Union Calendar No. 148

104TH CONGRESS

1ST SESSION H. R. 2491

[Report No. 104–280]

To provide for reconciliation pursuant to section

for fiscal year 1996.105 of the concurrent resolution on the budget

OCTOBER 17, 1995

Committed to the Committee of the Whole House on the

State of the Union and ordered to be printed
IB

Union Calendar No. 148

104TH CONGRESS

1ST SESSION H. R. 2491

[Report No. 104–280]

To provide for reconciliation pursuant to section 105 of the concurrent

resolution on the budget for fiscal year 1996.

IN THE HOUSE OF REPRESENTATIVES

OCTOBER 17, 1995

Mr. KASICH from the Committee on the Budget, reported the following bill;

which was committed to the Committee of the Whole House on the State

of the Union and ordered to be printed

A BILL

To provide for reconciliation pursuant to section 105 of

the concurrent resolution on the budget for fiscal year 1996.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 TITLE I—PROVISIONS OF

4 GENERAL APPLICABILITY

5 SECTION 1001. SHORT TITLE.

6 This Act may be cited as the ‘‘Seven-Year Balanced

7 Budget Reconciliation Act of 1995’’.

8 SEC. 1002. TABLE OF TITLES.

9 This Act is organized into titles as follows:

TITLE I—PROVISIONS OF GENERAL APPLICABILITY
2

•HR 2491 RH

TITLE II—COMMITTEE ON BANKING AND FINANCIAL SERVICES

TITLE III—COMMITTEE ON COMMERCE

TITLE IV—COMMITTEE ON ECONOMIC AND EDUCATIONAL

OPPORTUNITIES

TITLE V—COMMITTEE ON GOVERNMENT REFORM AND

OVERSIGHT

TITLE VI—COMMITTEE ON INTERNATIONAL RELATIONS

TITLE VII—COMMITTEE ON THE JUDICIARY

TITLE VIII—COMMITTEE ON NATIONAL SECURITY

TITLE IX—COMMITTEE ON RESOURCES

TITLE X—COMMITTEE ON TRANSPORTATION AND

INFRASTRUCTURE

TITLE XI—COMMITTEE ON VETERANS’ AFFAIRS

TITLE XII—COMMITTEE ON WAYS AND MEANS-TRADE

TITLE XIII—COMMITTEE ON WAYS AND MEANS-REVENUES

TITLE XIV—COMMITTEE ON WAYS AND MEANS-TAX

SIMPLIFICATION

TITLE XV—MEDICARE

TITLE XVI—TRANSFORMATION OF THE MEDICAID PROGRAM

TITLE XVII—DEPARTMENT OF COMMERCE ABOLITION

TITLE XVIII—WELFARE REFORM

TITLE XIX—CONTRACT TAX PROVISIONS

TITLE XX—BUDGET PROCESS

1 TITLE II—COMMITTEE ON BANK2 ING AND FINANCIAL SERV3 ICES

4 SEC. 2001. TABLE OF CONTENTS.

5 The table of contents for this title is as follows:

Subtitle A—Housing Provisions

Sec. 2101. Termination of RTC and FDIC affordable housing programs.

Sec. 2102. Elimination of FHA assignment program and foreclosure relief.

Sec. 2103. Reform of HUD-owned multifamily property disposition program.

Sec. 2104. Recapture of rural housing loan subsidies by Rural Housing and

Community Development Service.

Sec. 2105. Reduction of section 8 annual adjustment factors for units without

tenant turnover.
3

•HR 2491 RH

Subtitle B—Thrift Charter Conversion

Sec. 2200. Short title.

CHAPTER 1—BANK INSURANCE FUND AND SAVINGS ASSOCIATION

INSURANCE FUND

Sec. 2201. Special assessment.

Sec. 2202. Assessments on insured depository institutions.

Sec. 2203. Merger of Bank Insurance Fund and Savings Association Insurance

Fund after recapitalization of SAIF.

Sec. 2204. Refund of amounts in deposit insurance fund in excess of designated

reserve amount.

Sec. 2205. Assessments authorized only if needed to maintain the reserve ratio

of a deposit insurance fund.

CHAPTER 2—STATUS OF BANKS AND SAVINGS ASSOCIATIONS

Sec. 2221. Termination of Federal savings associations; treatment of State savings associations as banks for purposes of Federal banking law.

Sec. 2222. Treatment of certain activities and affiliations of bank holding companies resulting from this Act.

Sec. 2223. Transition provisions for activities of savings associations which convert into or become treated as banks.

Sec. 2224. Registration of bank holding companies resulting from conversions

of savings associations to banks or treatment of savings associations as banks.

Sec. 2225. Additional transition provisions and special rules.

Sec. 2226. Technical and conforming amendments.

Sec. 2227. References to savings associations and State banks in Federal law.

Sec. 2228. Repeal of Home Owners’ Loan Act.

Sec. 2229. Effective date; definitions.

CHAPTER 3—TRANSFER OF FUNCTIONS, PERSONNEL, AND PROPERTY

Sec. 2241. Office of Thrift Supervision abolished.

Sec. 2242. Determination of transferred functions and employees.

Sec. 2243. Savings provisions.

Sec. 2244. References in Federal law to Director of the Office of Thrift Supervision.

Sec. 2245. Reconfiguration of board of directors of FDIC as a result of removal

of Director of the Office of Thrift Supervision.

CHAPTER 4—LOAN LOSS RESERVE TREATMENT

Sec. 2261. Sense of the Congress.

Subtitle C—Community Reinvestment Act Amendments

Sec. 2301. Expression of congressional intent.

Sec. 2302. Community Reinvestment Act exemption.

Sec. 2303. Self-certification of CRA compliance.

Sec. 2304. Community input and conclusive rating.

Sec. 2305. Special purpose financial institutions.

Sec. 2306. Increased incentives for lending to low- and moderate-income communities.

Sec. 2307. Prohibition on additional reporting under CRA.

Sec. 2308. Technical amendment.
4

•HR 2491 RH

Sec. 2309. Duplicative reporting.

Sec. 2310. CRA congressional oversight.

Sec. 2311. Consultation among examiners.

Sec. 2312. Limitation on regulations.

1 Subtitle A—Housing Provisions

2 SEC. 2101. TERMINATION OF RTC AND FDIC AFFORDABLE

3 HOUSING PROGRAMS.

4 (a) REPEAL OF UNIFIED PROGRAM AND TRANSFER

5 OF RTC WINDUP AUTHORITY TO HUD.—Section 21A(c)

6 of the Federal Home Loan Bank Act (12 U.S.C.

7 1441a(c)) is amended by striking paragraph (17) and in8 serting the following new paragraph:

9 ‘‘(17) TRANSFER OF AUTHORITY.—The Sec10 retary shall assume, not later than December 31,

11 1995, and thereafter shall carry out, any remaining

12 authority and responsibilities of the Corporation to

13 recapture excess proceeds from resale of properties

14 and to monitor and enforce low-income occupancy

15 requirements or rent limitations under this sub16 section and shall assume any direct or contingent li17 ability of the Corporation to carry out such author18 ity and responsibilities.’’.

19 (b) TERMINATION OF RTC AFFORDABLE HOUSING

20 PROGRAM.—Section 21A(c) of the Federal Home Loan

21 Bank Act (12 U.S.C. 1441a(c)) is amended by adding at

22 the end the following new paragraph:

23 ‘‘(18) TERMINATION.—
5

•HR 2491 RH

1 ‘‘(A) IN GENERAL.—On and after the date

2 of the enactment of the Seven-Year Balanced

3 Budget Reconciliation Act of 1995, the provi4 sions of this subsection (other than paragraph

5 (17)) shall not apply with respect to any eligible

6 residential property or eligible condominium

7 property.

8 ‘‘(B) SAVINGS PROVISION.—Notwithstand9 ing subparagraph (A), the provisions of this

10 subsection shall continue to apply on and after

11 such date of enactment to any eligible residen12 tial property or eligible condominium property

13 that—

14 ‘‘(i) has been sold or otherwise dis15 posed of by the Corporation before such

16 date of enactment; or

17 ‘‘(ii) is subject to a contract of sale or

18 other disposition entered into before such

19 date of enactment.’’.

20 (c) TERMINATION OF AFFORDABLE HOUSING ADVI21 SORY BOARD.—Section 14(b)(9) of the Resolution Trust

22 Corporation Completion Act (12 U.S.C. 1831q note) is

23 amended by striking ‘‘September 30, 1998’’ and inserting

24 ‘‘September 30, 1995’’.
6

•HR 2491 RH

1 (d) REPEAL OF FDIC PROGRAM AND TRANSFER OF

2 WINDUP AUTHORITY TO HUD.—

3 (1) REPEAL.—Section 40 of the Federal De4 posit Insurance Act (12 U.S.C. 1831q) is hereby re5 pealed.

6 (2) TRANSFER OF WINDUP AUTHORITY.—Not7 withstanding paragraph (1)—

8 (A) effective December 31, 1995, the Sec9 retary shall carry out any remaining authority

10 and responsibilities of the Federal Deposit In11 surance Corporation under section 40 of the

12 Federal Deposit Insurance Act to recapture ex13 cess proceeds from resale of properties and to

14 monitor and enforce low-income occupancy re15 quirements or rent limitations under such sec16 tion and shall assume any direct or contingent

17 liability of the Corporation to carry out such

18 authority and responsibilities; and

19 (B) the Federal Deposit Insurance Cor20 poration shall consummate any sales of prop21 erty under section 40 of such Act that were

22 pending under contracts of sale on September

23 30, 1995.

24 (e) FDIC DISPOSITION OF ASSETS AS CONSERVATOR

25 OR RECEIVER.—Section 11(d)(13)(E) of the Federal
7

•HR 2491 RH

1 Deposit Insurance Act (12 U.S.C. 1821(d)(13)(E)) is

2 amended—

3 (1) in clause (iii), by inserting ‘‘and’’ after the

4 semicolon;

5 (2) in clause (iv), by striking ‘‘; and’’ and in6 serting a period; and

7 (3) by striking clause (v).

8 (f) DISPOSITION OF FDIC ASSETS.—Section

9 13(d)(3)(D) of the Federal Deposit Insurance Act (12

10 U.S.C. 1823(d)(3)(D)) is amended—

11 (1) in clause (iii), by inserting ‘‘and’’ after the

12 semicolon;

13 (2) in clause (iv), by striking ‘‘; and’’ and in14 serting a period; and

15 (3) by striking clause (v).

16 SEC. 2102. ELIMINATION OF FHA ASSIGNMENT PROGRAM

17 AND FORECLOSURE RELIEF.

18 (a) ELIMINATION OF TMAP AND ASSIGNMENT PRO19 GRAM.—Section 230 of the National Housing Act (12

20 U.S.C. 1715u) is hereby repealed.

21 (b) PROHIBITION OF FORECLOSURE AVOIDANCE RE22 LIEF.—Section 204 of the National Housing Act (12

23 U.S.C. 1710) is amended by adding at the end the follow24 ing new subsection:
8

•HR 2491 RH

1 ‘‘(m) PROHIBITION OF FORECLOSURE AVOIDANCE

2 RELIEF.—Notwithstanding any provision of this section,

3 any other provision of this Act, section 2 of the Housing

4 Act of 1949, section 2 of the Housing and Urban Develop5 ment Act of 1968, or any other provision of law, after

6 September 30, 1995, the Secretary of Housing and Urban

7 Development may not provide foreclosure avoidance relief

8 to any mortgagor who has defaulted in making payments

9 under a mortgage covering a 1-, 2-, 3-, or 4-family resi10 dence insured under this Act.’’.

11 SEC. 2103. REFORM OF HUD-OWNED MULTIFAMILY PROP12 ERTY DISPOSITION PROGRAM.

13 (a) IN GENERAL.—Effective October 1, 1995, section

14 203 of the Housing and Community Development Amend15 ments of 1978 (12 U.S.C. 1701z–11) is amended to read

16 as follows:

17 ‘‘SEC. 203. MANAGEMENT AND DISPOSITION OF HUD18 OWNED MULTIFAMILY HOUSING PROJECTS.

19 ‘‘(a) IN GENERAL.—The Secretary of Housing and

20 Urban Development may manage and dispose of (1) multi21 family housing projects that are owned by the Secretary

22 or that are subject to mortgages held by the Secretary,

23 and (2) mortgages on multifamily housing projects that

24 are held by the Secretary, without regard to any other pro25 vision of law.
9

•HR 2491 RH

1 ‘‘(b) AUTHORITY TO DELEGATE.—The Secretary of

2 Housing and Urban Development may delegate to one or

3 more entities the authority to carry out some or all of the

4 functions and responsibilities of the Secretary in connec5 tion with the foreclosure of mortgages on multifamily

6 housing projects held by the Secretary.

7 ‘‘(c) DEFINITION.—For purposes of this section, the

8 term ‘multifamily housing project’ means any multifamily

9 rental housing project which is, or prior to acquisition by

10 the Secretary was, assisted or insured under the National

11 Housing Act, or was subject to a loan under section 202

12 of the Housing Act of 1959.’’.

13 (b) CONFORMING AMENDMENTS.—

14 (1) NONDISCRIMINATION AGAINST CERTIFICATE

15 AND VOUCHER HOLDERS.—Section 183(c) of the

16 Housing and Community Development Act of 1987

17 (42 U.S.C. 1437f note) is amended by striking ‘‘sec18 tion 203(i)(2) of the Housing and Community De19 velopment Amendments of 1978, as amended by sec20 tion 181(h) of this Act’’ and inserting ‘‘section

21 203(b) of the Housing and Community Development

22 Amendments of 1978 (as in effect before October 1,

23 1995)’’.

24 (2) LIHPRH ACT OF 1990.—Section 212(c) of

25 the Low-Income Housing Preservation and Resident
10

•HR 2491 RH

1 Homeownership Act of 1990 (12 U.S.C. 4102(c)) is

2 amended by striking the last sentence.

3 (3) HOPE HOMEOWNERSHIP PROGRAM.—Sec4 tion 427 of the Cranston-Gonzalez National Afford5 able Housing Act (42 U.S.C. 12877) is amended by

6 striking ‘‘subject to—’’ and all that follows and in7 serting ‘‘subject to the Low-Income Housing Preser8 vation and Resident Homeownership Act of 1990.’’.

9 (4) FHA MULTIFAMILY HOUSING MORTGAGE

10 INSURANCE.—Section 207(k) of the National Hous11 ing Act (12 U.S.C. 1713(k)) is amended by striking

12 the third sentence.

13 (5) MULTIFAMILY MORTGAGE FORECLOSURE

14 ACT OF 1981.—Section 367(b)(2) of the Multifamily

15 Mortgage Foreclosure Act of 1981 (12

16 U.S.C.3706(b)(2)) is amended—

17 (A) by striking subparagraph (B); and

18 (B) by striking ‘‘(A)’’.

19 (6) PREVENTING MORTGAGE DEFAULTS ON IN20 SURED MULTIFAMILY PROJECTS.—Section

21 103(h)(2)(B) of the Multifamily Housing Property

22 Disposition Reform Act of 1994 (12 U.S.C. 1715z–

23 1a note) is amended by inserting ‘‘(as in effect be24 fore October 1, 1995)’’ after ‘‘1978’’.
11

•HR 2491 RH

1 SEC. 2104. RECAPTURE OF RURAL HOUSING LOAN SUB2 SIDIES BY RURAL HOUSING AND COMMUNITY

3 DEVELOPMENT SERVICE.

4 The first sentence of section 521(a)(1)(D)(i) of the

5 Housing Act of 1949 (42 U.S.C. 1490a(a)(1)(D)(i)) is

6 amended by inserting ‘‘upon the repayment of any loan

7 made under this title or’’ after ‘‘assistance rendered’’.

8 SEC. 2105. REDUCTION OF SECTION 8 ANNUAL ADJUST9 MENT FACTORS FOR UNITS WITHOUT TEN10 ANT TURNOVER.

11 Paragraph (2)(A) of section 8(c) of the United States

12 Housing Act of 1937 (42 U.S.C. 1437f(c)(2)(A)) is

13 amended by striking the last sentence.

14 Subtitle B—Thrift Charter

15 Conversion

16 SEC. 2200. SHORT TITLE.

17 This subtitle may be cited as the ‘‘Thrift Charter

18 Conversion Act of 1995’’.

19 CHAPTER 1—BANK INSURANCE FUND AND

20 SAVINGS ASSOCIATION INSURANCE FUND

21 SEC. 2201. SPECIAL ASSESSMENT.

22 Section 7(b)(6) of the Federal Deposit Insurance Act

23 (12 U.S.C. 1817(b)(6)) is amended—

24 (1) by redesignating clauses (i), (ii), and (iii) of

25 subparagraph (A) as subclauses (I), (II), and (III),

26 respectively;
12

•HR 2491 RH

1 (2) by redesignating subparagraphs (A) and

2 (B) as clauses (i) and (ii), respectively;

3 (3) by moving the left margin of such clauses

4 and subclauses (as so redesignated) 2 ems to the

5 right;

6 (4) by striking ‘‘SPECIAL ASSESSMENTS.—In

7 addition to’’ and inserting ‘‘SPECIAL ASSESS8 MENTS.—

9 ‘‘(A) IN GENERAL.—In addition to’’; and

10 (5) by adding at the end the following new sub11 paragraphs:

12 ‘‘(B) SINGLE ADDITIONAL SPECIAL AS13 SESSMENT WITH RESPECT TO CERTAIN AC14 COUNTS.—

15 ‘‘(i) IN GENERAL.—The Corporation

16 shall impose, on the basis of such factors

17 as the Board of Directors considers to be

18 appropriate, a single special assessment on

19 the institutions described in the following

20 subclauses (other than institutions exempt

21 under subparagraph (C)):

22 ‘‘(I) Each Savings Association

23 Insurance Fund member (including

24 any Savings Association Insurance
13

•HR 2491 RH

1 Fund member referred to in section

2 5(d)(2)(G)).

3 ‘‘(II) Each Bank Insurance Fund

4 member which has deposits which are

5 treated, under section 5(d)(3), as de6 posits which are insured by the Sav7 ings Association Insurance Fund.

8 ‘‘(ii) AMOUNT OF ASSESSMENT.—The

9 assessment imposed under clause (i) shall

10 be in an amount equal to such percentage

11 of the Savings Association Insurance Fund

12 assessment base (of the institutions subject

13 to such assessment) as of March 31, 1995,

14 as the Board of Directors determines, in

15 the Board of Directors’ discretion, to be

16 necessary in order for the reserve ratio of

17 the Savings Association Insurance Fund to

18 meet the designated reserve ratio on the

19 1st business day of January, 1996.

20 ‘‘(iii) DEPOSIT OF ASSESSMENT.—

21 Notwithstanding any other provision of

22 law, the proceeds of any assessment im23 posed under clause (i) shall be deposited in

24 the Savings Association Insurance Fund.
14

•HR 2491 RH

1 ‘‘(iv) DATE PAYMENT DUE.—The spe2 cial assessment imposed under this sub3 paragraph shall be—

4 ‘‘(I) due on the 1st business day

5 of January, 1996; and

6 ‘‘(II) paid to the Corporation on

7 the later of the due date or such other

8 date as the Corporation may prescribe

9 which may not be later than the end

10 of the 60-day period beginning on the

11 date of the Thrift Charter Conversion

12 Act of 1995.

13 ‘‘(v) SAVINGS ASSOCIATION INSUR14 ANCE FUND ASSESSMENT BASE DE15 FINED.—For purposes of this subpara16 graph, the term Savings Association Insur17 ance Fund assessment base means—

18 ‘‘(I) the assessment base of Sav19 ings Association Insurance Fund

20 members on which assessments are

21 imposed under the risk-based assess22 ment system established pursuant to

23 paragraph (1); and

24 ‘‘(II) in the case of an institution

25 described in clause (i)(II), the ad-
15

•HR 2491 RH

1 justed attributable deposit amount de2 termined under subparagraph (C) of

3 section 5(d)(3) for purposes of sub4 paragraph (B)(i) of such section.

5 ‘‘(C) SPECIAL RULES FOR CERTAIN EX6 EMPT INSTITUTIONS.—

7 ‘‘(i) IN GENERAL.—The Board of Di8 rectors may exempt any weak insured de9 pository institution from the payment of

10 the assessment imposed under subpara11 graph (B)(i) if the exemption would reduce

12 risk to the Savings Association Insurance

13 Fund.

14 ‘‘(ii) CONTINUATION OF ASSESSMENT

15 RATES APPLICABLE AS OF JUNE 30, 1995.—

16 Notwithstanding any other provision of

17 this subsection or any determination by the

18 Corporation pursuant to paragraph (2),

19 the semiannual assessment rate applicable

20 under paragraph (2) during the period be21 ginning on January 1, 1996, and ending

22 on December 31, 1999, with respect to any

23 insured depository institution which re24 ceives an exemption under clause (i) shall

25 be the semiannual assessment rate which
16

•HR 2491 RH

1 would be applicable to such institution

2 under paragraph (2) if such assessment

3 rate were calculated in the manner in

4 which semiannual assessment rates for

5 Savings Association Insurance Fund mem6 bers were determined by the Corporation

7 under such paragraph as of June 30,

8 1995.

9 ‘‘(iii) SPECIAL RULE FOR OAKAR

10 BANKS.—If an insured depository institu11 tion to which clause (ii) applies is an insti12 tution described in subparagraph

13 (B)(i)(II), section 5(d)(3) (as in effect on

14 September 13, 1995) shall continue to

15 apply with respect to such institution for

16 purposes of clause (ii) without regard to

17 the repeal of such section by section

18 2202(c) of the Thrift Charter Conversion

19 Act of 1995.

20 ‘‘(iv) DEPOSIT OF ASSESSMENT.—As21 sessments imposed under paragraph (2) in

22 accordance with clause (i) on depository in23 stitutions to which such clause applies

24 shall be deposited—
17

•HR 2491 RH

1 ‘‘(I) in the Savings Association

2 Insurance Fund until such fund is

3 merged into the deposit insurance

4 fund pursuant to section 2203(a)(2)

5 of the Thrift Charter Conversion Act

6 of 1995; and

7 ‘‘(II) after such merger, in the

8 deposit insurance fund.

9 ‘‘(v) GUIDELINES.—

10 ‘‘(I) GUIDELINES REQUIRED.—

11 Not later than 30 days after the date

12 of the enactment of the Thrift Char13 ter Conversion Act of 1995, the Board

14 of Directors shall prescribe guidelines

15 containing the criteria to be used by

16 the Board of Directors in making any

17 determination under clause (i).

18 ‘‘(II) PUBLICATION.—The guide19 lines prescribed under subclause (I)

20 shall be published in the Federal Reg21 ister.

22 ‘‘(D) PRO RATA PAYMENT OF SPECIAL AS23 SESSMENT BY EXEMPT INSTITUTIONS AUTHOR24 IZED.—In the case of any depository institution

25 which receives an exemption under subpara-
18

•HR 2491 RH

1 graph (C)(i) from the special assessment im2 posed under subparagraph (B) and any succes3 sor to such institution, subparagraph (C)(ii)

4 shall cease to apply with respect to such institu5 tion as of the date on which the institution

6 makes a payment to the Corporation, on such

7 terms as the Board of Directors may prescribe,

8 in an amount equal to the product of—

9 ‘‘(i) 12.5 percent of the product of—

10 ‘‘(I) the Savings Association In11 surance Fund assessment base of the

12 institution which would have been

13 used in the calculation of the amount

14 of such special assessment if the insti15 tution had not received the exemption

16 from such assessment; and

17 ‘‘(II) the percentage rate cal18 culated by the Board of Directors

19 under subparagraph (B)(ii) for use in

20 determining the amount of the special

21 assessment for depository institutions

22 which did not receive an exemption

23 under subparagraph (C); and

24 ‘‘(ii) the whole number of full semi25 annual periods which begin after the date
19

•HR 2491 RH

1 of such payment and end before January

2 1, 2000.

3 ‘‘(E) ASSESSMENT FOR CERTAIN DEPOS4 ITS.—

5 ‘‘(i) IN GENERAL.—Notwithstanding

6 any other provision of law, in carrying out

7 the special assessment under subparagraph

8 (B), the Corporation may set assessment

9 rates on the basis of the factors described

10 in clause (iii) for deposits treated under

11 section 5(d)(3) as deposits insured by the

12 Savings Association Insurance Fund.

13 ‘‘(ii) MINIMUM RATE.—Notwithstand14 ing clause (i), any rate assessed under

15 such clause may not be less than 2/3 of the

16 assessment rate imposed under subpara17 graph (B).

18 ‘‘(iii) FACTORS.—In setting any as19 sessment rate under clause (i), the Cor20 poration shall consider the following fac21 tors:

22 ‘‘(I) The extent to which deposits

23 treated under section 5(d)(3) as de24 posits insured by the Savings Associa25 tion Insurance Fund do not reflect the
20

•HR 2491 RH

1 actual amount of deposits insured by

2 such fund because of the growth attri3 bution rule contained in clause (iii) of

4 such section.

5 ‘‘(II) The ability of an insured

6 depository institution to demonstrate

7 with deposit data the amount of ac8 tual deposits which should be treated

9 as deposits insured by the Savings As10 sociation Insurance Fund notwith11 standing the growth attribution rule

12 referred to in subclause (I).

13 ‘‘(iv) NO NET BUDGET EFFECT.—Not14 withstanding any other provision of this

15 subparagraph, the Corporation shall not

16 set any assessment rate under clause (i)

17 that would result in an increased budget

18 outlay or a decrease in offsetting receipts

19 under this paragraph.’’.

20 SEC. 2202. ASSESSMENTS ON INSURED DEPOSITORY INSTI21 TUTIONS.

22 (a) FINANCING CORPORATION ASSESSMENTS ON ALL

23 FDIC-INSURED DEPOSITORY INSTITUTIONS.—Section

24 21(f) of the Federal Home Loan Bank Act (12 U.S.C.

25 1441(f)) is amended—
21

•HR 2491 RH

1 (1) in the portion of paragraph (2) which pre2 cedes subparagraph (A)—

3 (A) by striking ‘‘each Savings Association

4 Insurance Fund member’’ and inserting ‘‘each

5 insured depository institution (as defined in sec6 tion 3(c)(2) of the Federal Deposit Insurance

7 Act)’’; and

8 (B) by striking ‘‘such members’’ and in9 serting ‘‘such institutions’’; and

10 (2) by striking ‘‘, except that—’’ and all that

11 follows through the end of the paragraph and insert12 ing ‘‘, except that the Financing Corporation shall

13 have first priority to make the assessment.’’.

14 (b) ASSESSMENT RATES FOR SAIF MEMBERS MAY

15 NOT BE LESS THAN ASSESSMENT RATES FOR BIF MEM16 BERS.—Section 7(b)(2)(F) of the Federal Deposit Insur17 ance Act (12 U.S.C. 1817(b)(2)(F)) is amended—

18 (1) by striking ‘‘and’’ at the end of clause (i);

19 (2) by striking the period at the end of clause

20 (ii) and inserting ‘‘; and’’; and

21 (3) by adding at the end the following new

22 clause:

23 ‘‘(iii) notwithstanding any other provi24 sion of this subsection, assessment rates

25 for Savings Association Insurance Fund
22

•HR 2491 RH

1 members may not be less than assessment

2 rates for Bank Insurance Fund mem3 bers.’’.

4 (c) REPEAL OF EXIT MORATORIUM AND OAKAR

5 BANK PROVISIONS.—Effective January 1, 1998, section

6 5(d) of the Federal Deposit Insurance Act (12 U.S.C.

7 1815(d)) is amended by striking paragraphs (2) and (3).

8 (d) TECHNICAL AND CONFORMING AMENDMENTS.—

9 (1) Section 7(b)(2)(D) of the Federal Deposit

10 Insurance Act (12 U.S.C. 1817(b)(2)(D)) is amend11 ed by striking ‘‘Savings Association Insurance Fund

12 members’’ and inserting ‘‘members of a deposit in13 surance fund’’.

14 (2) Section 21(k) of the Federal Home Loan

15 Bank Act (12 U.S.C. 1441(k)) is amended—

16 (A) by striking paragraph (1); and

17 (B) by redesignating paragraphs (2) and

18 (3) as paragraphs (1) and (2), respectively.

19 (e) EFFECTIVE DATE.—The amendments made by

20 subsections (a), (b), and (d) shall take effect on January

21 1, 1996.
23

•HR 2491 RH

1 SEC. 2203. MERGER OF BANK INSURANCE FUND AND SAV2 INGS ASSOCIATION INSURANCE FUND AFTER

3 RECAPITALIZATION OF SAIF.

4 (a) ESTABLISHMENT OF DEPOSIT INSURANCE

5 FUND.—

6 (1) IN GENERAL.—Effective January 1, 1998,

7 section 11(a)(5) of the Federal Deposit Insurance

8 Act (12 U.S.C. 1821(a)(5)) is amended to read as

9 follows:

10 ‘‘(5) DEPOSIT INSURANCE FUND.—

11 ‘‘(A) ESTABLISHMENT.—There is estab12 lished a fund to be known as the deposit insur13 ance fund which shall—

14 ‘‘(i) be maintained and administered

15 by the Corporation; and

16 ‘‘(ii) initially consist of the assets and

17 liabilities of the Bank Insurance Fund and

18 Savings Association Insurance Fund which

19 have been merged by the Corporation into

20 the deposit insurance fund pursuant to

21 section 2203(a)(2) of the Thrift Charter

22 Conversion Act of 1995, other than any as23 sets of the Savings Association Insurance

24 Fund which have been deposited in the

25 special reserve of the deposit insurance
24

•HR 2491 RH

1 fund pursuant to section 2203(b)(2) of

2 such Act.

3 ‘‘(B) USES.—The deposit insurance fund

4 shall be available to the Corporation for use in

5 carrying out the insurance purposes of the Cor6 poration in accordance with this Act with re7 spect to insured depository institutions.

8 ‘‘(C) DEPOSITS.—All amounts assessed

9 against insured depository institutions by the

10 Corporation shall be deposited into the deposit

11 insurance fund.’’.

12 (2) MERGER BY CORPORATION.—Except with

13 respect to any assets of the Savings Association In14 surance Fund which are required to be deposited in

15 the special reserve of the deposit insurance fund

16 pursuant to subsection (b)(2), the Corporation shall

17 merge the Bank Insurance Fund and the Savings

18 Association Insurance Fund on January 1, 1998,

19 into the deposit insurance fund established by the

20 amendment made by paragraph (1).

21 (b) ESTABLISHMENT OF SPECIAL RESERVE OF THE

22 DEPOSIT INSURANCE FUND.—

23 (1) IN GENERAL.—Effective January 1, 1998,

24 section 11(a)(6) of the Federal Deposit Insurance
25

•HR 2491 RH

1 Act (12 U.S.C. 1821(a)(6)) is amended to read as

2 follows:

3 ‘‘(6) SPECIAL RESERVE OF THE DEPOSIT IN4 SURANCE FUND.—

5 ‘‘(A) IN GENERAL.—There is established a

6 fund to be known as the special reserve of the

7 deposit insurance fund which shall—

8 ‘‘(i) be maintained and administered

9 by the Corporation; and

10 ‘‘(ii) initially consist of amounts de11 posited in the special reserve pursuant to

12 section 2203(b)(2) of the Thrift Charter

13 Conversion Act of 1995.

14 ‘‘(B) EMERGENCY USE OF SPECIAL RE15 SERVE.—

16 ‘‘(i) USE AUTHORIZED.—Subject to

17 clause (ii) and notwithstanding subpara18 graph (C), the Corporation may, in the

19 sole discretion of the Board of Directors,

20 transfer amounts from the special reserve

21 for deposit in the deposit insurance fund

22 for use in accordance with paragraph

23 (5)(B).
26

•HR 2491 RH

1 ‘‘(ii) CONDITIONS ON TRANSFER.—

2 The Board of Directors may authorize a

3 transfer under clause (i) only if—

4 ‘‘(I) the Board of Directors de5 termines that the reserve ratio of the

6 deposit insurance fund is less than 50

7 percent of the designated reserve

8 ratio; and

9 ‘‘(II) the Board of Directors

10 finds that the reserve ratio of the de11 posit insurance will likely be less than

12 the designated reserve ratio of the

13 fund for each of the 4 calendar quar14 ters beginning after the date of such

15 determination.

16 ‘‘(C) NO REFUNDS OR OTHER USES AU17 THORIZED.—Except as provided in subpara18 graph (B), the Corporation may not make any

19 payment from the special reserve, make any re20 fund or provide any credit to any insured de21 pository institution with respect to any amount

22 in the special reserve, or use any amount in the

23 special reserve for any other purpose (including

24 the use of any such amount as security for the
27

•HR 2491 RH

1 repayment of any obligation of the Corpora2 tion).

3 ‘‘(D) EXCLUSION OF SPECIAL RESERVE IN

4 CALCULATING THE RESERVE RATIO.—No

5 amount in the special reserve may be taken into

6 account in calculating the reserve ratio of the

7 deposit insurance fund under section 7.’’.

8 (2) TRANSFER AND DEPOSIT BY CORPORA9 TION.—If, at the time of the merger of the Bank In10 surance Fund and the Savings Association Insur11 ance Fund pursuant to subsection (a)(2), the reserve

12 ratio of the Savings Association Insurance Fund ex13 ceeds the designated reserve ratio, the Corporation

14 shall transfer from such fund to the special reserve

15 of the deposit insurance fund established by the

16 amendment made by paragraph (1) an amount equal

17 to the amount which causes the reserve ratio of the

18 Savings Association Insurance Fund to exceed the

19 designated reserve ratio.

20 (c) TECHNICAL AND CONFORMING AMENDMENTS.—

21 (1) Section 3(y) of the Federal Deposit Insur22 ance Act (12 U.S.C. 1813(y)) is amended by strik23 ing ‘‘the Bank Insurance Fund or the Savings Asso24 ciation Insurance Fund, as appropriate’’ and insert-
28

•HR 2491 RH

1 ing ‘‘the deposit insurance fund established under

2 section 11(a)(5)’’.

3 (2) Section 11(a) of the Federal Deposit Insur4 ance Act (12 U.S.C. 1821(a)) is amended by strik5 ing paragraphs (4)(A) and (7).

6 (3) Section 5(d)(1) of the Federal Deposit In7 surance Act (12 U.S.C. 1815(d)(1)) is amended—

8 (A) in subparagraph (A), by striking ‘‘re9 serve ratios’’ and all that follows through the

10 period and inserting ‘‘the reserve ratio of the

11 deposit insurance fund.’’;

12 (B) by striking subparagraph (B); and

13 (C) by redesignating subparagraph (C) as

14 subparagraph (B).

15 (4) Section 7 of the Federal Deposit Insurance

16 Act (12 U.S.C. 1817) is amended by striking sub17 section (l).

18 (5) Section 7(b)(2) of the Federal Deposit In19 surance Act (12 U.S.C. 1817(b)(2)) is amended—

20 (A) by striking subparagraphs (B), (F),

21 and (G);

22 (B) in clauses (i) and (iv) of subparagraph

23 (A), by striking ‘‘each deposit insurance fund’’

24 and inserting ‘‘the deposit insurance fund’’;
29

•HR 2491 RH

1 (C) in subparagraph (A)(iii), by striking

2 ‘‘a deposit insurance fund’’ and inserting ‘‘the

3 deposit insurance fund’’; and

4 (D) by inserting after subparagraph (E)

5 the following new subparagraph:

6 ‘‘(F) RESERVE RATIO DEFINED.—For pur7 poses of this subsection, the term ‘reserve ratio’

8 means the ratio of the net worth of the deposit

9 insurance fund to the aggregate estimated in10 sured deposits held in all insured depository in11 stitutions.’’.

12 (6) Section 7(b)(3) of the Federal Deposit In13 surance Act (12 U.S.C. 1817(b)(3)) is amended—

14 (A) in subparagraph (A) by striking ‘‘any

15 deposit insurance fund’’ and inserting ‘‘the de16 posit insurance fund’’; and

17 (B) by striking subparagraphs (C) and

18 (D).

19 (7) Subparagraph (A) of section 7(b)(6) of the

20 Federal Deposit Insurance Act (12 U.S.C.

21 1817(b)(6)) (as so redesignated by section 2201 of

22 this subtitle) is amended—

23 (A) in clause (i)—

24 (i) by inserting ‘‘or’’ after the semi25 colon at the end of subclause (I);
30

•HR 2491 RH

1 (ii) by striking subclause (II); and

2 (iii) by striking ‘‘; and’’ at the end of

3 subclause (III) and inserting a period; and

4 (B) by striking clause (ii).

5 (8) Section 11(a)(4)(B) of the Federal Deposit

6 Insurance Act (12 U.S.C. 1821(a)(4)(B)) is amend7 ed by striking ‘‘Bank Insurance Fund and the Sav8 ings Association Insurance Fund’’ and inserting ‘‘de9 posit insurance fund’’.

10 (9) Paragraph (1) of section 11(f) of the Fed11 eral Deposit Insurance Act (12 U.S.C. 1821(f)) is

12 amended by striking ‘‘depositor, except that—’’ and

13 all that follows through the period at the end of the

14 paragraph and inserting ‘‘depositor.’’.

15 (10) Section 11(i)(3) of the Federal Deposit In16 surance Act (12 U.S.C. 1821(i)(3)) is amended—

17 (A) by striking subparagraph (B); and

18 (B) in subparagraph (C), by striking ‘‘sub19 paragraphs (A) and (B)’’ and inserting ‘‘sub20 paragraph (A)’’.

21 (11) Section 11A(a)(3) of the Federal Deposit

22 Insurance Act (12 U.S.C. 1821a(a)(3)) is amended

23 by striking ‘‘Bank Insurance Fund, the Savings As24 sociation Insurance Fund,’’ and inserting ‘‘deposit

25 insurance fund’’.
31

•HR 2491 RH

1 (12) Section 11A(f) of the Federal Deposit In2 surance Act (12 U.S.C. 1821a(f)) is amended by

3 striking ‘‘Savings Association Insurance Fund’’ and

4 inserting ‘‘deposit insurance fund’’.

5 (13) Section 13(a)(1) of the Federal Deposit

6 Insurance Act (12 U.S.C. 1823(a)(1)) is amended

7 by striking ‘‘Bank Insurance Fund, the Savings As8 sociation Insurance Fund,’’ and inserting ‘‘deposit

9 insurance fund, the special reserve of the deposit in10 surance fund,’’.

11 (14) Section 13(c)(4)(G)(ii) of the Federal De12 posit Insurance Act (12 U.S.C. 1823(c)(4)(G)(ii)) is

13 amended—

14 (A) by striking ‘‘appropriate insurance

15 fund’’ and inserting ‘‘deposit insurance fund’’;

16 (B) by striking ‘‘the members of the insur17 ance fund (of which such institution is a mem18 ber)’’ and inserting ‘‘insured depository institu19 tions’’;

20 (C) by striking ‘‘each member’s’’ and in21 serting ‘‘each insured depository institution’s’’;

22 and

23 (D) by striking ‘‘the member’s’’ each place

24 such term appears and inserting ‘‘the institu25 tion’s’’.
32

•HR 2491 RH

1 (15) Section 13(c) of the Federal Deposit In2 surance Act (12 U.S.C. 1823(c)) is amended by

3 striking paragraph (11).

4 (16) Section 13(h) of the Federal Deposit In5 surance Act (12 U.S.C. 1823(h)) is amended by

6 striking ‘‘Bank Insurance Fund’’ and inserting ‘‘de7 posit insurance fund’’.

8 (17) Section 14(a) of the Federal Deposit In9 surance Act (12 U.S.C. 1824(a)) is amended—

10 (A) by striking ‘‘Bank Insurance Fund or

11 the Savings Association Insurance Fund’’ and

12 inserting ‘‘deposit insurance fund’’; and

13 (B) by striking ‘‘each such fund’’ and in14 serting ‘‘the fund’’.

15 (18) Section 14(b) of the Federal Deposit In16 surance Act (12 U.S.C. 1824(b)) is amended by

17 striking ‘‘Bank Insurance Fund or Savings Associa18 tion Insurance Fund’’ and inserting ‘‘deposit insur19 ance fund’’.

20 (19) Section 14(c) of the Federal Deposit In21 surance Act (12 U.S.C. 1824(c)) is amended by

22 striking paragraph (3).

23 (20) Section 14 of the Federal Deposit Insur24 ance Act (12 U.S.C. 1824) is amended by striking

25 subsection (d).
33

•HR 2491 RH

1 (21) Section 15(c)(5) of the Federal Deposit

2 Insurance Act (12 U.S.C. 1825(c)(5)) is amended—

3 (A) by striking ‘‘Bank Insurance Fund or

4 Savings Association Insurance Fund, respec5 tively,’’ and inserting ‘‘deposit insurance fund’’;

6 (B) by striking ‘‘Bank Insurance Fund or

7 Savings Association Insurance Fund, respec8 tively;’’ and inserting ‘‘deposit insurance fund;’’;

9 and

10 (C) by striking ‘‘Bank Insurance Fund or

11 the Savings Association Insurance Fund, re12 spectively,’’ and inserting ‘‘deposit insurance

13 fund,’’.

14 (22) Section 17(a)(1) of the Federal Deposit

15 Insurance Act (12 U.S.C. 1827(a)(1)) is amended

16 by striking ‘‘Bank Insurance Fund, the Savings As17 sociation Insurance Fund,’’ each place such term ap18 pears and inserting ‘‘deposit insurance fund’’.

19 (23) Section 17(d) of the Federal Deposit In20 surance Act (12 U.S.C. 1827(d)) is amended by

21 striking ‘‘Bank Insurance Fund, the Savings Asso22 ciation Insurance Fund,’’ each place such term ap23 pears and inserting ‘‘deposit insurance fund’’.

24 (24) The heading for section 17(a) of the Fed25 eral Deposit Insurance Act (12 U.S.C. 1827(a)) is
34

•HR 2491 RH

1 amended by striking ‘‘BIF, SAIF,’’ and inserting

2 ‘‘THE DEPOSIT INSURANCE FUND’’.

3 (25) Subsections (a)(1) and (d)(1)(A) of section

4 24 of the Federal Deposit Insurance Act (12 U.S.C.

5 1831a) are each amended by striking ‘‘appropriate’’.

6 (26) Section 24(e)(2) of the Federal Deposit

7 Insurance Act (12 U.S.C. 1831a(e)(2)) is amend8 ed—

9 (A) in subparagraph (A), by striking ‘‘of

10 which such banks are members’’; and

11 (B) in subparagraph (B)(ii), by striking

12 ‘‘of which such bank is a member’’.

13 (27) Section 24(f)(6)(B) of the Federal Deposit

14 Insurance Act (12 U.S.C. 1831a(f)(6)(B)) is amend15 ed by striking ‘‘of which such bank is a member’’.

16 (28) Section 31 of the Federal Deposit Insur17 ance Act (12 U.S.C. 1831h) is hereby repealed.

18 (29) Section 36(i)(3) of the Federal Deposit In19 surance Act (12 U.S.C. 1831m(i)(3)) is amended by

20 striking ‘‘affected’’.

