensation and the payment thereof, except where inconsistent with the provisions of this subtitle or with the regulations or operating instructions of the Secretary promulgated

to carry out this subtitle, and

(3) the maximum amount of temporary supplemental unemployment compensation payable to any individual for whom a

20

temporary supplemental unemployment compensation account

is established under section 203 shall not exceed the amount

established in such account for such individual.

SEC. 203. TEMPORARY SUPPLEMENTAL UNEMPLOYMENT COMPENSATION ACCOUNT.

(a) IN GENERAL.—Any agreement under this subtitle shall provide that the State will establish, for each eligible individual who

files an application for temporary supplemental unemployment

compensation, a temporary supplemental unemployment compensation account.

(b) AMOUNT IN ACCOUNT.—

(1) IN GENERAL.—The amount established in an account

under subsection (a) shall be equal to the product obtained by

multiplying an individual’s weekly benefit amount by the applicable factor under paragraph (3).

(2) WEEKLY BENEFIT AMOUNT.—For purposes of this subsection, an individual’s weekly benefit amount for any week is

the amount of regular compensation (including dependents’ allowances) under the State law payable to such individual for

a week of total unemployment in such individual’s benefit year.

(3) APPLICABLE FACTOR.—

(A) GENERAL RULE.—The applicable factor under this

paragraph is 13, unless the individual’s benefit year begins

or ends during a period of high unemployment within such

individual’s State, in which case the applicable factor is 26.

(B) PERIOD OF HIGH UNEMPLOYMENT.—For purposes of

this paragraph, a period of high unemployment within a

State shall begin and end, if at all, in a way (to be set

forth in the State’s agreement under this subtitle) similar

to the way in which an extended benefit period would

under section 203 of the Federal-State Extended Unemployment Compensation Act of 1970, subject to the following:

(i) To determine if there is a State ‘‘on’’ or ‘‘off’’ indicator, apply section 203(f) of such Act, but—

(I) substitute ‘‘5 percent’’ for ‘‘6.5 percent’’ in

paragraph (1)(A)(i) thereof, and

(II) disregard paragraph (1)(A)(ii) thereof and

the last sentence of paragraph (1) thereof.

(ii) To determine the beginning and ending dates of

a period of high unemployment within a State, apply

section 203(a) and (b) of such Act, except that—

(I) in applying such section 203(a), deem paragraphs (1) and (2) thereof to be amended by striking ‘‘the third week after’’, and

(II) in applying such section 203(b), deem paragraph (1)(A) thereof amended by striking ‘‘thirteen’’ and inserting ‘‘twenty-six’’ and paragraph

(1)(B) thereof amended by striking ‘‘fourteenth’’

and inserting ‘‘twenty-seventh’’.

(4) RULE OF CONSTRUCTION.—For purposes of any computation under paragraph (1) (and any determination of amount

under section 202(f)(1)), the modification described in section

202(b)(2)(C) (relating to increased benefits) shall be deemed to

21

have been in effect with respect to the entirety of the benefit

year involved.

(c) ELIGIBILITY PERIOD.—An individual whose applicable factor

under subsection (b)(3) is 26 shall be eligible for temporary supplemental unemployment compensation for each week of total unemployment in his benefit year which begins in the State’s period of

high unemployment and, if his benefit year ends within such period, any such weeks thereafter which begin in such period of high

unemployment, not to exceed a total of 26 weeks.

SEC. 204. PAYMENTS TO STATES HAVING AGREEMENTS UNDER THIS

SUBTITLE.

(a) GENERAL RULE.—There shall be paid to each State which has

entered into an agreement under this subtitle an amount equal

to— (1) 100 percent of any regular compensation made payable to

individuals by such State by virtue of the modifications which

are described in section 202(b)(2) and deemed to be in effect

with respect to such State pursuant to section 202(b)(1)(A),

(2) 100 percent of any regular compensation— (A) which is paid to individuals by such State by reason

of the fact that its State law contains provisions comparable to the modifications described in section

202(b)(2)(A)–(B), but only

(B) to the extent that those amounts would, if such

amounts were instead payable by virtue of the State law’s

being deemed to be so modified pursuant to section

202(b)(1)(A), have been reimbursable under paragraph (1),

and

(3) 100 percent of the temporary supplemental unemployment compensation paid to individuals by the State pursuant

to such agreement.