21 (30) Section 38 of the Federal Deposit Insur22 ance Act (12 U.S.C. 1831o) is amended by striking

23 subsection (o).
35

•HR 2491 RH

1 (31) Section 21B(f)(2)(C)(ii) of the Federal

2 Home Loan Bank Act (12 U.S.C.

3 1441b(f)(2)(C)(ii)) is amended to read as follows:

4 ‘‘(C) PAYMENTS BY FEDERAL HOME

5 LOAN BANKS.—To the extent the amounts

6 available pursuant to subparagraphs (A)

7 and (B) are insufficient to cover the

8 amount of interest payments, each Federal

9 home loan bank shall pay to the Funding

10 Corporation each calendar year an amount

11 equal to 22.63 percent of the bank’s net

12 earnings for the year for which such

13 amount is required to be paid.’’.

14 (d) EFFECTIVE DATE OF AMENDMENTS.—The

15 amendments made by subsection (c) shall take effect on

16 January 1, 1998.

17 SEC. 2204. REFUND OF AMOUNTS IN DEPOSIT INSURANCE

18 FUND IN EXCESS OF DESIGNATED RESERVE

19 AMOUNT.

20 Subsection (e) of section 7 of the Federal Deposit In21 surance Act (12 U.S.C. 1817(e)) is amended to read as

22 follows:

23 ‘‘(e) REFUNDS.—

24 ‘‘(1) OVERPAYMENTS.—In the case of any pay25 ment of an assessment by an insured depository in-
36

•HR 2491 RH

1 stitution in excess of the amount due to the Cor2 poration, the Corporation may—

3 ‘‘(A) refund the amount of the excess pay4 ment to the insured depository institution; or

5 ‘‘(B) credit such excess amount toward the

6 payment of subsequent semiannual assessments

7 until such credit is exhausted.

8 ‘‘(2) BALANCE IN INSURANCE FUND IN EXCESS

9 OF DESIGNATED RESERVE.—

10 ‘‘(A) IN GENERAL.—Subject to subpara11 graph (B), if as of the end of any semiannual

12 period the amount of the actual reserves in—

13 ‘‘(i) the Bank Insurance Fund (until

14 the merger of such fund into the deposit

15 insurance fund pursuant to section

16 2203(a)(2) of the Thrift Charter Conver17 sion Act of 1995); or

18 ‘‘(ii) the deposit insurance fund (after

19 the establishment of such fund under sec20 tion 2203(a)(1) of such Act),

21 exceeds the balance required to meet the des22 ignated reserve ratio applicable with respect to

23 such fund, such excess amount shall be re24 funded to members of the fund by the Corpora25 tion on such basis as the Board of Directors de-
37

•HR 2491 RH

1 termines to be appropriate, taking into account

2 the factors considered under the risk-based as3 sessment system.

4 ‘‘(B) REFUND NOT TO EXCEED PREVIOUS

5 SEMIANNUAL ASSESSMENT.—The amount of

6 any refund under this paragraph to any mem7 ber of a deposit insurance fund for any semi8 annual period may not exceed the total amount

9 of assessments paid by such member to the in10 surance fund with respect to such period.’’.

11 SEC. 2205. ASSESSMENTS AUTHORIZED ONLY IF NEEDED

12 TO MAINTAIN THE RESERVE RATIO OF A DE13 POSIT INSURANCE FUND.

14 (a) IN GENERAL.—Section 7(b)(2)(A)(i) of the Fed15 eral Deposit Insurance Act (12 U.S.C. 1817(b)(2)(A)(i))

16 is amended in the portion of such section preceding

17 subclause (I) by inserting ‘‘when necessary, and only to

18 the extent necessary’’ after ‘‘insured depository institu19 tions’’.

20 (b) LIMITATION ON ASSESSMENT.—Section

21 7(b)(2)(A)(iii) of the Federal Deposit Insurance Act (12

22 U.S.C. 1817(b)(2)(A)(iii)) is amended to read as follows:

23 ‘‘(iii) LIMITATION ON ASSESSMENT.—

24 The Board of Directors shall not set semi25 annual assessments with respect to a de-
38

•HR 2491 RH

1 posit insurance fund in excess of the

2 amount needed—

3 ‘‘(I) to maintain the reserve ratio

4 of the fund at the designated reserve

5 ratio; or

6 ‘‘(II) if the reserve ratio is less

7 than the designated reserve ratio, to

8 increase the reserve ratio to the des9 ignated reserve ratio.’’.

10 CHAPTER 2—STATUS OF BANKS AND

11 SAVINGS ASSOCIATIONS

12 SEC. 2221. TERMINATION OF FEDERAL SAVINGS ASSOCIA13 TIONS; TREATMENT OF STATE SAVINGS ASSO14 CIATIONS AS BANKS FOR PURPOSES OF FED15 ERAL BANKING LAW.

16 (a) TERMINATION OF FEDERAL SAVINGS ASSOCIA17 TION CHARTERS.—

18 (1) IN GENERAL.—Each Federal savings asso19 ciation shall—

20 (A) convert to a national bank charter;

21 (B) convert to a State depository institu22 tion charter; or

23 (C) surrender the charter of such savings

24 association and liquidate the institution.
39

•HR 2491 RH

1 (2) CONVERSION TO NATIONAL BANK BY OPER2 ATION OF LAW.—If any Federal savings association

3 has not taken any action required under paragraph

4 (1) as of January 1, 1998, the savings association

5 shall—

6 (A) become a national bank on such date

7 by operation of law;

8 (B) immediately file articles of association

9 and an organizational certificate with the

10 Comptroller of the Currency in accordance with

11 sections 5133, 5134, and 5135 of the Revised

12 Statutes of the United States; and

13 (C) cease to exist as a Federal savings as14 sociation as of such date.

15 (3) PROHIBITION ON NEW CHARTERS OF FED16 ERAL SAVINGS ASSOCIATIONS.—The Director of the

17 Office of Thrift Supervision may not grant any char18 ter for a Federal savings association for which an

19 application was received after the date of the enact20 ment of this Act.

21 (b) TREATMENT OF STATE SAVINGS ASSOCIATIONS

22 AS BANKS FOR PURPOSES OF FEDERAL BANKING

23 LAW.—
40

•HR 2491 RH

1 (1) AMENDMENTS TO FEDERAL DEPOSIT IN2 SURANCE ACT.—Section 3 of the Federal Deposit

3 Insurance Act (12 U.S.C. 1813) is amended—

4 (A) by striking paragraph (2) of subsection

5 (a) and inserting the following new paragraph:

6 ‘‘(2) STATE BANK.—

7 ‘‘(A) IN GENERAL.—The term ‘State bank’

8 means any bank, banking association, trust

9 company, savings bank, industrial bank (or

10 similar depository institution which the Board

11 of Directors finds to be operating substantially

12 in the same manner as an industrial bank),

13 building and loan association, savings and loan

14 association, homestead association, cooperative

15 bank, or other banking institution—

16 ‘‘(i) which is engaged in the business

17 of receiving deposits, other than trust

18 funds (as defined in this section); and

19 ‘‘(ii) which—

20 ‘‘(I) is incorporated under the

21 laws of any State;

22 ‘‘(II) is organized and operating

23 according to the laws of the State in

24 which such institution is chartered or

25 organized; or
41

•HR 2491 RH

1 ‘‘(III) is operating under the

2 Code of Law for the District of Co3 lumbia (except a national bank).

4 ‘‘(B) CERTAIN INSURED BANKS IN5 CLUDED.—The term ‘State bank’ includes any

6 cooperative bank or other unincorporated bank

7 the deposits of which were insured by the Cor8 poration on the day before the date of the en9 actment of the Financial Institutions Reform,

10 Recovery, and Enforcement Act of 1989.

11 ‘‘(C) CERTAIN UNINSURED BANKS EX12 CLUDED.—The term ‘State bank’ does not in13 clude any cooperative bank or other unincor14 porated bank the deposits of which were not in15 sured by the Corporation on the day before the

16 date of the enactment of the Financial Institu17 tions Reform, Recovery, and Enforcement Act

18 of 1989.’’; and

19 (B) in subsection (q)—

20 (i) by inserting ‘‘and’’ after the semi21 colon at the end of paragraph (2);

22 (ii) by striking ‘‘; and’’ at the end of

23 paragraph (3) and inserting a period; and

24 (iii) by striking paragraph (4).
42

•HR 2491 RH

1 (2) AMENDMENTS TO THE BANK HOLDING

2 COMPANY ACT OF 1956.—Section 2 of the Bank

3 Holding Company Act of 1956 (12 U.S.C. 1841) is

4 amended—

5 (A) by striking subparagraph (E) of sub6 section (a)(5); and

7 (B) by striking subparagraphs (B) and (J)

8 of subsection (c)(2).

9 (3) AMENDMENTS TO THE FEDERAL RESERVE

10 ACT.—The 2d and 3d paragraphs of the 1st section

11 of the Federal Reserve Act (12 U.S.C. 221) are each

12 amended by inserting ‘‘(as defined in section 3(a)(2)

13 of the Federal Deposit Insurance Act)’’ after ‘‘State

14 bank’’.

15 SEC. 2222. TREATMENT OF CERTAIN ACTIVITIES AND AF16 FILIATIONS OF BANK HOLDING COMPANIES

17 RESULTING FROM THIS ACT.

18 Section 4 of the Bank Holding Company Act of 1956

19 (12 U.S.C. 1843) is amended by adding at the end the

20 following new subsection:

21 ‘‘(k) TREATMENT OF COMPANIES RESULTING FROM

22 SAVINGS AND LOAN HOLDING COMPANIES.—

23 ‘‘(1) IN GENERAL.—Notwithstanding any other

24 provision of this section (other than paragraph (5))

25 or any other provision of Federal law including sec-
43

•HR 2491 RH

1 tions 20 and 32 of the Banking Act of 1933, a

2 qualified bank holding company may, after such

3 company becomes a bank holding company—

4 ‘‘(A) maintain or enter into any non5 banking affiliation which such company was au6 thorized to maintain or enter into as of Septem7 ber 22, 1995, or was authorized to maintain

8 following a merger of insured depository institu9 tion subsidiaries pursuant to an application

10 filed no later than such date; and

11 ‘‘(B) engage, directly or through any affili12 ate described in subparagraph (A) which is not

13 a bank, in any activity in which such company

14 or any affiliate described in subparagraph (A)

15 was authorized to engage as of September 22,

16 1995, or in which such company was authorized

17 to engage following a merger of insured deposi18 tory institution subsidiaries pursuant to an ap19 plication filed no later than such date,

20 if the requirements of paragraph (4) are met.

21 ‘‘(2) QUALIFIED BANK HOLDING COMPANY DE22 FINED.—For purposes of this subsection, the term

23 ‘qualified bank holding company’ means—

24 ‘‘(A) any company which—
44

•HR 2491 RH

1 ‘‘(i) as of September 13, 1995, is a

2 savings and loan holding company and is

3 not a bank holding company; and

4 ‘‘(ii) becomes a bank holding company

5 after such date; and

6 ‘‘(B) any bank holding company which as

7 of September 13, 1995—

8 ‘‘(i) is a savings and loan holding

9 company; and

10 ‘‘(ii) is exempt from this section pur11 suant to an order issued by the Board

12 under subsection (d).

13 ‘‘(3) NO LOSS OF SUBSECTION (d) EXEMP14 TION.—No qualified bank holding company de15 scribed in paragraph (2)(B) shall lose the grounds

16 for the exemption under subsection (d) because a

17 savings association which such company controlled,

18 directly or indirectly, as of September 13, 1995, be19 comes a bank after such date so long as such bank

20 continues to meet the requirements of subpara21 graphs (A) and (B) of paragraph (4).

22 ‘‘(4) PREREQUISITES FOR CONTINUATION OF

23 GRANDFATHERED ACTIVITIES AND AFFILIATIONS.—

24 This subsection shall cease to apply with respect to

25 a qualified bank holding company if, at any time
45

•HR 2491 RH

1 after such company first meets the definition of a

2 qualified bank holding company—

3 ‘‘(A) any insured depository institution

4 controlled by such company which, as of the

5 day before the company first meets the defini6 tion of a qualified bank holding company, was

7 subject to the requirements contained in section

8 10(m) of the Home Owners’ Loan Act, as in ef9 fect on such date, (and regulations in effect on

10 such date under such section) for treatment as

11 a qualified thrift lender under such section fails

12 to meet such requirements;

13 ‘‘(B) any insured depository institution

14 controlled by such company fails to comply with

15 any limitation or restriction on the type or

16 amounts of loans or investments of the institu17 tion to which such institution was subject as of

18 the date of the enactment of the Thrift Charter

19 Conversion Act of 1995; or

20 ‘‘(C) the company or any subsidiary of the

21 company acquires more than 5 percent of the

22 shares or assets of any bank or insured institu23 tion after September 13, 1995.

24 ‘‘(5) NONTRANSFERABLE.—This subsection

25 shall not apply with respect to any qualified bank
46

•HR 2491 RH

1 holding company if, after September 13, 1995, any

2 person acquires, directly or indirectly, control of the

3 company or the company is the subject of any merg4 er, consolidation, or other similar transaction.

5 ‘‘(6) PROHIBITION ON CERTAIN INSURED DE6 POSITORY INSTITUTIONS IDENTIFYING THEMSELVES

7 AS NATIONAL BANKS.—

8 ‘‘(A) IN GENERAL.—Notwithstanding the

9 requirement of section 5134 of the Revised

10 Statutes of the United States—

11 ‘‘(i) the name of an insured depository

12 institution subsidiary of a qualified bank

13 holding company which—

14 ‘‘(I) as of the date of the enact15 ment of the Thrift Charter Conversion

16 Act of 1995, is a savings and loan

17 holding company described in section

18 10(c)(3) of the Home Owners’ Loan

19 Act (as in effect on such date); and

20 ‘‘(II) is subject to the restrictions

21 contained in paragraph (3),

22 may not include the term ‘national’; and

23 ‘‘(ii) such insured depository institu24 tion may not be identified as a national

25 bank on any sign displayed by the institu-
47

•HR 2491 RH

1 tion or in any advertisement or other pub2 lication of the institution.

3 ‘‘(B) DEPOSITORY INSTITUTION NOT LIA4 BLE FOR FRAUDULENT MISREPRESENTATION

5 FOR NOT REPRESENTING ITSELF AS A NA6 TIONAL BANK.—An insured depository institu7 tion which is subject to subparagraph (A) shall

8 not be liable for any civil or criminal penalty

9 under any Federal or State consumer protection

10 law, or in any criminal or civil action, for fraud11 ulently misrepresenting the nature of the char12 ter of the institution, for falsely advertising the

13 status of the institution, for making a false

14 statement with respect to the status of the in15 stitution, or for any similar offense by reason of

16 the institution’s compliance with such subpara17 graph.

18 ‘‘(7) ENFORCEMENT.—In addition to any other

19 power of the Board, the Board may enforce compli20 ance with the provisions of this subsection with re21 spect to any qualified bank holding company and

22 any bank controlled by such company under section

23 8 of the Federal Deposit Insurance Act.’’.
48

•HR 2491 RH

1 SEC. 2223. TRANSITION PROVISIONS FOR ACTIVITIES OF

2 SAVINGS ASSOCIATIONS WHICH CONVERT

3 INTO OR BECOME TREATED AS BANKS.

4 Notwithstanding any other provision of Federal law,

5 any insured depository institution which, as of September

6 13, 1995, is a savings association (as defined in section

7 3(b) of the Federal Deposit Insurance Act (as in effect

8 on such date)) and after such date converts to a national

9 or State bank charter or becomes treated as a State bank

10 pursuant to the amendment made by section 2221(b) may

11 continue to engage, directly or indirectly, in any activity

12 in which such institution was lawfully engaged as of such

13 date during the 5-year period beginning on the effective

14 date of such conversion or the effective date of such

15 amendments, as the case may be.

16 SEC. 2224. REGISTRATION OF BANK HOLDING COMPANIES

17 RESULTING FROM CONVERSIONS OF SAV18 INGS ASSOCIATIONS TO BANKS OR TREAT19 MENT OF SAVINGS ASSOCIATIONS AS BANKS.

20 Section 3 of the Bank Holding Company Act of 1956

21 (12 U.S.C. 1842) is amended by adding at the end the

22 following new subsections:

23 ‘‘(h) REGISTRATION OF CERTAIN BANK HOLDING

24 COMPANIES.—A company which, as of September 13,

25 1995, is a savings and loan holding company (as defined

26 in section 10(a)(1)(D) of Home Owners’ Loan Act (as in
49

•HR 2491 RH

1 effect on such date)) and is not a bank holding company

2 shall not be required to obtain the approval of the Board

3 under subsection (a) to become a bank holding company

4 after September 13, 1995, as a result of the conversion

5 of any insured depository institution subsidiary of such

6 company into a bank or by virtue of the treatment of any

7 insured depository institution subsidiary of such company

8 as a bank pursuant to the amendments made by the Thrift

9 Charter Conversion Act of 1995, if such company—

10 ‘‘(1) registers as a bank holding company with

11 the Board in accordance with section 5(a); and

12 ‘‘(2) does not acquire, directly or indirectly,

13 ownership or control of any additional insured de14 pository institution or other company in connection

15 with such conversion or treatment.

16 ‘‘(i) REGULATION OF QUALIFIED BANK HOLDING

17 COMPANIES.—The Board shall regulate qualified bank

18 holding companies (as defined in section 4(k)(2)) in a

19 manner consistent with—

20 ‘‘(1) the regulation of such companies by the

21 Director of the Office of Thrift Supervision before

22 the date of the enactment of the Thrift Charter Con23 version Act of 1995; and

24 ‘‘(2) the safety and soundness of insured depos25 itory institution subsidiaries of such companies.’’.
50

•HR 2491 RH

1 SEC. 2225. ADDITIONAL TRANSITION PROVISIONS AND SPE2 CIAL RULES.

3 (a) MUTUAL NATIONAL BANKS AUTHORIZED; CON4 VERSION OF MUTUAL SAVINGS ASSOCIATIONS INTO NA5 TIONAL BANKS.—

6 (1) IN GENERAL.—Chapter one of title LXII of

7 the Revised Statutes of the United States (12

8 U.S.C. 21 et seq.) is amended by inserting after sec9 tion 5133 the following new section:

10 ‘‘SEC. 5133A. MUTUAL NATIONAL BANKS.

11 ‘‘(a) IN GENERAL.—Notwithstanding the paragraph

12 designated the ‘‘Third’’ of section 5134, the Comptroller

13 of the Currency may charter national banks organized in

14 the mutual form either de novo or through a conversion

15 of any stock national or State bank (as defined in section

16 3 of the Federal Deposit Insurance Act) or any State mu17 tual bank or credit union, subject to regulations prescribed

18 by the Comptroller of the Currency in accordance with this

19 section.

20 ‘‘(b) REGULATIONS.—

21 ‘‘(1) TRANSITION RULES.—National banks or22 ganized in the mutual form shall be subject to the

23 regulations of the Director of the Office of Thrift

24 Supervision governing corporate organization, gov25 ernance, and conversion of mutual institutions, as in

26 effect on September 13, 1995, including parts 543,
51

•HR 2491 RH

1 544, 546, 563b, and 563c of chapter V of title 12

2 of the Code of Federal Regulations (as in effect on

3 such date), during the 3-year period beginning on

4 the date of the enactment of the Thrift Charter Con5 version Act of 1995.

6 ‘‘(2) REGULATIONS OF THE COMPTROLLER.—

7 The Comptroller of the Currency shall prescribe ap8 propriate regulations for national banks organized in

9 the mutual form, effective as of the end of the 3-

10 year period referred to in paragraph (1).

11 ‘‘(3) APPLICABILITY OF CAPITAL STOCK RE12 QUIREMENTS.—The Comptroller of the Currency

13 shall prescribe regulations regarding the manner in

14 which requirements of title LXII of the Revised

15 Statutes of the United States with respect to capital

16 stock, and limitations imposed on national banks

17 under such title based on capital stock, shall apply

18 to national banks organized in mutual form pursu19 ant to subsection (a).

20 ‘‘(c) CONVERSIONS.—

21 ‘‘(1) CONVERSION TO STOCK NATIONAL

22 BANK.—Subject to subsection (b)(1) and, after the

23 end of the 3-year period referred to in such sub24 section, such regulations as the Comptroller of the

25 Currency may prescribe for the protection of deposi-
52

•HR 2491 RH

1 tors’ rights and for any other purpose the Comptrol2 ler of the Currency may consider appropriate, any

3 national bank which is organized in mutual form

4 pursuant to paragraph (1) may reorganize as a

5 stock national bank.

6 ‘‘(2) CONVERSIONS TO STATE BANKS.—Any na7 tional mutual bank may convert to a State bank

8 charter in accordance with regulations prescribed by

9 the Comptroller of the Currency and applicable

10 State law.’’.

11 (2) MUTUAL BANK HOLDING COMPANIES.—

12 Subsection (g) of section 3 of the Bank Holding

13 Company Act of 1956 (12 U.S.C. 1842(g)) is

14 amended to read as follows:

15 ‘‘(g) MUTUAL BANK HOLDING COMPANIES.—

16 ‘‘(1) IN GENERAL.—A national mutual bank

17 may reorganize so as to become a holding company

18 by—

19 ‘‘(A) chartering an interim national bank,

20 the stock of which is to be wholly owned, except

21 as otherwise provided in this section, by the na22 tional mutual bank; and

23 ‘‘(B) transferring the substantial part of

24 the national mutual bank’s assets and liabil-
53

•HR 2491 RH

1 ities, including all of the bank’s insured liabil2 ities, to the interim national bank.

3 ‘‘(2) DIRECTORS AND CERTAIN ACCOUNT HOLD4 ERS’ APPROVAL OF PLAN REQUIRED.—A reorganiza5 tion is not authorized under this subsection unless—

6 ‘‘(A) a plan providing for such reorganiza7 tion has been approved by a majority of the

8 board of directors of the national mutual bank;

9 and

10 ‘‘(B) in the case of a national mutual bank

11 in which holders of accounts and obligors exer12 cise voting rights, such plan has been submitted

13 to and approved by a majority of such individ14 uals at a meeting held at the call of the direc15 tors in accordance with the procedures pre16 scribed by the bank’s charter and bylaws.

17 ‘‘(3) NOTICE TO THE BOARD; DISAPPROVAL PE18 RIOD.—

19 ‘‘(A) NOTICE REQUIRED.—

20 ‘‘(i) IN GENERAL.—At least 60 days

21 before taking any action described in para22 graph (1), a national mutual bank seeking

23 to establish a mutual holding company

24 shall provide written notice to the Board.
54

•HR 2491 RH

1 ‘‘(ii) CONTENTS OF NOTICE.—The no2 tice shall contain such relevant information

3 as the Board shall require by regulation or

4 by specific request in connection with any

5 particular notice.

6 ‘‘(B) TRANSACTION ALLOWED IF NOT DIS7 APPROVED.—Unless the Board within such 60-

8 day notice period disapproves the proposed

9 holding company formation, or extends for an10 other 30 days the period during which such dis11 approval may be issued, the national mutual

12 bank providing such notice may proceed with

13 the transaction, if the requirements of para14 graph (2) have been met.

15 ‘‘(C) GROUNDS FOR DISAPPROVAL.—The

16 Board may disapprove any proposed holding

17 company formation only if—

18 ‘‘(i) such disapproval is necessary to

19 prevent unsafe or unsound practices;

20 ‘‘(ii) the financial or management re21 sources of the national mutual bank in22 volved warrant disapproval;

23 ‘‘(iii) the national mutual bank fails

24 to furnish the information required under

25 subparagraph (A); or
55

•HR 2491 RH

1 ‘‘(iv) the national mutual bank fails to

2 comply with the requirement of paragraph

3 (2).

4 ‘‘(D) RETENTION OF CAPITAL ASSETS.—In

5 connection with the transaction described in

6 paragraph (1), a national mutual bank may,

7 subject to the approval of the Board, retain

8 capital assets at the holding company level to

9 the extent that the capital retained at the hold10 ing company is in excess of the amount of cap11 ital required in order for the interim national

12 bank to meet all relevant capital standards es13 tablished by the Comptroller of the Currency

14 for national banks.

15 ‘‘(4) OWNERSHIP.—

16 ‘‘(A) IN GENERAL.—Persons having own17 ership rights in the national mutual bank under

18 section 5133A of the Revised Statutes of the

19 United States (including paragraph 575.5 of

20 chapter V of title 12 of the Code of Federal

21 Regulations, as in effect on September 13,

22 1995, and applicable to national mutual banks

23 pursuant to such section) or State law shall

24 have the same ownership rights with respect to

25 the mutual holding company.
56

•HR 2491 RH

1 ‘‘(B) HOLDERS OF CERTAIN ACCOUNTS.—

2 Holders of savings, demand, or other accounts

3 of—

4 ‘‘(i) a national bank chartered as part

5 of a transaction described in paragraph

6 (1); or

7 ‘‘(ii) a mutual bank acquired pursuant

8 to paragraph (5)(B),

9 shall have the same ownership rights with re10 spect to the mutual holding company as persons

11 described in subparagraph (A) of this para12 graph.

13 ‘‘(5) PERMITTED ACTIVITIES.—A mutual hold14 ing company may engage only in the following activi15 ties:

16 ‘‘(A) Investing in the stock of a national or

17 State bank.

18 ‘‘(B) Acquiring a mutual bank through the

19 merger of such bank into a national bank sub20 sidiary of such holding company or an interim

21 national bank subsidiary of such holding com22 pany.

23 ‘‘(C) Subject to paragraph (6), merging

24 with or acquiring another holding company, one

25 of whose subsidiaries is a national mutual bank.
57

•HR 2491 RH

1 ‘‘(D) Investing in a corporation the capital

2 stock of which is available for purchase by a na3 tional mutual bank under Federal law or under

4 the law of any State where the home office of

5 any subsidiary bank is located.

6 ‘‘(E) Engaging in the activities permitted

7 under section 4(c).

8 ‘‘(6) LIMITATIONS ON CERTAIN ACTIVITIES OF

9 ACQUIRED HOLDING COMPANIES.—

10 ‘‘(A) NEW ACTIVITIES.—If a mutual hold11 ing company acquires or merges with another

12 holding company under paragraph (5)(C), the

13 holding company acquired or the holding com14 pany resulting from such merger or acquisition

15 may only invest in assets and engage in activi16 ties which are authorized under paragraph (5).

17 ‘‘(B) GRACE PERIOD FOR DIVESTING PRO18 HIBITED ASSETS OR DISCONTINUING PROHIB19 ITED ACTIVITIES.—Not later than 2 years fol20 lowing a merger or acquisition described in

21 paragraph (5)(C), the acquired holding com22 pany or the holding company resulting from

23 such merger or acquisition shall—
58

•HR 2491 RH

1 ‘‘(i) dispose of any asset which is an

2 asset in which a mutual holding company

3 may not invest under paragraph (5); and

4 ‘‘(ii) cease any activity which is an ac5 tivity in which a mutual holding company

6 may not engage under paragraph (5).

7 ‘‘(7) CHARTERING AND OTHER REQUIRE8 MENTS.—

9 ‘‘(A) IN GENERAL.—A mutual holding

10 company shall be chartered by the Board and

11 shall be subject to such regulations as the

12 Board may prescribe.

13 ‘‘(B) OTHER REQUIREMENTS.—Unless the

14 context otherwise requires, a mutual holding

15 company shall be subject to the other require16 ments of this Act regarding regulation of hold17 ing companies.

18 ‘‘(8) CAPITAL IMPROVEMENT.—

19 ‘‘(A) PLEDGE OF STOCK OF SAVINGS ASSO20 CIATION SUBSIDIARY.—This section shall not

21 prohibit a mutual holding company from pledg22 ing all or a portion of the stock of a national

23 bank chartered as part of a transaction de24 scribed in paragraph (1) to raise capital for

25 such bank.
59

•HR 2491 RH

1 ‘‘(B) ISSUANCE OF NONVOTING SHARES.—

2 No provision of this Act shall be construed as

3 prohibiting a national bank chartered as part of

4 a transaction described in paragraph (1) from

5 issuing any nonvoting shares or less than 50

6 percent of the voting shares of such bank to

7 any person other than the mutual holding com8 pany.

9 ‘‘(9) INSOLVENCY AND LIQUIDATION.—

10 ‘‘(A) IN GENERAL.—Notwithstanding any

11 provision of law, upon—

12 ‘‘(i) the default of any national

13 bank—

14 ‘‘(I) the stock of which is owned

15 by any mutual holding company; and

16 ‘‘(II) which was chartered in a

17 transaction described in paragraph

18 (1);

19 ‘‘(ii) the default of a mutual holding

20 company; or

21 ‘‘(iii) a foreclosure on a pledge by a

22 mutual holding company described in para23 graph (8)(A),

24 a trustee shall be appointed receiver of such

25 mutual holding company and such trustee shall
60

•HR 2491 RH

1 have the authority to liquidate the assets of,

2 and satisfy the liabilities of, such mutual hold3 ing company pursuant to title 11, United States

4 Code.

5 ‘‘(B) DISTRIBUTION OF NET PROCEEDS.—

6 Except as provided in subparagraph (C), the

7 net proceeds of any liquidation of any mutual

8 holding company pursuant to subparagraph (A)

9 shall be transferred to persons who hold owner10 ship interests in such mutual holding company.

11 ‘‘(C) RECOVERY BY CORPORATION.—If the

12 Corporation incurs a loss as a result of the de13 fault of any savings association subsidiary of a

14 mutual holding company which is liquidated

15 pursuant to subparagraph (A), the Corporation

16 shall succeed to the ownership interests of the

17 depositors of such savings association in the

18 mutual holding company, to the extent of the

19 Corporation’s loss.

20 ‘‘(10) STATE MUTUAL BANK HOLDING COM21 PANY.—

22 ‘‘(A) IN GENERAL.—Notwithstanding any

23 provision of Federal law, a State bank operat24 ing in mutual form may reorganize so as to

25 form a holding company under State law.
61

•HR 2491 RH

1 ‘‘(B) REGULATION OF STATE MUTUAL

2 HOLDING COMPANY.—A corporation organized

3 as a holding company in accordance with sub4 paragraph (A) shall be regulated on the same

5 terms and be subject to the same limitations as

6 any other holding company which controls a

7 bank.

8 ‘‘(11) REGULATIONS.—

9 ‘‘(A) TRANSITION RULES.—Mutual bank

10 holding companies organized under this sub11 section shall be subject to the regulations of the

12 Director of the Office of Thrift Supervision gov13 erning corporate organization, governance, and

14 conversion of mutual institutions, as in effect

15 on September 13, 1995, including part 575 of

16 chapter V of title 12 of the Code of Federal

17 Regulations (as in effect on such date), during

18 the 3-year period beginning on the date of the

19 enactment of the Thrift Charter Conversion Act

20 of 1995.

21 ‘‘(B) REGULATIONS OF THE BOARD.—The

22 Board shall prescribe appropriate regulations

23 for mutual holding companies, effective at the

24 end of the 3-year period referred to in subpara25 graph (A).
62

•HR 2491 RH

1 ‘‘(12) DEFINITIONS.—For purposes of this sub2 section—

3 ‘‘(A) MUTUAL HOLDING COMPANY.—The

4 term ‘mutual holding company’ means a cor5 poration organized as a holding company under

6 this subsection.

7 ‘‘(B) DEFAULT.—The term ‘default’

8 means an adjudication or other official deter9 mination of a court of competent jurisdiction or

10 other public authority pursuant to which a con11 servator, receiver, or other legal custodian is

12 appointed.

13 ‘‘(C) NATIONAL MUTUAL BANK.—The term

14 ‘national mutual bank’ means a national bank

15 organized in mutual form under section 5133A

16 of the Revised Statutes of the United States.’’.

17 (3) LIMITATION ON FEDERAL REGULATION OF

18 STATE BANKS.—Except as otherwise provided in

19 Federal law, the Comptroller of the Currency, Board

20 of Governors of the Federal Reserve System, and

21 Federal Deposit Insurance Corporation may not

22 adopt or enforce any regulation which contravenes

23 the corporate governance rules prescribed by State

24 law or regulation for State banks unless the Comp25 troller, Board, or Corporation finds that such Fed-
63

•HR 2491 RH

1 eral regulation is necessary to assure the safety and

2 soundness of such State banks.

3 (4) CONVERSIONS OF MUTUAL SAVINGS ASSO4 CIATIONS TO MUTUAL NATIONAL BANKS BY OPER5 ATION OF LAW.—Notwithstanding any other provi6 sion of Federal or State law, any savings association

7 (as defined in section 3 of the Federal Deposit In8 surance Act (as in effect on September 13, 1995))

9 which is organized in mutual form as of the date of

10 the enactment of this Act may become a national

11 mutual bank by operation of law if the association—

12 (A) files the articles of association and or13 ganization certificate with the Comptroller of

14 the Currency before January 1, 1998, in ac15 cordance with chapter one of title LXII of the

16 Revised Statutes of the United States; and

17 (B) provides such other document or infor18 mation as the Comptroller of the Currency may

19 prescribe in regulations consistent with this sec20 tion and section 5133A of the Revised Statutes

21 of the United States (as added by paragraph

22 (1) of this subsection).

23 (5) CLERICAL AMENDMENT.—The table of sec24 tions for chapter one of title LXII of the Revised

25 Statutes of the United States (12 U.S.C. 21 et seq.)
64

•HR 2491 RH

1 is amended by inserting after the item relating to

2 section 5133 the following new item:

‘‘5133A. Mutual national banks.’’.

3 (b) MEMBERSHIP IN FEDERAL HOME LOAN

4 BANKS.—Any insured depository institution which—

5 (1) as of the date of the enactment of this Act,

6 is a Federal savings association which, pursuant to

7 section 6(e) of the Federal Home Loan Bank Act,

8 may not voluntarily withdraw from membership in a

9 Federal home loan bank; and

10 (2) after such date converts from a Federal

11 savings association to a national bank,

12 shall continue to be subject to the prohibition under such

13 section on voluntary withdrawal from such membership as

14 though such bank were still a Federal savings association

15 until the bank ceases to be a national bank.

16 (c) BRANCHES.—

17 (1) IN GENERAL.—Notwithstanding any provi18 sion of the Federal Deposit Insurance Act, the Bank

19 Holding Company Act of 1956, or any other Federal

20 or State law, any depository institution which—

21 (A) as of the date of the enactment of this

22 Act, is a savings association; and

23 (B) becomes a bank before January 1,

24 1998, or, pursuant to the amendments made by
65

•HR 2491 RH

1 this subsection, is treated as a bank as of such

2 date under the Federal Deposit Insurance Act,

3 and any depository institution or bank holding com4 pany which acquires such depository institution, may

5 continue, after the depository institution becomes or

6 commences to be treated as a bank, to operate any

7 branch which the savings association operated as a

8 branch on September 13, 1995.

9 (2) NO ADDITIONAL BRANCHES.—Paragraph

10 (1) shall not be construed as authorizing the estab11 lishment, acquisition, or operation of any additional

12 branch of a depository institution in any State by

13 virtue of the operation by such institution of a

14 branch in such State pursuant to such paragraph

15 except to the extent such establishment, acquisition,

16 or operation is permitted under the Federal Deposit

17 Insurance Act, Bank Holding Company Act of 1956,

18 and any other applicable Federal or State law with19 out regard to such branch.

20 (d) TRANSITION PROVISION RELATING TO LIMITA21 TIONS ON LOANS TO 1 BORROWER.—Section 5200 of the

22 Revised Statutes of the United States (12 U.S.C. 84) is

23 amended by adding at the end the following new sub24 section:
66

•HR 2491 RH

1 ‘‘(e) TRANSITION PROVISION FOR SAVINGS ASSOCIA2 TIONS CONVERTING TO NATIONAL BANKS.—In the case

3 of any depository institution which, as of September 13,

4 1995, is a savings association (as defined in section 3(b)

5 of the Federal Deposit Insurance Act (as in effect on such

6 date)) and becomes a national bank on or before January

7 1, 1998, any loan, or legally binding commitment to make

8 a loan, made or entered into by such institution which is

9 outstanding on the date the institution becomes a national

10 bank may continue to be held without regard to any limi11 tation contained in this section during the 3-year period

12 beginning on such date.’’.

13 SEC. 2226. TECHNICAL AND CONFORMING AMENDMENTS.

14 (a) AMENDMENTS TO THE FEDERAL DEPOSIT IN15 SURANCE ACT.—

16 (1) Section 3(z) of the Federal Deposit Insur17 ance Act (12 U.S.C. 1813(z)) is amended by strik18 ing ‘‘the Director of the Office of Thrift Super19 vision,’’.

20 (2) Section 8(b) of the Federal Deposit Insur21 ance Act (12 U.S.C. 1818(b)) is amended by strik22 ing paragraph (9).

23 (3) Section 13 of the Federal Deposit Insurance

24 Act (12 U.S.C. 1823) is amended by striking sub25 section (k).
67

•HR 2491 RH

1 (4) Subsections (c)(2) and (i)(2) of section 18

2 of the Federal Deposit Insurance Act (12 U.S.C.

3 1828) are each amended—

4 (A) in subparagraph (B), by inserting

5 ‘‘and’’ after the semicolon;

6 (B) in subparagraph (C), by striking ‘‘;

7 and’’ and inserting a period; and

8 (C) by striking subparagraph (D).

9 (5) Section 18 of the Federal Deposit Insurance

10 Act (12 U.S.C. 1828) is amended by striking sub11 section (m).

12 (6) The Federal Deposit Insurance Act (12

13 U.S.C. 1811 et seq.) is amended by striking section

14 28.

15 (b) AMENDMENTS TO THE BANK HOLDING COMPANY

16 ACT OF 1956.—

17 (1) Section 2 of the Bank Holding Company

18 Act of 1956 (12 U.S.C. 1841) is amended by strik19 ing subsections (i) and (j).

20 (2) Section 4(c)(8) of the Bank Holding Com21 pany Act of 1956 (12 U.S.C. 1843(c)(8)) is amend22 ed by striking the sentence preceding the penul23 timate sentence.

24 (3) Section 4(f) of the Bank Holding Company

25 Act of 1956 (12 U.S.C. 1843(f)) is amended—
68

•HR 2491 RH

1 (A) in paragraph (2)(A)(i), by striking ‘‘or

2 an insured institution’’ and all that follows

3 through ‘‘of this subsection)’’;

4 (B) in paragraph (2)(A)(ii)—

5 (i) by striking ‘‘or a savings associa6 tion’’ where such term appears in the por7 tion of such paragraph which precedes

8 subclause (I);

9 (ii) by inserting ‘‘and’’ at the end of

10 subclause (VI);

11 (iii) by striking subclauses (VIII),

12 (IX), and (X); and

13 (iv) by striking ‘‘(V), and (VIII)’’,

14 where such term appears in the portion of

15 such paragraph which appears after the

16 end of subclause (VII), and inserting ‘‘and

17 (V)’’; and

18 (C) by striking paragraphs (10), (11),

19 (12), and (13).

20 (4) Section 4(i) of the Bank Holding Company

21 Act of 1956 (12 U.S.C. 1843(i)) is amended—

22 (A) by striking paragraphs (1) and (2);

23 and

24 (B) in paragraph (3)(A), by striking ‘‘any

25 Federal savings association’’ and all that fol-
69

•HR 2491 RH

1 lows through the period at the end of such

2 paragraph and inserting ‘‘such association was

3 authorized to engage under this section as of

4 September 15, 1995.’’.

5 (c) OTHER TECHNICAL AND CONFORMING AMEND6 MENTS.—

7 (1) Section 804(a) of the Alternative Mortgage

8 Transaction Parity Act of 1982 (12 U.S.C. 3803) is

9 amended—

10 (A) in the portion of such subsection which

11 precedes paragraph (1)—

12 (i) by striking ‘‘, and other

13 nonfederally chartered housing creditors,’’;

14 and

15 (ii) by inserting ‘‘and in order to per16 mit other nonfederally chartered housing

17 creditors to make, purchase, and enforce

18 alternative mortgage transactions,’’ after

19 ‘‘enforcing alternative mortgage trans20 actions, ’’; and

21 (B) in paragraph (1), by inserting ‘‘(as

22 such term is defined in section 3(a) of the Fed23 eral Deposit Insurance Act)’’ after ‘‘with re24 spect to banks’’.
70

•HR 2491 RH

1 (2) Section 205 of the Depository Institution

2 Management Interlocks Act (12 U.S.C. 3204) is

3 amended—

4 (A) in the portion of paragraph (8)(A)

5 which precedes clause (i), by striking ‘‘A diver6 sified savings’’ and all that follows through

7 ‘‘with respect to’’ and inserting ‘‘A depository

8 institution holding company which, as of Sep9 tember 13, 1995, and at all times thereafter, is

10 a diversified savings and loan holding company

11 (as defined in section 10(1)(F) of Home Own12 ers’ Loan Act, as such section is in effect on

13 such date) with respect to’’; and

14 (B) by striking paragraph (9).

15 (3) Section 19(b)(1)(A) of the Federal Reserve

16 Act (12 U.S.C. 461(b)(1)(A)) is amended—

17 (A) by inserting ‘‘and’’ after the semicolon

18 at the end of clause (v); and

19 (B) by striking clause (vi).

20 (4) Subparagraphs (A), (B), (C) of section

21 10(e)(5) of the Federal Home Loan Bank Act (12

22 U.S.C. 1430(e)(5)) are each amended by inserting

23 before the period at the end ‘‘(as such section is in

24 effect on September 13, 1995)’’.
71

•HR 2491 RH

1 SEC. 2227. REFERENCES TO SAVINGS ASSOCIATIONS AND

2 STATE BANKS IN FEDERAL LAW.

3 Effective January 1, 1998, any reference in any Fed4 eral banking law to—

5 (1) the term ‘‘savings association’’ shall be

6 deemed to be a reference to a bank as defined in

7 section 3(a) of the Federal Deposit Insurance Act;

8 and

9 (2) the term ‘‘State bank’’ shall be deemed to

10 include any depository institution included in the

11 definition of such term in section 3(a)(2) of such

12 Act.

13 SEC. 2228. REPEAL OF HOME OWNERS’ LOAN ACT.

14 Effective January 1, 1998, the Home Owners’ Loan

15 Act (12 U.S.C. 1461 et seq.) is hereby repealed.

16 SEC. 2229. EFFECTIVE DATE; DEFINITIONS.

17 (a) EFFECTIVE DATE OF AMENDMENTS.—The

18 amendments made by this chapter shall take effect on

19 January 1, 1998.

20 (b) DEFINITIONS.—For purposes of this chapter, the

21 terms ‘‘appropriate Federal banking agency’’, ‘‘bank hold22 ing company’’, ‘‘depository institution’’, ‘‘Federal savings

23 association’’, ‘‘insured depository institution’’, ‘‘savings

24 association’’, and ‘‘State bank’’ have the same meanings

25 as in section 3 of the Federal Deposit Insurance Act (as

26 in effect on the date of the enactment of this Act).
72

•HR 2491 RH

1 CHAPTER 3—TRANSFER OF FUNCTIONS,

2 PERSONNEL, AND PROPERTY

3 SEC. 2241. OFFICE OF THRIFT SUPERVISION ABOLISHED.

4 Effective January 1, 1998, the Office of Thrift Su5 pervision and the position of Director of the Office of

6 Thrift Supervision are hereby abolished.

7 SEC. 2242. DETERMINATION OF TRANSFERRED FUNCTIONS

8 AND EMPLOYEES.

9 (a) ALL OFFICE OF THRIFT SUPERVISION EMPLOY10 EES SHALL BE TRANSFERRED.—All employees of the Of11 fice of Thrift Supervision shall be identified for transfer

12 under subsection (b) to the Office of the Comptroller of

13 the Currency, the Federal Deposit Insurance Corporation,

14 or the Board of Governors of the Federal Reserve System.