(b) DETERMINATION OF AMOUNT.—Sums under subsection (a) payable to any State by reason of such State having an agreement

under this subtitle shall be payable, either in advance or by way

of reimbursement (as may be determined by the Secretary), in such

amounts as the Secretary estimates the State will be entitled to receive under this subtitle for each calendar month, reduced or increased, as the case may be, by any amount by which the Secretary

finds that the Secretary’s estimates for any prior calendar month

were greater or less than the amounts which should have been

paid to the State. Such estimates may be made on the basis of such

statistical, sampling, or other method as may be agreed upon by

the Secretary and the State agency of the State involved.

(c) ADMINISTRATIVE EXPENSES, ETC.—There is hereby appropriated out of the employment security administration account of

the Unemployment Trust Fund (as established by section 901(a) of

the Social Security Act) $500,000,000 to reimburse States for the

costs of the administration of agreements under this subtitle (including any improvements in technology in connection therewith)

and to provide reemployment services to unemployment compensation claimants in States having agreements under this subtitle.

Each State’s share of the amount appropriated by the preceding

sentence shall be determined by the Secretary according to the factors described in section 302(a) of the Social Security Act and certified by the Secretary to the Secretary of the Treasury.

22

SEC. 205. FINANCING PROVISIONS.

(a) IN GENERAL.—Funds in the extended unemployment compensation account (as established by section 905(a) of the Social Security Act), and the Federal unemployment account (as established

by section 904(g) of the Social Security Act), of the Unemployment

Trust Fund shall be used, in accordance with subsection (b), for the

making of payments (described in section 204(a)) to States having

agreements entered into under this subtitle.

(b) CERTIFICATION.—The Secretary shall from time to time certify

to the Secretary of the Treasury for payment to each State the

sums described in section 204(a) which are payable to such State

under this subtitle. The Secretary of the Treasury, prior to audit

or settlement by the General Accounting Office, shall make payments to the State in accordance with such certification by transfers from the extended unemployment compensation account (or, to

the extent that there are insufficient funds in that account, from

the Federal unemployment account) to the account of such State in

the Unemployment Trust Fund.

SEC. 206. FRAUD AND OVERPAYMENTS.

(a) IN GENERAL.—If an individual knowingly has made, or caused

to be made by another, a false statement or representation of a material fact, or knowingly has failed, or caused another to fail, to disclose a material fact, and as a result of such false statement or representation or of such nondisclosure such individual has received

any regular compensation or temporary supplemental unemployment compensation under this subtitle to which he was not entitled, such individual— (1) shall be ineligible for any further benefits under this subtitle in accordance with the provisions of the applicable State

unemployment compensation law relating to fraud in connection with a claim for unemployment compensation, and

(2) shall be subject to prosecution under section 1001 of title

18, United States Code.

(b) REPAYMENT.—In the case of individuals who have received

any regular compensation or temporary supplemental unemployment compensation under this subtitle to which they were not entitled, the State shall require such individuals to repay those benefits to the State agency, except that the State agency may waive

such repayment if it determines that—

(1) the payment of such benefits was without fault on the

part of any such individual, and

(2) such repayment would be contrary to equity and good

conscience.

(c) RECOVERY BY STATE AGENCY.—

(1) IN GENERAL.—The State agency may recover the amount

to be repaid, or any part thereof, by deductions from any regular compensation or temporary supplemental unemployment

compensation payable to such individual under this subtitle or

from any unemployment compensation payable to such individual under any Federal unemployment compensation law administered by the State agency or under any other Federal law

administered by the State agency which provides for the payment of any assistance or allowance with respect to any week

of unemployment, during the 3-year period after the date such

individuals received the payment of the regular compensation

23

or temporary supplemental unemployment compensation to

which they were not entitled, except that no single deduction

may exceed 50 percent of the weekly benefit amount from

which such deduction is made.

(2) OPPORTUNITY FOR HEARING.—No repayment shall be required, and no deduction shall be made, until a determination

has been made, notice thereof and an opportunity for a fair

hearing has been given to the individual, and the determination has become final.

(d) REVIEW.—Any determination by a State agency under this

section shall be subject to review in the same manner and to the

same extent as determinations under the State unemployment

compensation law, and only in that manner and to that extent.

SEC. 207. DEFINITIONS.

For purposes of this subtitle:

(1) IN GENERAL.—The terms ‘‘compensation’’, ‘‘regular compensation’’, ‘‘extended compensation’’, ‘‘additional compensation’’, ‘‘benefit year’’, ‘‘base period’’, ‘‘State’’, ‘‘State agency’’,

‘‘State law’’, and ‘‘week’’ have the respective meanings given

such terms under section 205 of the Federal-State Extended

Unemployment Compensation Act of 1970, subject to paragraph (2).

(2) STATE LAW AND REGULAR COMPENSATION.—In the case of

a State entering into an agreement under this subtitle—

(A) ‘‘State law’’ shall be considered to refer to the State

law of such State, applied in conformance with the modifications described in section 202(b)(2), subject to section

202(c), and

(B) ‘‘regular compensation’’ shall be considered to refer

to such compensation, determined under its State law (applied in the manner described in subparagraph (A)),

except as otherwise provided or where the context clearly indicates otherwise.

SEC. 208. APPLICABILITY.

(a) IN GENERAL.—An agreement entered into under this subtitle

shall apply to weeks of unemployment—

(1) beginning after the date on which such agreement is entered into, and

(2) ending before January 1, 2003.

(b) SPECIFIC RULES.—Under such an agreement—

(1) the modification described in section 202(b)(2)(A) (relating

to alternative base periods) shall not apply except in the case

of initial claims filed after September 11, 2001,

(2) the modifications described in section 202(b)(2)(B)–(C)

(relating to part-time employment and increased benefits, respectively) shall apply to weeks of unemployment (described in

subsection (a)), irrespective of the date on which an individual’s claim for benefits is filed, and

(3) the payments described in section 202(b)(1)(B) (relating to

temporary supplemental unemployment compensation) shall

not apply except in the case of individuals exhausting their

rights to regular compensation (as described in clause (i) thereof) after September 11, 2001.

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Subtitle B—Premium Assistance for

COBRA Continuation Coverage

SEC. 211. PREMIUM ASSISTANCE FOR COBRA CONTINUATION COVERAGE.

(a) ESTABLISHMENT.—

(1) IN GENERAL.—Not later than 60 days after the date of enactment of this Act, the Secretary of the Treasury, in consultation with the Secretary of Labor, shall establish a program

under which premium assistance for COBRA continuation coverage shall be provided for qualified individuals under this section.

(2) QUALIFIED INDIVIDUALS.—For purposes of this section, a

qualified individual is an individual who— (A) establishes that the individual— (i) on or after July 1, 2001, and before the end of the

1-year period beginning on the date of the enactment

of this Act, became entitled to elect COBRA continuation coverage; and

(ii) has elected such coverage; and

(B) enrolls in the premium assistance program under

this section by not later than the end of such 1-year period.

(b) LIMITATION OF PERIOD OF PREMIUM ASSISTANCE.—Premium

assistance provided under this subsection shall end with respect to

an individual on the earlier of—

(1) the date the individual is no longer covered under

COBRA continuation coverage; or

(2) 12 months after the date the individual is first enrolled

in the premium assistance program established under this section.

(c) PAYMENT, AND CREDITING OF ASSISTANCE.—

(1) AMOUNT OF ASSISTANCE.—Premium assistance provided

under this section shall be equal to 75 percent of the amount

of the premium required for the COBRA continuation coverage.

(2) PROVISION OF ASSISTANCE.—Premium assistance provided

under this section shall be provided through the establishment

of direct payment arrangements with the administrator of the

group health plan (or other entity) that provides or administers

the COBRA continuation coverage. It shall be a fiduciary duty

of such administrator (or other entity) to enter into such arrangements under this section.

(3) PREMIUMS PAYABLE BY QUALIFIED INDIVIDUAL REDUCED BY

AMOUNT OF ASSISTANCE.—Premium assistance provided under

this section shall be credited by such administrator (or other

entity) against the premium otherwise owed by the individual

involved for such coverage.

(d) CHANGE IN COBRA NOTICE.—

(1) GENERAL NOTICE.—

(A) IN GENERAL.—In the case of notices provided under

section 4980B(f)(6) of the Internal Revenue Code of 1986

with respect to individuals who, on or after July 1, 2001,

and before the end of the 1-year period beginning on the

date of the enactment of this Act, become entitled to elect

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COBRA continuation coverage, such notices shall include

an additional notification to the recipient of the availability of premium assistance for such coverage under this

section.