15 (b) FUNCTIONS AND EMPLOYEES TRANSFERRED.—

16 (1) IN GENERAL.—The Director of the Office of

17 Thrift Supervision, the Comptroller of the Currency,

18 the Chairperson of the Federal Deposit Insurance

19 Corporation, and the Chairman of the Board of Gov20 ernors of the Federal Reserve System shall jointly

21 determine the functions or activities of the Office of

22 Thrift Supervision, and the number of employees of

23 such Office necessary to perform or support such

24 functions or activities, which are transferred from

25 the Office to the Office of the Comptroller of the
73

•HR 2491 RH

1 Currency, the Federal Deposit Insurance Corpora2 tion, or the Board of Governors of the Federal Re3 serve System, as the case may be.

4 (2) ALLOCATION OF EMPLOYEES.—The Comp5 troller of the Currency, the Chairperson of the Fed6 eral Deposit Insurance Corporation, and the Chair7 man of the Board of Governors of the Federal Re8 serve System shall allocate the employees of the Of9 fice of Thrift Supervision consistent with the num10 ber determined pursuant to paragraph (1) in a man11 ner which such Comptroller, Chairperson, and Chair12 man, in their sole discretion, deem equitable, except

13 that, within work units, the agency preferences of

14 individual employees shall be accommodated as far

15 as possible.

16 (c) DISPOSITION OF AFFAIRS.—

17 (1) IN GENERAL.—In winding up the affairs of

18 the Office of Thrift Supervision, the Director of the

19 Office of Thrift Supervision shall consult and co20 operate with the Comptroller of the Currency, the

21 Federal Deposit Insurance Corporation, and the

22 Board of Governors of the Federal Reserve System,

23 as the case may be, to facilitate the orderly transfer

24 of the functions to such Comptroller, Corporation, or

25 Board.
74

•HR 2491 RH

1 (2) CONTINUING AUTHORITY OF DIRECTOR OF

2 THE OFFICE OF THRIFT SUPERVISION.—Except as

3 provided in paragraph (1), no provision of this sub4 title shall be construed as affecting the authority

5 vested in the Director of the Office of Thrift Super6 vision before the date of enactment of this Act which

7 is necessary to carry out the duties of the position

8 until the date upon which the position of Director of

9 the Office of Thrift Supervision is abolished.

10 (3) CONTINUATION OF AGENCY SERVICES.—

11 Any agency, department, or other instrumentality of

12 the United States, or any successor to any such

13 agency, department, or instrumentality, which was

14 providing support services to the Director of the Of15 fice of Thrift Supervision on the day before the date

16 such position is abolished shall—

17 (A) continue to provide such services on a

18 reimbursable basis, in accordance with the

19 terms of the arrangement pursuant to which

20 such services were provided until the arrange21 ment is modified or terminated in accordance

22 with such terms, except that effective January

23 1, 1998, the Comptroller of the Currency, the

24 Federal Deposit Insurance Corporation, or the

25 Board of Governors of the Federal Reserve Sys-
75

•HR 2491 RH

1 tem, as the case may be, shall be substituted

2 for the Director of the Office of Thrift Super3 vision as a party to the arrangement; and

4 (B) consult with the Comptroller, the Cor5 poration, or the Board to coordinate and facili6 tate a prompt and reasonable transition.

7 (d) TRANSFER OF PROPERTY.—Effective January 1,

8 1998, all property of the Office of Thrift Supervision shall

9 be transferred to the Comptroller of the Currency, the

10 Federal Deposit Insurance Corporation, or the Board of

11 Governors of the Federal Reserve System, as determined

12 in accordance with subsections (a) and (b).

13 SEC. 2243. SAVINGS PROVISIONS.

14 (a) EXISTING RIGHTS, DUTIES, AND OBLIGATIONS

15 NOT AFFECTED.—No provision of this title shall be con16 strued as affecting the validity of any right, duty, or obli17 gation of the United States, the Director of the Office of

18 Thrift Supervision, or any person, which existed on the

19 day before the date upon which the position of Director

20 of the Office of Thrift Supervision and the Office of Thrift

21 Supervision are abolished.

22 (b) CONTINUATION OF SUITS.—No action or other

23 proceeding commenced by or against the Director of the

24 Office of Thrift Supervision shall abate by reason of enact25 ment of this Act, except that, effective January 1, 1998,
76

•HR 2491 RH

1 the Comptroller of the Currency, the Federal Deposit In2 surance Corporation, or the Board of Governors of the

3 Federal Reserve System, as the case may be, shall be sub4 stituted as a party to any such action or proceeding.

5 (c) CONTINUATION OF ADMINISTRATIVE RULES.—

6 All orders, resolutions, determinations, regulations, inter7 pretative rules, other interpretations, guidelines, proce8 dures, supervisory and enforcement actions, and other ad9 visory material (other than any regulation implementing

10 or prescribed pursuant to section 3(f) of the Home Own11 ers’ Loan Act (as in effect on September 13, 1995))

12 which—

13 (1) have been issued, made, prescribed, or per14 mitted to become effective by the Office of Thrift

15 Supervision, and

16 (2) are in effect on December 31, 1996, (or be17 come effective after such date pursuant to the terms

18 of the order, resolution, determination, rule, other

19 interpretation, guideline, procedure, supervisory or

20 enforcement action, and other advisory material, as

21 in effect on such date), shall—

22 (A) continue in effect according to the

23 terms of such orders, resolutions, determina24 tions, regulations, interpretative rules, other in25 terpretations, guidelines, procedures, super-
77

•HR 2491 RH

1 visory or enforcement actions, or other advisory

2 material;

3 (B) be administered by the Comptroller of

4 the Currency, the Federal Deposit Insurance

5 Corporation, or the Board of Governors of the

6 Federal Reserve System; and

7 (C) be enforceable by or against the Comp8 troller of the Currency, the Federal Deposit In9 surance Corporation, or the Board of Governors

10 of the Federal Reserve System until modified,

11 terminated, set aside, or superseded in accord12 ance with applicable law by the Comptroller,

13 Corporation, or Board, by any court of com14 petent jurisdiction, or by operation of law.

15 (d) TREATMENT OF REFERENCES IN ADJUSTABLE

16 RATE MORTGAGES ISSUED BEFORE FIRREA.—For pur17 poses of section 402(e) of Financial Institutions Reform,

18 Recovery, and Enforcement Act of 1989 (12 U.S.C. 1437

19 note), any reference in such section to—

20 (A) the Director of the Office of Thrift Su21 pervision shall be deemed to be a reference to

22 the Secretary of the Treasury; and

23 (B) a Savings Association Insurance Fund

24 member shall be deemed to be a reference to an
78

•HR 2491 RH

1 insured depository institution (as defined in sec2 tion 3 of the Federal Deposit Insurance Act).

3 (e) TREATMENT OF REFERENCES IN ADJUSTABLE

4 RATE MORTGAGE INSTRUMENTS ISSUED AFTER

5 FIRREA.—

6 (1) IN GENERAL.—For purposes of adjustable

7 rate mortgage instruments that are in effect as of

8 the date of enactment of this Act, any reference in

9 the instrument to the Director of the Office of

10 Thrift Supervision or Savings Association Insurance

11 Fund members shall be treated as a reference to the

12 Secretary of the Treasury or insured depository in13 stitutions (as defined in section 3 of the Federal De14 posit Insurance Act), as appropriate.

15 (2) SUBSTITUTION FOR INDEXES.—If any index

16 used to calculate the applicable interest rate on any

17 adjustable rate mortgage instrument is no longer

18 calculated and made available as a direct or indirect

19 result of the enactment of this Act, any index—

20 (A) made available by the Secretary of the

21 Treasury; or

22 (B) determined by the Secretary of the

23 Treasury, pursuant to paragraph (4), to be sub24 stantially similar to the index which is no

25 longer calculated or made available,
79

•HR 2491 RH

1 may be substituted by the holder of any such adjust2 able rate mortgage instrument upon notice to the

3 borrower.

4 (3) AGENCY ACTION REQUIRED TO PROVIDE

5 CONTINUED AVAILABILITY OF INDEXES.—Promptly

6 after the enactment of this subsection, the Secretary

7 of the Treasury, the Chairperson of the Federal De8 posit Insurance Corporation, and the Comptroller of

9 the Currency shall take such action as may be nec10 essary to assure that the indexes prepared by the

11 Director of the Office of Thrift Supervision imme12 diately prior to the enactment of this subsection and

13 used to calculate the interest rate on adjustable rate

14 mortgage instruments continue to be available.

15 (4) REQUIREMENTS RELATING TO SUBSTITUTE

16 INDEXES.—If any agency can no longer make avail17 able an index pursuant to paragraph (3), an index

18 that is substantially similar to such index may be

19 substituted for such index for purposes of paragraph

20 (2) if the Secretary of the Treasury determines,

21 after notice and opportunity for comment, that—

22 (A) the new index is based upon data sub23 stantially similar to that of the original index;

24 and
80

•HR 2491 RH

1 (B) the substitution of the new index will

2 result in an interest rate substantially similar to

3 the rate in effect at the time the original index

4 became unavailable.

5 SEC. 2244. REFERENCES IN FEDERAL LAW TO DIRECTOR OF

6 THE OFFICE OF THRIFT SUPERVISION.

7 Any reference in any Federal law to the Director of

8 the Office of Thrift Supervision or the Office of Thrift

9 Supervision shall be deemed to be a reference to the appro10 priate Federal banking agency (as defined in section 3(q)

11 of the Federal Deposit Insurance Act).

12 SEC. 2245. RECONFIGURATION OF BOARD OF DIRECTORS

13 OF FDIC AS A RESULT OF REMOVAL OF DI14 RECTOR OF THE OFFICE OF THRIFT SUPER15 VISION.

16 (a) IN GENERAL.—Section 2(a)(1) of the Federal

17 Deposit Insurance Act (12 U.S.C. 1812(a)(1)) is amended

18 to read as follows:

19 ‘‘(1) IN GENERAL.—The management of the

20 Corporation shall be vested in a Board of Directors

21 consisting of 3 members—

22 ‘‘(A) 1 of whom shall be the Comptroller of

23 the Currency; and

24 ‘‘(B) 2 of whom shall be appointed by the

25 President, by and with the advice and consent
81

•HR 2491 RH

1 of the Senate, from among individuals who are

2 citizens of the United States.’’.

3 (b) TECHNICAL AND CONFORMING AMENDMENTS.—

4 (1) Section 2(a)(2) of the Federal Deposit In5 surance Act (12 U.S.C. 1812(a)(2)) is amended—

6 (A) by striking ‘‘February 28, 1993’’ and

7 inserting ‘‘January 1, 1998’’; and

8 (B) by striking ‘‘3’’ and inserting ‘‘2’’.

9 (2) Section 2(d)(2) of the Federal Deposit In10 surance Act (12 U.S.C. 1812(d)(2)) is amended—

11 (A) by striking ‘‘or the office of Director

12 of the Office of Thrift Supervision’’;

13 (B) by striking ‘‘or such Director’’;

14 (C) by striking ‘‘or the Acting Director of

15 the Office of Thrift Supervision, as the case

16 may be’’; and

17 (D) by striking ‘‘or Director’’.

18 (c) EFFECTIVE DATE.—The amendments made by

19 subsections (a) and (b) shall take effect on January 1,

20 1998.

21 (d) DESIGNATION OF ABOLISHED POSITION.—Unless

22 there is a vacancy in the position of an appointed member

23 of the Board of Directors as of January 1, 1998, the

24 President, consistent with the requirements of section

25 2(a)(2) of the Federal Deposit Insurance Act, shall des-
82

•HR 2491 RH

1 ignate which of the 3 positions of appointed member of

2 such Board of Directors shall be abolished pursuant to

3 the amendment made by subsection (a).

4 CHAPTER 4—LOAN LOSS RESERVE

5 TREATMENT

6 SEC. 2261. SENSE OF THE CONGRESS.

7 It is the sense of the Congress that—

8 (1) one of the major obstacles to the conversion

9 of thrift institutions into banks is the tax treatment

10 of bad debt reserve deductions of thrift institutions;

11 (2) as part of a comprehensive solution to the

12 merger of the Federal deposit insurance funds and

13 thrift and bank charters, section 593 of the Internal

14 Revenue Code of 1986 should be repealed; and

15 (3) the repeal of section 593 of the Internal

16 Revenue Code of 1986 should be accomplished in

17 such a fashion as would neither threaten the eco18 nomic viability of thrift institutions which convert to

19 bank charters nor cause the Federal Treasury to

20 lose revenue.
83

•HR 2491 RH

1 Subtitle C—Community

2 Reinvestment Act Amendments

3 SEC. 2301. EXPRESSION OF CONGRESSIONAL INTENT.

4 Subsection (b) of section 802 of the Community Rein5 vestment Act of 1977 (12 U.S.C. 2901) is amended to

6 read as follows:

7 ‘‘(b) It is the purpose of this title to require each ap8 propriate Federal financial supervisory agency to use its

9 authority, when examining financial institutions, to en10 courage such institutions to help meet the credit needs of

11 the local communities in which they are chartered consist12 ent with the safe and sound operation of such institutions.

13 When examining financial institutions, a supervisory agen14 cy shall not impose additional burden, recordkeeping, or

15 reporting upon such institutions.’’.

16 SEC. 2302. COMMUNITY REINVESTMENT ACT EXEMPTION.

17 The Community Reinvestment Act of 1977 (12

18 U.S.C. 2901 et seq.) is amended by adding at the end

19 the following new section:

20 ‘‘SEC. 809. TREATMENT OF SMALL FINANCIAL INSTITU21 TIONS.

22 ‘‘(a) IN GENERAL.—In lieu of being evaluated under

23 section 806A and receiving a written evaluation under sec24 tion 807, an eligible regulated financial institution shall
84

•HR 2491 RH

1 make a notice, signed by the president, available to the

2 public that—

3 ‘‘(1) lists the type of credit and services that

4 the institution provides to help meet the credit needs

5 of the local community; and

6 ‘‘(2) states that the institution helps meet the

7 credit needs of the local communities in which the

8 institution operates, including low- and moderate-in9 come neighborhoods.

10 ‘‘(b) ELIGIBLE REGULATED FINANCIAL INSTITU11 TIONS.—

12 ‘‘(1) IN GENERAL.—A regulated financial insti13 tution shall be eligible for purposes of subsection (a)

14 if the institution and any bank holding company

15 which controls such institution have aggregate assets

16 of not more than $100,000,000.

17 ‘‘(2) ANNUAL ADJUSTMENT.—The dollar

18 amount in paragraph (1) shall be adjusted annually

19 after December 31, 1994, by the annual percentage

20 increase in the Consumer Price Index for Urban

21 Wage Earners and Clerical Workers published by

22 the Bureau of Labor Statistics.

23 ‘‘(c) EXEMPTION FROM OTHER REQUIREMENTS.—A

24 regulated financial institution which has complied with the

25 notice requirements of subsection (a) shall not be subject
85

•HR 2491 RH

1 to section 804 and any regulations prescribed under sec2 tion 806.’’.

3 SEC. 2303. SELF-CERTIFICATION OF CRA COMPLIANCE.

4 Section 804 of the Community Reinvestment Act of

5 1977 (12 U.S.C. 2903) is amended by adding at the end

6 the following new subsection (c):

7 ‘‘(c) SELF-CERTIFICATION OF CRA COMPLIANCE.—

8 ‘‘(1) CERTIFICATION.—In lieu of being evalu9 ated under section 806A and receiving a written

10 evaluation under section 807, a qualifying financial

11 institution may elect to self-certify to the appro12 priate Federal financial supervisory agency that such

13 institution is in compliance with the goals of this

14 title.

15 ‘‘(2) QUALIFYING INSTITUTION.—

16 ‘‘(A) IN GENERAL.—For purposes of para17 graph (1), the term ‘qualifying institution’

18 means a financial institution which—

19 ‘‘(i) has not more than $250 million

20 in assets;

21 ‘‘(ii) has not been found to have en22 gaged in a pattern or practice of illegal

23 discrimination under the Fair Housing Act

24 or the Equal Credit Opportunity Act for

25 the preceding 5-year calendar period; and
86

•HR 2491 RH

1 ‘‘(iii) received rating under section

2 807(b)(2) of ‘satisfactory’ or ‘outstanding’

3 in the most recent evaluation of such insti4 tution under this title.

5 ‘‘(B) ANNUAL ADJUSTMENT.—The dollar

6 amount in subparagraph (A) shall be adjusted

7 annually after December 31, 1994, by the an8 nual percentage increase in the Consumer Price

9 Index for Urban Wage Earners and Clerical

10 Workers published by the Bureau of Labor Sta11 tistics.

12 ‘‘(3) PUBLIC NOTICE.—

13 ‘‘(A) IN GENERAL.—A qualifying institu14 tion shall maintain in every branch a public no15 tice stating that—

16 ‘‘(i) the institution has self-certified

17 that the institution is satisfactorily helping

18 to meet the credit needs of its community;

19 ‘‘(ii) the institution maintains—

20 ‘‘(I) at the main office of such in21 stitution, a public file which contains

22 a copy of the self-certification to the

23 appropriate Federal financial super24 visory agency; and
87

•HR 2491 RH

1 ‘‘(II) a map delineating the com2 munity served by the institution;

3 ‘‘(iii) a list of the types of credit and

4 services that the institution provides to the

5 community served by the institution;

6 ‘‘(iv) such other information that the

7 institution believes demonstrates the insti8 tution’s record of helping to meet the cred9 it needs of its community; and

10 ‘‘(v) every public comment or letter to

11 the institution (and any response by the

12 institution) received within the previous 2-

13 year period about the record of the institu14 tion of helping to meet the credit needs of

15 its community.

16 ‘‘(B) PUBLIC FILE.—A qualifying institu17 tion shall maintain a public file containing the

18 contents described in this paragraph at the in19 stitution’s main office.

20 ‘‘(4) RATING.—

21 ‘‘(A) IN GENERAL.—A qualifying institu22 tion shall be deemed to have a rating of a ‘sat23 isfactory record of meeting community credit

24 needs’ for the purposes of this section and sec25 tion 806A(c).
88

•HR 2491 RH

1 ‘‘(B) PUBLICATION.—Each Federal finan2 cial supervisory agency shall publish in the Fed3 eral Register once each month a list of institu4 tions that have self-certified during the previous

5 month.

6 ‘‘(C) PUBLICATION CONSTITUTES DISCLO7 SURE.—Publication of the name of the institu8 tion in the Federal Register as having self-cer9 tified shall constitute disclosure of the rating of

10 the institution to the public for purposes of sec11 tions 806A and 807.

12 ‘‘(5) REGULATORY REVIEW.—

13 ‘‘(A) ASSESSMENT.—During each exam14 ination for safety and soundness, a qualifying

15 institution’s supervisory agency shall, as part of

16 the agency’s review of the institution’s loans,

17 assess whether the institution’s basis for its

18 self-certification is reasonable based on the pub19 lic notice and the information contained in the

20 public file pursuant to paragraph (3).

21 ‘‘(B) EXAMINATION IF SELF-CERTIFI22 CATION IS NOT REASONABLE.—If the agency

23 determines that the institution’s basis for the

24 institution’s self-certification is not reasonable,

25 the agency shall schedule an examination of the
89

•HR 2491 RH

1 institution for the purpose of assessing the in2 stitution’s record of helping to meet the credit

3 needs of its community.

4 ‘‘(C) REVOCATION OF SELF-CERTIFI5 CATION.—If an assessment pursuant to sub6 paragraph (B) results in a less than ‘satisfac7 tory’ rating, the agency shall revoke the institu8 tion’s self-certification and substitute a written

9 evaluation as provided under section 807.

10 ‘‘(D) PERIOD OF INELIGIBILITY FOR SELF11 CERTIFICATION.—An institution whose self-cer12 tification has been revoked may not self-certify

13 pursuant to this subsection during the 5 years

14 succeeding the year in which the self-certifi15 cation is revoked.

16 ‘‘(E) SUBSEQUENT ELIGIBILITY.—After

17 the end of the period of ineligibility described in

18 subparagraph (D), an institution which meets

19 the requirements for self-certification may elect

20 to self-certify.

21 ‘‘(6) PROHIBITION ON ADDITIONAL REQUIRE22 MENTS.—No appropriate Federal financial super23 visory agency may impose any additional require24 ments, whether by regulation or otherwise, relating
90

•HR 2491 RH

1 to the self-certification procedure under this sub2 section.’’.

3 SEC. 2304. COMMUNITY INPUT AND CONCLUSIVE RATING.

4 (a) CONFORMING AMENDMENT.—Section 804(a) of

5 the Community Reinvestment Act of 1977 (12 U.S.C.

6 2903) is amended by inserting ‘‘conducted in accordance

7 with section 806A,’’ after ‘‘financial institution,’’.

8 (b) COMMUNITY INPUT AND CONCLUSIVE RATING.—

9 The Community Reinvestment Act of 1977 (12 U.S.C.

10 2901 et seq.) is amended by inserting after section 806

11 the following new section:

12 ‘‘SEC. 806A. COMMUNITY INPUT AND CONCLUSIVE RATING.

13 ‘‘(a) PUBLICATION OF EXAM SCHEDULE AND OPPOR14 TUNITY FOR COMMENT.—

15 ‘‘(1) PUBLICATION OF NOTICE.—Each appro16 priate Federal financial supervisory agency shall—

17 ‘‘(A) publish in the Federal Register, 30

18 days before the beginning of a calendar quarter,

19 a listing of institutions scheduled for evaluation

20 for compliance with this title during such cal21 endar quarter; and

22 ‘‘(B) provide opportunity for written com23 ments from the community on the performance,

24 under this title, of each institution scheduled

25 for evaluation.
91

•HR 2491 RH

1 ‘‘(2) COMMENT PERIOD.—Written comments

2 may not be submitted to an appropriate Federal fi3 nancial supervisory agency pursuant to paragraph

4 (1) after the end of the 30-day period beginning on

5 the first day of the calendar quarter.

6 ‘‘(3) COPY OF COMMENTS.—The agency shall

7 provide a copy of such comments to the institution.

8 ‘‘(b) EVALUATION.—The appropriate Federal finan9 cial supervisory agency shall—

10 ‘‘(1) evaluate the institution in accordance with

11 the standards contained in section 804; and

12 ‘‘(2) prepare and publish a written evaluation of

13 the institution as required under section 807.

14 ‘‘(c) RECONSIDERATION OF RATING.—

15 ‘‘(1) REQUEST FOR RECONSIDERATION.—A re16 consideration of an institution’s rating referred to in

17 section 807(b)(1)(C), may be requested within 30

18 days of the rating’s disclosure to the public.

19 ‘‘(2) PROCEDURES FOR REQUEST.—Any such

20 request shall be made in writing and filed with the

21 appropriate Federal financial supervisory agency,

22 and may be filed by the institution or a member of

23 the community.

24 ‘‘(3) BASIS FOR REQUEST.—Any request for re25 consideration under this subsection shall be based on
92

•HR 2491 RH

1 significant issues of a substantive nature which are

2 relevant to the delineated community of the institu3 tion and, in the case of a request by a member of

4 the community, shall be limited to issues previously

5 raised in comments submitted pursuant to sub6 section (a).

7 ‘‘(4) COMPLETION OF REVIEW.—The appro8 priate Federal financial supervisory agency shall

9 complete any requested reconsideration within 30

10 days of the filing of the request.

11 ‘‘(d) CONCLUSIVE RATING.—

12 ‘‘(1) IN GENERAL.—An institution’s rating shall

13 become conclusive on the later of—

14 ‘‘(A) 30 days after the rating is disclosed

15 to the public; or

16 ‘‘(B) the completion of any requested re17 consideration by the Federal financial super18 visory agency.

19 ‘‘(2) RATING CONCLUSIVE OF MEETING COMMU20 NITY CREDIT NEEDS.—An institution’s rating shall

21 be the conclusive assessment of the institution’s

22 record of meeting the credit needs of its community

23 for purposes of section 804 until the institution’s

24 next rating, developed pursuant to an examination,

25 becomes conclusive.
93

•HR 2491 RH

1 ‘‘(3) SAFE HARBOR.—Institutions which have

2 received a ‘satisfactory’ or ‘outstanding’ rating shall

3 be deemed to have met the purposes of section 804.

4 ‘‘(4) RULE OF CONSTRUCTION.—Notwithstand5 ing any other provision of law, no provision of this

6 section shall be construed as granting a cause of ac7 tion to any person.’’.

8 (c) OVERALL EVALUATION OF INSTITUTION.—Para9 graph (2) of section 804(a) of the Community Reinvest10 ment Act of 1977 (12 U.S.C. 2903(a)) is amended to read

11 as follows:

12 ‘‘(2) take such record into account in the over13 all evaluation of the condition of the institution by

14 the appropriate Federal financial supervisory agen15 cy.’’.

16 SEC. 2305. SPECIAL PURPOSE FINANCIAL INSTITUTIONS.

17 (a) IN GENERAL.—Section 804 of the Community

18 Reinvestment Act of 1977 (12 U.S.C. 2903) is amended

19 by inserting after subsection (c) (as added by section 2303

20 of this subtitle) the following new subsection:

21 ‘‘(d) SPECIAL PURPOSE INSTITUTIONS.—

22 ‘‘(1) IN GENERAL.—In conducting assessments

23 pursuant to this section at any special purpose insti24 tution, the appropriate Federal financial supervisory

25 agency shall—
94

•HR 2491 RH

1 ‘‘(A) consider the nature of business such

2 institution is involved in; and

3 ‘‘(B) assess and take into account the

4 record of the institution commensurate with the

5 amount of deposits (as defined in section 3(1)

6 of the Federal Deposit Insurance Act) received

7 by such institution.

8 ‘‘(2) STANDARDS.—Each appropriate Federal

9 financial supervisory agency shall develop standards

10 under which special purpose institutions may be

11 deemed to have complied with the requirements of

12 this title which are consistent with the specific na13 ture of such businesses.’’.

14 (b) SPECIAL PURPOSE INSTITUTION DEFINED.—

15 Section 803 of the Community Reinvestment Act of 1977

16 (12 U.S.C. 2902) is amended by adding at the end the

17 following new paragraph:

18 ‘‘(5) SPECIAL PURPOSE INSTITUTIONS.—The

19 term ‘special purpose institution’ means a financial

20 institution that does not generally accept deposits

21 from the public in amounts of less than $100,000,

22 such as wholesale, credit card, and trust institu23 tions.’’.
95

•HR 2491 RH

1 SEC. 2306. INCREASED INCENTIVES FOR LENDING TO LOW2 AND MODERATE-INCOME COMMUNITIES.

3 (a) IN GENERAL.—Section 804(b) of the Community

4 Reinvestment Act of 1977 (12 U.S.C. 2903(b)) is amend5 ed to read as follows:

6 ‘‘(b) POSITIVE CONSIDERATION OF CERTAIN LOANS

7 AND INVESTMENTS.—In assessing and taking into ac8 count the records of a regulated financial institution under

9 subsection (a), the appropriate Federal financial super10 visory agency shall—

11 ‘‘(1) consider as a positive factor, consistent

12 with the safe and sound operation of the institution,

13 the institution’s investment in or loan to—

14 ‘‘(A) any minority depository institution or

15 women’s depository institution (as such terms

16 are defined in section 808(b)) or any low-in17 come credit union;

18 ‘‘(B) any joint venture or other entity or

19 project which promotes the public welfare in

20 any distressed community (as defined by such

21 agency) whether or not the distressed commu22 nity is located in the local community in which

23 the regulated financial institution is chartered

24 to do business; and
96

•HR 2491 RH

1 ‘‘(C) targeted low- and moderate-income

2 communities, including real property loans to

3 such communities; and

4 ‘‘(2) consider equally with other factors capital

5 investment, loan participation, and other ventures

6 undertaken by the institution in cooperation with—

7 ‘‘(A) minority- and women-owned financial

8 institutions and low-income credit unions to the

9 extent that these activities help meet the credit

10 needs of the local communities in which such

11 institutions are chartered; and

12 ‘‘(B) community development corporations

13 in extending credit and other financial services

14 principally to low- and moderate-income persons

15 and small businesses to the extent that such

16 community development corporations help meet

17 the credit needs of the local communities served

18 by the majority-owned institution.’’.

19 (b) AMENDMENT TO DEFINITIONS.—Section 803 of

20 the Community Reinvestment Act of 1977 (12 U.S.C.

21 2902) is amended by inserting after paragraph (5) (as

22 added by section 2305(b) of this subtitle) the following

23 new paragraph:
97

•HR 2491 RH

1 ‘‘(6) STATE BANK SUPERVISOR.—The term

2 ‘State bank supervisor’ has the same meaning as in

3 section 3(r) of the Federal Deposit Insurance Act.’’.

4 (c) TECHNICAL CORRECTION.—The 1st of the 2

5 paragraphs designated as paragraph (2) of section 803 of

6 the Community Reinvestment Act of 1977 (12 U.S.C.

7 2902) is amended to read as follows:

8 ‘‘(D) the Director of the Office of Thrift

9 Supervision with respect to any savings associa10 tion (the deposits of which are insured by the

11 Federal Deposit Insurance Corporation) and

12 any savings and loan holding company (other

13 than a company which is a bank holding com14 pany);’’.

15 SEC. 2307. PROHIBITION ON ADDITIONAL REPORTING

16 UNDER CRA.

17 Section 806 of the Community Reinvestment Act of

18 1977 (12 U.S.C. 2905) is amended to read as follows:

19 ‘‘SEC. 806. REGULATIONS.

20 ‘‘(a) IN GENERAL.—

21 ‘‘(1) PUBLICATION REQUIREMENT.—Regula22 tions to carry out the purposes of this title shall be

23 published by each appropriate Federal financial su24 pervisory agency.
98

•HR 2491 RH

1 ‘‘(2) PROHIBITION ON ADDITIONAL RECORD2 KEEPING.—Regulations prescribed and policy state3 ments, commentary, examiner guidance, or other su4 pervisory material issued under this title shall not

5 impose any additional recordkeeping on a financial

6 institution.

7 ‘‘(3) PROHIBITION ON LOAN DATA COLLEC8 TION.—No loan data may be required to be collected

9 and reported by a financial institution and no such

10 data may be made public by any Federal financial

11 supervisory agency under this title.’’.

12 SEC. 2308. TECHNICAL AMENDMENT.

13 Section 807(b)(1)(B) of the Community Reinvest14 ment Act (12 U.S.C. 2906) is amended by striking ‘‘The

15 information’’ and inserting ‘‘In the case of a regulated fi16 nancial institution that maintains domestic branches in 2

17 or more States, the information’’.

18 SEC. 2309. DUPLICATIVE REPORTING.

19 Section 10(g) of the Federal Home Loan Bank Act

20 (12 U.S.C. 1430(g)) is amended by adding at the end the

21 following new paragraph (3):

22 ‘‘(3) SPECIAL RULE.—This subsection shall not

23 apply to members receiving a grade of ‘outstanding’

24 or ‘satisfactory’ under section 807 of the Community

25 Reinvestment Act of 1977.’’.
99

•HR 2491 RH

1 SEC. 2310. CRA CONGRESSIONAL OVERSIGHT.

2 (a) SENSE OF CONGRESS RELATING TO AGGRESSIVE

3 OVERSIGHT.—It is the sense of the Congress that the ap4 propriate committees of the House of Representatives and

5 the Senate should exercise aggressive oversight of the

6 adoption and implementation of any regulation by any ap7 propriate Federal financial supervisory agency under the

8 Community Reinvestment Act of 1977 after the date of

9 the enactment of this Act.

10 (b) AGENCY REPORTS REQUIRED.—

11 (1) IN GENERAL.—Each appropriate Federal fi12 nancial supervisory agency shall submit a report to

13 the Congress by December 31, 1996, and by Decem14 ber 31, 1997, on the implementation of all regula15 tions prescribed by such agency under the Commu16 nity Reinvestment Act of 1977 after the date of the

17 enactment of this Act.

18 (2) REQUIREMENTS RELATING TO PREPARA19 TION OF REPORTS.—In preparing each report re20 quired under paragraph (1), each appropriate Fed21 eral financial supervisory agency shall—

22 (A) solicit and include comments from reg23 ulated financial institutions with respect to the

24 regulations which are the subject of the report;

25 and
100

•HR 2491 RH

1 (B) include quantifiable measures of the

2 cost savings achieved under the regulations

3 which are the subject of the report and the ef4 fectiveness of such regulations in achieving the

5 purposes of the Community Reinvestment Act

6 of 1977.

7 (3) DEFINITIONS.—For purposes of this sec8 tion, the terms ‘‘appropriate Federal financial super9 visory agency’’ and ‘‘regulated financial institution’’

10 have the same meanings as in section 803 of the

11 Community Reinvestment Act of 1977.

12 SEC. 2311. CONSULTATION AMONG EXAMINERS.

13 Section 10 of the Federal Deposit Insurance Act (12

14 U.S.C. 1820) is amended by adding at the end the follow15 ing new subsection:

16 ‘‘(j) CONSULTATION AMONG EXAMINERS.—

17 ‘‘(1) IN GENERAL.—Each appropriate Federal

18 banking agency shall take such action as may be

19 necessary to ensure that examiners employed by the

20 agency—

21 ‘‘(A) consult on examination activities with

22 respect to any depository institution; and

23 ‘‘(B) achieve an agreement and resolve any

24 inconsistencies on the recommendations to be
101

•HR 2491 RH

1 given to such institution as a consequence of

2 any examinations.

3 ‘‘(2) EXAMINER-IN-CHARGE.—Each agency

4 shall consider appointing an examiner-in-charge with

5 respect to a depository institution to ensure con6 sultation on examination activities among all of the

7 agency’s examiners involved in examinations of such

8 institution.’’.

9 SEC. 2312. LIMITATION ON REGULATIONS.

10 Section 806 of the Community Reinvestment Act of

11 1977 (12 U.S.C. 2905) (as amended by section 2307) is

12 amended by adding at the end the following new sub13 sections:

14 ‘‘(b) LIMITATION ON REGULATIONS.—No regulation

15 may be prescribed under this title by any Federal agency

16 which would—

17 ‘‘(1) require any regulated financial institution

18 to—

19 ‘‘(A) make any loan or enter into any

20 other agreement on the basis of any discrimina21 tory criteria prohibited under any law of the

22 United States; or

23 ‘‘(B) make any loan to, or enter into any

24 other agreement with, any uncreditworthy per-
102

•HR 2491 RH

1 son that would jeopardize the safety and sound2 ness of such institution; or

3 ‘‘(2) prevent or hinder in any way a financial

4 institution’s full responsibility to provide credit to all

5 segments of the community.

6 ‘‘(c) ENCOURAGE LOANS TO CREDITWORTHY BOR7 ROWERS.—Regulations prescribed under this title shall en8 courage regulated financial institutions to make loans and

9 extend credit to all creditworthy persons, consistent with

10 safety and soundness.’’.

11 TITLE III—COMMITTEE ON

12 COMMERCE

13 Subtitle A—Communications

14 CHAPTER 1—SPECTRUM AUCTIONS

15 SEC. 3001. SPECTRUM AUCTIONS.

16 (a) EXTENSION AND EXPANSION OF AUCTION AU17 THORITY.—

18 (1) AMENDMENTS.—Section 309(j) of the Com19 munications Act of 1934 (47 U.S.C. 309(j)) is

20 amended—

21 (A) by striking paragraphs (1) and (2) and

22 inserting in lieu thereof the following:

23 ‘‘(1) GENERAL AUTHORITY.—If, consistent with

24 the obligations described in paragraph (6)(E), mutu25 ally exclusive applications are accepted for any ini-
103

•HR 2491 RH

1 tial license or construction permit which will involve

2 an exclusive use of the electromagnetic spectrum,

3 then the Commission shall grant such license or per4 mit to a qualified applicant through a system of

5 competitive bidding that meets the requirements of

6 this subsection.

7 ‘‘(2) EXEMPTIONS.—The competitive bidding

8 authority granted by this subsection shall not apply

9 to licenses or construction permits issued by the

10 Commission—

11 ‘‘(A) that, as the result of the Commission

12 carrying out the obligations described in para13 graph (6)(E), are not mutually exclusive;

14 ‘‘(B) for public safety radio services, in15 cluding non-Government uses that protect the

16 safety of life, health, and property and that are

17 not made commercially available to the public;

18 or

19 ‘‘(C) for initial licenses or construction

20 permits for new terrestrial digital television

21 services assigned by the Commission to existing

22 terrestrial broadcast licensees to replace their

23 current television licenses.’’; and

24 (B) by striking ‘‘1998’’ in paragraph (11)

25 and inserting ‘‘2002’’.
104

•HR 2491 RH

1 (2) CONFORMING AMENDMENT.—Subsection (i)

2 of section 309 of such Act is repealed.

3 (3) EFFECTIVE DATE.—The amendment made

4 by paragraph (1)(A) shall not apply with respect to

5 any license or permit for which the Federal Commu6 nications Commission has accepted mutually exclu7 sive applications on or before the date of enactment

8 of this Act.

9 (b) COMMISSION OBLIGATION TO MAKE ADDITIONAL

10 SPECTRUM AVAILABLE BY AUCTION.—

11 (1) IN GENERAL.—The Federal Communica12 tions Commission shall complete all actions nec13 essary to permit the assignment, by September 30,

14 2002, by competitive bidding pursuant to section

15 309(j) of the Communications Act of 1934 (47

16 U.S.C. 309(j)) of licenses for the use of bands of

17 frequencies that—

18 (A) individually span not less than 25

19 megahertz, unless a combination of smaller

20 bands can, notwithstanding the provisions of

21 paragraph (7) of such section, reasonably be ex22 pected to produce greater receipts;

23 (B) in the aggregate span not less than

24 100 megahertz;

25 (C) are located below 3 gigahertz; and
105

•HR 2491 RH

1 (D) have not, as of the date of enactment

2 of this Act—

3 (i) been designated by Commission

4 regulation for assignment pursuant to such

5 section; or

6 (ii) been identified by the Secretary of

7 Commerce pursuant to section 113 of the

8 National Telecommunications and Infor9 mation Administration Organization Act.

10 The Commission shall conduct the competitive

11 bidding for not less than one-half of such aggre12 gate spectrum by September 30, 2000.

13 (2) CRITERIA FOR REASSIGNMENT.—In making

14 available bands of frequencies for competitive bid15 ding pursuant to paragraph (1), the Commission

16 shall—

17 (A) seek to promote the most efficient use

18 of the spectrum;

19 (B) take into account the cost to incum20 bent licensees of relocating existing uses to

21 other bands of frequencies or other means of

22 communication;

23 (C) take into account the needs of public

24 safety radio services; and
106

•HR 2491 RH

1 (D) comply with the requirements of inter2 national agreements concerning spectrum allo3 cations.

4 (3) NOTIFICATION TO NTIA.—The Commission

5 shall notify the Secretary of Commerce if—

6 (A) the Commission is not able to provide

7 for the effective relocation of incumbent licens8 ees to bands of frequencies that are available to

9 the Commission for assignment; and

10 (B) the Commission has identified bands

11 of frequencies that are—

12 (i) suitable for the relocation of such

13 licensees; and

14 (ii) allocated for Federal Government

15 use, but that could be reallocated pursuant

16 to part B of the National Telecommuni17 cations and Information Administration

18 Organization Act (as amended by this

19 Act).

20 (c) IDENTIFICATION AND REALLOCATION OF FRE21 QUENCIES.—The National Telecommunications and Infor22 mation Administration Organization Act (47 U.S.C. 901

23 et seq.) is amended—

24 (1) in section 113, by adding at the end the fol25 lowing new subsection:
107

•HR 2491 RH

1 ‘‘(f) ADDITIONAL REALLOCATION REPORT.—If the

2 Secretary receives a notice from the Commission pursuant

3 to section 3001(b)(3) of the Seven-Year Balanced Budget

4 Reconciliation Act of 1995, the Secretary shall prepare

5 and submit to the President and the Congress a report

6 recommending for reallocation for use other than by Fed7 eral Government stations under section 305 of the 1934

8 Act (47 U.S.C. 305), bands of frequencies that are suit9 able for the uses identified in the Commission’s notice.’’;

10 (2) in section 114(a)(1), by striking ‘‘(a) or

11 (d)(1)’’ and inserting ‘‘(a), (d)(1), or (f)’’.

12 (d) COMPLETION OF C-BLOCK PCS AUCTION.—The

13 Federal Communications Commission shall commence the

14 Broadband Personal Communications Services C-Block

15 auction described in the Commission’s Sixth Report and

16 Order in DP Docket 93–253 (FCC 93–510, released July

17 18, 1995) not later than December 4, 1995. The Commis18 sion’s competitive bidding rules governing such auction,

19 as set forth in such Sixth Report and Order, are hereby

20 ratified and adopted as a matter of Federal law.

21 (e) MODIFICATION OF AUCTION POLICY TO PRE22 SERVE AUCTION VALUE OF SPECTRUM.—The voluntary

23 negotiation period for relocating fixed microwave licensees

24 to frequency bands other than those allocated for licensed

25 emerging technology services (including licensed personal
108

•HR 2491 RH

1 communications services), established by the Commis2 sion’s Third Report and Order in ET Docket No. 92–9,

3 shall expire one year after the date of acceptance by the

4 Commission of applications for such licensed emerging

5 technology services. The mandatory negotiation period for

6 relocating fixed microwave licensees to frequency bands

7 other than those allocated for licensed emerging tech8 nology services (including licensed personal communica9 tions services), established in such Third Report and

10 Order, shall expire two years after the date of acceptance

11 by the Commission of applications for such licensed

12 emerging technology services.