(B) ALTERNATIVE NOTICE.—In the case of COBRA continuation coverage to which the notice provision under section 4980B(f)(6) of the Internal Revenue Code of 1986 does

not apply, the Secretary of the Treasury shall, in coordination with administrators of the group health plans (or

other entities) that provide or administer the COBRA continuation coverage involved, assure provision of such notice.

(C) FORM.—The requirement of the additional notification under this paragraph may be met by amendment of

existing notice forms or by inclusion of a separate document with the notice otherwise required.

(2) SPECIFIC REQUIREMENTS.—Each additional notification

under paragraph (1) shall include— (A) the forms necessary for establishing eligibility under

subsection (a)(2)(A) and enrollment under subsection

(a)(2)(B) in connection with the coverage with respect to

each covered employee or other qualified beneficiary;

(B) the name, address, and telephone number necessary

to contact the plan administrator and any other person

maintaining relevant information in connection with the

premium assistance; and

(C) the following statement displayed in a prominent

manner: ‘‘You may be eligible to receive assistance with payment of 75

percent of your COBRA continuation coverage premiums for a duration of not to exceed 12 months.’’. (3) NOTICE RELATING TO RETROACTIVE COVERAGE.—In the

case of such notices previously transmitted before the date of

the enactment of this Act in the case of an individual described

in paragraph (1) who has elected (or is still eligible to elect)

COBRA continuation coverage as of the date of the enactment

of this Act, the administrator of the group health plan (or other

entity) involved or the Secretary of the Treasury (in the case

described in the paragraph (1)(B)) shall provide (within 60

days after the date of the enactment of this Act) for the additional notification required to be provided under paragraph (1).

(4) MODEL NOTICES.—The Secretary shall prescribe models

for the additional notification required under this subsection.

(f) OBLIGATION OF FUNDS.—This section constitutes budget authority in advance of appropriations Acts and represents the obligation of the Federal Government to provide for the payment of premium assistance under this section.

(g) PROMPT ISSUANCE OF GUIDANCE.—The Secretary of the Treasury, in consultation with the Secretary of Labor, shall issue guidance under this section not later than 30 days after the date of the

enactment of this Act.

(h) DEFINITIONS.—In this section:

(1) ADMINISTRATOR.—The term ‘‘administrator’’ has the

meaning given such term in section 3(16) of the Employee Retirement Income Security Act of 1974.

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(2) COBRA CONTINUATION COVERAGE.—The term ‘‘COBRA

continuation coverage’’ means continuation coverage provided

pursuant to title XXII of the Public Health Service Act, section

4980B of the Internal Revenue Code of 1986 (other than subsection (f)(1) of such section insofar as it relates to pediatric

vaccines), part 6 of subtitle B of title I of the Employee Retirement Income Security Act of 1974 (other than under section

609), section 8905a of title 5, United States Code, or under a

State program that provides continuation coverage comparable

to such continuation coverage.

(3) GROUP HEALTH PLAN.—The term ‘‘group health plan’’ has

the meaning given such term in section 9832(a) of the Internal

Revenue Code of 1986.

(4) STATE.—The term ‘‘State’’ includes the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands,

Guam, American Samoa, and the Commonwealth of the Northern Mariana Islands.

Subtitle C—Additional Assistance for

Temporary Health Insurance Coverage

SEC. 221. OPTIONAL TEMPORARY MEDICAID COVERAGE FOR CERTAIN

UNINSURED EMPLOYEES.

(a) IN GENERAL.—Notwithstanding any other provision of law,

with respect to any month before the ending month, a State may

elect to provide, under its medicaid program under title XIX of the

Social Security Act, medical assistance in the case of an

individual—

(1)(A) who has become totally or partially separated from

employment on or after July 1, 2001, and before the end of

such ending month; or

(B) whose hours of employment have been reduced on or

after July 1, 2001, and before the end of such ending month;

(2) who is not eligible for COBRA continuation coverage; and

(3) who is uninsured.

(b) LIMITATION OF PERIOD OF COVERAGE.—Assistance under this

section shall end with respect to an individual on the earlier of—

(1) the date the individual is no longer uninsured; or

(2) 12 months after the date the individual is first determined to be eligible for medical assistance under this section.