13 (f) IDENTIFICATION AND REALLOCATION OF

14 AUCTIONABLE FREQUENCIES.—The National Tele15 communications and Information Administration Organi16 zation Act (47 U.S.C. 901 et seq.) is amended—

17 (1) in section 113(b)—

18 (A) by striking the heading of paragraph

19 (1) and inserting ‘‘INITIAL REALLOCATION RE20 PORT’’;

21 (B) by inserting ‘‘in the first report re22 quired by subsection (a)’’ after ‘‘recommend for

23 reallocation’’ in paragraph (1);
109

•HR 2491 RH

1 (C) by inserting ‘‘or (3)’’ after ‘‘paragraph

2 (1)’’ each place it appears in paragraph (2);

3 and

4 (D) by inserting after paragraph (2) the

5 following new paragraph:

6 ‘‘(3) SECOND REALLOCATION REPORT.—In ac7 cordance with the provisions of this section, the Sec8 retary shall recommend for reallocation in the sec9 ond report required by subsection (a), for use other

10 than by Federal Government stations under section

11 305 of the 1934 Act (47 U.S.C. 305), a single fre12 quency band that spans not less than an additional

13 20 megahertz, that is located below 3 gigahertz, and

14 that meets the criteria specified in paragraphs (1)

15 through (5) of subsection (a).’’; and

16 (2) in section 115—

17 (A) in subsection (b), by striking ‘‘the re18 port required by section 113(a)’’ and inserting

19 ‘‘the initial reallocation report required by sec20 tion 113(a)’’; and

21 (B) by adding at the end the following new

22 subsection:

23 ‘‘(c) ALLOCATION AND ASSIGNMENT OF FRE24 QUENCIES IDENTIFIED IN THE SECOND REALLOCATION

25 REPORT.—With respect to the frequencies made available
110

•HR 2491 RH

1 for reallocation pursuant to section 113(b)(3), the Com2 mission shall, not later than 1 year after receipt of the

3 second reallocation report required by such section, pre4 pare, submit to the President and the Congress, and im5 plement, a plan for the allocation and assignment under

6 the 1934 Act of such frequencies. Such plan shall propose

7 the immediate allocation and assignment of all such fre8 quencies in accordance with section 309(j).’’.

9 CHAPTER 2—FEDERAL COMMUNICATIONS

10 COMMISSION AUTHORIZATION

11 SEC. 3011. SHORT TITLE.

12 This chapter may be cited as the ‘‘Federal Commu13 nications Commission Authorization Act of 1995’’.

14 SEC. 3012. EXTENSION OF AUTHORITY.

15 (a) AUTHORIZATION OF APPROPRIATIONS.—Section

16 6 of the Communications Act of 1934 (47 U.S.C. 156)

17 is amended to read as follows:

18 ‘‘SEC. 6. AUTHORIZATION OF APPROPRIATIONS.

19 ‘‘There are authorized to be appropriated for the ad20 ministration of this Act by the Commission $186,000,000

21 for fiscal year 1996, together with such sums as may be

22 necessary for increases resulting from adjustments in sal23 ary, pay, retirement, other employee benefits required by

24 law, and other nondiscretionary costs, for fiscal year 1996.

25 Of the sum appropriated in each fiscal year under this
111

•HR 2491 RH

1 section, a portion, in an amount determined under sections

2 8(b) and 9(b), shall be derived from fees authorized by

3 sections 8 and 9.’’.

4 (b) TRAVEL AND REIMBURSEMENT PROGRAM.—Sec5 tion 4(g)(2) of the Communications Act of 1934 (47

6 U.S.C. 154(g)(2)) is amended to read as follows:

7 ‘‘(2) The Commission shall submit to the appropriate

8 committees of Congress, and publish in the Federal Reg9 ister, semiannual reports specifying the reimbursements

10 which the Commission has accepted under section 1353

11 of title 31, United States Code.’’.

12 (c) COMMUNICATIONS SUPPORT FROM OLDER AMER13 ICANS.—Section 6(a) of the Federal Communications

14 Commission Authorization Act of 1988 (47 U.S.C. 154

15 note) is amended by striking ‘‘fiscal years 1992 and 1993’’

16 and inserting ‘‘fiscal year 1996’’.

17 SEC. 3013. APPLICATION FEES.

18 (a) ADJUSTMENT OF APPLICATION FEE SCHED19 ULE.—Section 8(b) of the Communications Act of 1934

20 (47 U.S.C. 158(b)) is amended to read as follows:

21 ‘‘(b)(1) For fiscal year 1996 and each fiscal year

22 thereafter, the Commission shall, by regulation, modify

23 the application fees by proportionate increases or de24 creases so as to result in estimated total collections for

25 the fiscal year equal to—
112

•HR 2491 RH

1 ‘‘(A) $40,000,000; plus

2 ‘‘(B) an additional amount, specified in an ap3 propriation Act for the Commission for that fiscal

4 year to be collected and credited to such appropria5 tion, not to exceed the amount by which the nec6 essary expenses for the costs described in paragraph

7 (5) exceeds $40,000,000.

8 ‘‘(2) In making adjustments pursuant to this para9 graph the Commission may round such fees to the nearest

10 $5.00 in the case of fees under $100, or to the nearest

11 $20 in the case of fees of $100 or more. The Commission

12 shall transmit to the Congress notification of any adjust13 ment made pursuant to this paragraph immediately upon

14 the adoption of such adjustment.

15 ‘‘(3) The Commission is authorized to continue to col16 lect fees at the prior year’s rate until the effective date

17 of fee adjustments or amendments made pursuant to para18 graphs (1) and (4).

19 ‘‘(4) The Commission shall, by regulation, add, de20 lete, or reclassify services, categories, applications, or

21 other filings subject to application fees to reflect additions,

22 deletions, or changes in the nature of its services or au23 thorization of service processes as a consequence of Com24 mission rulemaking proceedings or changes in law.
113

•HR 2491 RH

1 ‘‘(5) Any modified fees established under paragraph

2 (4) shall be derived by determining the full-time equivalent

3 number of employees performing application activities, ad4 justed to take into account other expenses that are reason5 ably related to the cost of processing the application or

6 filing, including all executive and legal costs incurred by

7 the Commission in the discharge of these functions, and

8 other factors that the Commission determines are nec9 essary in the public interest. The Commission shall—

10 ‘‘(A) transmit to the Congress notification of

11 any proposed modification made pursuant to this

12 paragraph immediately upon adoption of such pro13 posal; and

14 ‘‘(B) transmit to the Congress notification of

15 any modification made pursuant to this paragraph

16 immediately upon adoption of such modification.

17 ‘‘(6) Increases or decreases in application fees made

18 pursuant to this subsection shall not be subject to judicial

19 review.’’.

20 (b) TREATMENT OF ADDITIONAL COLLECTIONS.—

21 Section 8(e) of such Act is amended to read as follows:

22 ‘‘(e) Of the moneys received from fees authorized

23 under this section—

24 ‘‘(1) $40,000,000 shall be deposited in the gen25 eral fund of the Treasury to reimburse the United
114

•HR 2491 RH

1 States for amounts appropriated for use by the

2 Commission in carrying out its functions under this

3 Act; and

4 ‘‘(2) the remainder shall be deposited as an off5 setting collection in, and credited to, the account

6 providing appropriations to carry out the functions

7 of the Commission.’’.

8 (c) SCHEDULE OF APPLICATION FEES FOR PCS.—

9 The schedule of application fees in section 8(g) of such

10 Act is amended by adding, at the end of the portion under

11 the heading ‘‘COMMON CARRIER SERVICES’’, the following

12 new item:

‘‘23. Personal communications services

‘‘a. Initial or new application ....................................................... 230.00

‘‘b. Amendment to pending application ....................................... 35.00

‘‘c. Application for assignment or transfer of control ................. 230.00

‘‘d. Application for renewal of license .......................................... 35.00

‘‘e. Request for special temporary authority ............................... 200.00

‘‘f. Notification of completion of construction ............................. 35.00

‘‘g. Request to combine service areas .......................................... 50.00’’.

13 (d) VANITY CALL SIGNS.—

14 (1) LIFETIME LICENSE FEES.—

15 (A) AMENDMENT.—The schedule of appli16 cation fees in section 8(g) of such Act is further

17 amended by adding, at the end of the portion

18 under the heading ‘‘PRIVATE RADIO SERVICES’’,

19 the following new item:

‘‘11. Amateur vanity call signs ........................................................ 150.00’’.

20 (B) TREATMENT OF RECEIPTS.—Moneys

21 received from fees established under the amend-
115

•HR 2491 RH

1 ment made by this subsection shall be deposited

2 as an offsetting collection in, and credited to,

3 the account providing appropriations to carry

4 out the functions of the Commission.

5 (2) TERMINATION OF ANNUAL REGULATORY

6 FEES.—The schedule of regulatory fees in section

7 9(g) of such Act (47 U.S.C. 159(g)) is amended by

8 striking the following item from the fees applicable

9 to the Private Radio Bureau:

‘‘Amateur vanity call-signs ................................................... 7’’.

10 SEC. 3014. REGULATORY FEES.

11 (a) EXECUTIVE AND LEGAL COSTS.—Section 9(a)(1)

12 of the Communications Act of 1934 (47 U.S.C. 159(a)(1))

13 is amended by inserting before the period at the end the

14 following: ‘‘, and all executive and legal costs incurred by

15 the Commission in the discharge of these functions’’.

16 (b) ESTABLISHMENT AND ADJUSTMENT.—Section

17 9(b) of such Act is amended—

18 (1) in paragraph (4)(B), by striking ‘‘90 days’’

19 and inserting ‘‘45 days’’; and

20 (2) by adding at the end the following new

21 paragraph:

22 ‘‘(5) EFFECTIVE DATE OF ADJUSTMENTS.—The

23 Commission is authorized to continue to collect fees

24 at the prior year’s rate until the effective date of fee
116

•HR 2491 RH

1 adjustments or amendments made pursuant to para2 graph (2) or (3).’’.

3 (c) REGULATORY FEES FOR SATELLITE TV OPER4 ATIONS.—The schedule of regulatory fees in section 9(g)

5 of such Act is amended, in the fees applicable to the Mass

6 Media Bureau, by inserting after each of the items per7 taining to construction permits in the fees applicable to

8 VHF commercial and UHF commercial TV the following

9 new item:

‘‘Terrestrial television satellite operations .................... 500’’.

10 (d) GOVERNMENTAL ENTITIES USE FOR COMMON

11 CARRIER PURPOSES.—Section 9(h) of such Act is amend12 ed by adding at the end the following new sentence: ‘‘The

13 exceptions provided by this subsection for governmental

14 entities shall not be applicable to any services that are pro15 vided on a commercial basis in competition with another

16 carrier.’’.

17 (e) INFORMATION REQUIRED IN CONNECTION WITH

18 ADJUSTMENT OF REGULATORY FEES.—Title I of such

19 Act is amended—

20 (1) in section 9, by striking subsection (i); and

21 (2) by inserting after section 9 the following

22 new section:
117

•HR 2491 RH

1 ‘‘SEC. 10. ACCOUNTING SYSTEM AND ADJUSTMENT INFOR2 MATION.

3 ‘‘(a) ACCOUNTING SYSTEM REQUIRED.—The Com4 mission shall develop accounting systems for the purposes

5 of making the adjustments authorized by sections 8 and

6 9. The Commission shall annually prepare and submit to

7 the Congress an analysis of such systems and shall annu8 ally afford interested persons the opportunity to submit

9 comments concerning the allocation of the costs of per10 forming the functions described in section 8(a)(5) and

11 9(a)(1) in making such adjustments in the schedules re12 quired by sections 8 and 9.

13 ‘‘(b) INFORMATION REQUIRED IN CONNECTION WITH

14 ADJUSTMENT OF APPLICATION AND REGULATORY

15 FEES.—

16 ‘‘(1) SCHEDULE OF REQUESTED AMOUNTS.—

17 No later than May 1 of each calendar year, the

18 Commission shall prepare and transmit to the Com19 mittees of Congress responsible for the Commis20 sion’s authorization and appropriations a detailed

21 schedule of the amounts requested by the Presi22 dent’s budget to be appropriated for the ensuing fis23 cal year for the activities described in sections

24 8(a)(5) and 9(a)(1), allocated by bureaus, divisions,

25 and offices of the Commission.
118

•HR 2491 RH

1 ‘‘(2) EXPLANATORY STATEMENT.—If the Com2 mission anticipates increases in the application fees

3 or regulatory fees applicable to any applicant, li4 censee, or unit subject to payment of fees, the Com5 mission shall submit to the Congress by May 1 of

6 such calendar year a statement explaining the rela7 tionship between any such increases and either (A)

8 increases in the amounts requested to be appro9 priated for Commission activities in connection with

10 such applicants, licensees, or units subject to pay11 ment of fees, or (B) additional activities to be per12 formed with respect to such applicants, licensees, or

13 units.

14 ‘‘(3) DEFINITION.—For purposes of this sub15 section, the term ‘amount requested by the Presi16 dent’s budget’ shall include any adjustments to such

17 requests that are made by May 1 of such calendar

18 year. If any such adjustment is made after May 1,

19 the Commission shall provide such Committees with

20 updated schedules and statements containing the in21 formation required by this subsection within 10 days

22 after the date of any such adjustment.’’.

23 SEC. 3015. INSPECTION OF SHIP RADIO STATIONS.

24 (a) AUTHORITY TO DESIGNATE ENTITIES TO IN25 SPECT.—Section 4(f)(3) of the Communications Act of
119

•HR 2491 RH

1 1934 (47 U.S.C. 154(f)(3)) is amended by inserting before

2 the period at the end the following: ‘‘: And provided fur3 ther, That, in the alternative, an entity designated by the

4 Commission may make the inspections referred to in this

5 paragraph’’.

6 (b) CONDUCT OF INSPECTIONS.—Section 362(b) of

7 such Act (47 U.S.C. 362(b)) is amended to read as

8 follows:

9 ‘‘(b) Every ship of the United States that is subject

10 to this part shall have the equipment and apparatus pre11 scribed therein inspected at least once each year by the

12 Commission or an entity designated by the Commission.

13 If, after such inspection, the Commission is satisfied that

14 all relevant provisions of this Act and the station license

15 have been complied with, the fact shall be certified to on

16 the station license by the Commission. The Commission

17 shall make such additional inspections at frequent inter18 vals as the Commission determines may be necessary to

19 ensure compliance with the requirements of this Act. The

20 Commission may, upon a finding that the public interest

21 could be served thereby—

22 ‘‘(1) waive the annual inspection required under

23 this section for a period of up to 90 days for the sole

24 purpose of enabling a vessel to complete its voyage
120

•HR 2491 RH

1 and proceed to a port in the United States where an

2 inspection can be held; or

3 ‘‘(2) waive the annual inspection required under

4 this section for a vessel that is in compliance with

5 the radio provisions of the Safety Convention and

6 that is operating solely in waters beyond the juris7 diction of the United States, provided that such in8 spection shall be performed within 30 days of such

9 vessel’s return to the United States.’’.

10 (c) INSPECTION BY OTHER ENTITIES.—Section 385

11 of such Act (47 U.S.C. 385) is amended by inserting ‘‘or

12 an entity designated by the Commission’’ after ‘‘The Com13 mission’’.

14 SEC. 3016. EXPEDITED ITFS PROCESSING.

15 Section 5(c)(1) of the Communications Act of 1934

16 (47 U.S.C. 155(c)(1)) is amended by striking the last sen17 tence and inserting the following: ‘‘Except for cases involv18 ing the authorization of service in the Instructional Tele19 vision Fixed Service, or as otherwise provided in this Act,

20 nothing in this paragraph shall authorize the Commission

21 to provide for the conduct, by any person or persons other

22 than persons referred to in paragraph (2) or (3) of section

23 556(b) of title 5, United States Code, of any hearing to

24 which such section applies.’’.
121

•HR 2491 RH

1 SEC. 3017. TARIFF REJECTION AUTHORITY.

2 Section 203(d) of the Communications Act of 1934

3 (47 U.S.C. 203(d)) is amended by inserting after the first

4 sentence the following new sentences: ‘‘The Commission

5 may, after affording interested parties an opportunity to

6 comment, reject a proposed tariff filing in whole or in

7 part, if the filing or any part thereof is patently unlawful.

8 In evaluating whether a proposed tariff filing is patently

9 unlawful, the Commission may consider additional infor10 mation filed by the carrier or any interested party and

11 shall presume the facts alleged by the carrier to be true.’’.

12 SEC. 3018. REFUND AUTHORITY.

13 Title II of the Communications Act of 1934 (47

14 U.S.C. 201 et seq.) is amended by adding at the end there15 of the following new section:

16 ‘‘SEC. 230. REFUND AUTHORITY.

17 ‘‘In addition to any other provision of this Act under

18 which the Commission may order refunds, the Commission

19 may require by order the refund of such portion of any

20 charge by any carrier or carriers as results from a viola21 tion of section 220 (a), (b), or (d) or 221 (c) or (d) or

22 of any of the rules promulgated pursuant to such sections

23 or pursuant to section 215, 218, or 219. Such refunds

24 shall be ordered only to the extent that the Commission

25 or a court finds that such violation resulted in unlawful

26 charges and shall be made to such persons or classes of
122

•HR 2491 RH

1 persons as the Commission determines reasonably rep2 resent the persons from whom amounts were improperly

3 received by reason of such violation. No refunds shall be

4 required under this section unless—

5 ‘‘(1) the Commission issues an order advising

6 the carrier of its potential refund liability and pro7 vides the carrier with an opportunity to file written

8 comments as to why refunds should not be required;

9 and

10 ‘‘(2) such order is issued not later than 5 years

11 after the date the charge was paid.

12 In the case of a continuing violation, a violation shall be

13 considered to occur on each date that the violation is re14 peated.’’.

15 SEC. 3019. LICENSING OF AVIATION AND MARITIME SERV16 ICES BY RULE.

17 Section 307(e) of the Communications Act of 1934

18 (47 U.S.C. 307(e)) is amended to read as follows:

19 ‘‘(e)(1) Notwithstanding any license requirement es20 tablished in this Act, if the Commission determines that

21 such authorization serves the public interest, convenience,

22 and necessity, the Commission may by rule authorize the

23 operation of radio stations without individual licenses in

24 the following radio services: (A) the aviation radio service

25 for aircraft stations operated on domestic flights when
123

•HR 2491 RH

1 such aircraft are not otherwise required to carry a radio

2 station; and (B) the maritime radio service for ship sta3 tions navigated on domestic voyages when such ships are

4 not otherwise required to carry a radio station.

5 ‘‘(2) Any radio station operator who is authorized by

6 the Commission to operate without an individual license

7 shall comply with all other provisions of this Act and with

8 rules prescribed by the Commission under this Act.

9 ‘‘(3) For purposes of this subsection, the terms ‘air10 craft station’ and ‘ship station’ shall have the meanings

11 given them by the Commission by rule.’’.

12 SEC. 3020. AUCTION TECHNICAL AMENDMENTS.

13 (a) FUNDING AVAILABILITY.—Section 309(j)(8)(B)

14 of the Communications Act of 1934 (47 U.S.C.

15 309(j)(8)(B)) is amended by adding at the end the follow16 ing new sentence: ‘‘Such offsetting collections are author17 ized to remain available until expended.’’.

18 (b) ESCROW OF DEPOSITS.—Section 309(j)(8) of

19 such Act is further amended by adding at the end the fol20 lowing new subparagraph:

21 ‘‘(C) ESCROW OF DEPOSIT.—The Commis22 sion is authorized, based on the competitive bid23 ding methodology selected, to provide for the

24 deposit of moneys for bids in an interest-bear25 ing account until such time as the Commission
124

•HR 2491 RH

1 accepts a deposit from the high bidder. All in2 terest earned on bid moneys received from the

3 winning bidder shall be deposited into the gen4 eral fund of the Treasury. All interest earned

5 on bid moneys deposited from unsuccessful bid6 ders, less any applicable fees and penalties,

7 shall be paid to those bidders.’’.

8 SEC. 3021. FORFEITURES FOR VIOLATIONS IMPERILING

9 SAFETY OF LIFE.

10 (a) ADMINISTRATIVE SANCTIONS.—Section 312(a) of

11 the Communications Act of 1934 (47 U.S.C. 312(a)) is

12 amended—

13 (1) by striking ‘‘or’’ at the end of paragraph

14 (6);

15 (2) by striking the period at the end of para16 graph (7) and inserting ‘‘; or’’; and

17 (3) by adding at the end the following new

18 paragraph:

19 ‘‘(8) for failure to comply with any requirement

20 of this Act or the Commission’s rules that imperils

21 the safety of life.’’.

22 (b) FORFEITURES.—Section 503(b)(1) of such Act

23 (47 U.S.C. 503(b)(1)) is amended—

24 (1) by striking ‘‘or’’ at the end of subparagraph

25 (C);
125

•HR 2491 RH

1 (2) by striking the semicolon at the end of sub2 paragraph (D) and inserting ‘‘; or’’; and

3 (3) by adding after subparagraph (D) the fol4 lowing new subparagraph:

5 ‘‘(E) failed to comply with any requirement of

6 this Act or the Commission’s rules that imperils the

7 safety of life;’’.

8 SEC. 3022. USE OF EXPERTS AND CONSULTANTS.

9 Section 4(f)(1) of the Communications Act of 1934

10 (47 U.S.C. 154) is amended by adding at the end thereof

11 the following: ‘‘The Commission may also procure the

12 services of experts and consultants in accordance with sec13 tion 3109 of title 5, United States Code, relating to ap14 pointments in the Federal Service, at rates of compensa15 tion for individuals not to exceed the daily rate equivalent

16 to the maximum rate payable for senior-level positions

17 under section 5276 of title 5, United States Code.’’.

18 SEC. 3023. STATUTE OF LIMITATIONS FOR FORFEITURE

19 PROCEEDINGS AGAINST COMMON CARRIERS.

20 Section 503(b)(6) of the Communications Act of

21 1934 (47 U.S.C. 503(b)(6)) is amended—

22 (1) by striking ‘‘or’’ at the end of subparagraph

23 (A);

24 (2) by inserting ‘‘and is not a common carrier’’

25 after ‘‘title III of this Act’’ in subparagraph (B);
126

•HR 2491 RH

1 (3) by redesignating subparagraph (B) as sub2 paragraph (C); and

3 (4) by inserting after subparagraph (A) the fol4 lowing new subparagraph:

5 ‘‘(B) such person is a common carrier and the

6 required notice of apparent liability is issued more

7 than 5 years after the date the violation charged oc8 curred; or’’.

9 SEC. 3024. UTILIZATION OF FM BAND FOR ASSISTIVE DE10 VICES FOR HEARING IMPAIRED INDIVID11 UALS.

12 Within 6 months after the date of enactment of this

13 Act, the Federal Communications Commission shall report

14 to the Congress on the existing and future use of the FM

15 band to facilitate the use of auditory assistive devices for

16 individuals with hearing impairments. In preparing such

17 report, the Commission shall consider—

18 (1) the potential for utilizing FM band auditory

19 assistive devices to comply with the American with

20 Disabilities Act;

21 (2) the impact on such compliance of the vul22 nerability of such devices to harmful interference

23 from radio licensees; and

24 (3) alternative frequency allocations that could

25 facilitate such compliance.
127

•HR 2491 RH

1 SEC. 3025. TECHNICAL AMENDMENT.

2 Section 302(d)(1) of the Communications Act of

3 1934 (47 U.S.C. 309(d)(1)) is amended—

4 (1) in subparagraph (A), by striking ‘‘allocated

5 to the domestic cellular radio telecommunications

6 service’’ and inserting ‘‘utilized to provide commer7 cial mobile service (as defined in section 332(d))’’;

8 and

9 (2) in subparagraph (C), by striking ‘‘cellular’’

10 and inserting ‘‘commercial mobile service’’.

11 Subtitle B—Nuclear Regulatory

12 Commission Annual Charge

13 SEC. 3031. NUCLEAR REGULATORY COMMISSION ANNUAL

14 CHARGES.

15 Section 6101(a)(3) of the Omnibus Budget Reconcili16 ation Act of 1990 (42 U.S.C. 2214(a)(3)) is amended by

17 striking ‘‘September 30, 1998’’ and inserting ‘‘September

18 30, 2002’’.

19 Subtitle C—United States

20 Enrichment Corporation

21 SEC. 3035. SHORT TITLE AND REFERENCE.

22 (a) SHORT TITLE.—This subtitle may be cited as the

23 ‘‘USEC Privatization Act’’.

24 (b) REFERENCE.—Except as otherwise expressly pro25 vided, whenever in this subtitle an amendment or repeal

26 is expressed in terms of an amendment to, or repeal of,
128

•HR 2491 RH

1 a section or other provision, the reference shall be consid2 ered to be made to a section or other provision of the

3 Atomic Energy Act of 1954 (42 U.S.C. 2011 et seq.).

4 SEC. 3036. PRODUCTION FACILITY.

5 Paragraph v. of section 11 (42 U.S.C. 2014 v.) is

6 amended by striking ‘‘or the construction and operation

7 of a uranium enrichment production facility using Atomic

8 Vapor Laser Isotope Separation technology’’.

9 SEC. 3037. DEFINITIONS.

10 Section 1201 (42 U.S.C. 2297) is amended—

11 (1) in paragraph (4), by inserting before the pe12 riod the following: ‘‘and any successor corporation

13 established through privatization of the Corpora14 tion’’;

15 (2) by redesignating paragraphs (10) through

16 (13) as paragraphs (14) through (17), respectively,

17 and by inserting after paragraph (9) the following

18 new paragraphs:

19 ‘‘(10) The term ‘low-level radioactive waste’ has

20 the meaning given such term in section 102(9) of

21 the Low-Level Radioactive Waste Policy Amend22 ments Act of 1985 (42 U.S.C. 2021b(9)).

23 ‘‘(11) The term ‘mixed waste’ has the meaning

24 given such term in section 1004(41) of the Solid

25 Waste Disposal Act (42 U.S.C. 6903(41)).
129

•HR 2491 RH

1 ‘‘(12) The term ‘privatization’ means the trans2 fer of ownership of the Corporation to private inves3 tors pursuant to chapter 25.

4 ‘‘(13) The term ‘privatization date’ means the

5 date on which 100 percent of ownership of the Cor6 poration has been transferred to private investors.’’;

7 (3) by inserting after paragraph (17) (as redes8 ignated) the following new paragraph:

9 ‘‘(18) The term ‘transition date’ means July 1,

10 1993.’’;

11 (4) by redesignating the unredesignated para12 graph (14) as paragraph (19); and

13 (5) by adding the following new paragraphs

14 after paragraph (19):

15 ‘‘(20) The term ‘gaseous diffusion plants’

16 means the Paducah Gaseous Diffusion Plant at Pa17 ducah, Kentucky and the Portsmouth Gaseous Dif18 fusion Plant at Piketon, Ohio.

19 ‘‘(21) The term ‘private corporation’ means the

20 corporation established under section 1503.

21 ‘‘(22) The term ‘Russian HEU agreement’

22 means the Agreement Between the Government of

23 the United States of America and the Government

24 of the Russian Federation Concerning the Disposi-
130

•HR 2491 RH

1 tion of Highly Enriched Uranium Extracted from

2 Nuclear Weapons, dated February 18, 1993.

3 ‘‘(23) The term ‘Suspension Agreement’ means

4 the Agreement to Suspend the Antidumping Inves5 tigation on Uranium from the Russian Federation,

6 as amended.’’.

7 SEC. 3038. EMPLOYEES OF THE CORPORATION.

8 (a) PARAGRAPHS (1) AND (2).—Section 1305(e) (42

9 U.S.C. 2297b–4(e)) is amended by striking paragraphs

10 (1) and (2) and inserting in thereof the following:

11 ‘‘(1) IN GENERAL.—

12 ‘‘(A) Privatization shall not diminish the

13 accrued, vested pension benefits of employees of

14 the Corporation’s operating contractor at the

15 two gaseous diffusion plants.

16 ‘‘(B) In the event that the private corpora17 tion terminates or changes the contractor at ei18 ther or both of the gaseous diffusion plants, the

19 plan sponsor or other appropriate fiduciary of

20 the pension plan covering employees of the

21 prior operating contractor shall arrange for the

22 transfer of all plan assets and liabilities relating

23 to accrued pension benefits of such plan’s par24 ticipants and beneficiaries from such plan to a
131

•HR 2491 RH

1 pension plan sponsored by the new contractor

2 or the private corporation, as the case may be.

3 ‘‘(C) Any employer (including the private

4 corporation or any contractor of the private cor5 poration) at a gaseous diffusion plant shall

6 abide by the terms of any unexpired collective

7 bargaining agreement covering employees in

8 bargaining units at the plant and in effect on

9 the privatization date until the expiration of the

10 agreement.

11 ‘‘(D) In the event of a plant closing or

12 mass layoff (as such terms are defined in sec13 tion 2101(a)(2) and (3) of title 29, United

14 States Code) at either of the gaseous diffusion

15 plants, the Secretary of Energy shall treat such

16 plant as a Department of Energy defense nu17 clear facility and any person employed by an

18 operating contractor on the privatization date

19 at either plant as a Department of Energy em20 ployee for purposes of sections 3161 through

21 3163 of the National Defense Authorization Act

22 for Fiscal Year 1993 (42 U.S.C. 7274h–7274j).

23 ‘‘(E) The Department of Energy and the

24 private corporation shall continue to fund post25 retirement health benefits for persons employed
132

•HR 2491 RH

1 by an operating contractor at either of the gas2 eous diffusion plants at substantially the same

3 level of coverage as eligible retirees are entitled

4 to receive on the privatization date, consistent

5 with clauses (i) through (iii), except that the

6 Department of Energy, the private corporations

7 and the operating contractor shall have the

8 right to implement cost-saving measures, in9 cluding (but not limited to) preferred provider

10 organizations, managed care programs, manda11 tory second opinions before surgery or other

12 medical procedures, and mandatory use of ge13 neric drugs, that do not materially diminish the

14 overall quality of the medical care provided—

15 ‘‘(i) persons eligible for this coverage

16 shall be limited to persons who retired

17 from active employment at one of the gase18 ous diffusion plants as of the privatization

19 date, as vested participants in a pension

20 plan maintained either by the Corpora21 tion’s operating contractor or by a contrac22 tor employed prior to July 1, 1993, by the

23 Department of Energy to operate either of

24 the gaseous diffusion plants and persons

25 who, as of the privatization date, are em-
133

•HR 2491 RH

1 ployed by the Corporation’s operating con2 tractor and are vested participants in a

3 pension plan maintained either by the Cor4 poration’s operating contractor or by a

5 contractor employed prior to July 1, 1993,

6 by the Department of Energy to operate

7 either of the gaseous diffusion plants;

8 ‘‘(ii) for persons who retired from em9 ployment with an operating contractor

10 prior to July 1, 1993, the Department of

11 Energy shall fund the entire cost of post12 retirement health benefits; and

13 ‘‘(iii) for persons who retire from em14 ployment with an operating contractor

15 after July 1, 1993, the Department of En16 ergy and the private corporation shall fund

17 the cost of postretirement health benefits

18 in proportion to the retired persons’ years

19 and months of service at a gaseous diffu20 sion plant under their respective manage21 ment.’’.

22 (b) PARAGRAPH (4).—Paragraph (4) of section

23 1305(e) (42 U.S.C. 2297b–4(e)(4)) is amended—

24 (1) by striking ‘‘AND DETAILEES’’ in the head25 ing;
134

•HR 2491 RH

1 (2) by striking the first sentence;

2 (3) in the second sentence, by inserting ‘‘from

3 other Federal employment’’ after ‘‘transfer to the

4 Corporation’’; and

5 (4) by striking the last sentence.

6 SEC. 3039. MARKETING AND CONTRACTING AUTHORITY.

7 (a) MARKETING AUTHORITY.—Section 1401(a) (42

8 U.S.C. 2297c(a)) is amended effective on the privatization

9 date (as defined in section 1201(13) of the Atomic Energy

10 Act of 1954)—

11 (1) by amending the subsection heading to read

12 ‘‘MARKETING AUTHORITY.—’’; and

13 (2) by striking the first sentence.

14 (b) TRANSFER OF CONTRACTS.—Section 1401(b) (42

15 U.S.C. 2297c(b)) is amended—

16 (1) in paragraph (2)(B), by adding at the end

17 the following: ‘‘The privatization of the Corporation

18 shall not affect the terms of, or the rights or obliga19 tions of the parties to, any such power purchase con20 tract.’’; and

21 (2) by adding at the end the following:

22 ‘‘(3) EFFECT OF TRANSFER.—

23 ‘‘(A) As a result of the transfer pursuant

24 to paragraph (1), all rights, privileges, and ben25 efits under such contracts, agreements, and
135

•HR 2491 RH

1 leases, including the right to amend, modify, ex2 tend, revise, or terminate any of such contracts,

3 agreements, or leases were irrevocably assigned

4 to the Corporation for its exclusive benefit.

5 ‘‘(B) Notwithstanding the transfer pursu6 ant to paragraph (1), the United States shall

7 remain obligated to the parties to the contracts,

8 agreements, and leases transferred pursuant to

9 paragraph (1) for the performance of the obli10 gations of the United States thereunder during

11 the term thereof. The Corporation shall reim12 burse the United States for any amount paid by

13 the United States in respect of such obligations

14 arising after the privatization date to the extent

15 such amount is a legal and valid obligation of

16 the Corporation then due.

17 ‘‘(C) After the privatization date, upon any

18 material amendment, modification, extension,

19 revision, replacement, or termination of any

20 contract, agreement, or lease transferred under

21 paragraph (1), the United States shall be re22 leased from further obligation under such con23 tract, agreement, or lease, except that such ac24 tion shall not release the United States from
136

•HR 2491 RH

1 obligations arising under such contract, agree2 ment, or lease prior to such time.’’.

3 (c) PRICING.—Section 1402 (42 U.S.C. 2297c–1) is

4 amended to read as follows:

5 ‘‘SEC. 1402. PRICING.

6 ‘‘The Corporation shall establish prices for its prod7 ucts, materials, and services provided to customers on a

8 basis that will allow it to attain the normal business objec9 tives of a profitmaking corporation.’’.

10 (d) LEASING OF GASEOUS DIFFUSION FACILITIES OF

11 DEPARTMENT.—Effective on the privatization date (as de12 fined in section 1201(13) of the Atomic Energy Act of

13 1954), section 1403 (42 U.S.C. 2297c–2) is amended by

14 adding at the end the following:

15 ‘‘(h) LOW-LEVEL RADIOACTIVE WASTE AND MIXED

16 WASTE.—

17 ‘‘(1) RESPONSIBILITY OF THE DEPARTMENT;

18 COSTS.—

19 ‘‘(A) With respect to low-level radioactive

20 waste and mixed waste generated by the Cor21 poration as a result of the operation of the fa22 cilities and related property leased by the Cor23 poration pursuant to subsection (a) or as a re24 sult of treatment of such wastes at a location

25 other than the facilities and related property
137

•HR 2491 RH

1 leased by the Corporation pursuant to sub2 section (a) the Department, at the request of

3 the Corporation, shall—

4 ‘‘(i) accept for treatment or disposal

5 of all such wastes for which treatment or

6 disposal technologies and capacities exist,

7 whether within the Department or else8 where; and

9 ‘‘(ii) accept for storage (or ultimately

10 treatment or disposal) all such wastes for

11 which treatment and disposal technologies

12 or capacities do not exist, pending develop13 ment of such technologies or availability of

14 such capacities for such wastes.

15 ‘‘(B) All low-level wastes and mixed wastes

16 that the Department accepts for treatment,

17 storage, or disposal pursuant to subparagraph

18 (A) shall, for the purpose of any permits, li19 censes, authorizations, agreements, or orders

20 involving the Department and other Federal

21 agencies or State or local governments, be

22 deemed to be generated by the Department and

23 the Department shall handle such wastes in ac24 cordance with any such permits, licenses, au25 thorizations, agreements, or orders. The De-
138

•HR 2491 RH

1 partment shall obtain any additional permits, li2 censes, or authorizations necessary to handle

3 such wastes, shall amend any such agreements

4 or orders as necessary to handle such wastes,

5 and shall handle such wastes in accordance

6 therewith.

7 ‘‘(C) The Corporation shall reimburse the

8 Department for the treatment, storage, or dis9 posal of low-level radioactive waste or mixed

10 waste pursuant to subparagraph (A) in an

11 amount equal to the Department’s costs but in

12 no event greater than an amount equal to that

13 which would be charged by commercial, State,

14 regional, or interstate compact entities for

15 treatment, storage, or disposal of such waste.

16 ‘‘(2) AGREEMENTS WITH OTHER PERSONS.—

17 The Corporation may also enter into agreements for

18 the treatment, storage, or disposal of low-level radio19 active waste and mixed waste generated by the Cor20 poration as a result of the operation of the facilities

21 and related property leased by the Corporation pur22 suant to subsection (a) with any person other than

23 the Department that is authorized by applicable laws

24 and regulations to treat, store, or dispose of such

25 wastes.’’.
139

•HR 2491 RH

1 (e) LIABILITIES.—

2 (1) Subsection (a) of section 1406 (42 U.S.C.

3 2297c–5(a)) is amended—

4 (A) by inserting ‘‘AND PRIVATIZATION’’

5 after ‘‘TRANSITION’’ in the heading; and

6 (B) by adding at the end the following:

7 ‘‘As of the privatization date, all liabilities at8 tributable to the operation of the Corporation

9 from the transition date to the privatization

10 date shall be direct liabilities of the United

11 States.’’.

12 (2) Subsection (b) of section 1406 (42 U.S.C.

13 2297c–5(b)) is amended—

14 (A) by inserting ‘‘AND PRIVATIZATION’’

15 after ‘‘TRANSITION’’ in the heading; and

16 (B) by adding at the end the following:

17 ‘‘As of the privatization date, any judgment en18 tered against the Corporation imposing liability

19 arising out of the operation of the Corporation

20 from the transition date to the privatization

21 date shall be considered a judgment against the

22 United States.’’.

23 (3) Subsection (d) of section 1406 (42 U.S.C.

24 2297c–5(d)) is amended—
140

•HR 2491 RH

1 (A) by inserting ‘‘AND PRIVATIZATION’’

2 after ‘‘TRANSITION’’ in the heading; and

3 (B) by striking ‘‘the transition date’’ and

4 inserting ‘‘the privatization date (or, in the

5 event the privatization date does not occur, the

6 transition date)’’.

7 (f) TRANSFER OF URANIUM.—

8 (1) AMENDMENT.—Title II (42 U.S.C. 2297 et

9 seq.) is amended by redesignating section 1408 as

10 section 1409 and by inserting after section 1407 the

11 following:

12 ‘‘SEC. 1408. URANIUM TRANSFERS AND SALES.

13 ‘‘(a) TRANSFERS AND SALES BY THE SECRETARY.—

14 The Secretary shall not provide enrichment services or

15 transfer or sell any uranium (including natural or enriched

16 uranium in any form) to any person except as provided

17 in this section.

18 ‘‘(b) RUSSIAN HEU.—

19 (1) TRANFERS.—Prior to December 31, 1996,

20 the United States Executive Agent under the Rus21 sian HEU Agreement shall transfer to the Secretary

22 without charge an amount of uranium hexafluoride

23 equivalent to the natural uranium component of low24 enriched uranium derived from at least 18 metric

25 tons of highly enriched uranium purchased from the
141

•HR 2491 RH

1 Russian Executive Agent under the Russian HEU

2 Agreement. The quantity of such uranium

3 hexafluoride delivered to the Secretary shall be

4 based on a tails assay of 0.30 U235. Title to ura5 nium hexafluoride delivered to the Secretary pursu6 ant to this paragraph shall transfer to the Secretary

7 upon delivery of such material to the Secretary. Ura8 nium hexafluoride delivered to the Secretary pursu9 ant to this paragraph shall be deemed to be of Rus10 sian origin.

11 ‘‘(2) CONTRACTS.—Within 7 years of the date

12 of enactment of the USEC Privatization Act, the

13 Secretary shall enter into contracts to sell the ura14 nium hexafluoride transferred to the Secretary pur15 suant to paragraph (1). Such uranium hexafluoride

16 shall be sold—

17 ‘‘(A) at any time for use in the United

18 States for the purpose of overfeeding;

19 ‘‘(B) at any time for use outside the Unit20 ed States; and

21 ‘‘(C) for consumption by end users in the

22 United States not prior to January 1, 2002, in

23 volumes not to exceed 3 million pounds U3O8

24 equivalent per year.
142

•HR 2491 RH

1 ‘‘(3) URANIUM HEXAFLUORIDE.—With respect

2 to all low-enriched uranium that is delivered to the

3 United States Executive Agent under the Russian

4 HEU Agreement after January 1, 1997, the United

5 States Executive Agent shall, upon request of the

6 Russian Executive Agent, deliver to the Russian Ex7 ecutive Agent an amount of uranium hexafluoride

8 equivalent to the natural uranium component of

9 such low-enriched uranium simultaneously with the

10 delivery of such low-enriched uranium. The quantity

11 of such uranium hexafluoride delivered to the Rus12 sian Executive Agent shall be based on a tails assay

13 of 0.30 U235. Title to uranium hexafluoride deliv14 ered to the Russian Executive Agent pursuant to

15 this paragraph shall transfer to the Russian Execu16 tive Agent upon delivery of such material to the

17 Russian Executive Agent at a North American facil18 ity designated by the Russian Executive Agent. Ura19 nium hexafluoride delivered to the Russian Execu20 tive Agent pursuant to this paragraph shall be

21 deemed to be of Russian origin. Such uranium

22 hexafluoride may be sold to any person or entity

23 consistent with the limitations on delivery to end

24 users set forth in this subsection. Nothing in this
143

•HR 2491 RH

1 subsection shall restrict the sale of the conversion

2 component of such uranium hexafluoride.

3 ‘‘(4) INDEPENDENT PARTY.—In the event that

4 the Russian Executive Agent does not request deliv5 ery of the natural uranium component of any low6 enriched uranium, as contemplated in paragraph (3),

7 within 90 days of the date such low-enriched ura8 nium is delivered to the United States Executive

9 Agent, then the United States Executive Agent shall

10 engage an independent party through a competitive

11 selection process to auction an amount of uranium

12 hexafluoride equivalent to the natural uranium com13 ponent of such low-enriched uranium. Such inde14 pendent party shall sell such uranium hexafluoride

15 to any person or entity consistent with the limita16 tions set forth in this subsection. The independent

17 entity shall pay to the Russian Executive Agent the

18 proceeds of any such auction less all transaction and

19 other administrative costs. The quantity of such ura20 nium hexafluoride auctioned shall be based on a tails

21 assay of 0.30 U235. Title to uranium hexafluoride

22 auctioned pursuant to this paragraph shall transfer

23 to the buyer of such material upon delivery of such

24 material to the buyer. Uranium hexafluoride auc-
144

•HR 2491 RH

1 tioned pursuant to this paragraph shall be deemed

2 to be of Russian origin.

3 ‘‘(5) CONSUMPTION.—Except as provided in

4 paragraphs (6) and (7), uranium hexafluoride deliv5 ered to the Secretary under paragraph (1) or the

6 Russian Executive Agent under paragraph (3) or

7 auctioned pursuant to paragraph (4), may not be de8 livered for consumption by end users in the United

9 States prior to January 1, 1998 and thereafter only

10 in accordance with the following schedule:

Annual Maximum Deliveries

to End Users

‘‘Year (millions lbs. U3O8 equivalent)

1998 ............................................... 2 million lbs. U3O8 equivalent

1999 ............................................... 4 million lbs. U3O8 equivalent

2000 ............................................... 6 million lbs. U3O8 equivalent

2001 ............................................... 8 million lbs. U3O8 equivalent

2002 ............................................... 10 million lbs. U3O8 equivalent

2003 ............................................... 12 million lbs. U3O8 equivalent

2004 ............................................... 14 million lbs. U3O8 equivalent

2005 and each year thereafter ...... 16 million lbs. U3O8 equivalent

11 ‘‘(6) MATCHED SALES.—Uranium hexafluoride

12 delivered to the Secretary under paragraph (1) or

13 the Russian Executive Agent under paragraph (3) or

14 auctioned pursuant to paragraph (4) may be sold at

15 any time as Russian-origin natural uranium in a

16 sale with an equal portion of U.S.-origin natural

17 uranium pursuant to the Suspension Agreement and

18 in such case shall not be counted against the annual

19 maximum deliveries set forth in paragraph (5).
145

•HR 2491 RH

1 ‘‘(7) OVERFEEDING.—Uranium hexafluoride de2 livered to the Secretary under paragraph (1) or the

3 Russian Executive Agent under paragraph (3) or

4 auctioned pursuant to paragraph (4) may be sold at

5 any time for use in the United States for the pur6 pose of overfeeding in the operations of enrichment

7 facilities.

8 ‘‘(c) TRANSFERS TO THE CORPORATION.—(1) Before

9 the privatization date, the Secretary may transfer to the

10 Corporation without charge the low enriched uranium

11 from up to 50 metric tons of highly enriched uranium and

12 up to 7,000 metric tons of natural uranium, subject to

13 the restrictions in subsection (b)(2).

14 ‘‘(2) The Corporation (or its successor) may not de15 liver for commercial end use—

16 ‘‘(A) any of the natural uranium transferred

17 under this subsection before January 1, 1998;

18 ‘‘(B) more than 10 percent of the natural ura19 nium (by uranium hexafluoride equivalent content)

20 transferred under this subsection or more than 4

21 million pounds, whichever is less, in any calendar

22 year after 1997; or

23 ‘‘(C) more than 800,000 separative work units

24 of low-enriched uranium transferred under this sub25 section in any calendar year.
146

•HR 2491 RH

1 ‘‘(d) INVENTORY SALES.—(1) In addition to the

2 transfers authorized under subsection (b), the Secretary

3 may, from time to time, sell natural and low-enriched ura4 nium (including low-enriched uranium derived from highly

5 enriched uranium) from the Department of Energy s

6 stockpile.

7 ‘‘(2) Except as provided in subsections (b) and (d),

8 no sale or transfer of natural or low-enriched uranium

9 shall be made unless—

10 ‘‘(A) the President determines that the material

11 is not necessary to national security needs,

12 ‘‘(B) the Secretary determines that the sale of

13 the material will not have an adverse impact on the

14 domestic uranium mining and enrichment industries,

15 taking into account the sales of uranium under the

16 Russian HEU Agreement and the Suspension Agree17 ment, and

18 ‘‘(C) the price paid to the Secretary will not be

19 less than the fair market value of the material.

20 ‘‘(e) GOVERNMENT TRANSFERS.—Notwithstanding

21 subsection (c), the Secretary may transfer or sell low-en22 riched uranium—

23 ‘‘(1) to a federal agency if the material is trans24 ferred for the use of the receiving agency without
147

•HR 2491 RH

1 any resale or transfer to another entity and the ma2 terial does not meet commercial specifications;

3 ‘‘(2) to any person for national security pur4 poses, as determined by the Secretary; or

5 ‘‘(3) to any state or local agency or nonprofit,

6 charitable, or educational institution for use other

7 than the generation of electricity for commercial

8 use.’’.

9 (2) CONFORMING AMENDMENT.—The table of

10 contents for chapter 24 is amended by redesignating

11 the item relating to section 1408 as the item relat12 ing to section 1409 and by inserting after the item

13 for section 1407 the following:

‘‘Sec. 1408. Uranium transfers and sales.’’.

14 SEC. 3040. PRIVATIZATION OF THE CORPORATION.

15 (a) ESTABLISHMENT OF PRIVATE CORPORATION.—

16 Chapter 25 (42 U.S.C. 2297d et seq.) is amended by add17 ing at the end the following new section:

18 ‘‘SEC. 1503. ESTABLISHMENT OF PRIVATE CORPORATION.

19 ‘‘(a) ESTABLISHMENT.—

20 ‘‘(1) IN GENERAL.—In order to facilitate pri21 vatization, the Corporation may provide for the es22 tablishment of a private corporation organized under

23 the laws of any of the several States. Such corpora24 tion shall have among its purposes the following:
148

•HR 2491 RH

1 ‘‘(A) To help maintain a reliable and eco2 nomical domestic source of uranium enrichment

3 services.

4 ‘‘(B) To undertake any and all activities as

5 provided in its corporate charter.

6 ‘‘(2) AUTHORITIES.—The corporation estab7 lished pursuant to paragraph (1) shall be authorized

8 to—

9 ‘‘(A) enrich uranium, provide for uranium

10 to be enriched by others, or acquire enriched

11 uranium (including low-enriched uranium de12 rived from highly enriched uranium);

13 ‘‘(B) conduct, or provide for conducting,

14 those research and development activities relat15 ed to uranium enrichment and related processes

16 and activities the corporation considers nec17 essary or advisable to maintain itself as a com18 mercial enterprise operating on a profitable and

19 efficient basis;

20 ‘‘(C) enter into transactions regarding ura21 nium, enriched uranium, or depleted uranium

22 with—

23 ‘‘(i) persons licensed under section 53,

24 63, 103, or 104 in accordance with the li25 censes held by those persons;
149

•HR 2491 RH

1 ‘‘(ii) persons in accordance with, and

2 within the period of, an agreement for co3 operation arranged under section 123; or

4 ‘‘(iii) persons otherwise authorized by

5 law to enter into such transactions;

6 ‘‘(D) enter into contracts with persons li7 censed under section 53, 63, 103, or 104, for

8 as long as the corporation considers necessary

9 or desirable, to provide uranium or uranium en10 richment and related services;

11 ‘‘(E) enter into contracts to provide ura12 nium or uranium enrichment and related serv13 ices in accordance with, and within the period

14 of, an agreement for cooperation arranged

15 under section 123 or as otherwise authorized by

16 law; and

17 ‘‘(F) take any and all such other actions as

18 are permitted by the law of the jurisdiction of

19 incorporation of the corporation.

20 ‘‘(3) TRANSFER OF ASSETS.—For purposes of

21 implementing the privatization, the Corporation may

22 transfer some or all of its assets and obligations to

23 the corporation established pursuant to this section,

24 including—
150

•HR 2491 RH

1 ‘‘(A) all of the Corporation’s assets and

2 obligations, including all of the Corporation’s

3 rights, duties, and obligations accruing subse4 quent to the privatization date under contracts,

5 agreements, and leases entered into by the Cor6 poration before the privatization date, including

7 all uranium enrichment contracts and power

8 purchase contracts;

9 ‘‘(B) all funds in accounts of the Corpora10 tion held by the Treasury or on deposit with

11 any bank or other financial institution;

12 ‘‘(C) all of the Corporation’s rights, duties,

13 and obligations, accruing subsequent to the pri14 vatization date, under the power purchase con15 tracts covered by section 1401(b)(2)(B);

16 ‘‘(D) all of the Corporation’s rights, duties,

17 and obligations, accruing subsequent to the pri18 vatization date, under the lease agreement be19 tween the Department and the Corporation exe20 cuted by the Department and the Corporation

21 pursuant to section 1403; and

22 ‘‘(E) all of the Corporation’s records, in23 cluding all of the papers and other documentary

24 materials, regardless of physical form or char-
151

•HR 2491 RH

1 acteristics, made or received by the Corpora2 tion.

3 ‘‘(4) MERGER OR CONSOLIDATION.—For pur4 poses of implementing the privatization, the Cor5 poration may merge or consolidate with the corpora6 tion established pursuant to subsection (a)(1) if such

7 action is contemplated by the plan for privatization

8 approved by the President under section 1502(b).

9 The Board shall have exclusive authority to approve

10 such merger or consolidation and to take all further

11 actions necessary to consummate such merger or

12 consolidation, and no action by or in respect of

13 shareholders shall be required. The merger or con14 solidation shall be effected in accordance with, and

15 have the effects of a merger or consolidation under,

16 the laws of the jurisdiction of incorporation of the

17 surviving corporation, and all rights and benefits

18 provided under this title to the Corporation shall

19 apply to the surviving corporation as if it were the

20 Corporation.

21 ‘‘(b) OSHA REQUIREMENTS.—For purposes of the

22 regulation of radiological and nonradiological hazards

23 under the Occupational Safety and Health Act of 1970,

24 the corporation established pursuant to subsection (a)(1)

25 shall be treated in the same manner as other employers
152

•HR 2491 RH

1 licensed by the Nuclear Regulatory Commission. Any

2 interagency agreement entered into between the Nuclear

3 Regulatory Commission and the Occupational Safety and

4 Health Administration governing the scope of their respec5 tive regulatory authorities shall apply to the corporation

6 as if the corporation were a Nuclear Regulatory Commis7 sion licensee.

8 ‘‘(c) LEGAL STATUS OF PRIVATE CORPORATION.—

9 ‘‘(1) NOT FEDERAL AGENCY.—The corporation

10 established pursuant to subsection (a)(1) shall not

11 be an agency, instrumentality, or establishment of

12 the United States Government and shall not be a

13 Government corporation or Government-controlled

14 corporation.

15 ‘‘(2) NO RECOURSE AGAINST UNITED

16 STATES.—Obligations of the Corporation established

17 pursuant to subsection (a)(1) shall not be obliga18 tions of, or guaranteed as to principal or interest by,

19 the Corporation or the United States, and the obli20 gations shall so plainly state.

21 ‘‘(3) NO CLAIMS COURT JURISDICTION.—No ac22 tion under section 1491 of title 28, United States

23 Code, shall be allowable against the United States

24 based on the actions of the Corporation established

25 pursuant to subsection (a)(1).
153

•HR 2491 RH

1 ‘‘(d) BOARD OF DIRECTOR’S ELECTION AFTER PUB2 LIC OFFERING.—In the event that the privatization is im3 plemented by means of a public offering, an election of

4 the members of the board of directors of the Corporation

5 by the shareholders shall be conducted before the end of

6 the 1-year period beginning the date shares are first of7 fered to the public pursuant to such public offering.

8 ‘‘(e) ADEQUATE PROCEEDS.—The Secretary of En9 ergy shall not allow the privatization of the Corporation

10 unless before the sale date the Secretary determines that

11 the estimated sum of the gross proceeds from the sale of

12 the Corporation will be an adequate amount.’’.

13 (b) OWNERSHIP LIMITATIONS.—Chapter 25 (as

14 amended by subsection (a)) is amended by adding at the

15 end the following new section:

16 ‘‘SEC. 1504. OWNERSHIP LIMITATIONS.

17 ‘‘(a) SECURITIES LIMITATION.—In the event that the

18 privatization is implemented by means of a public offering,

19 during a period of 3 years beginning on the privatization

20 date, no person, directly or indirectly, may acquire or hold

21 securities representing more than 10 percent of the total

22 votes of all outstanding voting securities of the Corpora23 tion.

24 ‘‘(b) APPLICATION.—Subsection (a) shall not apply—
154

•HR 2491 RH

1 ‘‘(1) to any employee stock ownership plan of

2 the Corporation,

3 ‘‘(2) to underwriting syndicates holding shares

4 for resale, or

5 ‘‘(3) in the case of shares beneficially held for

6 others, to commercial banks, broker-dealers, clearing

7 corporations, or other nominees.

8 ‘‘(c) ACQUISITIONS.—No director, officer, or em9 ployee of the Corporation may acquire any securities, or

10 any right to acquire securities, of the Corporation—

11 ‘‘(1) in the public offering of securities of the

12 Corporation in the implementation of the privatiza13 tion,

14 ‘‘(2) pursuant to any agreement, arrangement,

15 or understanding entered into before the privatiza16 tion date, or

17 ‘‘(3) before the election of directors of the Cor18 poration under section 1503(d) on any terms more

19 favorable than those offered to the general public.’’.

20 (c) EXEMPTION FROM LIABILITY.—Chapter 25 (as

21 amended by subsection (b)) is amended by adding at the

22 end the following new section:

23 ‘‘SEC. 1505. EXEMPTION FROM LIABILITY.

24 ‘‘(a) IN GENERAL.—No director, officer, employee, or

25 agent of the Corporation shall be liable, for money dam-
155

•HR 2491 RH

1 ages or otherwise, to any party if, with respect to the sub2 ject matter of the action, suit, or proceeding, such person

3 was fulfilling a duty, in connection with any action taken

4 in connection with the privatization, which such person in

5 good faith reasonably believed to be required by law or

6 vested in such person.

7 ‘‘(b) EXCEPTION.—The privatization shall be subject

8 to the Securities Act of 1933 and the Securities Exchange

9 Act of 1934. The exemption set forth in subsection (a)

10 shall not apply to claims arising under such Acts or under

11 the Constitution or laws of any State, territory, or posses12 sion of the United States relating to transactions in secu13 rities, which claims are in connection with a public offer14 ing implementing the privatization.

15 ‘‘(c) SECURITIES LAWS APPLICABLE.—Any offering

16 or sale of securities by the Corporation established pursu17 ant to section 1503(a)(1) shall be subject to the Securities

18 Act of 1933, the Securities Exchange Act of 1934 and

19 the provisions of the Constitution and laws of any State,

20 territory, or possession of the United States relating to

21 transactions in securities.’’.

22 (d) RESOLUTION OF CERTAIN ISSUES.—Chapter 25

23 (as amended by subsection (c)) is amended by adding at

24 the end the following new section:
156

•HR 2491 RH

1 ‘‘SEC. 1506. RESOLUTION OF CERTAIN ISSUES.

2 ‘‘(a) CORPORATION ACTIONS.—Notwithstanding any

3 provision of any agreement to which the Corporation is

4 a party, the Corporation shall not be considered to be in

5 breach, default, or violation of any such agreement be6 cause of any provision of this chapter or any action the

7 Corporation is required to take under this chapter.

8 ‘‘(b) RIGHT TO SUE WITHDRAWN.—The United

9 States hereby withdraws any stated or implied consent for

10 the United States, or any agent or officer of the United

11 States, to be sued by any person for any legal, equitable,

12 or other relief with respect to any claim arising out of,

13 or resulting from, acts or omissions under this chapter.’’.

14 (e) ADDITIONAL PROVISIONS.—Chapter 25 (as

15 amended by subsection (d)) is amended by adding at the

16 end the following:

17 ‘‘SEC. 1507. APPLICATION OF PRIVATIZATION PROCEEDS.

18 ‘‘The proceeds from the privatization shall be in19 cluded in the budget baseline required by the Balanced

20 Budget and Emergency Deficit Control Act of 1985 and

21 shall be counted as an offset to direct spending for pur22 poses of section 252 of such Act, notwithstanding section

23 257(e) of such Act.’’.

24 (f) CONFORMING AMENDMENT.—The table of con25 tents for chapter 25 is amended by inserting after the item

26 for section 1502 the following:
157

•HR 2491 RH

‘‘Sec. 1503. Establishment of private corporation.

‘‘Sec. 1504. Ownership limitations.

‘‘Sec. 1505. Exemption from liability.

‘‘Sec. 1506. Resolution of certain issues.

‘‘Sec. 1507. Application of privatization proceeds.’’.

1 (g) Section 193 (42 U.S.C. 2243) is amended by add2 ing at the end the following:

3 ‘‘(f) LIMITATION.—If the privatization of the United

4 States Enrichment Corporation results in the Corporation

5 being—

6 ‘‘(1) owned, controlled, or dominated by a for7 eign corporation or a foreign government, or

8 ‘‘(2) otherwise inimical to the common defense

9 or security of the United States,

10 any license held by the Corporation under sections 53 and

11 63 shall be terminated.’’.

12 (h) PERIOD FOR CONGRESSIONAL REVIEW.—Section

13 1502(d) (42 U.S.C. 2297d–1(d)) is amended by striking

14 ‘‘less than 60 days after notification of the Congress’’ and

15 inserting ‘‘less than 60 days after the date of the report

16 to Congress by the Comptroller General under subsection

17 (c)’’.

18 SEC. 3041. PERIODIC CERTIFICATION OF COMPLIANCE.

19 Section 1701(c)(2) (42 U.S.C. 2297f(c)(2)) is

20 amended by striking ‘‘ANNUAL APPLICATION FOR CER21 TIFICATE OF COMPLIANCE.—The Corporation shall apply

22 at least annually to the Nuclear Regulatory Commission

23 for a certificate of compliance under paragraph (1).’’ and
158

•HR 2491 RH

1 inserting ‘‘PERIODIC APPLICATION FOR CERTIFICATE OF

2 COMPLIANCE.—The Corporation shall apply to the Nu3 clear Regulatory Commission for a certificate of compli4 ance under paragraph (1) periodically, as determined by

5 the Nuclear Regulatory Commission, but not less than

6 every 5 years.’’.

7 SEC. 3042. LICENSING OF OTHER TECHNOLOGIES.

8 Subsection (a) of section 1702 (42 U.S.C. 2297f–

9 1(a)) is amended by striking ‘‘other than’’ and inserting

10 ‘‘including’’.

11 SEC. 3043. CONFORMING AMENDMENTS.

12 (a) REPEALS IN ATOMIC ENERGY ACT OF 1954 AS

13 OF THE PRIVATIZATION DATE.—

14 (1) REPEALS.—As of the privatization date (as

15 defined in section 1201(13) of the Atomic Energy

16 Act of 1954), the following sections (as in effect on

17 such privatization date) of the Atomic Energy Act of

18 1954 are repealed:

19 (A) Section 1202.

20 (B) Sections 1301 through 1304.

21 (C) Sections 1306 through 1316.

22 (D) Sections 1404 and 1405.

23 (E) Section 1601.

24 (F) Sections 1603 through 1607.
159

•HR 2491 RH

1 (2) CONFORMING AMENDMENT.—The table of

2 contents of such Act is amended by repealing the

3 items referring to sections repealed by paragraph

4 (1).

5 (b) STATUTORY MODIFICATIONS.—As of such privat6 ization date, the following shall take effect:

7 (1) For purposes of title I of the Atomic En8 ergy Act of 1954, all references in such Act to the

9 ‘‘United States Enrichment Corporation’’ shall be

10 deemed to be references to the corporation estab11 lished pursuant to section 1503 of the Atomic En12 ergy Act of 1954 (as added by section 3036(a)).

13 (2) Section 1018(1) of the Energy Policy Act of

14 1992 (42 U.S.C. 2296b–7(1)) is amended by strik15 ing ‘‘the United States’’ and all that follows through

16 the period and inserting ‘‘the corporation referred to

17 in section 1201(4) of the Atomic Energy Act of

18 1954.’’.

19 (3) Section 9101(3) of title 31, United States

20 Code, is amended by striking subparagraph (N), as

21 added by section 902(b) of Public Law 102–486.

22 (c) REVISION OF SECTION 1305.—As of such privat23 ization date, section 1305 of the Atomic Energy Act of

24 1954 (42 U.S.C 2297b–4) is amended—
160

•HR 2491 RH

1 (1) by repealing subsections (a), (b), (c), and

2 (d), and

3 (2) in subsection (e)—

4 (A) by striking the subsection designation

5 and heading,

6 (B) by redesignating paragraph (1) (as

7 added by section 3038(a)) as subsection (a),

8 striking ‘‘IN GENERAL.—’’ and inserting ‘‘IN

9 GENERAL.—’’, redesignating subparagraphs (A)

10 through (E) as paragraphs (1) through (5) (re11 designating in such paragraph, clauses (i)

12 through (iii) as subparagraphs (A) through

13 (C)), striking ‘‘clauses (i) through (iii)’’ in

14 paragraph (5) and inserting ‘‘subparagraphs

15 (A) through (C)’’, and by moving the margins

16 2-ems to the left,

17 (C) by striking paragraph (3), and

18 (D) by redesignating paragraph (4) (as

19 amended by section 3038(b)) as subsection (b),

20 and by moving the margins 2-ems to the left.
161

•HR 2491 RH

1 Subtitle D—Waste Isolation Pilot

2 Project

3 SEC. 3045. SHORT TITLE AND REFERENCE.

4 (a) SHORT TITLE.—This subtitle may be cited as the

5 ‘‘Waste Isolation Pilot Plant Land Withdrawal Amend6 ment Act’’.

7 (b) REFERENCE.—Except as otherwise expressly pro8 vided, whenever in this subtitle an amendment or repeal

9 is expressed in terms of an amendment to, or repeal of,

10 a section or other provision, the reference shall be consid11 ered to be made to a section or other provision of the

12 Waste Isolation Pilot Plant Land Withdrawal Act (Public

13 Law 102–579).

14 SEC. 3046. DEFINITIONS.

15 Paragraphs (18) and (19) of section 2 are repealed.

16 SEC. 3047. TEST PHASE AND RETRIEVAL PLANS.

17 Section 5 is repealed.

18 SEC. 3048. TEST PHASE ACTIVITIES.

19 Section 6 is amended—

20 (1) by repealing subsections (a) and (b),

21 (2) by repealing paragraph (1) of subsection

22 (c),

23 (3) by repealing subparagraph (A) of paragraph

24 (2) of subsection (c),
162

•HR 2491 RH

1 (4) by redesignating subsection (c) as sub2 section (a), by striking the subsection heading and

3 the matter before paragraph (1) and inserting

4 ‘‘STUDY.—The following study shall be conducted:’’,

5 by striking ‘‘(2) REMOTE-HANDLED WASTE.—’’, by

6 striking ‘‘(B) STUDY.—’’, and by redesignating

7 clauses (i), (ii), and (iii) as paragraphs (1), (2), and

8 (3), respectively, and moving them 4-ems to the left,

9 and

10 (5) by redesignating subsection (d) as sub11 section (b).

12 SEC. 3049. DISPOSAL OPERATIONS.

13 Section 7(b) is repealed.

14 SEC. 3050. ENVIRONMENTAL PROTECTION AGENCY DIS15 POSAL REGULATIONS.

16 (a) SECTION 8(d)(1).—Section 8(d)(1) is amended by

17 striking subparagraphs (B), (C), and (D) and by adding

18 after subparagraph (A) the following:

19 ‘‘(B) COMMENTS OF ADMINISTRATOR.—

20 Within 2 months of receipt of the application

21 under subparagraph (A), the Administrator

22 shall provide the Secretary with any comments

23 on the Secretary’s application. Within one

24 month of the receipt of such comments, the

25 Secretary shall, to the extent practicable, incor-
163

•HR 2491 RH

1 porate the Administrator’s comments in the

2 Secretary’s application. The comments of the

3 Administrator provided to the Secretary should

4 also be transmitted to the appropriate commit5 tees of jurisdiction in the House of Representa6 tives and the Senate.’’.

7 (b) SECTION 8(d) (2), (3).—Section 8(d) is amended

8 by striking paragraphs (2) and (3), by striking ‘‘(1) COM9 PLIANCE WITH DISPOSAL REGULATIONS.—’’, and by re10 designating subparagraphs (A) and (B) of paragraph (1),

11 as amended by subsection (a), as paragraphs (1) and (2),

12 respectively, and moving them 2-ems to the left.

13 (c) SECTION 8(f).—Subsection (f) of section 8 is

14 amended—

15 (1) by amending the subsection heading to read

16 ‘‘PERIODIC REVIEW’’, and

17 (2) by amending paragraph (2) to read as fol18 lows:

19 ‘‘(2) REVIEW BY THE ADMINISTRATOR.—The

20 Administrator shall, not later than 6 months after

21 receiving a submission under paragraph (1), com22 ment on whether or not the WIPP facility continues

23 to be in compliance with the final disposition regula24 tions.’’.
164

•HR 2491 RH

1 (d) SECTION 8(g).—Section 8(g) is amended to read

2 as follows:

3 ‘‘(g) ENGINEERED AND NATURAL BARRIERS, ETC.—

4 The Secretary should determine whether or not engineered

5 barriers or natural barriers, or both, will be required at

6 WIPP consistent with regulations published as part 191

7 of 40 C.F.R.’’.

8 SEC. 3051. COMPLIANCE WITH ENVIRONMENTAL LAWS AND

9 REGULATIONS.

10 (a) SECTION 9(a)(1).—Section 9(a)(1) is amended by

11 adding after and below subparagraph (H) the following:

12 ‘‘With respect to transuranic mixed waste designated

13 by the Secretary for disposal at WIPP, such waste

14 is exempt from the land disposal restrictions pub15 lished at part 268 of 40 C.F.R. because compliance

16 with the environmental radiation protection stand17 ards published at part 191 of 40 C.F.R. renders

18 compliance with the land disposal restrictions unnec19 essary to achieve desired environmental protection

20 and a no migration variance is not required for dis21 posal of transuranic mixed waste at WIPP.’’.

22 (b) SECTION 9(b).—Subsection (b) of section 9 is re23 pealed.

24 (c) SECTIONS 9(c), (d).—Subsections (c) and (d) of

25 section 9 are repealed.
165

•HR 2491 RH

1 SEC. 3052. RETRIEVABILITY.

2 Section 10 is amended to read as follows:

3 ‘‘SEC. 10. TRANSURANIC WASTE.

4 ‘‘It is the intent of Congress that a decision will be

5 made by the Secretary with respect to the disposal of

6 transuranic waste no later than March 31, 1997.’’.

7 SEC. 3053. DECOMMISSIONING OF WIPP.

8 Section 13 is amended—

9 (1) by repealing subsection (a), and

10 (2) in subsection (b), by striking ‘‘(b) MANAGE11 MENT PLAN FOR THE WITHDRAWAL AFTER DECOM12 MISSIONING.—Within 5 years after the date of the

13 enactment of this Act, the’’ and inserting ‘‘The’’.

14 SEC. 3054. ECONOMIC ASSISTANCE AND MISCELLANEOUS

15 PAYMENTS.

16 Section 15(a) is amended—

17 (1) by striking ‘‘to the Secretary for payments

18 to the State $20,000,000 for each of the 15 fiscal

19 years beginning with the fiscal year in which the

20 transport of transuranic waste to WIPP is initiated’’

21 and inserting ‘‘to the State $20,000,000 for each of

22 the 15 fiscal years beginning with the date of the en23 actment of the Waste Isolation Pilot Plant Land

24 Withdrawal Amendment Act’’, and
166

•HR 2491 RH

1 (2) by adding at the end the following: ‘‘An ap2 propriation to the State shall be in addition to any

3 appropriation for WIPP.’’.

4 SEC. 3055. NON-DEFENSE WASTE.

5 Section 7(a) is amended by redesignating paragraph

6 (3) as paragraph (4) and by inserting after paragraph (2)

7 the following:

8 ‘‘(3) NONDEFENSE WASTE.—Within the capac9 ity prescribed by paragraph (4), WIPP may receive

10 transuranic waste from the Secretary which did not

11 result from a defense activity.’’.

12 Subtitle E—Naval Petroleum

13 Reserves

14 SEC. 3071. SHORT TITLE.

15 This subtitle may be cited as the ‘‘Naval Petroleum

16 Reserve Privatization Act of 1995’’.

17 SEC. 3072. SALE OF NAVAL PETROLEUM RESERVES.

18 (a) SALE OF RESERVES REQUIRED.—Chapter 641 of

19 title 10, United States Code, is amended by inserting after

20 section 7421 the following new section:

21 ‘‘§ 7421a. Sale of naval petroleum reserves

22 ‘‘(a) SALE REQUIRED.—(1) Notwithstanding any

23 other provision of this chapter, the Secretary shall sell all

24 right, title, and interest of the United States in and to

25 the lands owned or controlled by the United States inside
167

•HR 2491 RH

1 the naval petroleum and oil shale reserves established by

2 this chapter. In the case of Naval Petroleum Reserve

3 Numbered 1, the lands to be sold shall include sections

4 16 and 36 of township 30 south, range 23 east, Mount

5 Diablo Principal Meridian, California.

6 ‘‘(2) Not later than December 31, 1996, the Sec7 retary shall enter into one or more contracts for the sale

8 of all of the interest of the United States in the naval

9 petroleum reserves.

10 ‘‘(b) TIMING AND ADMINISTRATION OF SALE.—(1)

11 Not later than January 1, 1996, the Secretary shall retain

12 the services of five independent experts in the valuation

13 of oil and gas fields to conduct separate assessments, in

14 a manner consistent with commercial practices, of the fair

15 market value of the interest of the United States in each

16 naval petroleum reserve. In making their assessments for

17 each naval petroleum reserve, the independent experts

18 shall consider (among other factors) all equipment and fa19 cilities to be included in the sale, the net present value

20 of the reserve, and the net present value of the anticipated

21 revenue stream that the Secretary determines the Treas22 ury would receive from the reserve if it were not sold, ad23 justed for any anticipated increases in tax revenues that

24 would result if it were sold. The independent experts shall

25 complete their assessments not later than July 1, 1996.
168

•HR 2491 RH

1 In setting the minimum acceptable price for each naval

2 petroleum reserve, the Secretary shall consider the average

3 of the five assessments regarding the reserve or, if more

4 advantageous to the Government, the average of three as5 sessments after excluding the high and low assessments.

6 ‘‘(2) Not later than March 1, 1996, the Secretary

7 shall retain the services of an investment banker to inde8 pendently administer, in a manner consistent with com9 mercial practices and in a manner that maximizes sale

10 proceeds to the Government, the sale of the naval petro11 leum reserves under this section. The Secretary may enter

12 into the contracts required under this paragraph and

13 paragraph (1) on a noncompetitive basis.

14 ‘‘(3) Not later than August 1, 1996, the sales admin15 istrator selected under paragraph (2) shall complete a

16 draft contract for the sale of each naval petroleum reserve,

17 which shall accompany the invitation for bids and describe

18 the terms and provisions of the sale of the interest of the

19 United States in the reserve. Each draft contract shall

20 identify all equipment and facilities to be included in the

21 sales. Each draft contract, including the terms and provi22 sions of the sale of the interest of the United States in

23 the naval petroleum reserves, shall be subject to review

24 and approval by the Secretary, the Secretary of the Treas-
169

•HR 2491 RH

1 ury, and the Director of the Office of Management and

2 Budget.

3 ‘‘(4) Not later than September 1, 1996, the Secretary

4 shall publish an invitation for bids for the purchase of the

5 naval petroleum reserves.

6 ‘‘(5) Not later than November 1, 1996, the Secretary

7 shall accept the highest responsible offer for purchase of

8 the interest of the United States in the naval petroleum

9 reserves, or a particular reserve, that meets or exceeds the

10 minimum acceptable price determined under paragraph

11 (1). The Secretary may accept an offer for only a portion

12 of a reserve so long as the entire reserve is still sold under

13 this section at a price that meets or exceeds the minimum

14 acceptable price.

15 ‘‘(c) FUTURE LIABILITIES.—The United States shall

16 hold harmless and fully indemnify the purchaser of the

17 interest of the United States in a naval petroleum reserve

18 from and against any claim or liability as a result of own19 ership in the reserve by the United States.

20 ‘‘(d) SPECIAL RULES PREPARATORY TO SALE OF

21 NAVAL PETROLEUM RESERVE NUMBERED 1.—(1) Not

22 later than June 1, 1996, the Secretary shall finalize equity

23 interests of the known oil and gas zones in Naval Petro24 leum Reserve Numbered 1 in the manner provided by this

25 subsection.
170

•HR 2491 RH

1 ‘‘(2) The Secretary shall retain the services of an

2 independent petroleum engineer, mutually acceptable to

3 the equity owners, who shall prepare a recommendation

4 on final equity figures. The Secretary may accept the rec5 ommendation of the independent petroleum engineer for

6 final equity in each known oil and gas zone and establish

7 final equity interest in the Naval Petroleum Reserve Num8 bered 1 in accordance with such recommendation, or the

9 Secretary may use such other method to establish final

10 equity interest in that reserve as the Secretary considers

11 appropriate. The Secretary may enter into the contract re12 quired under this paragraph on a noncompetitive basis.

13 ‘‘(3) If, on the effective date of this section, there

14 is an ongoing equity redetermination dispute between the

15 equity owners under section 9(b) of the unit plan contract,

16 such dispute shall be resolved in the manner provided in

17 the unit plan contract not later than June 1, 1996. Such

18 resolution shall be considered final for all purposes under

19 this section.

20 ‘‘(4) In this section, the term ‘unit plan contract’

21 means the unit plan contract between equity owners of the

22 lands within the boundaries of Naval Petroleum Reserve

23 Numbered 1 (Elk Hills) entered into on June 19, 1944.

24 ‘‘(e) PRODUCTION ALLOCATION REGARDING NAVAL

25 PETROLEUM RESERVE NUMBERED 1.—(1) As part of the
171

•HR 2491 RH

1 contract for purchase of Naval Petroleum Reserve Num2 bered 1, the purchaser of the interest of the United States

3 in that reserve shall agree to make up to 25 percent of

4 the purchaser’s share of annual petroleum production

5 from the purchased lands available for sale to small refin6 ers, which do not have their own adequate sources of sup7 ply of petroleum, for processing or use only in their own

8 refineries. None of the reserved production sold to small

9 refiners may be resold in kind. The purchaser of that re10 serve may reduce the quantity of petroleum reserved under

11 this subsection in the event of an insufficient number of

12 qualified bids. The seller of this petroleum production has

13 the right to refuse bids that are less than the prevailing

14 market price of comparable oil.

15 ‘‘(2) The purchaser of Naval Petroleum Reserve

16 Numbered 1 shall also agree to ensure that the terms of

17 every sale of the purchaser’s share of annual petroleum

18 production from the purchased lands shall be so struc19 tured as to give full and equal opportunity for the acquisi20 tion of petroleum by all interested persons, including

21 major and independent oil producers and refiners alike.

22 ‘‘(f) MAINTAINING PRODUCTION PENDING SALE OF

23 NAVAL PETROLEUM RESERVE NUMBERED 1.—Until the

24 sale of Naval Petroleum Reserve Numbered 1 is completed

25 under this section, the Secretary shall continue to produce
172

•HR 2491 RH

1 that reserve at the maximum daily oil or gas rate from

2 a reservoir, which will permit maximum economic develop3 ment of the reservoir consistent with sound oil field engi4 neering practices in accordance with section 3 of the unit

5 plan contract. The definition of maximum efficient rate

6 in section 7420(6) of this title shall not apply to Naval

7 Petroleum Reserve Numbered 1.

8 ‘‘(g) EFFECT ON EXISTING CONTRACTS.—(1) In the

9 case of any contract, in effect on the effective date of this

10 section, for the purchase of production from any part of

11 the United States’ share of the naval petroleum reserves,

12 the sale of the interest of the United States in the reserves

13 shall be subject to the contract for a period of three

14 months after the closing date of the sale or until termi15 nation of the contract, whichever occurs first. The term

16 of any contract entered into after the effective date of this

17 section for the purchase of such production shall not ex18 ceed the anticipated closing date for the sale of the re19 serve.

20 ‘‘(2) In the case of Naval Petroleum Reserve Num21 bered 1, the Secretary shall exercise the termination pro22 cedures provided in the contract between the United

23 States and Bechtel Petroleum Operation, Inc., Contract

24 Number DE–ACO1–85FE60520 so that the contract ter-
173

•HR 2491 RH

1 minates not later than the date of closing of the sale of

2 that reserve.

3 ‘‘(3) In the case of Naval Petroleum Reserve Num4 bered 1, the Secretary shall exercise the termination pro5 cedures provided in the unit plan contract so that the unit

6 plan contract terminates not later than the date of closing

7 of the sale of that reserve.

8 ‘‘(h) SET ASIDE OF SALE PROCEEDS ON ACCOUNT

9 OF CALIFORNIA CLAIMS REGARDING NAVAL PETROLEUM

10 RESERVE NUMBERED 1.—(1) An amount equal to seven

11 percent of the proceeds from the sale of Naval Petroleum

12 Reserve Numbered 1 shall be retained in a special account

13 in the Treasury for the purpose of paying any amount that

14 may be owed by the United States as a result of legal

15 action in connection with claims against the United States

16 by the State of California and the Teachers’ Retirement

17 Fund of the State of California with respect to lands with18 in Naval Petroleum Reserve Numbered 1, including sec19 tions 16 and 36 of township 30 south, range 23 east,

20 Mount Diablo Principal Meridian, California, or produc21 tion or proceeds of sale from that reserve.

22 ‘‘(2) In determining the amount of the proceeds aris23 ing from the sale of Naval Petroleum Reserve Numbered

24 1, the Secretary shall deduct the costs incurred to conduct

25 the sale of that reserve.
174

•HR 2491 RH

1 ‘‘(3) A payment may be made from the special ac2 count only to the extent that the aggregate amount of such

3 payment is provided for in advance in an appropriations

4 Act.

5 ‘‘(i) EFFECT ON ANTITRUST LAWS.—Nothing in this

6 section shall be construed to alter the application of the

7 antitrust laws of the United States to the purchaser of

8 a naval petroleum reserve or to the lands in the naval pe9 troleum reserves subject to sale under this section upon

10 the completion of the sale.

11 ‘‘(j) PRESERVATION OF PRIVATE RIGHT, TITLE, AND

12 INTEREST.—Nothing in this section shall be construed to

13 adversely affect the ownership interest of any other entity

14 having any right, title, and interest in and to lands within

15 the boundaries of the naval petroleum reserves.

16 ‘‘(k) CONGRESSIONAL NOTIFICATION.—Section 7431

17 of this title shall not apply to the sale of the naval petro18 leum reserves under this section. However, the Secretary

19 may not enter into a contract for the sale of a naval petro20 leum reserve until the end of the 15-day period beginning

21 on the date on which the Secretary notifies the Committee

22 on Armed Services of the Senate and the Committee on

23 National Security and the Committee on Commerce of the

24 House of Representatives that the Secretary has accepted
175

•HR 2491 RH

1 an offer under subsection (b)(5) for the sale of that re2 serve.’’.

3 (b) CLERICAL AMENDMENT.—The table of sections

4 at the beginning of such chapter is amended by inserting

5 after the item relating to section 7421 the following new

6 item:

‘‘7421a. Sale of naval petroleum reserves.’’.

7 TITLE IV—COMMITTEE ON ECO8 NOMIC AND EDUCATIONAL

9 OPPORTUNITIES

10 SEC. 4000. TABLE OF CONTENTS.

11 The table of contents for this title is as follows:

TITLE IV—ECONOMIC AND EDUCATIONAL OPPORTUNITIES

Subtitle A—Higher Education

Sec. 4001. Short title; effective date.

Sec. 4002. Termination of direct lending.

Sec. 4003. Elimination of grace period interest subsidies.

Sec. 4004. Plus program reductions.

Sec. 4005. Loan transfer fee.

Sec. 4006. Lender fees to guaranty agencies.

Sec. 4007. Additional loan program changes.

Sec. 4008. Use of reserve funds to purchase defaulted loans.

Sec. 4009. Extension of period a guaranty agency must hold a defaulted loan.

Sec. 4010. Privatization of College Construction Loan Insurance Association.

Sec. 4011. Eligible institution.

Sec. 4012. Extension of program duration.

Subtitle B—Davis-Bacon and Service Contract Repeals

Sec. 4101. Davis-Bacon Act.

Sec. 4102. Service Contract Act of 1965.

Subtitle C—Provisions Relating to the Employee Retirement Income Security

Act of 1974

Sec. 4201. Waiver of minimum period for joint and survivor annuity explanation before annuity starting date.
176

•HR 2491 RH

1 Subtitle A—Higher Education

2 SEC. 4001. SHORT TITLE; EFFECTIVE DATE.

3 (a) SHORT TITLE.—This subtitle may be cited as the

4 ‘‘Higher Education Program Efficiency Act of 1995’’.

5 (b) EFFECTIVE DATE.—Except as otherwise provided

6 therein, the amendments made by this subtitle shall take

7 effect on January 1, 1996.

8 SEC. 4002. TERMINATION OF DIRECT LENDING.

9 (a) TERMINATION OF AUTHORITY.—

10 (1) PROGRAM AUTHORITY.—Section 451(a) of

11 the Higher Education Act of 1965 (20 U.S.C.

12 1087a(a)) is amended by inserting ‘‘and ending

13 June 30, 1996’’ after ‘‘period beginning July 1,

14 1994’’.

15 (2) TERMINATION OF FUNDING.—Section 452

16 of such Act (20 U.S.C. 1087b) is amended by add17 ing at the end the following new subsection:

18 ‘‘(e) TERMINATION OF FUNDING.—The Secretary

19 shall not provide funds under this section for loans for

20 any academic year beginning on or after July 1, 1996.

21 The Secretary shall not pay any fees pursuant to sub22 section (b) of this section on or after January 1, 1996.’’.

23 (3) TERMINATION OF AUTHORITY TO ENTER

24 NEW AGREEMENTS.—Section 453(a) of such Act (20

25 U.S.C. 1087c(a)) is amended—
177

•HR 2491 RH

1 (A) in paragraph (1), by inserting ‘‘and

2 ending before July 1, 1996’’ after ‘‘academic

3 years beginning on or after July 1, 1994’’;

4 (B) in paragraph (2)—

5 (i) by inserting ‘‘and’’ after the semi6 colon at the end of subparagraph (A);

7 (ii) by striking the semicolon at the

8 end of subparagraph (B) and inserting a

9 period; and

10 (iii) by striking subparagraphs (C)

11 and (D); and

12 (C) by striking paragraph (3) and redesig13 nating paragraph (4) as paragraph (3).

14 (b) ADMINISTRATIVE COST AMENDMENTS.—Section

15 458 of such Act (20 U.S.C. 1087h) of such Act is

16 amended—

17 (1) by striking subsection (d);

18 (2) by redesignating subsections (b) and (c) as

19 subsections (f) and (g), respectively; and

20 (3) by striking subsection (a) and inserting the

21 following:

22 ‘‘(a) IN GENERAL.—

23 ‘‘(1) DIRECT ADMINISTRATIVE COSTS.—Each

24 fiscal year there shall be available to the Secretary

25 of Education, from funds not otherwise appro-
178

•HR 2491 RH

1 priated, funds to be obligated for the subsidy costs

2 of direct administrative costs under this part, sub3 ject to subsection (b) of this section.

4 ‘‘(2) INDIRECT ADMINISTRATIVE COSTS.—There

5 shall also be available from funds available from

6 funds not otherwise appropriated, funds to be obli7 gated for indirect administrative costs under this

8 part and part B, subject to subsection (c) of this

9 section, not to exceed (from such funds not other10 wise appropriated) $260,000,000 in fiscal year

11 1994, $345,000,000 in fiscal year 1995,

12 $110,000,000 in fiscal year 1996 (of which

13 $40,000,000 shall be available for administrative

14 cost allowances for guaranty agencies for October

15 through December of 1995), and $70,000,000 in

16 each of the fiscal years 1997 through 2002.