(c) SPECIAL RULES.—In the case of medical assistance provided

under this section—

(1) the Federal medical assistance percentage under section

1905(b) of the Social Security Act shall be the enhanced FMAP

(as defined in section 2105(b) of such Act);

(2) a State may elect to apply alternative income, asset, and

resource limitations and the provisions of section 1916(g) of

such Act, except that in no case shall a State cover individuals

with higher family income without covering individuals with a

lower family income;

(3) such medical assistance shall not be provided for periods

before the date the individual becomes uninsured;

(4) a State may elect to make eligible for such assistance a

spouse or children of an individual eligible for medical assistVerDate 11-MAY-2000 05:32 Oct 24, 2001 Jkt 099008 PO 00000 Frm 00026 Fmt 6659 Sfmt 6602 E:\HR\OC\HR252.XXX pfrm04 PsN: HR252
27

ance under paragraph (1), if such spouse or children are uninsured;

(5) individuals eligible for medical assistance under this section shall be deemed to be described in the list of individuals

described in the matter preceding paragraph (1) of section

1905(a) of such Act; and

(6) the Secretary of Health and Human Services shall not

count, for purposes of section 1108(f) of the Social Security Act,

such amount of payments under this section as bears a reasonable relationship to the average national proportion of payments made under this section for the 50 States and the District of Columbia to the payments otherwise made under title

XIX for such States and District.

(d) DEFINITIONS.—For purposes of this subtitle:

(1) UNINSURED.—The term ‘‘uninsured’’ means, with respect

to an individual, that the individual is not covered under— (A) a group health plan (as defined in section 2791(a) of

the Public Health Service Act),

(B) health insurance coverage (as defined in section

2791(b)(1) of the Public Health Service Act), or

(C) a program under title XVIII, XIX, or XXI of the Social Security Act, other than under such title XIX pursuant

to this section.

For purposes of this paragraph, such coverage under subparagraph (A) or (B) shall not include coverage consisting solely of

coverage of excepted benefits (as defined in section 2791(c) of

the Public Health Service Act).

(2) COBRA CONTINUATION COVERAGE.—The term ‘‘COBRA

continuation coverage’’ means coverage under a group health

plan provided by an employer pursuant to title XXII of the

Public Health Service Act, section 4980B of the Internal Revenue Code of 1986, part 6 of subtitle B of title I of the Employee Retirement Income Security Act of 1974, or section

8905a of title 5, United States Code.

(3) STATE.—The term ‘‘State’’ has the meaning given such

term for purposes of title XIX of the Social Security Act.

(4) ENDING MONTH.—The term ‘‘ending month’’ means the

last month that begins before the date that is 1 year after the

date of the enactment of this Act.

(e) EFFECTIVE DATE.—This section shall take effect upon its enactment, whether or not regulations implementing this section are

issued.

(f) LIMITATION ON ELECTION.—A State may not elect to provide

coverage under this section unless the State elects to provide coverage under section 222.

SEC. 222. OPTIONAL TEMPORARY COVERAGE FOR UNSUBSIDIZED

PORTION OF COBRA CONTINUATION PREMIUMS.

(a) IN GENERAL.—Notwithstanding any other provision of law,

with respect to COBRA continuation coverage provided for any

month through the ending month, a State may elect to provide payment of the unsubsidized portion of the premium for COBRA continuation coverage in the case of any individual—

(1)(A) who has become totally or partially separated from

employment on or after July 1, 2001, and before the end of the

ending month; or

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(B) whose hours of employment have been reduced on or

after July 1, 2001, and before the end of such ending month;

and

(2) who is eligible for, and has elected coverage under,

COBRA continuation coverage.

(b) LIMITATION OF PERIOD OF COVERAGE.—Premium assistance

under this section shall end with respect to an individual on the

earlier of—

(1) the date the individual is no longer covered under

COBRA continuation coverage; or

(2) 12 months after the date the individual is first determined to be eligible for premium assistance under this section.

(c) FINANCIAL PAYMENT TO STATES.—A State providing premium

assistance under this section shall be entitled to payment under

section 1903(a) of the Social Security Act with respect to such assistance (and administrative expenses relating to such assistance)

in the same manner as such State is entitled to payment with respect to medical assistance (and such administrative expenses)

under such section, except that, for purposes of this subsection, any

reference to the Federal medical assistance percentage shall be

deemed a reference to the enhanced FMAP (as defined in section

2105(b) of such Act). The provisions of subsection (c)(6) of section

221 shall apply with respect to this section in the same manner as

it applies under such section.