17 ‘‘(3) REDUCTION.—The amount authorized to

18 be made available for fiscal year 1997 under para19 graph (2) shall be reduced by the amount of any un20 obligated unexpended funds available to carry out

21 this subsection for any fiscal year prior to fiscal year

22 1996.

23 ‘‘(b) SUBSIDY COSTS.—For purposes of this section,

24 ‘subsidy cost’ means the estimated long-term cost to the
179

•HR 2491 RH

1 Federal Government of direct administrative expenses cal2 culated on a net present value basis.

3 ‘‘(c) DIRECT ADMINISTRATIVE EXPENSES.—For pur4 poses of this section, ‘direct administrative expenses’ shall

5 consist of the cost of—

6 ‘‘(1) activities related to credit extension, loan

7 origination, loan servicing, management of contrac8 tors, and payments to contractors, other government

9 entities, and program participants;

10 ‘‘(2) collection of delinquent loans; and

11 ‘‘(3) write-off and closeout of loans.

12 ‘‘(d) INDIRECT ADMINISTRATIVE EXPENSES.—For

13 purposes of this section, ‘indirect administrative expenses’

14 shall consist of the cost of—

15 ‘‘(1) personnel engaged in developing program

16 regulations, policy, and administrative guidelines;

17 ‘‘(2) audits of institutions and contractors;

18 ‘‘(3) program reviews; and

19 ‘‘(4) other oversight of the program.

20 ‘‘(e) LIMITATION ON PART D EXPENDITURES.—For

21 any fiscal year, expenditures for indirect administrative

22 expenses and for loan servicing for loans made pursuant

23 to this part shall not exceed 30 percent of funds available

24 pursuant to paragraph (2) for such fiscal year.’’.
180

•HR 2491 RH

1 (c) ELIMINATION OF TRANSITION TO DIRECT

2 LOANS.—Such Act is further amended—

3 (1) in section 422(c)(7) (20 U.S.C.

4 1072(c)(7))—

5 (A) by striking ‘‘during the transition’’ and

6 all that follows through ‘‘part D of this title’’

7 in subparagraph (A); and

8 (B) by striking ‘‘section 428(c)(10)(F)(v)’’

9 in subparagraph (B) and inserting ‘‘section

10 428(c)(9)(F)(v)’’;

11 (2) in section 428(c)(8) (20 U.S.C. 1078(c)(8)),

12 by striking subparagraph (B) and inserting the fol13 lowing:

14 ‘‘(B) Prior to making such determination for

15 any guaranty agency, the Secretary shall, in con16 sultation with the guaranty agency, develop criteria

17 to determine whether such guaranty agency has

18 made adequate collection efforts. In determining

19 whether a guaranty agency’s collection efforts have

20 met such criteria, the Secretary shall consider the

21 agency’s record of success in collecting on defaulted

22 loans, the age of the loans, and the amount of recent

23 payments received on the loans.’’;

24 (3) in section 428(c)(9)(E)—
181

•HR 2491 RH

1 (A) by inserting ‘‘or’’ after the semicolon

2 at the end of clause (iv);

3 (B) by striking ‘‘; or’’ at the end of clause

4 (v) and inserting a period; and

5 (C) by striking clause (vi);

6 (4) in clause (vii) of section 428(c)(9)(F)—

7 (A) by inserting ‘‘and’’ before ‘‘to avoid

8 disruption’’; and

9 (B) by striking ‘‘, and to ensure an orderly

10 transition’’ and all that follows through the end

11 of such clause and inserting a period;

12 (5) in section 428(c)(9)(K), by striking ‘‘the

13 progress of the transition from the loan programs

14 under this part to’’ and inserting ‘‘the integrity and

15 administration of’’;

16 (6) in section 428(e)(1)(B)(ii), by striking

17 ‘‘during the transition’’ and all that follows through

18 ‘‘part D of this title’’;

19 (7) in section 428(e)(3), by striking ‘‘of transi20 tion’’;

21 (8) in section 428(j)(3)—

22 (A) by striking ‘‘DURING TRANSITION TO

23 DIRECT LENDING’’; and

24 (B) by striking ‘‘during the transition’’

25 and all that follows through ‘‘part D of this
182

•HR 2491 RH

1 title,’’ in subparagraph (A) and inserting a

2 comma;

3 (9) in section 453(c)(2) (20 U.S.C.

4 1087c(c)(2)), by striking ‘‘TRANSITION’’ and insert5 ing ‘‘INSTITUTIONAL’’;

6 (10) in section 453(c), by striking paragraph

7 (3); and

8 (11) in section 456(b) (20 U.S.C. 1087f(b))—

9 (A) by inserting ‘‘and’’ after the semicolon

10 at the end of paragraph (3);

11 (B) by striking paragraph (4);

12 (C) by redesignating paragraph (5) as

13 paragraph (4); and

14 (D) in such paragraph (4) (as redesig15 nated), by striking ‘‘successful operation’’ and

16 inserting ‘‘integrity and efficiency’’.

17 (d) ADDITIONAL CONFORMING AMENDMENTS.—

18 (1) ABILITY OF PART D BORROWERS TO OBTAIN

19 FEDERAL STAFFORD CONSOLIDATION LOANS.—Sec20 tion 428C(a)(4) of such Act (20 U.S.C. 1078–

21 3(a)(4)) is amended—

22 (A) by redesignating subparagraphs (C)

23 and (D) as subparagraphs (D) and (E); and

24 (B) by inserting after subparagraph (B)

25 the following new subparagraph:
183

•HR 2491 RH

1 ‘‘(C) made under part D of this title;’’.

2 (2) CONFORMING AMENDMENTS.—Section

3 428C(b) of such Act (20 U.S.C. 1078–3(b)) is

4 amended by striking paragraph (5).

5 SEC. 4003. ELIMINATION OF GRACE PERIOD INTEREST SUB6 SIDIES.

7 Section 428(a)(3) of the Higher Education Act of

8 1965 (20 U.S.C. 1078(a)(3)) is amended by adding at the

9 end the following new subparagraph:

10 ‘‘(C) Notwithstanding subparagraph (A), no

11 portion of the interest which accrues after the stu12 dent ceases to carry at an eligible institution at least

13 one-half the normal full-time academic workload (as

14 determined by the institution) and prior to the be15 ginning of the repayment period of the loan shall be

16 paid by the Secretary under this subsection on any

17 loan made on or after January 1, 1996. Interest on

18 the unpaid principal amount of any such loan during

19 the interval described in the preceding sentence

20 shall, at the option of the borrower—

21 ‘‘(i) be paid monthly or quarterly, or

22 ‘‘(ii) be added by the lender to the prin23 cipal amount of the loan at the commencement

24 of the repayment period.’’.
184

•HR 2491 RH

1 SEC. 4004. PLUS PROGRAM REDUCTIONS.

2 (a) LOAN LIMITS.—Section 428B(b) of the Higher

3 Education Act of 1965 (20 U.S.C. 1078-2(b)) is amend4 ed—

5 (1) by striking ‘‘(b) LIMITATION BASED ON

6 NEED.—’’ and inserting the following:

7 ‘‘(b) ANNUAL LIMITS.—

8 ‘‘(1) LIMITATION BASED ON NEED.—’’;

9 (2) by inserting before the last sentence thereof

10 the following:

11 ‘‘(3) LIMITATION COMPUTED ON BASIS OF AC12 TUAL PAYMENTS.—’’; and

13 (3) by inserting before paragraph (3) (as des14 ignated by the amendment made by paragraph (2)

15 of this subsection) the following new paragraph:

16 ‘‘(2) DOLLAR LIMITATION.—Subject to para17 graph (1), the maximum amount parents may bor18 row for one student in any academic year or its

19 equivalent (as defined by regulations of the Sec20 retary) is $15,000.’’.

21 (b) INTEREST REBATE.—Section 428B of such Act

22 is further amended by adding at the end the following new

23 subsection:

24 ‘‘(f) INTEREST REBATE.—

25 ‘‘(1) REBATE REQUIRED.—Each holder of a

26 loan under this section made on or after the date of
185

•HR 2491 RH

1 enactment of the Omnibus Budget Reconciliation

2 Act of 1995, shall pay, on June 30 and December

3 31 of each year, to the Secretary a rebate of sub4 sidies in an amount equal to 0.8 percent of the out5 standing principal balance of loans held on such

6 date. Payment of such rebate shall be made not later

7 than 60 days after each such date.

8 ‘‘(2) DEPOSIT OF REBATES.—The Secretary

9 shall deposit all fees collected pursuant to paragraph

10 (1) into the insurance fund established in section

11 431.’’.

12 (c) PLUS LOANS INTEREST RATES.—Section

13 427A(c)(4) of such Act (20 U.S.C. 1077a(c)(4)) is amend14 ed by adding at the end the following new subparagraph:

15 ‘‘(F) Notwithstanding subparagraphs (A), (D),

16 and (E), for any loan made pursuant to section

17 428B for which the first disbursement is made on or

18 after January 1, 1996—

19 ‘‘(i) subparagraph (B) shall be applied by

20 substituting ‘4.0’ for ‘3.25’; and

21 ‘‘(ii) the interest rate shall not exceed 11

22 percent.’’.

23 (d) CONFORMING AMENDMENT.—Section 427A(h) of

24 such Act (20 U.S.C. 1077a(h)) is amended—

25 (1) by striking paragraph (2); and
186

•HR 2491 RH

1 (2) by redesignating paragraph (3) as para2 graph (2).

3 SEC. 4005. LOAN TRANSFER FEE.

4 Section 428(b)(2) of the Higher Education Act of

5 1965 (20 U.S.C. 1078(b)(2)) is amended—

6 (1) by striking ‘‘and’’ at the end of subpara7 graph (E);

8 (2) by striking the period at the end of sub9 paragraph (F) and inserting ‘‘; and’’; and

10 (3) by adding at the end thereof the following

11 new subparagraph:

12 ‘‘(G) provide that, if a lender or holder, on

13 or after January 1, 1996, sells, transfers, or as14 signs a loan under this part, then the transferee

15 shall pay to the Secretary a transfer fee in an

16 amount equal to 0.20 percent of the principal

17 of the loan, which transfer fee shall be depos18 ited into the insurance fund established in sec19 tion 431, except that the provisions of this sub20 paragraph shall not apply to any such sale,

21 transfer, or assignment by a lender or holder to

22 such lender’s or holder’s affiliate or pursuant to

23 a merger or other consolidation transaction.’’.
187

•HR 2491 RH

1 SEC. 4006. LENDER FEES TO GUARANTY AGENCIES.

2 Subsection (f) of section 428 of the Higher Education

3 Act of 1965 (20 U.S.C. 1078(f)) is amended to read as

4 follows:

5 ‘‘(f) PAYMENTS OF CERTAIN COSTS.—

6 ‘‘(1) PAYMENTS FROM LENDERS.—With respect

7 to any loan under this part for which the first dis8 bursement is made on or after January 1, 1996, the

9 originating lender shall remit to the guaranty agency

10 which guarantees the loan, a fee equal to 0.70 per11 cent of the principal amount of the loan.

12 ‘‘(2) USE OF PAYMENTS.—Payments made pur13 suant to paragraph (1) shall be used for the pur14 poses of—

15 ‘‘(A) the administrative costs of collections

16 of loans;

17 ‘‘(B) the administrative costs of preclaim

18 assistance and other predefault activities;

19 ‘‘(C) the administrative costs of monitoring

20 the enrollment and repayment status of stu21 dents; and

22 ‘‘(D) other such costs related to the stu23 dent loan insurance program.

24 ‘‘(3) TIMING OF PAYMENTS.—Payments made

25 pursuant to paragraph (1) shall be made at the time
188

•HR 2491 RH

1 insurance premiums on such loans are paid to the

2 guaranty agency.

3 ‘‘(4) PROHIBITION ON PASS-THROUGH.—No

4 part of any payments required by this section shall

5 be assessed or collected, directly or indirectly, from

6 any borrower under this part.’’.

7 SEC. 4007. ADDITIONAL LOAN PROGRAM CHANGES.

8 (a) RESERVE FUNDS.—

9 (1) AMENDMENTS TO SECTION 422.—Section

10 422 of the Higher Education Act of 1965 (20

11 U.S.C. 1072) is amended—

12 (A) in the last sentence of subsection

13 (a)(2), by striking ‘‘Except as provided in sec14 tion 428(c)(10)(E) or (F), such unencumbered’’

15 and inserting ‘‘Such’’;

16 (B) in subsection (g)(1), by striking ‘‘or

17 the program authorized by part D of this title’’

18 each place it appears;

19 (C) in subsection (g)(1)(D), by striking

20 ‘‘(A) or (B)’’ and inserting ‘‘(A), (B), or (C)’’;

21 and

22 (D) in subsection (g), by striking para23 graph (4) and inserting the following:

24 ‘‘(4) DISPOSITION OF FUNDS RETURNED TO OR

25 RECOVERED BY THE SECRETARY.—Any funds that
189

•HR 2491 RH

1 are returned to or otherwise recovered by the Sec2 retary pursuant to this subsection shall be returned

3 to the Treasury of the United States for purposes of

4 reducing the Federal debt and shall be deposited

5 into the special account under section 3113(d) of

6 title 31, United States Code.’’.

7 (2) AMENDMENTS TO SECTION 428.—Section

8 428(c)(9)(A) of such Act (20 U.S.C. 1078(c)(9)(A))

9 is amended—

10 (A) by inserting ‘‘and’’ after the semicolon

11 at the end of clause (i);

12 (B) by striking ‘‘; and’’ at the end of

13 clause (ii) and inserting a period; and

14 (C) by striking clause (iii).

15 (b) APPLICATION FOR PART B LOANS USING FREE

16 FEDERAL APPLICATION.—

17 (1) SINGLE FORM REQUIRED.—Section 483(a)

18 of such Act (20 U.S.C. 1090(a)) is amended—

19 (A) in paragraph (1)—

20 (i) by inserting ‘‘B,’’ after ‘‘assistance

21 under parts A,’’;

22 (ii) by striking ‘‘and to determine the

23 need of a student for the purpose of part

24 B of this title’’; and
190

•HR 2491 RH

1 (iii) by striking the last sentence and

2 inserting the following: ‘‘Such form may be

3 in an electronic or any other format (sub4 ject to section 485B) in order to facilitate

5 use by borrowers and institutions.’’; and

6 (B) in paragraph (3), by striking ‘‘and

7 States shall receive,’’ and inserting ‘‘, any guar8 anty agency authorized by any such institution,

9 and States shall receive, at their request and’’.

10 (2) USE OF ELECTRONIC FORMS.—Section

11 483(a) of such Act is further amended by adding the

12 following new paragraph after paragraph (4):

13 ‘‘(5) ELECTRONIC FORMS.—(A) The Secretary,

14 in cooperation with representatives of institutions of

15 higher education, eligible lenders, and guaranty

16 agencies, shall prescribe an electronic version of the

17 form described in subsection (a)(1). Such electronic

18 form shall not require signatures to be collected at

19 the time such form is submitted if the data con20 tained in the electronic form is certified in one or

21 more separate writings. The Secretary shall pre22 scribe the initial electronic form not later than 90

23 days after the date of enactment of this paragraph.

24 ‘‘(B) Nothing in this Act shall preclude the use

25 of the electronic form prescribed under subpara-
191

•HR 2491 RH

1 graph (A) through software developed, produced,

2 distributed (including by diskette, modem or net3 work communication, or otherwise) or collected by

4 eligible lenders, guaranty agencies, eligible institu5 tions, or consortia thereof. Such organization or con6 sortium shall submit such electronic form to the Sec7 retary for review prior to its use. If such electronic

8 form is inconsistent with the provisions of this part,

9 the Secretary shall notify the submitting organiza10 tion or consortium of his objection within 30 days of

11 such submission, and shall specifically identify the

12 necessary changes. In the absence of such an objec13 tion the organization or consortium may use the

14 electronic form as submitted. No fee may be charged

15 in connection with use of the electronic form, or of

16 any other electronic forms used in conjunction with

17 such form in applying for Federal or State student

18 financial assistance.’’.

19 (c) AMENDMENTS TO ELIGIBLE LENDER DEFINI20 TION.—Section 435(d)(1) of such Act (20 U.S.C. 1085)

21 is amended—

22 (1) by inserting before the semicolon at the end

23 of subparagraph (A) the following: ‘‘; and in deter24 mining whether the making or holding of loans to

25 students and parents under this part is the primary
192

•HR 2491 RH

1 consumer credit function of the eligible lender, loans

2 made or held as trustee or in a trust capacity for

3 the benefit of a third party shall not be considered’’;

4 (2) by striking ‘‘and’’ at the end of subpara5 graph (I);

6 (3) in subparagraph (J), by striking the period

7 and inserting ‘‘; and’’; and

8 (4) by adding at the end the following new sub9 paragraph:

10 ‘‘(K) a wholly owned subsidiary of a pub11 licly-held holding company which, as of the date

12 of enactment of this subparagraph, through one

13 or more subsidiaries (i) acts as a finance com14 pany, and (ii) participates in the program au15 thorized by this part pursuant to subparagraph

16 (C).’’.

17 (d) ADDITIONAL AMENDMENTS TO SECTION 428.—

18 (1) AMENDMENTS.—Section 428 of such Act is

19 further amended—

20 (A) in subsection (b)(1)(G), by striking

21 ‘‘98 percent’’ and inserting ‘‘95 percent’’;

22 (B) in subsection (b)(1)(X), by striking

23 ‘‘section 428(c)(10)’’ and inserting ‘‘section

24 428(c)(9)’’;
193

•HR 2491 RH

1 (C) in subsection (c)(1)(A), by striking

2 ‘‘98 percent’’ and inserting ‘‘96 percent’’;

3 (D) in subsection (c)(1)(B)(i), by striking

4 ‘‘88 percent’’ and inserting ‘‘86 percent’’;

5 (E) in subsection (c)(1)(B)(ii), by striking

6 ‘‘78 percent’’ and inserting ‘‘76 percent’’;

7 (F) in subsection (c)(9)(C)(ii), by striking

8 ‘‘80 percent’’ and inserting ‘‘76 percent’’;

9 (G) in subsection (c)(9)(I) by inserting ‘‘on

10 the record’’ after ‘‘for a hearing’’;

11 (H) in subsection (j)(2)(A), by striking

12 ‘‘60’’ and inserting ‘‘15’’;

13 (I) in subsection (j)(2)(B), by striking

14 ‘‘two rejections’’ and inserting ‘‘one rejection’’;

15 and

16 (J) in subsection (l)—

17 (i) by striking paragraph (2); and

18 (ii) by striking ‘‘(1) ASSISTANCE RE19 QUIRED.—’’.

20 (2) EFFECTIVE DATE.—The amendments made

21 by paragraph (1) of this subsection shall apply to

22 loans on which the first disbursement of principal is

23 made on or after January 1, 1996.
194

•HR 2491 RH

1 (e) REINSURANCE PERCENTAGE UNDER SECTION

2 428I.—Section 428I of such Act (20 U.S.C. 1078–9) is

3 amended in subsection (b)(1)—

4 (1) by striking ‘‘100 PERCENT’’ in the heading

5 and inserting ‘‘95 PERCENT’’; and

6 (2) by striking ‘‘100 percent’’ and inserting ‘‘95

7 percent’’.

8 (f) LOAN FEES FROM LENDERS.—Section 438(d)(2)

9 of such Act (20 U.S.C. 1087–1(d)(2)) is amended to read

10 as follows:

11 ‘‘(2) AMOUNT OF LOAN FEES.—The amount of

12 the loan fee which shall be deducted under para13 graph (1) shall be—

14 ‘‘(A) 0.50 percent of the principal amount

15 of the loan, for any loan under this part for

16 which the first disbursement was made on or

17 after October 1, 1993, and before January 1,

18 1996; or

19 ‘‘(B) 0.30 percent of the principal amount

20 of the loan, for any loan under this part for

21 which the first disbursement was made on or

22 after January 1, 1996.’’.

23 (g) SMALL LENDER AUDIT EXEMPTION.—Section

24 428(b)(1)(U)(iii) of such Act (20 U.S.C.

25 1078(b)(1)(U)(iii)) is amended—
195

•HR 2491 RH

1 (1) by inserting ‘‘in the case of any lender that

2 originates or holds more than $5,000,000 in prin3 cipal on loans made under this title in any fiscal

4 year,’’ before ‘‘for (I)’’;

5 (2) by inserting ‘‘such’’ before ‘‘lender at least

6 once’’;

7 (3) by inserting ‘‘such’’ before ‘‘a lender that is

8 audited’’; and

9 (4) by striking ‘‘if the lender’’ and inserting ‘‘if

10 such lender’’.

11 SEC. 4008. USE OF RESERVE FUNDS TO PURCHASE DE12 FAULTED LOANS.

13 Section 422 of the Higher Education Act of 1965 (20

14 U.S.C. 1072) is amended by adding at the end the follow15 ing new subsection:

16 ‘‘(h) USE OF RESERVE FUNDS TO PURCHASE DE17 FAULTED LOANS.—

18 ‘‘(1) IN GENERAL.—Except as provided in para19 graph (2), a guaranty agency shall use not less than

20 50 percent of such agency’s reserve funds to pur21 chase and hold defaulted loans that are guaranteed

22 by such agency and for which a claim for insurance

23 is filed with such agency by an eligible lender after

24 the date of enactment of this subsection. The

25 amount of such purchases shall be considered as re-
196

•HR 2491 RH

1 serve funds under this section and used in the cal2 culation of the minimum reserve level under section

3 428(c)(9).

4 ‘‘(2) SPECIAL RULE.—A guaranty agency shall

5 not be required to use its reserve funds to purchase

6 and hold defaulted loans in accordance with para7 graph (1) to the extent that—

8 ‘‘(A) the dollar volume of insurance claims

9 filed with such agency does not amount to 50

10 percent of such agency’s available reserve

11 funds; or

12 ‘‘(B) such use is prohibited by State law;

13 or

14 ‘‘(C) such use will compromise the ability

15 of the guaranty agency to pay program ex16 penses.’’.

17 SEC. 4009. EXTENSION OF PERIOD A GUARANTY AGENCY

18 MUST HOLD A DEFAULTED LOAN.

19 (a) EXEMPTION FOR EXTENDED HOLDING PE20 RIOD.—The last sentence of section 428(c)(1)(A) of the

21 Higher Education Act of 1965 (20 U.S.C. 1078(c)(1)(A))

22 is amended by striking out ‘‘A guaranty agency’’ and in23 serting ‘‘Except as provided in section 428K, a guaranty

24 agency’’.
197

•HR 2491 RH

1 (b) NEW EXTENDED HOLDING PERIOD PROGRAM.—

2 Part B of title IV of such Act (20 U.S.C. 1071 et seq.)

3 is amended by inserting after section 428J the following

4 new section:

5 ‘‘SEC. 428K. GUARANTOR PURCHASE OF CLAIMS WITH RE6 SERVE FUNDS.

7 ‘‘(a) LOANS SUBJECT TO EXTENDED HOLDING PE8 RIOD.—Except as provided in subsection (b), a guaranty

9 agency shall file a claim for reimbursement with respect

10 to losses (resulting from the default of a student borrower)

11 subject to reimbursement by the Secretary pursuant to

12 section 428(c)(1) not less than 180 days nor more than

13 225 days after the guaranty agency discharges such agen14 cy’s insurance obligation on a loan insured under this

15 part. Such claim shall include losses on the unpaid prin16 cipal and accrued interest of any such loan, including in17 terest accrued from the date of such discharge to the date

18 such agency files the claim for reimbursement from the

19 Secretary.

20 ‘‘(b) LOANS EXCLUDED FROM EXTENDED HOLD21 ING.—A guaranty agency may file a claim with respect

22 to losses subject to reimbursement by the Secretary pursu23 ant to section 428(c)(1) prior to 180 days after the date

24 the guaranty agency discharges such agency’s insurance

25 obligation on a loan insured under this part, if—
198

•HR 2491 RH

1 ‘‘(1) such agency used 50 percent or more of

2 such agency’s reserve funds to purchase or hold

3 loans in accordance with section 422(h);

4 ‘‘(2) such claim is based on an inability to lo5 cate the borrower and the guaranty agency certifies

6 to the Secretary that—

7 ‘‘(A) diligent attempts were made to locate

8 the borrower through the use of reasonable

9 skip-tracing techniques in accordance with sec10 tion 428(c)(2)(G); and

11 ‘‘(B) such skip-tracing attempts to locate

12 the borrower were unsuccessful; or

13 ‘‘(3) the guaranty agency determines that the

14 borrower is unlikely to possess the financial re15 sources to begin repaying the loan prior to 180 days

16 after default by the borrower.

17 ‘‘(c) GUARANTY AGENCY EFFORTS DURING EX18 TENDED HOLDING PERIOD.—A guaranty agency shall at19 tempt to bring a loan described in subsection (a) into re20 payment status prior to 180 days after the date the guar21 anty agency discharges its insurance obligation on the

22 loan, so that no claim for reimbursement by the Secretary

23 is necessary. Upon securing payment satisfactory to the

24 guaranty agency during the 180-day period, such agency

25 shall, if practicable, sell such loan to an eligible lender.
199

•HR 2491 RH

1 Such loan shall not be sold to an eligible lender that the

2 guaranty agency determines has substantially failed to ex3 ercise the due diligence required of lenders under this

4 part.

5 ‘‘(d) REGULATION PROHIBITED.—The Secretary

6 shall not regulate the collection activities of a guaranty

7 agency with respect to a loan described in subsection (a)

8 for which reinsurance has not been paid under section

9 428(c)(1).’’.

10 SEC. 4010. PRIVATIZATION OF COLLEGE CONSTRUCTION

11 LOAN INSURANCE ASSOCIATION.

12 (a) REPEAL OF STATUTORY RESTRICTIONS.—Part D

13 of title VII of the Higher Education Act of 1965 (20

14 U.S.C. 1132f et seq.) is repealed.

15 (b) STATUS OF THE CORPORATION.—

16 (1) STATUS OF THE CORPORATION.—The Cor17 poration shall not be an agency, instrumentality, or

18 establishment of the United States Government and

19 shall not be a ‘‘Government corporation’’ nor a

20 ‘‘Government controlled corporation’’ as defined in

21 section 103 of title 5, United States Code. No action

22 under section 1491 of title 28, United States Code

23 (commonly known as the Tucker Act) shall be allow24 able against the United States based on the actions

25 of the Corporation.
200

•HR 2491 RH

1 (2) CORPORATE POWERS.—The Corporation

2 shall have the power to engage in any business or

3 other activities for which corporations may be orga4 nized under the laws of any State of the United

5 States or the District of Columbia. The Corporation

6 shall have the power to enter into contracts, to exe7 cute instruments, to incur liabilities, to provide prod8 ucts and services, and to do all things as are nec9 essary or incidental to the proper management of its

10 affairs and the efficient operation of a private, for11 profit business.

12 (3) LIMITATION ON OWNERSHIP OF STOCK.—

13 Except as provided in subsection (d)(2) of this sec14 tion, no stock of the Corporation may be sold or is15 sued to an agency, instrumentality, or establishment

16 of the United States Government, to a Government

17 corporation or a Government controlled corporation

18 (as such terms are defined in section 103 of title 5,

19 United States Code), or to a Government sponsored

20 enterprise (as such term is defined in section 622 of

21 title 2, United States Code). The Student Loan

22 Marketing Association shall not own any stock of

23 the Corporation, except that it may retain the stock

24 it owns on the date of enactment. The Student Loan

25 Marketing Association shall not control the oper-
201

•HR 2491 RH

1 ation of the Corporation, except that the Student

2 Loan Marketing Association may participate in the

3 election of directors as a shareholder, and may con4 tinue to exercise its right to appoint directors under

5 section 754 of the Higher Education Act of 1965 as

6 long as that section is in effect. The Student Loan

7 Marketing Association shall not provide financial

8 support or guarantees to the Corporation. Notwith9 standing the prohibitions in this subsection, the

10 United States may pursue any remedy against a

11 holder of the Corporation’s stock to which it would

12 otherwise be entitled.

13 (c) RELATED PRIVATIZATION REQUIREMENTS.—

14 (1) NOTICE REQUIREMENTS.—During the 5-

15 year period following the date of the enactment of

16 this Act, the Corporation shall include in any docu17 ment offering the Corporation’s securities, in any

18 contracts for insurance, guarantee, or reinsurance of

19 obligations, and in any advertisement or promotional

20 material, a statement that—

21 (A) the Corporation is not a Government22 sponsored enterprise or instrumentality of the

23 United States; and
202

•HR 2491 RH

1 (B) the Corporation’s obligations are not

2 guaranteed by the full faith and credit of the

3 United States.

4 (2) CORPORATE CHARTER.—The Corporation’s

5 charter shall be amended as necessary and without

6 delay to conform the requirements of this Act.

7 (3) CORPORATE NAME.—The name of the Cor8 poration, or of any direct or indirect subsidiary

9 thereof, may not contain the term ‘‘College Con10 struction Loan Insurance Association’’.

11 (4) ARTICLES OF INCORPORATION.—The Cor12 poration shall amend its articles of incorporation

13 without delay to reflect that one of the purposes of

14 the Corporation shall be to guarantee, insure and re15 insure bonds, leases, and other evidences of debt of

16 educational institutions, including Historically Black

17 Colleges and Universities and other academic insti18 tutions which are ranked in the lower investment

19 grade category using a nationally recognized credit

20 rating system.

21 (5) TRANSITION REQUIREMENTS.—

22 (A) REQUIREMENTS UNTIL STOCK SALE.—

23 Notwithstanding subsection (a), the require24 ments of section 754 of the Higher Education

25 Act of 1965 (20 U.S.C. 1132f–3), as in exist-
203

•HR 2491 RH

1 ence as of the day before enactment of this Act,

2 shall continue to be effective until the day im3 mediately following the date of closing of the

4 purchase of the Secretary’s stock (or the date

5 of closing of the final purchase, in the case of

6 multiple transactions) pursuant to subsection

7 (d) of this section.

8 (B) REPORTS AFTER STOCK SALE.—The

9 Corporation shall, not later than March 30 of

10 the first full calendar year immediately follow11 ing the sale pursuant to subsection (d), and

12 each of the 2 succeeding years, submit to the

13 Secretary of Education a report describing the

14 Corporation’s efforts to assist in the financing

15 of education facilities projects, including

16 projects for elementary, secondary, and post17 secondary educational institution infrastructure,

18 and detailing, on a project-by-project basis, the

19 Corporation’s business dealings with edu20 cational institutions that are rated by a nation21 ally recognized statistical rating organization at

22 or below the organization’s third highest rat23 ings.

24 (d) SALE OF FEDERALLY OWNED STOCK.—
204

•HR 2491 RH

1 (1) SALE OF STOCK REQUIRED.—The Secretary

2 of the Treasury shall make every effort to sell, pur3 suant to section 324 of title 31, United States Code,

4 the stock of the Corporation owned by the Secretary

5 of Education not later than 6 months after the date

6 of the enactment of this Act.

7 (2) PURCHASE BY THE CORPORATION.—In the

8 event that the Secretary of the Treasury is unable

9 to sell the stock, or any portion thereof, at a price

10 acceptable to the Secretary of Education and the

11 Secretary of the Treasury, the Corporation shall

12 purchase, within the period specified in paragraph

13 (1), such stock at a price determined by the Sec14 retary of the Treasury and acceptable to the Cor15 poration based on independent appraisal by one or

16 more nationally recognized financial firms, except

17 that such price shall not exceed the value of the Sec18 retary’s stock as determined by the Congressional

19 Budget Office in House Report 104–153, dated

20 June 22, 1995. Such firms shall be selected by the

21 Secretary of the Treasury in consultation with the

22 Secretary of Education and the Corporation.

23 (e) ASSISTANCE BY THE CORPORATION.—The Cor24 poration shall provide such assistance as the Secretary of
205

•HR 2491 RH

1 the Treasury and the Secretary of Education may require

2 to facilitate the sale of the stock under this section.

3 (f) DEFINITION.—As used in this section, the term

4 ‘‘Corporation’’ means the Corporation established pursu5 ant to the provision of law repealed by subsection (a).

6 SEC. 4011. ELIGIBLE INSTITUTION.

7 (a) AMENDMENTS.—Section 481(b) of the Higher

8 Education Act of 1965 (20 U.S.C. 1088(b)) is amended—

9 (1) by inserting before the period at the end of

10 the first sentence the following: ‘‘on the basis of a

11 review by the institution’s independent auditor using

12 generally accepted accounting principles’’; and

13 (2) by inserting after the end of such first sen14 tence the following new sentences: ‘‘For the purposes

15 of clause (6), revenues from sources that are not de16 rived from funds provided under this title include

17 revenues from programs of education or training

18 that do not meet the definition of an eligible pro19 gram in subsection (e), but are provided on a con20 tractual basis under Federal, State, or local training

21 programs, or to business and industry. For the pur22 poses of determining whether an institution meets

23 the requirements of clause (6), the Secretary shall

24 not consider the financial information of any institu-
206

•HR 2491 RH

1 tion for a fiscal year began on or before April 30,

2 1994.’’.

3 (b) EFFECTIVE DATE.—Notwithstanding section 713

4 of this Act, the amendments made by subsection (a) shall

5 apply to any determination made on or after July 1, 1994,

6 by the Secretary of Education pursuant to section

7 481(b)(6) of the Higher Education Act of 1965.

8 SEC. 4012. EXTENSION OF PROGRAM DURATION.

9 Part B of title IV of the Higher Education Act of

10 1965 is amended—

11 (1) in section 424(a) (20 U.S.C. 1074(a)), by

12 striking ‘‘1998’’ and inserting ‘‘2002’’;

13 (2) in section 428(a)(5) (20 U.S.C.

14 1078(a)(5))—

15 (A) by striking ‘‘2002’’ and inserting

16 ‘‘2006’’; and

17 (B) by striking ‘‘1998’’ and inserting

18 ‘‘2002’’; and

19 (3) in section 428C(e) (20 U.S.C. 1078–3(e)),

20 by striking the first sentence and inserting ‘‘The au21 thority to make loans under this section expires at

22 the close of September 30, 2002.’’.
207

•HR 2491 RH

1 Subtitle B—Davis-Bacon and

2 Service Contract Repeals

3 SEC. 4101. DAVIS-BACON ACT.

4 (a) REPEAL.—The Act of March 3, 1931 (40 U.S.C.

5 276a et seq.) (commonly referred to as the Davis-Bacon

6 Act) is repealed.

7 (b) REFERENCES.—Any reference in any law to a

8 wage requirement of the Act of March 3, 1931, shall, 45

9 days after the date of the enactment of this Act, be null

10 and void.

11 (c) EFFECTIVE DATE.—The amendment made by

12 subsection (a) shall take effect 45 days after the date of

13 the enactment of this Act but shall not affect any contract

14 in existence on the expiration of such days or made pursu15 ant to an invitation for bids outstanding on the expiration

16 of such days.

17 SEC. 4102. SERVICE CONTRACT ACT OF 1965.

18 (a) REPEAL.—The Service Contract Act of 1965 (41

19 U.S.C. 351 et seq.) is repealed.

20 (b) APPLICATION.—The amendment made by sub21 section (a) shall not apply to a contract which was entered

22 into before the 45th day after the date of the enactment

23 of this Act and to which the Service Contract Act of 1965

24 applied.
208

•HR 2491 RH

1 Subtitle C—Provisions Relating to

2 the Employee Retirement In3 come Security Act of 1974

4 SEC. 4201. WAIVER OF MINIMUM PERIOD FOR JOINT AND

5 SURVIVOR ANNUITY EXPLANATION BEFORE

6 ANNUITY STARTING DATE.

7 (a) GENERAL RULE.—For purposes of section

8 205(c)(3)(A) of the Employee Retirement Income Security

9 Act of 1974 (29 U.S.C. 1055(c)(3)(A)), the minimum pe10 riod prescribed by the Secretary of the Treasury between

11 the date that the explanation referred to in such section

12 is provided and the annuity starting date shall not apply

13 if waived by the participant and, if applicable, the partici14 pant’s spouse.

15 (b) EFFECTIVE DATE.—Subsection (a) shall apply to

16 plan years beginning after December 31, 1995.

17 TITLE V—COMMITTEE ON GOV18 ERNMENT REFORM AND

19 OVERSIGHT

20 [Text to be supplied.]
209

•HR 2491 RH

1 TITLE VI—COMMITTEE ON

2 INTERNATIONAL RELATIONS

3 SEC. 6001. RECOVERY OF COSTS OF HEALTH CARE SERV4 ICES FOR PERSONNEL OF THE FOREIGN

5 SERVICE OF THE UNITED STATES AND

6 OTHER ELIGIBLE INDIVIDUALS.

7 (a) AUTHORITIES.—Section 904 of the Foreign Serv8 ice Act of 1980 (22 U.S.C. 4084) is amended—

9 (1) in subsection (a) by—

10 (A) striking ‘‘and’’ before ‘‘members of the

11 families of such members and employees’’; and

12 (B) by inserting immediately before the pe13 riod ‘‘, and for care provided abroad) such

14 other persons as are designated by the Sec15 retary of State, except that such persons shall

16 be considered persons other than covered bene17 ficiaries for purposes of subsections (g) and

18 (h)’’;

19 (2) in subsection (d) by inserting ‘‘, subject to

20 the provisions of subsections (g) and (h)’’ after

21 ‘‘treatment’’; and

22 (3) by adding the following new subsections:

23 ‘‘(g)(1) In the case of a person who is a covered bene24 ficiary, the Secretary of State is authorized to collect from

25 a third-party payer the reasonable costs incurred by the
210

•HR 2491 RH

1 Department of State on behalf of such person for health

2 care services to the same extent that the covered bene3 ficiary would be eligible to receive reimbursement or in4 demnification from the third-party payer for such costs.

5 ‘‘(2) If the insurance policy, plan, contract, or similar

6 agreement of that third-party payer includes a require7 ment for a deductible or copayment by the beneficiary of

8 the plan, then the Secretary of State may collect from the

9 third-party payer only the reasonable costs of the care pro10 vided less the deductible or copayment amount.

11 ‘‘(3) A covered beneficiary shall not be required to

12 pay any deductible or copayment for health care services

13 under this subsection.

14 ‘‘(4) No provision of any insurance, medical service,

15 or health plan contract or agreement having the effect of

16 excluding from coverage or limiting payment of charges

17 for care in the following circumstances shall operate to

18 prevent collection by the Secretary of State under para19 graph (1)—

20 ‘‘(A) care provided directly or indirectly by a

21 governmental entity;

22 ‘‘(B) care provided to an individual who has not

23 paid a required deductible or copayment; or

24 ‘‘(C) care provided by a provider with which the

25 third-party payer has no participation agreement.
211

•HR 2491 RH

1 ‘‘(5) No law of any State, or of any political subdivi2 sion of a State, and no provision of any contract or agree3 ment shall operate to prevent or hinder recovery or collec4 tion by the United States under this section.

5 ‘‘(6) As to the authority provided in paragraph (1)

6 of this subsection—

7 ‘‘(A) the United States shall be subrogated to

8 any right or claim that the covered beneficiary may

9 have against a third-party payer;

10 ‘‘(B) the United States may institute and pros11 ecute legal proceedings against a third-party payer

12 to enforce a right of the United States under this

13 subsection; and

14 ‘‘(C) the Secretary may compromise, settle, or

15 waive a claim of the United States under this sub16 section.

17 ‘‘(7) The Secretary shall prescribe regulations for the

18 administration of this subsection and subsection (h). Such

19 regulations shall provide for computation of the reasonable

20 cost of health care services.

21 ‘‘(8) Regulations prescribed under this subsection

22 shall provide that medical records of a covered beneficiary

23 receiving health care under this subsection shall be made

24 available for inspection and review by representatives of

25 the payer from which collection by the United States is
212

•HR 2491 RH

1 sought for the sole purpose of permitting the third party

2 to verify—

3 ‘‘(A) that the care or services for which recov4 ery or collection is sought were furnished to the cov5 ered beneficiary; and

6 ‘‘(B) that the provisions of such care or services

7 to the covered beneficiary meets criteria generally

8 applicable under the health plan contract involved,

9 except that this paragraph shall be subject to the

10 provisions of paragraphs (2) and (4).

11 ‘‘(9) Amounts collected under this subsection or

12 under subsection (h) from a third party payer or from any

13 other payer shall be deposited in the Treasury as a mis14 cellaneous offsetting receipt.

15 ‘‘(10) For purposes of this section—

16 ‘‘(A) the term ‘covered beneficiary’ means an

17 individual eligible to receive health care under this

18 section whose health care costs are to be paid by a

19 third-party payer under a contractual agreement

20 with such payer;

21 ‘‘(B) the term ‘services’, as used in ‘health care

22 services’ includes products; and

23 ‘‘(C) the term ‘third-party payer’ means an en24 tity that provides a fee-for-service insurance policy,

25 contract, or similar agreement through the Federal
213

•HR 2491 RH

1 Employees Health Benefit program, under which the

2 expenses of health care services for individuals are

3 paid.

4 ‘‘(h) In the case of a person, other than a covered

5 beneficiary, who receives health care services pursuant to

6 this section, the Secretary of State is authorized to collect

7 from such person the reasonable costs of health care serv8 ices incurred by the Department of State on behalf of such

9 person. The United States shall have the same rights

10 against persons subject to the provisions of this subsection

11 as against third-party payers covered by subsection (g).’’.

12 (b) EFFECTIVE DATE.—The authorities of this sec13 tion shall be effective beginning on the date of the enact14 ment of this Act.

15 SEC. 6002. ENACTMENT INTO LAW OF DIVISION A OF H.R.

16 1561.

17 Division A of H.R. 1561, as passed the House of

18 Representatives on June 8, 1995 (relating to consolidation

19 of foreign affairs agencies), is hereby enacted into law.

20 TITLE VII—COMMITTEE ON THE

21 JUDICIARY

22 SEC. 7001. PATENT AND TRADEMARK FEES.

23 Section 10101 of the Omnibus Budget Reconciliation

24 Act of 1990 (35 U.S.C. 41 note) is amended—
214

•HR 2491 RH

1 (1) in subsection (a) by striking ‘‘1998’’ and in2 serting ‘‘2002’’;

3 (2) in subsection (b)(2) by striking ‘‘1998’’ and

4 inserting ‘‘2002’’; and

5 (3) in subsection (c)—

6 (A) by striking ‘‘through 1998’’ and insert7 ing ‘‘through 2002’’; and

8 (B) by adding at the end the following:

9 ‘‘(9) $119,000,000 in fiscal year 1999.

10 ‘‘(10) $119,000,000 in fiscal year 2000.

11 ‘‘(11) $119,000,000 in fiscal year 2001.

12 ‘‘(12) $119,000,000 in fiscal year 2002.’’.

13 TITLE VIII—COMMITTEE ON

14 NATIONAL SECURITY

15 Subtitle A—Military Retired Pay

16 SEC. 8001. ELIMINATION OF DISPARITY BETWEEN EFFEC17 TIVE DATES FOR MILITARY AND CIVILIAN RE18 TIREE COST-OF-LIVING ADJUSTMENTS FOR

19 FISCAL YEARS 1996, 1997, AND 1998.

20 (a) CONFORMANCE WITH SCHEDULE FOR CIVIL

21 SERVICE COLAS.—Subparagraph (B) of section

22 1401a(b)(2) of title 10, United States Code, is amended—

23 (1) by striking out ‘‘THROUGH 1998’’ the first

24 place it appears and all that follows through ‘‘In the
215

•HR 2491 RH

1 case of’’ the second place it appears and inserting in

2 lieu thereof ‘‘THROUGH 1996.—In the case of’’;

3 (2) by striking ‘‘of 1994, 1995, 1996, or 1997’’

4 and inserting in lieu thereof ‘‘of 1993, 1994, or

5 1995’’; and

6 (3) by striking out ‘‘September’’ and inserting

7 in lieu thereof ‘‘March’’.

8 (b) REPEAL OF PRIOR CONDITIONAL ENACTMENT.—

9 Section 8114A(b) of Public Law 103–335 (108 Stat.

10 2648) is repealed.

11 Subtitle B—Naval Petroleum

12 Reserves

13 SEC. 8011. SALE OF NAVAL PETROLEUM RESERVES.

14 (a) SALE OF RESERVES REQUIRED.—Chapter 641 of

15 title 10, United States Code, is amended by inserting after

16 section 7421 the following new section:

17 ‘‘§ 7421a. Sale of naval petroleum reserves

18 ‘‘(a) SALE REQUIRED.—(1) Notwithstanding any

19 other provision of this chapter, the Secretary shall sell all

20 right, title, and interest of the United States in and to

21 the lands owned or controlled by the United States inside

22 the naval petroleum and oil shale reserves established by

23 this chapter. In the case of Naval Petroleum Reserve

24 Numbered 1, the lands to be sold shall include sections
216

•HR 2491 RH

1 16 and 36 of township 30 south, range 23 east, Mount

2 Diablo Principal Meridian, California.

3 ‘‘(2) Not later than September 30, 1996, the Sec4 retary shall enter into one or more contracts for the sale

5 of all of the interest of the United States in the naval

6 petroleum reserves.

7 ‘‘(b) TIMING AND ADMINISTRATION OF SALE.—(1)

8 Not later than January 1, 1996, the Secretary shall retain

9 the services of five independent experts in the valuation

10 of oil and gas fields to conduct separate assessments, in

11 a manner consistent with commercial practices, of the fair

12 market value of the interest of the United States in each

13 naval petroleum reserve. In making their assessments for

14 each naval petroleum reserve, the independent experts

15 shall consider (among other factors) all equipment and fa16 cilities to be included in the sale, the net present value

17 of the reserve, and the net present value of the anticipated

18 revenue stream that the Secretary determines the Treas19 ury would receive from the reserve if it were not sold, ad20 justed for any anticipated increases in tax revenues that

21 would result if it were sold. The independent experts shall

22 complete their assessments not later than June 1, 1996.

23 In setting the minimum acceptable price for each naval

24 petroleum reserve, the Secretary shall consider the average

25 of the five assessments regarding the reserve or, if more
217

•HR 2491 RH

1 advantageous to the Government, the average of three as2 sessments after excluding the high and low assessments.

3 ‘‘(2) Not later than March 1, 1996, the Secretary

4 shall retain the services of an investment banker to inde5 pendently administer, in a manner consistent with com6 mercial practices and in a manner that maximizes sale

7 proceeds to the Government, the sale of the naval petro8 leum reserves under this section. The Secretary may enter

9 into the contracts required under this paragraph and

10 paragraph (1) on a noncompetitive basis.

11 ‘‘(3) Not later than June 1, 1996, the sales adminis12 trator selected under paragraph (2) shall complete a draft

13 contract for the sale of each naval petroleum reserve,

14 which shall accompany the invitation for bids and describe

15 the terms and provisions of the sale of the interest of the

16 United States in the reserve. Each draft contract shall

17 identify all equipment and facilities to be included in the

18 sales. Each draft contract, including the terms and provi19 sions of the sale of the interest of the United States in

20 the naval petroleum reserves, shall be subject to review

21 and approval by the Secretary, the Secretary of the Treas22 ury, and the Director of the Office of Management and

23 Budget.
218

•HR 2491 RH

1 ‘‘(4) Not later than July 1, 1996, the Secretary shall

2 publish an invitation for bids for the purchase of the naval

3 petroleum reserves.

4 ‘‘(5) Not later than September 1, 1996, the Secretary

5 shall accept the highest responsible offer for purchase of

6 the interest of the United States in the naval petroleum

7 reserves, or a particular reserve, that meets or exceeds the

8 minimum acceptable price determined under paragraph

9 (1). The Secretary may accept an offer for only a portion

10 of a reserve so long as the entire reserve is still sold under

11 this section at a price that meets or exceeds the minimum

12 acceptable price.

13 ‘‘(c) FUTURE LIABILITIES.—To effectuate the sale of

14 the interest of the United States in a naval petroleum re15 serve, the Secretary may extend such indemnities and war16 ranties as the Secretary considers reasonable and nec17 essary to protect the purchaser from claims arising from

18 the ownership in the reserve by the United States.

19 ‘‘(d) SPECIAL RULES PREPARATORY TO SALE OF

20 NAVAL PETROLEUM RESERVE NUMBERED 1.—(1) Not

21 later than June 1, 1996, the Secretary shall finalize equity

22 interests of the known oil and gas zones in Naval Petro23 leum Reserve Numbered 1 in the manner provided by this

24 subsection.
219

•HR 2491 RH

1 ‘‘(2) The Secretary shall retain the services of an

2 independent petroleum engineer, mutually acceptable to

3 the equity owners, who shall prepare a recommendation

4 on final equity figures. The Secretary may accept the rec5 ommendation of the independent petroleum engineer for

6 final equity in each known oil and gas zone and establish

7 final equity interest in the Naval Petroleum Reserve Num8 bered 1 in accordance with such recommendation, or the

9 Secretary may use such other method to establish final

10 equity interest in that reserve as the Secretary considers

11 appropriate. The Secretary may enter into the contract re12 quired under this paragraph on a noncompetitive basis.

13 ‘‘(3) If, on the effective date of this section, there

14 is an ongoing equity redetermination dispute between the

15 equity owners under section 9(b) of the unit plan contract,

16 such dispute shall be resolved in the manner provided in

17 the unit plan contract not later than June 1, 1996. Such

18 resolution shall be considered final for all purposes under

19 this section.

20 ‘‘(4) In this section, the term ‘unit plan contract’

21 means the unit plan contract between equity owners of the

22 lands within the boundaries of Naval Petroleum Reserve

23 Numbered 1 (Elk Hills) entered into on June 19, 1944.

24 ‘‘(e) PRODUCTION ALLOCATION REGARDING NAVAL

25 PETROLEUM RESERVE NUMBERED 1.—(1) As part of the
220

•HR 2491 RH

1 contract for purchase of Naval Petroleum Reserve Num2 bered 1, the purchaser of the interest of the United States

3 in that reserve shall agree to make up to 25 percent of

4 the purchaser’s share of annual petroleum production

5 from the purchased lands available for sale to small refin6 ers, which do not have their own adequate sources of sup7 ply of petroleum, for processing or use only in their own

8 refineries. None of the reserved production sold to small

9 refiners may be resold in kind. The purchaser of that re10 serve may reduce the quantity of petroleum reserved under

11 this subsection in the event of an insufficient number of

12 qualified bids. The seller of this petroleum production has

13 the right to refuse bids that are less than the prevailing

14 market price of comparable oil.

15 ‘‘(2) The purchaser of Naval Petroleum Reserve

16 Numbered 1 shall also agree to ensure that the terms of

17 every sale of the purchaser’s share of annual petroleum

18 production from the purchased lands shall be so struc19 tured as to give full and equal opportunity for the acquisi20 tion of petroleum by all interested persons, including

21 major and independent oil producers and refiners alike.

22 ‘‘(f) MAINTAINING PRODUCTION PENDING SALE OF

23 NAVAL PETROLEUM RESERVE NUMBERED 1.—Until the

24 sale of Naval Petroleum Reserve Numbered 1 is completed

25 under this section, the Secretary shall continue to produce
221

•HR 2491 RH

1 that reserve at the maximum daily oil or gas rate from

2 a reservoir, which will permit maximum economic develop3 ment of the reservoir consistent with sound oil field engi4 neering practices in accordance with section 3 of the unit

5 plan contract. The definition of maximum efficient rate

6 in section 7420(6) of this title shall not apply to Naval

7 Petroleum Reserve Numbered 1.

8 ‘‘(g) EFFECT ON EXISTING CONTRACTS.—(1) In the

9 case of any contract, in effect on the effective date of this

10 section, for the purchase of production from any part of

11 the United States’ share of the naval petroleum reserves,

12 the sale of the interest of the United States in the reserves

13 shall be subject to the contract for a period of three

14 months after the closing date of the sale or until termi15 nation of the contract, whichever occurs first. The term

16 of any contract entered into after the effective date of this

17 section for the purchase of such production shall not ex18 ceed the anticipated closing date for the sale of the re19 serve.

20 ‘‘(2) In the case of Naval Petroleum Reserve Num21 bered 1, the Secretary shall exercise the termination pro22 cedures provided in the contract between the United

23 States and Bechtel Petroleum Operation, Inc., Contract

24 Number DE–ACO1–85FE60520 so that the contract ter-
222

•HR 2491 RH

1 minates not later than the date of closing of the sale of

2 that reserve.

3 ‘‘(3) In the case of Naval Petroleum Reserve Num4 bered 1, the Secretary shall exercise the termination pro5 cedures provided in the unit plan contract so that the unit

6 plan contract terminates not later than the date of closing

7 of the sale of that reserve.

8 ‘‘(h) OFFER OF SETTLEMENT OF STATE OF CALI9 FORNIA CLAIMS REGARDING NAVAL PETROLEUM RE10 SERVE NUMBERED 1.—(1) In connection with the sale of

11 Naval Petroleum Reserve Numbered 1, the Secretary shall

12 offer to settle all claims against the United States by the

13 State of California and the Teachers’ Retirement Fund

14 of the State of California with respect to lands within that

15 reserve, including sections 16 and 36 of township 30

16 south, range 23 east, Mount Diablo Principal Meridian,

17 California, or production or proceeds of sale from that re18 serve. Subject to paragraph (2), the Secretary shall offer

19 in settlement of such claims—

20 ‘‘(A) a payment from funds provided for this

21 purpose in advance in appropriation Acts;

22 ‘‘(B) a grant of land pursuant to sections 2275

23 and 2276 of the Revised Statutes of the United

24 States (43 U.S.C. 851 and 852) so long as such

25 land is not generating revenue for the United States;
223

•HR 2491 RH

1 ‘‘(C) any other option that would not be incon2 sistent with the Congressional Budget Act of 1974

3 (2 U.S.C. 621 et seq.); or

4 ‘‘(D) any combination of subparagraphs (A),

5 (B), and (C).

6 ‘‘(2) The value of any payment, grant, or option (or

7 combination thereof) offered as settlement under para8 graph (1) may not exceed an amount equal to seven per9 cent of the proceeds from the sale of Naval Petroleum Re10 serve Numbered 1, after deducting the costs incurred to

11 conduct the sale of that reserve.

12 ‘‘(3) Acceptance of the settlement offered under para13 graph (1) shall be subject to the condition that all claims

14 against the United States by the State of California or

15 the Teachers’ Retirement Fund of the State of California

16 are released with respect to lands within the Naval Petro17 leum Reserve Numbered 1, including sections 16 and 36

18 of township 30 south, range 23 east, Mount Diablo Prin19 cipal Meridian, California, or production or proceeds of

20 sale from that reserve. The Secretary may specify the

21 manner in which the release of such claims shall be evi22 denced.

23 ‘‘(i) EFFECT ON ANTITRUST LAWS.—Nothing in this

24 section shall be construed to alter the application of the

25 antitrust laws of the United States to the purchaser of
224

•HR 2491 RH

1 a naval petroleum reserve or to the lands in the naval pe2 troleum reserves subject to sale under this section upon

3 the completion of the sale.

4 ‘‘(j) PRESERVATION OF PRIVATE RIGHT, TITLE, AND

5 INTEREST.—Nothing in this section shall be construed to

6 adversely affect the ownership interest of any other entity

7 having any right, title, and interest in and to lands within

8 the boundaries of the naval petroleum reserves.

9 ‘‘(k) CONGRESSIONAL NOTIFICATION.—Section 7431

10 of this title shall not apply to the sale of the naval petro11 leum reserves under this section. However, the Secretary

12 may not enter into a contract for the sale of a naval petro13 leum reserve until the end of the 15-day period beginning

14 on the date on which the Secretary notifies the Committee

15 on Armed Services of the Senate and the Committee on

16 National Security and the Committee on Commerce of the

17 House of Representatives that the Secretary has accepted

18 an offer under subsection (b)(5) for the sale of that re19 serve.’’.

20 (b) CLERICAL AMENDMENT.—The table of sections

21 at the beginning of such chapter is amended by inserting

22 after the item relating to section 7421 the following new

23 item:

‘‘7421a. Sale of naval petroleum reserves.’’.
225

•HR 2491 RH

1 Subtitle C—National Defense

2 Stockpile

3 SEC. 8021. DISPOSAL OF CERTAIN MATERIALS IN NATIONAL

4 DEFENSE STOCKPILE FOR DEFICIT REDUC5 TION.

6 (a) DISPOSALS REQUIRED.—(1) During fiscal year

7 1996, the President shall dispose of all cobalt contained

8 in the National Defense Stockpile that, as the date of the

9 enactment of this Act, is authorized for disposal under any

10 law (other than this Act).

11 (2) In addition to the disposal of cobalt under para12 graph (1), the President shall dispose of additional quan13 tities of cobalt and quantities of aluminum, ferro colum14 bium, germanium, palladium, platinum, and rubber con15 tained in the National Defense Stockpile so as to result

16 in receipts to the United States in amounts equal to—

17 (A) $21,000,000 during the fiscal year ending

18 September 30, 1996;

19 (B) $338,000,000 during the five-fiscal year pe20 riod ending on September 30, 2000; and

21 (C) $649,000,000 during the seven-fiscal year

22 period ending on September 30, 2002.

23 (3) The President is not required to include the dis24 posal of the materials identified in paragraph (2) in an

25 annual materials plan for the National Defense Stockpile.
226

•HR 2491 RH

1 Disposals made under this section may be made without

2 consideration of the requirements of an annual materials

3 plan.

4 (b) LIMITATION ON DISPOSAL QUANTITY.—The total

5 quantities of materials authorized for disposal by the

6 President under subsection (a)(2) may not exceed the

7 amounts set forth in the following table:

Authorized Stockpile Disposals

Material for disposal Quantity

Aluminum ............................................................................. 62,881 short tons

Cobalt .................................................................................... 42,482,323 pounds contained

Ferro Columbium .................................................................. 930,911 pounds contained

Germanium ........................................................................... 68,207 kilograms

Palladium .............................................................................. 1,264,601 troy ounces

Platinum ............................................................................... 452,641 troy ounces

Rubber .................................................................................. 125,138 long tons

8 (c) DEPOSIT OF RECEIPTS.—Notwithstanding sec9 tion 9 of the Strategic and Critical Materials Stock Piling

10 Act (50 U.S.C. 98h), funds received as a result of the dis11 posal of materials under subsection (a)(2) shall be depos12 ited into the general fund of the Treasury for the purpose

13 of deficit reduction.

14 (d) RELATIONSHIP TO OTHER DISPOSAL AUTHOR15 ITY.—The disposal authority provided in subsection (a)(2)

16 is new disposal authority and is in addition to, and shall

17 not affect, any other disposal authority provided by law

18 regarding the materials specified in such subsection.

19 (e) TERMINATION OF DISPOSAL AUTHORITY.—The

20 President may not use the disposal authority provided in
227

•HR 2491 RH

1 subsection (a)(2) after the date on which the total amount

2 of receipts specified in subparagraph (C) of such sub3 section is achieved.

4 (f) DEFINITION.—The term ‘‘National Defense

5 Stockpile’’ means the National Defense Stockpile provided

6 for in section 4 of the Strategic and Critical Materials

7 Stock Piling Act (50 U.S.C. 98c).

8 TITLE IX—COMMITTEE ON

9 RESOURCES

10 SEC. 9000. TABLE OF CONTENTS.

11 The table of contents for this title is as follows:

TITLE IX—COMMITTEE ON RESOURCES

Sec. 9000. Table of contents.

Subtitle A—Alaska and Helium Privatization

PART 1—ALASKA

Sec. 9001. Exports of Alaskan North Slope oil.

Sec. 9002. Arctic Coastal Plain leasing and revenue.

Sec. 9003. Alaska Power Administration sale.

PART 2—HELIUM PRIVATIZATION

Sec. 9011. Short title.

Sec. 9012. Amendment of Helium Act.

Sec. 9013. Authority of Secretary.

Sec. 9014. Sale of crude helium.

Sec. 9015. Elimination of stockpile.

Sec. 9016. Repeal of authority to borrow.

Sec. 9017. Reports.

Sec. 9018. Land conveyance in Potter County, Texas.

Subtitle B—Water and Power

PART 1—POWER MARKETING ADMINISTRATIONS

Sec. 9201. Short title.

Sec. 9202. Sale of the Southeastern Power Administration.

Sec. 9203. Federal Energy Regulatory Commission jurisdiction.

Sec. 9204. Evaluation of sales of Southwestern Power Administration and

Western Area Power Administration facilities.

Sec. 9205. Bonneville Power Administration appropriations refinancing.
228

•HR 2491 RH

PART 2—RECLAMATION

Sec. 9211. Prepayment of certain repayment contracts between the United

States and the Central Utah Water Conservancy District.

Sec. 9212. Treatment of city of Folsom as a Central Valley Project contractor.

Sec. 9213. Sly Park.

Sec. 9214. Hetch Hetchy Dam.

Subtitle C—National Parks, Forests, and Public Lands

PART 1—CONCESSION REFORM

Sec. 9301. Short title.

Sec. 9302. Purpose.

Sec. 9303. Definitions.

Sec. 9304. Nature and types of concession authorizations.

Sec. 9305. Competitive selection process for concession service agreements.

Sec. 9306. Concessioner evaluations.

Sec. 9307. Capital improvements.

Sec. 9308. Duration of concession authorization.

Sec. 9309. Rates and charges to the public.

Sec. 9310. Transferability of concession authorizations.

Sec. 9311. Fees charged by the United States for concession authorizations.

Sec. 9312. Disposition of fees.

Sec. 9313. Dispute resolution.

Sec. 9314. Recordkeeping.

Sec. 9315. Application of general governmental acquisition requirements.

Sec. 9316. Rules of construction.

Sec. 9317. Regulations.

Sec. 9318. Relationship to other existing laws.

PART 2—NATIONAL FOREST SKI AREAS

Sec. 9321. Privatization of Forest Service ski areas.

Sec. 9322. Ski area permit fees and withdrawal of ski areas from operation of

mining laws.

PART 3—DOMESTIC LIVESTOCK GRAZING

Sec. 9331. Applicable regulations.

Sec. 9332. Fees and charges.

Sec. 9333. Animal unit month.

Sec. 9334. Term of grazing permits or grazing leases.

Sec. 9335. Conformance with land use plan.

Sec. 9336. Effective date.

PART 4—REGIONAL DISPOSAL FACILITY OF SOUTHWESTERN LOW LEVEL

RADIOACTIVE WASTE DISPOSAL COMPACT

Sec. 9341. Conveyance of property.

Sec. 9342. Conveyance of easements.

Subtitle D—Territories

PART 1—COMMONWEALTH OF THE NORTHERN MARIANA ISLANDS

Sec. 9401. Termination of annual direct grant assistance.
229

•HR 2491 RH

PART 2—TERRITORIAL ADMINISTRATIVE CESSATION ACT

Sec. 9421. Short title.

Sec. 9422. Congressional findings.

Sec. 9423. Elimination of Office of Territorial and International Affairs.

Sec. 9424. Certain activities not funded.

Subtitle E—Minerals

PART 1—HARDROCK MINING

Sec. 9501. Findings and purpose.

Sec. 9502. Patents under the general mining law.

Sec. 9503. Royalty under the general mining law.

Sec. 9504. Mineral materials.

Sec. 9505. Claim maintenance requirements.

PART 2—FEDERAL OIL AND GAS ROYALTIES

Sec. 9511. Short title.

Sec. 9512. Definitions.

Sec. 9513. Limitation periods.

Sec. 9514. Adjustment and refunds.

Sec. 9515. Required recordkeeping.

Sec. 9516. Royalty interest, penalties, and payments.

Sec. 9517. Limitation on assessments.

Sec. 9518. Alternatives for marginal properties.

Sec. 9519. Royalty in kind.

Sec. 9520. Royalty simplification and cost-effective audit and collection requirements.

Sec. 9521. Repeals.

Sec. 9522. Delegation to States.

Sec. 9523. Performance standard.

Sec. 9524. Indian lands.

Sec. 9525. Private lands.

Sec. 9526. Effective date.

Subtitle F—Indian Gaming and Health

PART 1—INDIAN GAMING

Sec. 9601. Indian gaming.

PART 2—INDIAN HEALTH: MEDICAID

Sec. 9611. Health care facilities.

Sec. 9612. Provider reimbursement.

Sec. 9613. Study.

PART 3—INDIAN HEALTH: MEDICARE

Sec. 9621. Health care facilities.

Sec. 9622. Provider reimbursement.

Subtitle G—Consultation

Sec. 9701. Consultation.

Subtitle H—Mapping
230

•HR 2491 RH

Sec. 9801. Short title.

Sec. 9802. Surveying and mapping contracting program.

Sec. 9803. Inventory of activities.

Sec. 9804. Plan to increase use of contracts.

Sec. 9805. Reports.

Sec. 9806. Definitions.

Subtitle I—National Park System Reform

Sec. 9901. Short title.

Sec. 9902. Definitions.

PART 1—NATIONAL PARK SYSTEM PLAN

Sec. 9911. Preparation of National Park System plan.

Sec. 9912. Management review of National Park System.

Sec. 9913. National Park System Review Commission.

Sec. 9914. Subsequent Act of Congress required to modify or terminate a park.

Sec. 9915. Authorization of appropriations.

Sec. 9916. Commendation and protection of National Park rangers.

PART 2—NEW AREA ESTABLISHMENT

Sec. 9921. Study of new Park System areas.

1 Subtitle A—Alaska and Helium

2 Privatization

3 PART 1—ALASKA

4 SEC. 9001. EXPORTS OF ALASKAN NORTH SLOPE OIL.

5 (a) AMENDMENT OF MINERAL LEASING ACT.—Sec6 tion 28(s) of the Mineral Leasing Act (30 U.S.C. 185(s))

7 is amended to read as follows:

8 ‘‘EXPORTS OF ALASKAN NORTH SLOPE OIL

9 ‘‘(s)(1) Subject to paragraphs (2) through (6) of this

10 subsection and notwithstanding any other provision of this

11 Act or any other provision of law (including any regula12 tion) applicable to the export of oil transported by pipeline

13 over right-of-way granted pursuant to section 203 of the

14 Trans-Alaska Pipeline Authorization Act (43 U.S.C.

15 1652), such oil may be exported unless the President finds
231

•HR 2491 RH

1 that exportation of this oil is not in the national interest.

2 The President shall make his national interest determina3 tion within 5 months after the date of enactment of this

4 subsection. In evaluating whether exports of this oil are

5 in the national interest, the President shall at a minimum

6 consider—

7 ‘‘(A) whether exports of this oil would diminish

8 the total quantity or quality of petroleum available

9 to the United States;

10 ‘‘(B) the results of an appropriate environ11 mental review, including consideration of appropriate

12 measures to mitigate any potential adverse effects of

13 exports of this oil on the environment, which shall

14 be completed within four months of the date of the

15 enactment of this subsection; and

16 ‘‘(C) whether exports of this oil are likely to

17 cause sustained material oil supply shortages or sus18 tained oil prices significantly above world market

19 levels that would cause sustained material adverse

20 employment effects in the United States or that

21 would cause substantial harm to consumers, includ22 ing in noncontiguous States and Pacific territories.

23 If the President determines that exports of this oil are

24 in the national interest, he may impose such terms and

25 conditions (other than a volume limitation) as are nec-
232

•HR 2491 RH

1 essary or appropriate to ensure that such exports are con2 sistent with the national interest.

3 ‘‘(2) Except in the case of oil exported to a country

4 with which the United States entered into a bilateral inter5 national oil supply agreement before November 26, 1979,

6 or to a country pursuant to the International Emergency

7 Oil Sharing Plan of the International Energy Agency, any

8 oil transported by pipeline over right-of-way granted pur9 suant to section 203 of the Trans-Alaska Pipeline Author10 ization Act (43 U.S.C. 1652) shall, when exported, be

11 transported by a vessel documented under the laws of the

12 United States and owned by a citizen of the United States

13 (as determined in accordance with section 2 of the Ship14 ping Act, 1916 (46 U.S.C. App. 802)).

15 ‘‘(3) Nothing in this subsection shall restrict the au16 thority of the President under the Constitution, the Inter17 national Emergency Economic Powers Act (50 U.S.C.

18 1701 et seq.), or the National Emergencies Act (50 U.S.C.

19 1601 et seq.) to prohibit exports of this oil or under Part

20 B of title II of the Energy Policy and Conservation Act

21 (42 U.S.C. 6271–76).

22 ‘‘(4) The Secretary of Commerce shall issue any rules

23 necessary for implementation of the President’s national

24 interest determination, including any licensing require25 ments and conditions, within 30 days of the date of such
233

•HR 2491 RH

1 determination by the President. The Secretary of Com2 merce shall consult with the Secretary of Energy in ad3 ministering the provisions of this subsection.

4 ‘‘(5) If the Secretary of Commerce finds that export5 ing oil under authority of this subsection has caused sus6 tained material oil supply shortages or sustained oil prices

7 significantly above world market levels and further finds

8 that these supply shortages or price increases have caused

9 or are likely to cause sustained material adverse employ10 ment effects in the United States, the Secretary of Com11 merce, in consultation with the Secretary of Energy, shall

12 recommend, and the President may take, appropriate ac13 tion concerning exports of this oil, which may include

14 modifying or revoking authority to export such oil.

15 ‘‘(6) Administrative action under this subsection is

16 not subject to sections 551 and 553 through 559 of title

17 5, United States Code.’’.

18 (b) GAO REPORT.—

19 (1) REVIEW.—The Comptroller General of the

20 United States shall conduct a review of energy pro21 duction in California and Alaska and the effects of

22 Alaskan North Slope oil exports, if any, on consum23 ers, independent refiners, and shipbuilding and ship

24 repair yards on the West Coast and in Hawaii. The

25 Comptroller General shall commence this review 2
234

•HR 2491 RH

1 years after the date of enactment of this Act and,

2 within 6 months after commencing the review, shall

3 provide a report to the Committee on Resources and

4 the Committee on Commerce of the House of Rep5 resentatives and the Committee on Energy and Nat6 ural Resources of the Senate.

7 (2) CONTENTS OF REPORT.—The report shall

8 contain a statement of the principal findings of the

9 review and recommendations for Congress and the

10 President to address job loss in the shipbuilding and

11 ship repair industry on the West Coast, as well as

12 adverse impacts on consumers and refiners on the

13 West Coast and in Hawaii, that the Comptroller

14 General attributes to Alaska North Slope oil exports.

15 SEC. 9002. ARCTIC COASTAL PLAIN LEASING AND REVE16 NUE.

17 (a) PURPOSE.—It is the purpose of this section to

18 reduce the Federal deficit by an estimated $1,300,000,000

19 over the next 5 years. This revenue will be derived from

20 competitive bonus bids for oil and gas leases in the Coastal

21 Plain area of Alaska’s North Slope.

22 (b) DEFINITIONS.—For the purposes of this section:

23 (1) The term ‘‘Secretary’’ means the Secretary

24 of the Interior.
235

•HR 2491 RH

1 (2) The term ‘‘Coastal Plain’’ means that por2 tion of the Arctic National Wildlife Refuge identified

3 in section 1002(b)(1) of the Alaska National Inter4 est Lands Conservation Act of 1980 (Public Law

5 96–487; 16 U.S.C. 3142(b)(1)) consisting of ap6 proximately 1,549,000 acres.

7 (c) COMPATIBILITY.—Congress hereby determines

8 that the oil and gas leasing program and activities author9 ized by this section in the Coastal Plain are compatible

10 with the purposes for which the Arctic National Wildlife

11 Refuge was established, and that no further findings or

12 decisions are required to implement this determination.

13 (d) AUTHORIZATION.—(1) Congress hereby author14 izes and directs the Secretary to establish and promptly

15 implement a program to assure the expeditious competi16 tive leasing exploration, development, production, and

17 transportation of the oil and gas resources of the Coastal

18 Plain. Regulations to implement this program and to gov19 ern oil and gas leasing, exploration, development and pro20 duction shall be promulgated by the Secretary within 6

21 months of the date of enactment of this section.

22 (2) The Coastal Plain leasing program required by

23 paragraph (1) shall include the following:
236

•HR 2491 RH

1 (A) The first lease sale of not less than 200,000

2 acres shall be conducted within 12 months of the

3 date of enactment of this section.

4 (B) The lease sales shall be based upon an in5 dustry nomination process.

6 (C) The Secretary is directed to grant to the

7 highest responsible qualified bidder or bidders by

8 competitive bidding, under regulations promulgated

9 in advance, any oil and gas lease on unleased Fed10 eral lands within the Coastal Plain. These regula11 tions may provide for the deposit of cash bids in an

12 interest-bearing account until the Secretary accepts

13 the bids, with interest earned paid to the General

14 Treasury for bids that are accepted, and to the un15 successful bidders for bids that are rejected.

16 (D) Royalty payments shall not be less than

121 17 ⁄2 percent, and rental payments shall be pre18 scribed by the Secretary.

19 (E) The Attorney General of the United States

20 and the Federal Trade Commission may conduct

21 such review of lease terms and lease sale activities

22 as are necessary to ensure compliance with the anti23 trust laws.

24 (F) The size of lease tracts may be up to

25 11,520 acres but not less than 2,560 acres, as deter-
237

•HR 2491 RH

1 mined by the Secretary, except that the Secretary

2 may lease smaller tracts if he determines smaller

3 tracts are necessary to promote a more competitive

4 leasing program or are necessary in certain locations

5 to mitigate reasonably foreseeable impacts on the en6 vironment.

7 (G) Each lease shall be issued for an initial pe8 riod of up to 10 years and shall be extended as long

9 as oil or gas is produced in paying quantities from

10 the lease or unit area to which the lease is commit11 ted or as drilling or reworking operations as ap12 proved by the Secretary are conducted thereon.

13 (H) The Secretary is authorized and directed to

14 promulgate regulations and to include terms in

15 leases to ensure that—

16 (i) activities are conducted pursuant to an

17 approved exploration or development plan;

18 (ii) lessees secure an appropriate perform19 ance bond to cover activities;

20 (iii) provision is made for the suspension,

21 cancellation, assignment, relinquishment and

22 unitization of leases; and

23 (iv) the Secretary has access to lease infor24 mation and that confidential, privileged or pro-
238

•HR 2491 RH

1 prietary information furnished by lessees is ade2 quately protected.

3 (e) JUDICIAL REVIEW.—Any complaint filed seeking

4 judicial review of an action of the Secretary in promulgat5 ing any regulation under this section may be filed only

6 in the United States Court of Appeals for the District of

7 Columbia, and such complaint shall be filed within 90 days

8 from the date of such promulgation, or after such date

9 if such complaint is based solely on grounds arising after

10 such 90th day, in which case the complaint must be filed

11 within 90 days after the complainant knew or reasonably

12 should have known of the grounds for the complaint. Any

13 complaint seeking judicial review of any other actions of

14 the Secretary under this section may be filed in any appro15 priate district court of the United States, and such com16 plaint must be filed within 90 days from the date of the

17 action being challenged, or after such date if such com18 plaint is based solely on grounds arising after such 90th

19 day, in which case the complaint must be filed within 90

20 days after the complainant knew or reasonably should

21 have known of the grounds for the complaint.

22 (f) ADMINISTRATION.—(1) Section 1003 of the Alas23 ka National Interest Lands Conservation Act of 1980 (94

24 Stat. 2452; 16 U.S.C. 3143) is repealed.
239

•HR 2491 RH

1 (2) This section shall be considered the primary land

2 management authorization for all activities associated

3 with exploration, development, and production from the

4 Coastal Plain. No land management review, determina5 tion, or other action shall be required except as specifically

6 authorized by this section.

7 (g) PROTECTION OF FISH AND WILDLIFE RE8 SOURCES AND OTHER ENVIRONMENTAL VALUES.—(1)

9 Before conducting a competitive oil and gas lease sale

10 under this section, the Secretary shall promulgate, within

11 6 months, as provided in subsection (d)(1), such rules and

12 regulations as are necessary to ensure that oil and gas

13 exploration, development, production, and transportation

14 activities undertaken in the Coastal Plain achieve the rea15 sonable protection of the fish and wildlife resources, envi16 ronment and subsistence uses of the Coastal Plain.

17 (2) The Secretary shall administer the provisions of

18 this section through regulations and lease terms that the

19 Secretary determines to be necessary to mitigate reason20 ably foreseeable and significantly adverse effects on the

21 fish and wildlife, surface resources and subsistence re22 sources of the Coastal Plain.

23 (3)(A) The Secretary, after consultation with the

24 State of Alaska, the city of Kaktovik, Alaska, and the

25 North Slope Borough, is authorized to close to leasing and
240

•HR 2491 RH

1 designate up to 30,000 acres of the Coastal Plain as Spe2 cial Areas if the Secretary determines that these lands are

3 of such unique character and interest so as to require spe4 cial management and regulatory protection. The Secretary

5 shall notify the Committee on Energy and Natural Re6 sources of the Senate and the Committee on Resources

7 of the House of Representatives 90 days in advance of

8 making such designations. The Secretary may permit leas9 ing of all or portions of any lands within the Coastal Plain

10 designated as Special Areas by setting lease terms that

11 limit or condition surface use and occupancy by lessees

12 of such lands but permit the use of horizontal drilling

13 technology from sites on leases located outside the des14 ignated Special Areas.

15 (B) Notwithstanding any other provision of law or

16 any international agreement to which the United States

17 is a party, the Secretary’s sole authority to close lands

18 within the Coastal Plain to oil and gas leasing and to ex19 ploration, development, and production as provided for in

20 this part is set forth in subparagraph (A).

21 (4) The Secretary shall, in consultation with the

22 State of Alaska, the city of Kaktovik, Alaska, and the

23 North Slope Borough, develop guidelines to encourage the

24 siting of facilities having common use characteristics

25 (service bases, ports and docks, airports, major pipelines
241

•HR 2491 RH

1 and roads) in a manner which leads to facility consolida2 tion, avoids unnecessary duplication, utilizes existing fa3 cilities, minimizes impacts on fish, wildlife, habitat and the

4 subsistence activities of residents of Native communities,

5 and avoids disruption of the lives of the residents of the

6 Village of Kaktovik and other communities.

7 (5) Notwithstanding title XI of the Alaska National

8 Interest Lands Conservation Act of 1980 (94 Stat. 2457;

9 16 U.S.C. 3161 et seq.), the Secretary is authorized and

10 directed to grant, under sections 28(a) through (t) and

11 (v) through (y) of the Mineral Leasing Act (30 U.S.C.

12 185), rights-of-way and easements across the Coastal

13 Plain for the purposes of this section, for pipeline con14 struction, and the transportation of oil and gas and relat15 ed purposes.

16 (6) The Secretary is authorized to close, on a sea17 sonal basis, portions of the Coastal Plain to exploratory

18 drilling activities as necessary to protect caribou calving

19 areas and other species of fish and wildlife.

20 (h) APPLICATION OF ENVIRONMENTAL LAWS.—The

21 ‘‘Final Legislative Environmental Impact Statement’’

22 (April 1987) prepared pursuant to section 1002 of the

23 Alaska National Interest Lands Conservation Act of 1980

24 (94 Stat. 2449; 16 U.S.C. 3142) and section 102(2)(C)

25 of the National Environmental Policy Act of 1969 (89
242

•HR 2491 RH

1 Stat. 424; 42 U.S.C. 4332(2)(C)) is hereby determined

2 to be adequate and legally sufficient for all actions author3 ized pursuant to this section, including all phases of oil

4 and gas leasing, exploration, development, production,

5 transportation and related activities, including the grant6 ing of rights-of-way, use permits and other authorizations.

7 (i) NEW REVENUES.—(1) Notwithstanding any other

8 provision of law, all revenues received from competitive

9 bids, sales, bonuses, royalties, rents, fees, interest or other

10 income derived from the leasing of oil and gas resources

11 within the Coastal Plain shall be deposited into the Treas12 ury of the United States: Provided, That 50 percent of

13 all such Coastal Plain revenues shall be paid by the Sec14 retary of the Treasury semiannually, on March 30th and

15 on September 30th of each year, to the State of Alaska.

16 (2) On March 1st of each year following the date of

17 enactment of this section, the Secretary shall prepare and

18 submit to the Congress an annual report on the revenues

19 derived and on the leasing program authorized by this sec20 tion.

21 (j) CONVEYANCE.—Notwithstanding the provisions of

22 section 1302(h)(2) of the Alaska National Interest Lands

23 Conservation Act (16 U.S.C. 3192(h)(2)), the Secretary

24 is authorized and directed to convey (1) to the Kaktovik

25 Inupiat Corporation the surface estate of the lands de-
243

•HR 2491 RH

1 scribed in paragraph 2 of Public Land Order 6959, to the

2 extent necessary to fulfill the corporation’s entitlement

3 under section 12 of the Alaska Native Claims Settlement

4 Act (43 U.S.C. 1611), and (2) to the Arctic Slope Re5 gional Corporation the subsurface estate beneath such

6 surface estate pursuant to the August 9, 1983, agreement

7 between the Arctic Slope Regional Corporation and the

8 United States of America.

9 (k) PENALTY.—Any person, including any Federal

10 official, who fails to comply with any provision or mandate

11 of this section, a lease term, or a regulation promulgated

12 under this section, after notice of such failure and expira13 tion of a reasonable period for corrective action, shall be

14 liable, after hearing, for a civil penalty of not more than

15 $10,000 for each day of the continuance of such failure.

16 (l) COMMUNITY ASSISTANCE.—There is hereby estab17 lished a Community Assistance Fund in the Treasury

18 which shall be maintained at a level of $5,000,000 annu19 ally from the Federal share of Coastal Plain revenues and

20 shall be available to the Secretary for the purposes of this

21 section. Organized boroughs, other municipal subdivisions

22 of the State of Alaska, and recognized Indian Reorganiza23 tion Act entities which are impacted by activities author24 ized under this section shall be eligible, on application to

25 the Secretary, for local assistance from the Community
244

•HR 2491 RH

1 Assistance Fund for needed social services and to provide

2 public services and facilities required in connection with

3 supporting exploration and development of the Coastal

4 Plain.

5 (m) EMPLOYMENT AND CONTRACTING.—As a condi6 tion of any leases, permits, or other Federal authorizations

7 granted or issued pursuant to this section, a recipient of

8 those leases, permits, or authorizations shall be required

9 to use its best efforts to assure that the lessee and its

10 agents and contractors provide a fair share of employment

11 and contracting for Alaska Natives and Alaska Native

12 Corporations from throughout the State.

13 (n) USE OF ANWR REVENUES.—

14 (1) ESTABLISHMENT OF ENDOWMENT.—There

15 is hereby established in the general fund of the

16 Treasury a separate account which shall be known

17 as the National Endowment for Fish and Wildlife.

18 (2) CONTENTS.—(A) Except as provided in

19 subparagraph (B), the Endowment shall consist of

20 revenues received from the following sources:

21 (i) Gifts, devises, and bequests to the En22 dowment.

23 (ii) Amounts appropriated by the Congress

24 to the Endowment.
245

•HR 2491 RH

1 (iii) Any revenues deposited into the

2 Treasury of the United States under subsection

3 (i), from the Federal share of revenues derived

4 from oil and gas leasing within the Coastal

5 Plain, that exceed $1,300,000,000.

6 (B) After the Endowment has reached a level of

7 $250,000,000 in principal, further payments to the

8 Endowment shall consist only of the following:

9 (i) Gifts, devises, and bequests to the En10 dowment.

11 (ii) Amounts appropriated by the Congress

12 to the Endowment.

13 (iii) 5 percent of the Federal royalties de14 rived from commercial production of oil and gas

15 on Federal leases on the Coastal Plain.

16 (3) ESTABLISHMENT OF FISH AND WILDLIFE

17 CONSERVATION COMMISSION.—(A) To carry out the

18 purposes of this subsection, there is hereby estab19 lished a commission to be known as the Fish and

20 Wildlife Conservation Commission.

21 (B) The Commission shall consist of—

22 (i) the Secretary of the Interior, who shall

23 be the chairman,

24 (ii) 3 Members of the Senate selected by

25 the President of the Senate, and
246

•HR 2491 RH

1 (iii) 3 Members of the House of Represent2 atives selected by the Speaker.

3 (C) At least 1 member of the Commission se4 lected from each House of Congress shall be a mem5 ber of the minority party in that House.

6 (D) Any Member of the House of Representa7 tives who is a member of the Commission, if re8 elected to the succeeding Congress, may serve on the

9 Commission notwithstanding the expiration of a

10 Congress.

11 (E) Any vacancy on the Commission shall be

12 filled in the same manner as the original appoint13 ment.

14 (4) EXPENDITURES BY COMMISSION.—(A) The

15 Fish and Wildlife Commission may make expendi16 tures from the Endowment for the following fish and

17 wildlife conservation purposes:

18 (i) Acquisition of important habitat lands

19 for endangered species or threatened species

20 from owners of private property. Such lands

21 may be acquired solely on a willing seller basis

22 and shall be managed by the Secretary of the

23 Interior for the conservation of such species

24 pursuant to the terms of section 5 of the En-
247

•HR 2491 RH

1 dangered Species Act of 1973 (16 U.S.C.

2 1534).

3 (ii) Provision of funding for purposes au4 thorized under the Endangered Species Act of

5 1973.

6 (iii) Provision of funds to the North Amer7 ican Wetlands Conservation Fund pursuant to

8 the North American Wetlands Conservation Act

9 (16 U.S.C. 4401 et seq.).

10 (B) The amount expended under subparagraph

11 (A)(iii) each fiscal year shall equal or exceed 25 per12 cent of the total expenditures from the Endowment

13 in that fiscal year.