(d) UNSUBSIDIZED PORTION OF PREMIUM FOR COBRA CONTINUATION COVERAGE.—For purposes of this section, the term ‘‘unsubsidized portion of premium for COBRA continuation coverage’’

means that portion of the premium for COBRA continuation coverage for which there is no financial assistance available under section 211.

(e) EFFECTIVE DATE.—This section shall take effect upon its enactment, whether or not regulations implementing this section are

issued.

(f) LIMITATION ON ELECTION.—A State may not elect to provide

coverage under this section unless the State elects to provide coverage under section 221.

TITLE III—FREEZE OF TOP INDIVIDUAL

INCOME TAX RATE AND DOMESTIC

SECURITY TRUST FUND

SEC. 301. FREEZE OF TOP INDIVIDUAL INCOME TAX RATE AND DOMESTIC SECURITY TRUST FUND.

(a) FREEZE OF TOP INDIVIDUAL INCOME TAX RATE.—Paragraph

(2) of section 1(i) (relating to reductions in rates after June 30,

2001) is amended—

(A) by striking ‘‘37.6’’ and inserting ‘‘38.6’’, and

(B) by striking ‘‘35.0’’ and inserting ‘‘38.6’’.

(b) DOMESTIC SECURITY TRUST FUND.—Subchapter A of chapter

98 (relating to trust fund code) is amended by adding at the end

the following new section:

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‘‘SEC. 9511. DOMESTIC SECURITY TRUST FUND.

‘‘(a) CREATION OF TRUST FUND.—There is established in the

Treasury of the United States a trust fund to be known as the ‘Domestic Security Trust Fund’, consisting of such amounts as may be

transferred or credited to the Trust Fund as provided in this section and section 9602(b).

‘‘(b) TRANSFERS TO FUND.—There are hereby transferred from the

General Fund of the Treasury to the Domestic Security Trust Fund

so much of the additional amounts received in the Treasury by reason of the amendment made by section 301(a) of the Fiscal Stimulus and Worker Relief Act of 2001 (relating to freeze in top individual income tax rate) as does not exceed the sum of—

‘‘(1) $32,000,000,000, plus

‘‘(2) the amount determined by the Secretary to be necessary

to pay the interest on any repayable advance made to the

Trust Fund.

‘‘(c) EXPENDITURES.—Amounts in the Domestic Security Trust

Fund shall be available, as provided by appropriation Acts, for purposes of making the following expenditures to the extent such expenditures are hereafter authorized by law:

‘‘(1) $7,000,000,000 for domestic economic development programs.

‘‘(2) $25,000,000,000 for programs to significantly enhance

safety and security of transportation systems, facilities, and

environmental protection, including the emergency management systems and emergency response training.

‘‘(d) REPAYABLE ADVANCES.—

‘‘(1) IN GENERAL.—If amounts in the Trust Fund are not sufficient for the purposes of subsection (c), the Secretary shall

transfer from the General Fund of the Treasury to the Trust

Fund such additional amounts as may be necessary for such

purposes. Such amounts shall be transferred as repayable advances.

‘‘(2) REPAYMENT OF ADVANCES.—

‘‘(A) IN GENERAL.—Advances made to the Trust Fund

shall be repaid, and interest on such advances shall be

paid, to the General Fund of the Treasury when the Secretary determines that moneys are available for such purposes in the Trust Fund.

‘‘(B) RATE OF INTEREST.—Interest on advances made to

the Trust Fund shall be at a rate determined by the Secretary of the Treasury (as of the close of the calendar

month preceding the month in which the advance is made)

to be equal to the current average market yield on outstanding marketable obligations of the United States with

remaining periods to maturity comparable to the anticipated period during which the advance will be outstanding

and shall be compounded annually.’’.

(c) CLERICAL AMENDMENT.—The table of sections for subchapter

A of chapter 98 is amended by adding at the end the following new

item:

‘‘Sec. 9511. Domestic security trust fund.’’.

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(d) EFFECTIVE DATE.—The amendments made by this section

shall apply to taxable years beginning after December 31, 2001.

Æ