14 (C) The Secretary of the Interior may not rec15 ommend any lands or interest in lands for purchase

16 or other forms of acquisition using funds made

17 available under the terms of this section unless the

18 Secretary of the Interior—

19 (i) has determined that such lands are nec20 essary for the conservation of endangered spe21 cies or other fish and wildlife; and

22 (ii) has consulted with the county or other

23 unit of local government in which such lands

24 are located and with the Governor of the State

25 concerned.
248

•HR 2491 RH

1 (D) Land or an interest in land may not be ac2 quired with moneys from the Endowment unless—

3 (i) the acquisition thereof has been ap4 proved by the Governor of the State in which

5 the land is located; and

6 (ii) the owner of the land or interest has

7 offered the land or interest for acquisition

8 under this subsection and consented to the ac9 quisition.

10 (5) ANNUAL REPORT.—The Commission shall,

11 through its chairman, annually report in detail to

12 the Congress, by not later than the first Monday in

13 December, regarding the operations of the Commis14 sion during the preceding fiscal year.

15 (6) STATE LAW.—The jurisdiction of any State,

16 both civil and criminal, over persons upon areas ac17 quired under this subsection shall not be changed or

18 otherwise affected by reason of the acquisition and

19 administration of the areas by the United States as

20 endangered species habitat. Nothing in this sub21 section is intended to interfere with the operation of

22 the game laws of the States.

23 (7) ADMINISTRATION OF AREAS ACQUIRED.—

24 Areas of lands, waters, or interest therein acquired

25 or reserved pursuant to this subsection shall, unless
249

•HR 2491 RH

1 otherwise provided by law, be administered by the

2 Secretary of the Interior under rules and regulations

3 prescribed by the Secretary to conserve and protect

4 endangered species in accordance with the Endan5 gered Species Act of 1973, or to restore or develop

6 adequate wildlife habitat.

7 (8) DEFINITIONS.—In this subsection:

8 (A) The term ‘‘Commission’’ means the

9 Fish and Wildlife Conservation Commission es10 tablished by this subsection.

11 (B) The term ‘‘Endowment’’ means the

12 National Endowment for Fish and Wildlife es13 tablished by this subsection.

14 (9) CONFORMING AMENDMENT.—Section 7 of

15 the North American Wetlands Conservation Act of

16 1989 (16 U.S.C. 4406) is amended by adding at the

17 end the following:

18 ‘‘(e) FISH AND WILDLIFE COMMISSION FUNDING.—

19 In addition to the amounts made available under sub20 sections (a), (b), and (c) of this section, the Council may

21 receive funds from the Fish and Wildlife Commission to

22 carry out the purposes of this Act. Use of such funds shall

23 not be subject to the cost allocation requirements of sec24 tion 8 of this Act.’’.
250

•HR 2491 RH

1 SEC. 9003. ALASKA POWER ADMINISTRATION SALE.

2 (a) DEFINITIONS.—For purposes of this section:

3 (1) The term ‘‘Eklutna assets’’ means the

4 Eklutna Hydroelectric Project and related assets as

5 described in section 4 and Exhibit A of the Eklutna

6 Purchase Agreement.

7 (2) The term ‘‘Eklutna Purchase Agreement’’

8 means the August 2, 1989, Eklutna Purchase

9 Agreement between the Alaska Power Administra10 tion of the Department of Energy and the Eklutna

11 Purchasers, together with any amendments thereto

12 which were adopted before the enactment of this sec13 tion.

14 (3) The term ‘‘Eklutna Purchasers’’ means the

15 Municipality of Anchorage doing business as Munici16 pal Light and Power, the Chugach Electric Associa17 tion, Inc. and the Matanuska Electric Association,

18 Inc.

19 (4) The term ‘‘Secretary’’ means the Secretary

20 of Energy except where otherwise specified.

21 (5) The term ‘‘Snettisham assets’’ means the

22 Snettisham Hydroelectric Project and related assets

23 as described in section 4 and Exhibit A of the

24 Snettisham Purchase Agreement.

25 (6) The term ‘‘Snettisham Purchase Agree26 ment’’ means the February 10, 1989, Snettisham
251

•HR 2491 RH

1 Purchase Agreement between the Alaska Power Ad2 ministration of the Department of Energy and the

3 Alaska Power Authority and its successors in inter4 est, together with any amendments thereto which

5 were adopted before the enactment of this section.

6 (b) SALE OF SNETTISHAM AND EKLUNTA ASSETS.—

7 (1) SNETTISHAM.—The Secretary is authorized

8 and directed to sell and transfer the Snettisham as9 sets to the State of Alaska in accordance with the

10 terms of this section and the Snettisham Purchase

11 Agreement.

12 (2) EKLUTNA.—The Secretary is authorized

13 and directed to sell and transfer the Eklutna assets

14 to the Eklutna Purchasers in accordance with the

15 terms of this section and the Eklutna Purchase

16 Agreement.

17 (3) COOPERATION OF OTHER AGENCIES.—

18 Other departments, agencies, and instrumentalities

19 of the United States shall cooperate with the Sec20 retary in implementing the sales and transfers under

21 this section.

22 (4) AUTHORIZATION OF APPROPRIATIONS; CON23 TRIBUTED FUNDS.—(A) There are authorized to be

24 appropriated such sums as may be necessary to pre25 pare, survey, or acquire Snettisham and Eklutna as-
252

•HR 2491 RH

1 sets for sale and transfer under this section. Such

2 preparations and acquisitions shall provide sufficient

3 title in the assets to ensure beneficial use, enjoy4 ment, and occupancy thereof to the purchasers.

5 (B) Notwithstanding any other provision of law,

6 the Alaska Power Administration is authorized to re7 ceive, administer, and expend such contributed funds

8 as may be provided by the Eklutna Purchasers or

9 customers or the Snettisham Purchasers or cus10 tomers for the purposes of upgrading, improving,

11 maintaining, or administering Eklutna or

12 Snettisham. Upon the termination of the Alaska

13 Power Administration required under subsection (d),

14 the Secretary of Energy shall administer and expend

15 any remaining balances of such contributed funds

16 for the purposes intended by the contributors.

17 (c) GENERAL PROVISIONS.—

18 (1) RIGHTS-OF-WAY AND OTHER LANDS FOR

19 THE EKLUTNA PROJECT.—With respect to Eklutna

20 lands described in Exhibit A of the Eklutna Pur21 chase Agreement:

22 (A) The Secretary of the Interior shall

23 issue rights-of-way to the Alaska Power Admin24 istration for subsequent reassignment to the
253

•HR 2491 RH

1 Eklutna Purchasers at no cost to the Eklutna

2 Purchasers.

3 (B) Such rights-of-way shall remain effec4 tive for a period equal to the life of the Eklutna

5 hydroelectric project as extended by improve6 ments, repairs, renewals, or replacements.

7 (C) Such rights-of-way shall be sufficient

8 for the operation, maintenance, repair, and re9 placement of, and access to, the facilities of the

10 Eklutna hydroelectric project located on mili11 tary lands and lands managed by the Bureau of

12 Land Management, including land selected by,

13 but not yet conveyed to, the State of Alaska.

14 (D) If the Eklutna Purchasers subse15 quently sell or transfer the Eklutna hydro16 electric project to private ownership, the Bu17 reau of Land Management may assess reason18 able and customary fees for continued use of

19 the rights-of-way on lands managed by the Bu20 reau of Land Management and military lands

21 in accordance with applicable law.

22 (E) The Secretary shall transfer fee title to

23 lands at Anchorage Substation to the Eklutna

24 Purchasers at no additional cost if the Sec25 retary of the Interior determines that pending
254

•HR 2491 RH

1 claims to and selections of those lands are in2 valid or relinquished.

3 (F) With respect only to the Eklutna lands

4 identified in Exhibit A of the Eklutna Purchase

5 Agreement, the State of Alaska may select, and

6 the Secretary of the Interior shall convey, to the

7 State, improved lands under the selection enti8 tlements in section 6 of the Alaska Statehood

9 Act (Public Law 85–508; 72 Stat. 339) and the

10 North Anchorage Land Agreement of January

11 31, 1983. The conveyance of such lands is sub12 ject to the rights-of-way provided to the

13 Eklutna Purchasers under subparagraph (A).

14 (2) LANDS FOR THE SNETTISHAM PROJECT.—

15 With respect to the Snettisham lands identified in

16 Exhibit A of the Snettisham Purchase Agreement,

17 the State of Alaska may select, and the Secretary of

18 the Interior shall convey to the State, improved

19 lands under the selection entitlement in section 6 of

20 the Alaska Statehood Act (Public Law 85–508; 72

21 Stat. 339).

22 (3) EFFECT ON STATE SELECTIONS.—Notwith23 standing the expiration of the right of the State of

24 Alaska to make selections under section 6 of the

25 Alaska Statehood Act (Public Law 85–508; 72 Stat.
255

•HR 2491 RH

1 339), the State of Alaska may select lands author2 ized for selection under this section or any Purchase

3 Agreement incorporated into or ratified by this sec4 tion. The State shall complete such selections within

5 one year after the date of the enactment of this sec6 tion. The Secretary of the Interior shall convey lands

7 selected by the State under this section notwith8 standing the limitation contained in section 6(b) of

9 the Alaska Statehood Act (Public Law 85–508; 72

10 Stat. 339) regarding the occupancy, appropriation,

11 or reservation of selected lands. Nothing in this sub12 section shall be construed to authorize the Secretary

13 of the Interior to convey to the State of Alaska a

14 total acreage of selected lands in excess of the total

15 acreage which could be transferred to the State of

16 Alaska pursuant to the Alaska Statehood Act (Pub17 lic Law 85–508; 72 Stat. 339), and other applicable

18 law.

19 (4) REPEAL OF ACT OF AUGUST 9, 1955.—The

20 Act of August 9, 1955 (69 Stat. 618), concerning

21 water resources investigations in Alaska, is repealed.

22 (5) TREATMENT OF ASSET SALE.—The sales of

23 assets under this section shall not be considered a

24 disposal of Federal surplus property under the Fed25 eral Property and Administrative Services Act of
256

•HR 2491 RH

1 1949 (40 U.S.C. 484) or the Surplus Property Act

2 of 1944 (50 U.S.C. App. 1622).

3 (6) APPLICATION OF CERTAIN LAWS.—(A) The

4 Act of July 31, 1950 (64 Stat. 382), shall cease to

5 apply on the date, as determined by the Secretary,

6 when all Eklutna assets have been conveyed to the

7 Eklutna Purchasers.

8 (B) Section 204 of the Flood Control Act of

9 1962 (Public Law 87–874; 76 Stat. 1193) shall

10 cease to apply effective on the date, as determined

11 by the Secretary, when all Snettisham assets have

12 been conveyed to the State of Alaska.

13 (d) TERMINATION OF ALASKA POWER ADMINISTRA14 TION.—

15 (1) TERMINATION OF ALASKA POWER

16 ADMINISTATION.—Not later than one year after both

17 of the sales authorized in this section have occurred,

18 as measured by the Transaction Dates stipulated in

19 the Purchase Agreements, the Secretary shall—

20 (A) complete the business of, and close

21 out, the Alaska Power Administration;

22 (B) prepare and submit to Congress a re23 port documenting the sales; and
257

•HR 2491 RH

1 (C) return unobligated balances of funds

2 appropriated for the Alaska Power Administra3 tion to the Treasury of the United States.

4 (2) DOE ORGANIZATION ACT.—Section 302(a)

5 of the Department of Energy Organization Act (42

6 U.S.C. 7152(a)) is amended as follows:

7 (A) In paragraph (1)—

8 (i) by striking out subparagraph (C);

9 and

10 (ii) by redesignating subparagraphs

11 (D), (E), and (F) as subparagraphs (C),

12 (D), and (E) respectively.

13 (B) In paragraph (2), by striking out ‘‘the

14 Bonneville Power Administration, and the Alas15 ka Power Administration’’ and inserting in lieu

16 thereof ‘‘and the Bonneville Power Administra17 tion’’.

18 The amendments made by this paragraph shall take

19 effect on the date on which the Secretary submits

20 the report referred to in subparagraph (B) of para21 graph (1).

22 (e) PROCEEDS.—The proceeds from the sale of

23 Snettisham and Eklutna assets under this section shall be

24 credited to miscellaneous receipts in the Treasury.
258

•HR 2491 RH

1 PART 2—HELIUM PRIVATIZATION

2 SEC. 9011. SHORT TITLE.

3 This part may be cited as the ‘‘Helium Privatization

4 Act of 1995’’.

5 SEC. 9012. AMENDMENT OF HELIUM ACT.

6 Except as otherwise expressly provided, whenever in

7 this part an amendment or repeal is expressed in terms

8 of an amendment to, or repeal of, a section or other provi9 sion, the reference shall be considered to be made to a

10 section or other provision of the Helium Act (50 U.S.C.

11 167 to 167n).

12 SEC. 9013. AUTHORITY OF SECRETARY.

13 Sections 3, 4, and 5 are amended to read as follows:

14 ‘‘SEC. 3. AUTHORITY OF SECRETARY.

15 ‘‘(a) EXTRACTION AND DISPOSAL OF HELIUM ON

16 FEDERAL LANDS.—(1) The Secretary may enter into

17 agreements with private parties for the recovery and dis18 posal of helium on Federal lands upon such terms and

19 conditions as he deems fair, reasonable and necessary. The

20 Secretary may grant leasehold rights to any such helium.

21 The Secretary may not enter into any agreement by which

22 the Secretary sells such helium other than to a private

23 party with whom the Secretary has an agreement for re24 covery and disposal of helium. Such agreements may be

25 subject to such rules and regulations as may be prescribed

26 by the Secretary.
259

•HR 2491 RH

1 ‘‘(2) Any agreement under this subsection shall be

2 subject to the existing rights of any affected Federal oil

3 and gas lessee. Each such agreement (and any extension

4 or renewal thereof) shall contain such terms and condi5 tions as deemed appropriate by the Secretary.

6 ‘‘(3) This subsection shall not in any manner affect

7 or diminish the rights and obligations of the Secretary and

8 private parties under agreements to dispose of helium pro9 duced from Federal lands in existence at the enactment

10 of the Helium Privatization Act of 1995 except to the ex11 tent that such agreements are renewed or extended after

12 such date.

13 ‘‘(b) STORAGE, TRANSPORTATION, AND SALE.—The

14 Secretary is authorized to store, transport, and sell helium

15 only in accordance with this Act.

16 ‘‘(c) MONITORING AND REPORTING.—The Secretary

17 is authorized to monitor helium production and helium re18 serves in the United States and to periodically prepare re19 ports regarding the amounts of helium produced and the

20 quantity of crude helium in storage in the United States.

21 ‘‘SEC. 4. STORAGE, TRANSPORTATION, AND WITHDRAWAL

22 OF CRUDE HELIUM.

23 ‘‘(a) STORAGE, TRANSPORTATION, AND WITH24 DRAWAL.—The Secretary is authorized to store and trans25 port crude helium and to maintain and operate existing
260

•HR 2491 RH

1 crude helium storage at the Bureau of Mines Cliffside

2 Field, together with related helium transportation and

3 withdrawal facilities.

4 ‘‘(b) CESSATION OF PRODUCTION, REFINING, AND

5 MARKETING.—Effective 18 months after the date of en6 actment of the Helium Privatization Act of 1995, the Sec7 retary shall cease producing, refining and marketing re8 fined helium and shall cease carrying out all other activi9 ties relating to helium which the Secretary was authorized

10 to carry out under this Act before the date of enactment

11 of the Helium Privatization Act of 1995, except those ac12 tivities described in subsection (a). The amount of helium

13 reserves owned by the United States and stored in the Bu14 reau of Mines Cliffside Field at such date of cessation,

15 less 600,000,000 cubic feet, shall be the helium reserves

16 owned by the United States required to be sold pursuant

17 to section 8(b) hereof.

18 ‘‘(c) DISPOSAL OF FACILITIES.—(1) Within two

19 years after the date on which the Secretary ceases produc20 ing, refining and marketing refined helium and ceases all

21 other activities relating to helium in accordance with sub22 section (b), the Secretary shall dispose of all facilities,

23 equipment, and other real and personal property, together

24 with all interests therein, held by the United States for

25 the purpose of producing, refining and marketing refined
261

•HR 2491 RH

1 helium. The disposal of such property shall be in accord2 ance with the provisions of law governing the disposal of

3 excess or surplus properties of the United States.

4 ‘‘(2) All proceeds accruing to the United States by

5 reason of the sale or other disposal of such property shall

6 be treated as moneys received under this chapter for pur7 poses of section 6(f). All costs associated with such sale

8 and disposal (including costs associated with termination

9 of personnel) and with the cessation of activities under

10 subsection (b) shall be paid from amounts available in the

11 helium production fund established under section 6(f).

12 ‘‘(3) Paragraph (1) shall not apply to any facilities,

13 equipment, or other real or personal property, or any in14 terest therein, necessary for the storage and transpor15 tation of crude helium or any equipment needed to main16 tain the purity, quality control, and quality assurance of

17 helium in the reserve.

18 ‘‘(d) EXISTING CONTRACTS.—All contracts which

19 were entered into by any person with the Secretary for

20 the purchase by such person from the Secretary of refined

21 helium and which are in effect on the date of the enact22 ment of the Helium Privatization Act of 1995 shall remain

23 in force and effect until the date on which the facilities

24 referred to in subsection (c) are disposed of. Any costs

25 associated with the termination of such contracts shall be
262

•HR 2491 RH

1 paid from the helium production fund established under

2 section 6(f).

3 ‘‘SEC. 5. FEES FOR STORAGE, TRANSPORTATION AND WITH4 DRAWAL.

5 ‘‘Whenever the Secretary provides helium storage,

6 withdrawal, or transportation services to any person, the

7 Secretary is authorized and directed to impose fees on

8 such person to reimburse the Secretary for the full costs

9 of providing such storage, transportation, and withdrawal.

10 All such fees received by the Secretary shall be treated

11 as moneys received under this Act for purposes of section

12 6(f).’’.

13 SEC. 9014. SALE OF CRUDE HELIUM.

14 Section 6 is amended as follows:

15 (1) Subsection (a) is amended by striking out

16 ‘‘from the Secretary’’ and inserting ‘‘from persons

17 who have entered into enforceable contracts to pur18 chase an equivalent amount of crude helium from

19 the Secretary’’.

20 (2) Subsection (b) is amended by inserting

21 ‘‘crude’’ before ‘‘helium’’ and by adding the follow22 ing at the end thereof: ‘‘Except as may be required

23 by reason of subsection (a), the Secretary shall not

24 make sales of crude helium under this section in
263

•HR 2491 RH

1 such amounts as will disrupt the market price of

2 crude helium.’’.

3 (3) Subsection (c) is amended by inserting

4 ‘‘crude’’ before ‘‘helium’’ the first place it appears

5 and by striking ‘‘together with interest as provided

6 in subsection (d) of this section’’ and all that follows

7 down through the period at the end of such sub8 section and inserting the following:

9 ‘‘all funds required to be repaid to the United States as

10 of October 1, 1995, under this section (hereinafter re11 ferred to as ‘repayable amounts’). The price at which

12 crude helium is sold by the Secretary shall not be less than

13 the amount determined by the Secretary as follows:

14 ‘‘(1) Divide the outstanding amount of such re15 payable amounts by the volume (in mcf) of crude he16 lium owned by the United States and stored in the

17 Bureau of Mines Cliffside Field at the time of the

18 sale concerned.

19 ‘‘(2) Adjust the amount determined under para20 graph (1) by the Consumer Price Index for years be21 ginning after December 31, 1995.’’.

22 (4) Subsection (d) is amended to read as fol23 lows:

24 ‘‘(d) EXTRACTION OF HELIUM FROM DEPOSITS ON

25 FEDERAL LANDS.—All moneys received by the Secretary
264

•HR 2491 RH

1 from the sale or disposition of helium on Federal lands

2 shall be paid to the Treasury and credited against the

3 amounts required to be repaid to the Treasury under sub4 section (c) of this section.’’.

5 (5) Subsection (e) is repealed.

6 (6) Subsection (f) is amended by inserting

7 ‘‘(1)’’ after ‘‘(f)’’ and by adding the following at the

8 end thereof:

9 ‘‘(2) Within 7 days after the commencement of each

10 fiscal year after the disposal of the facilities referred to

11 in section 4(c), all amounts in such fund in excess of

12 $2,000,000 (or such lesser sum as the Secretary deems

13 necessary to carry out this Act during such fiscal year)

14 shall be paid to the Treasury and credited as provided in

15 paragraph (1). Upon repayment of all amounts referred

16 to in subsection (c), the fund established under this sec17 tion shall be terminated and all moneys received under this

18 Act shall be deposited in the Treasury as General Reve19 nues.’’.

20 SEC. 9015. ELIMINATION OF STOCKPILE.

21 Section 8 is amended to read as follows:

22 ‘‘SEC. 8. ELIMINATION OF STOCKPILE.

23 ‘‘(a) REVIEW OF RESERVES.—The Secretary shall re24 view annually the known helium reserves in the United

25 States and make a determination as to the expected life
265

•HR 2491 RH

1 of the domestic helium reserves (other than Federally

2 owned helium stored at the Cliffside Reservoir) at that

3 time.

4 ‘‘(b) STOCKPILE SALES.—Not later than January 1,

5 2005, the Secretary shall commence offering for sale crude

6 helium from helium reserves owned by the United States

7 in such minimum annual amounts as would be necessary

8 to dispose of all such helium reserves in excess of

9 600,000,000 cubic feet (mcf) on a straight-line basis be10 tween such date and January 1, 2015: Provided, That the

11 minimum price for all such sales, as determined by the

12 Secretary in consultation with the helium industry, shall

13 be such as will ensure repayment of the amounts required

14 to be repaid to the Treasury under section 6(c): And pro15 vided further, That the minimum annual sales requirement

16 may be deferred only if, and to the extent that, the Sec17 retary is unable to arrange sales at the minimum price.

18 The sales shall be at such times during each year and in

19 such lots as the Secretary determines, in consultation with

20 the helium industry, are necessary to carry out this sub21 section with minimum market disruption.

22 ‘‘(c) DISCOVERY OF ADDITIONAL RESERVES.—The

23 discovery of additional helium reserves shall not affect the

24 duty of the Secretary to make sales of helium as provided

25 in subsection (b), as the case may be.’’.
266

•HR 2491 RH

1 SEC. 9016. REPEAL OF AUTHORITY TO BORROW.

2 Sections 12 and 15 are repealed.

3 SEC. 9017. REPORTS.

4 Section 16 is amended by redesignating existing sec5 tion 16 as section 16(a) and inserting the following at the

6 end thereof:

7 ‘‘(b)(1) The Inspector General of the Department of

8 the Interior shall cause to be prepared, not later than

9 March 31 following each fiscal year commencing with the

10 date of enactment of the Helium Privatization Act of

11 1995, annual financial statements for the Helium Oper12 ations of the Bureau of Mines. The Director of the Bureau

13 of Mines shall cooperate with the Inspector General in ful14 filling this requirement, and shall provide him with such

15 personnel and accounting assistance as may be necessary

16 for that purpose. The financial statements shall be audited

17 by the General Accounting Office, and a report on such

18 audit shall be delivered by the General Accounting Office

19 to the Secretary of the Interior and Congress, not later

20 than June 30 following the end of the fiscal year for which

21 they are prepared. The audit shall be prepared in accord22 ance with generally accepted government auditing stand23 ards.

24 ‘‘(2) The financial statements shall be comprised of

25 the following:
267

•HR 2491 RH

1 ‘‘(A) A balance sheet reflecting the overall fi2 nancial position of the Helium Operations, including

3 assets and liabilities thereof;

4 ‘‘(B) the Statement of Operations, reflecting

5 the fiscal period results of the Helium Operations;

6 ‘‘(C) a statement cash flows or changes in fi7 nancial position of the Helium Operations; and

8 ‘‘(D) a reconciliation of budget reports of the

9 Helium Operations.

10 ‘‘(3) The Statement of Operations shall include but

11 not be limited to the revenues from, and costs of, sales

12 of crude helium, the storage and transportation of crude

13 helium, the production, refining and marketing of refined

14 helium, and the maintenance and operation of helium stor15 age facilities at the Bureau of Mines Cliffside Field. The

16 term ‘revenues’ for this purpose shall exclude (A) royalties

17 paid to the United States for production of helium or other

18 extraction of resources, except to the extent that the He19 lium Operations incur direct costs in connection therewith,

20 and (B) proceeds from sales of assets other than inven21 tory. The term ‘expenses’ shall include, but not be limited

22 to (i) all labor costs of the Bureau of Mines Helium Oper23 ations, and of the Department of the Interior in connec24 tion therewith, and (ii) for financial reporting purposes

25 but not in connection with the determination of sales
268

•HR 2491 RH

1 prices in section 6(c), all current-period interest on out2 standing repayable amounts (as described in section 6(c))

3 calculated at the same rates as such interest was cal4 culated prior to the enactment of the Helium Privatization

5 Act of 1995.

6 ‘‘(4) The balance sheet shall include, but not be lim7 ited to, on the asset side, the present discounted market

8 value of crude helium reserves; and on the liability side,

9 the accrued liability for principal and interest on debt to

10 the United States. For financial reporting purposes but

11 not in connection with the determination of sales prices

12 in section 6(c), the balance sheet shall also include accrued

13 but unpaid interest on outstanding repayable amounts (as

14 described in section 6(c)) through the date of the report,

15 calculated at the same rates as such interest was cal16 culated prior to the enactment of the Helium Privatization

17 Act of 1995.’’.

18 SEC. 9018. LAND CONVEYANCE IN POTTER COUNTY, TEXAS.

19 (a) IN GENERAL.—The Secretary of the Interior shall

20 transfer all right, title, and interest of the United States

21 in and to the parcel of land described in subsection (b)

22 to the Texas Plains Girl Scout Council for consideration

23 of $1, reserving to the United States such easements as

24 may be necessary for pipeline rights-of-way.
269

•HR 2491 RH

1 (b) LAND DESCRIPTION.—The parcel of land re2 ferred to in subsection (a) is all those certain lots, tracts

3 or parcels of land lying and being situated in the County

4 of Potter and State of Texas, and being the East Three

5 Hundred Thirty-One (E331) acres out of Section Seventy6 eight (78) in Block Nine (9), B.S. & F. Survey, (some7 times known as the G. D. Landis pasture) Potter County,

8 Texas, located by certificate No. 1/39 and evidenced by

9 letters patents Nos. 411 and 412 issued by the State of

10 Texas under date of November 23, 1937, and of record

11 in Vol. 66A of the Patent Records of the State of Texas.

12 The metes and bounds description of such lands is as fol13 lows:

14 (1) FIRST TRACT.—One Hundred Seventy-one

15 (171) acres of land known as the North part of the

16 East part of said survey Seventy-eight (78) afore17 said, described by metes and bounds as follows:

18 Beginning at a stone 20 x 12 x 3 inches

19 marked X, set by W. D. Twichell in 1905, for

20 the Northeast corner of this survey and the

21 Northwest corner of Section 59;

22 Thence, South 0 degrees 12 minutes East with

23 the West line of said Section 59, 999.4 varas to

24 the Northeast corner of the South 160 acres of

25 East half of Section 78:
270

•HR 2491 RH

1 Thence, North 89 degrees 47 minutes West

2 with the North line of the South 150 acres of

3 the East half, 956.8 varas to a point in the

4 East line of the West half Section 78:

5 Thence North 0 degrees 10 minutes West with

6 the East line of the West half 999.4 varas to

7 a stone 18 x 14 x 3 inches in the middle of the

8 South line of Section 79;

9 Thence South 89 degrees 47 minutes East 965

10 varas to the place of beginning.

11 (2) SECOND TRACT.—One Hundred Sixty (160)

12 acres of land known as the South part of the East

13 part of said survey No. Seventy-eight (78) described

14 by metes and bounds as follows:

15 Beginning at the Southwest corner of Section

16 59, a stone marked X and a pile of stones;

17 Thence North 89 degrees 47 minutes West with

18 the North line of Section 77, 966.5 varas to the

19 Southeast corner of the West half of Section

20 78; Thence North 0 degrees 10 minutes West

21 with the East line of the West half of Section

22 78;

23 Thence South 89 degrees 47 minutes East

24 965.8 varas to a point in the East line of Sec25 tion 78;
271

•HR 2491 RH

1 Thence South 0 degrees 12 minutes East 934.6

2 varas to the place of beginning.

3 Containing an area of 331 acres, more or less.

4 Subtitle B—Water and Power

5 PART 1—POWER MARKETING ADMINISTRATIONS

6 SEC. 9201. SHORT TITLE.

7 This part may be cited as the ‘‘Power Administration

8 Act’’.

9 SEC. 9202. SALE OF THE SOUTHEASTERN POWER ADMINIS10 TRATION.

11 (a) SALE OF THE SOUTHEASTERN POWER ADMINIS12 TRATION ASSETS.—The Secretary of Energy (hereafter in

13 this part referred to as the ‘‘Secretary’’) is authorized and

14 directed to sell the facilities used to generate the electric

15 power marketed by the Southeastern Power Administra16 tion, including all dams, locks, reservoirs, and related

17 transmission and generation structures, equipment, facili18 ties and real property (including rights-of-way) which are

19 used in connection with the operation of such power gen20 eration facilities. The sale shall also include all contracts,

21 marketing agreements, and any and all other rights, inter22 ests, and obligations held or owed by the Southeastern

23 Power Administration. Each sale shall be subject to all

24 existing storage rights in such reservoirs acquired by local

25 interests pursuant to the Water Supply Act of 1958 (Pub-
272

•HR 2491 RH

1 lic Law 85–500; 43 U.S.C. 390b) and sections 1, 2, and

2 3 of Public Law 88–140 (43 U.S.C. 390c through 390e)

3 for water supply or other purposes and all such rights

4 shall survive such sale; all obligations of the United States

5 under contracts with such local interests for the use of

6 such storage shall be assumed by any purchaser so that

7 such local interests may continue to operate and utilize

8 their storage in accordance with their existing contracts

9 with the United States without entering into an additional

10 contract with the United States or the purchaser, notwith11 standing any provision of law or contract to the contrary.

12 In order to assure that the facilities are transferred in a

13 manner that provides a reasonable payment to the United

14 States, sales under this section shall be made through a

15 competitive bidding process open to all bidders determined

16 by the Secretary to be financially qualified and who have

17 the experience and resources necessary to manage the

18 transferred assets. No facility or group of facilities may

19 be sold for an amount less than the minimum bid estab20 lished and published by the Secretary. The minimum bid

21 shall be equal to the net present value of the outstanding

22 debt repayable to the United States and attributable to

23 the facility or group of facilities concerned.

24 (b) COOPERATION OF OTHER AGENCIES.—The heads

25 of other affected Federal departments and agencies shall
273

•HR 2491 RH

1 assist the Secretary in implementing the sales authorized

2 by this section. Upon receiving a written request from the

3 Secretary, the head of any such department or agency hav4 ing administrative jurisdiction over any facility to be sold

5 under this section shall transfer (at such time as may be

6 specified by the Secretary in such request) such facility

7 to the Secretary for purposes of effectuating such sale.

8 (c) FINANCIAL AND BID MANAGEMENT ADVISOR.—

9 (1) RETENTION OF ADVISOR.—Within six

10 months of the date of enactment of this Act, the

11 Secretary shall retain an experienced private sector

12 firm to serve as financial and bid management advi13 sor (hereinafter ‘‘advisor’’) to the Secretary with re14 spect to such sales. The advisor shall not have any

15 substantial financial interest in the existing assets,

16 their operation or the ultimate purchasers.

17 (2) NOTICE.—Within six months after the date

18 of enactment of this Act, the Secretary shall also

19 publish a notice in the Federal Register soliciting all

20 parties which have an operational or ownership in21 terest in the Southeast Power Administration to pro22 vide evidence of such interest within 90 days of the

23 published notice.

24 (3) ADVISOR’S REPORT.—Within six months of

25 being retained by the Secretary and based on infor-
274

•HR 2491 RH

1 mation provided by the Secretary and the informa2 tion obtained in paragraph (2), the advisor shall pro3 vide to the Secretary a report containing each of the

4 following:

5 (A) A plan for the competitive sale of all

6 assets and interests, held by the Southeastern

7 Power Administration, out of Federal owner8 ship and operation.

9 (B) An estimate of the net present value of

10 the income expected to be derived over the next

11 50 years from each facility or group of facilities

12 to be sold under this section.

13 (C) An estimate of the net present value of

14 the expenses expected to be incurred over the

15 next 50 years in connection with each facility or

16 group of facilities to be sold under this section.

17 (D) a comparison between the net of sub18 paragraphs (A) and (B) and the net present

19 value of the outstanding debt which the Federal

20 government attributes to the asset being sold.

21 (E) The options for the grouping of facili22 ties to be sold under this section. The transfer

23 shall be structured to transfer assets and inter24 ests of the Southeast Power Administration by

25 watershed or by project unless the Advisor can
275

•HR 2491 RH

1 provide satisfactory information to the Sec2 retary that another alternative should be used.

3 Groupings of assets shall specifically be de4 signed to transfer all assets in a manner that

5 provides reasonable payment to the United

6 States of all assets within the Southeast Power

7 Administration.

8 (d) PROCEEDS.—The Secretary is directed to use up

9 to $6,000,000 from unobligated balances available to the

10 Department of Energy to fund any sale preparation costs

11 or studies provided for in this section, and shall provide

12 an accounting of all sale preparation costs and studies to

13 the Committee on Resources of the House of Representa14 tives and to the Committee on Energy and Natural Re15 sources of the Senate within 60 days after completion of

16 the sale or study. The proceeds of any sale of a facility

17 or group of facilities under this section shall be used first

18 to offset the costs of carrying out such sale or study and

19 the remaining net proceeds shall be deemed to extinguish

20 the outstanding debt repayable to the United States and

21 attributable to such facility or group of facilities. Any por22 tion of such net proceeds which exceeds the net present

23 value of the outstanding debt repayable to the United

24 States and attributable to the facility or group of facilities
276

•HR 2491 RH

1 concerned shall be deposited in the Treasury of the United

2 States as miscellaneous receipts.

3 (e) TREATMENT OF SALES FOR PURPOSES OF CER4 TAIN LAWS.—The sales of assets under this part shall not

5 be considered a disposal of Federal surplus property under

6 the following provisions of law:

7 (1) Section 203 of the Federal Property and

8 Administrative Services Act of 1949 (40 U.S.C.

9 484).

10 (2) Section 13 of the Surplus Property Act of

11 1944 (50 U.S.C. App. 1622).

12 (f) EXISTING CONTRACTS, USES, ETC.—All sales of

13 assets and rights under this section shall be subject to all

14 contracts, debt obligations to non-Federal entities, and

15 other binding agreements which apply, as of the date of

16 such sale, to the facilities concerned and to the sale of

17 electric power from such facilities. The purchaser of each

18 such facility shall assume all liabilities and obligations of

19 the United States under such contracts, obligations or

20 other agreements. The Southeastern Power Administra21 tion shall not, after the date of enactment of this Act,

22 enter into a long-term agreement, contract, or other long23 term obligation or responsibility, except to the extent that

24 such an obligation is essential to the continued operation

25 of the Southeastern Power Administration or will signifi-
277

•HR 2491 RH

1 cantly enhance or maintain the value of a facility after

2 it is transferred. The United States shall remain respon3 sible for concluding all lawsuits associated with the assets

4 which are the subject of a transfer and which are extant

5 as of the date of the enactment of this Act, whether in

6 its capacity of plaintiff or defendant. Any right, title, or

7 interest of the United States which exists at the conclusion

8 of such lawsuits and which would otherwise have been

9 transferred, but for the lawsuit, shall be transferred to the

10 party in interest who acquired the related asset from the

11 United States. The United States shall remain responsible

12 for any outstanding Indian trust responsibilities, unless

13 the transfer in question specifically identifies the obliga14 tion being transferred.

15 (g) REPORT TO FERC.—Not later than June 30,

16 1997, the Secretary shall provide each of the following to

17 the Federal Energy Regulatory Commission each of the

18 following:

19 (1) A description of—

20 (A) all the assets tangible and intangible

21 that comprise each hydroelectric project to be

22 sold under this section;

23 (B) the existing terms of operation with

24 respect to such hydroelectric project; and
278

•HR 2491 RH

1 (C) any other interest being proposed for

2 transfer.

3 (2) The information pertaining to such hydro4 electric project required by title 18 of the Code of

5 Federal Regulations, subparts B and F, or G, as ap6 propriate, except exhibit E.

7 (3) The date when an offer for purchase of the

8 assets must be submitted.

9 (h) NOTICE OF SALE AND SOLICITATION OF BIDS.—

10 Not later than March 31, 1998, the Secretary shall pub11 lish a notice in the Federal Register which includes each

12 of the following:

13 (1) A description of—

14 (A) all the assets tangible and intangible

15 that comprise each hydroelectric project to be

16 sold under this section;

17 (B) the existing terms of operation with

18 respect to such hydroelectric project; and

19 (C) any other interest being proposed for

20 transfer.

21 (2) The date, time, and conditions of the bids

22 that must be met to submit a successful bid for the

23 assets to be sold under this part.

24 (3) The terms and conditions identified in the

25 proposed license provided from the Federal Energy
279

•HR 2491 RH

1 Regulatory Commission to the Secretary under this

2 part.

3 (i) DATE OF SALE.—All sales under this section shall

4 be completed between July 1, 1999, and September 30,

5 1999.

6 (j) TERMINATION OF THE SOUTHEASTERN POWER

7 ADMINISTRATION.—Following the sale of all facilities re8 ferred to in subsection (a), the Secretary shall complete

9 the business of and close out the Southeast Power Admin10 istration and return the unexpended balances of funds ap11 propriated for the Administration to the Treasury of the

12 United States. To the extent practical, the purchasers

13 under this section should, consistent with good business

14 practices, attempt to offer to employ those former employ15 ees of the Southeastern Power Administration who are

16 necessary to the continued operation of such facilities fol17 lowing the sale of the facilities.

18 SEC. 9203. FEDERAL ENERGY REGULATORY COMMISSION

19 JURISDICTION.

20 (a) REGULATION OF RATES AND CHARGES.—All

21 rates and charges established for the wholesale sale of

22 electric power from facilities sold under section 9202 shall

23 be subject to part 2 of the Federal Power Act. This sub24 section shall take effect upon the expiration of any con25 tract which is applicable to the sale of such electric power
280

•HR 2491 RH

1 on the date of the sale of the facility concerned. In approv2 ing, disapproving or establishing rates and charges for the

3 sale of electric power from any facility sold under section

4 9202, the Federal Energy Regulatory Commission shall

5 determine the extent to which any proposed increase in

6 any such rate or charge is attributable to the sale of such

7 facility. The Commission shall disallow any such increase

8 to the extent the increase is attributable to such sale and

is greater than 1 9 ⁄2 of the increase (between the date of

10 sale of the facility and the date on which the application

11 for a rate increase is filed) in the Consumer Price Index

12 (published by the Bureau of Labor Statistics) for the re13 gion in which such power is sold. For purposes of deter14 mining the amount of a proposed increase in a rate or

15 charge for the sale of electric power from any facility sold

16 under section 9202, the increase shall be measured from

17 the rates and charges in effect on date of the sale of the

18 facility. This subsection applies to all wholesale purchasers

19 who, for the calendar year ending immediately prior to the

20 year in which this Act is enacted, received at least 20 per21 cent of their power from the Southeastern Power Adminis22 tration.

23 (b) ORIGINAL LICENSE.—Not later than January 1,

24 1998, the Federal Energy Regulatory Commission shall

25 provide the Secretary with a proposed license for each hy-
281

•HR 2491 RH

1 droelectric project to be sold under section 9202. Not later

2 than September 30, 1999, the Commission shall issue to

3 the purchaser of each hydroelectric project sold under sec4 tion 9202 a license under part I of the Federal Power

5 Act (16 U.S.C. 791a–823b) authorizing the continued op6 eration and maintenance of such project for a term of 30

7 years. Such license shall—

8 (1) be for the project purposes established by

9 the existing terms of operation and shall be consist10 ent with the proposed license provided to the Sec11 retary;

12 (2) be conditioned upon the requirement that

13 the licensed project continue to be operated and

14 maintained in accordance with the existing terms of

15 operation, except that the licensee may make im16 provements to the project which increase capacity

17 without amendment to the license so long as existing

18 minimum flows are not affected;

19 (3) be subject only to the appropriate standard

20 ‘‘L-Form’’ license conditions, published at 54 FPC

21 1792–1928 (1975), except that the license may not

22 be reopened for any purpose for the first 10 years

23 of the license;

24 (4) provide a 10-year period for the licensee to

25 meet the Commission’s dam safety regulations, set
282

•HR 2491 RH

1 forth at title 18 of the Code of Federal Regulations,

2 part 12;

3 (5) not be subject to: the word ‘‘constructed’’ in

4 section 3(10), the 4 provisos of section 4(e); section

5 6 to the extent it requires the licensee’s acceptance

6 of those terms and conditions of the Act that this

7 subsection waives; section 10(e) as it concerns an8 nual charges for the use and occupancy of Federal

9 lands and facilities; section 10(f), section 10(j), sec10 tion 18, section 19, section 20, and section 22 of the

11 Federal Power Act (16 U.S.C. 796(10), 797(e), 799,

12 803(e), 803(f), 803(j), 811, 812, 813, and 815); and

13 (6) contain minimum flow restrictions no more

14 restrictive than those currently in effect, if any, such

15 minimum flow restrictions may not be altered during

16 the primary term of the license.

17 (c) ACTS APPLICABLE TO LICENSING.—The issuance

18 of a license pursuant to subsection (b) shall not be subject

19 to the provisions of the Federal Land Policy and Manage20 ment Act of 1976, section 2402 of the Energy Policy Act

21 of 1992, the National Environmental Policy Act of 1969,

22 the Endangered Species Act of 1973, the Wild and Scenic

23 Rivers Act, the Federal Water Pollution Control Act, the

24 National Historic Preservation Act, the Coastal Zone

25 Management Act, the Fish and Wildlife Coordination Act,
283

•HR 2491 RH

1 or any other Act otherwise applicable to the licensing of

2 the projects.

3 (d) EFFECT OF LICENSE.—A license issued under

4 subsection (b)—

5 (1) is deemed to meet the licensing standards

6 of the Federal Power Act, including section 10(a)

7 and the last sentence of section 4(e) (16 U.S.C.

8 797(e)); and

9 (2) shall constitute the sole and exclusive source

10 for a transferred hydroelectric project of authoriza11 tions and requirements with respect to project oper12 ation.

13 (e) RESERVATIONS.—Any power site reservation es14 tablished by the President, the Department of the Interior,

15 or pursuant to section 24 of the Federal Power Act (16

16 U.S.C. 818), or any other law, which exists on any lands,

17 whether Federally or privately owned, that are included

18 within the final project boundaries of a transferred hydro19 electric project as approved by the Commission shall be

20 vacated by operation of law upon issuance of a license for

21 such project.

22 (f) RELICENSING.—All requirements of part I of the

23 Federal Power Act and of any other Act applicable to the

24 licensing of a hydroelectric project shall apply to a trans-
284

•HR 2491 RH

1 ferred hydroelectric project upon expiration of an original

2 license issued under this section.

3 (g) DEFINITIONS.—For purposes of this section:

4 (1) The term ‘‘Commission’’ means the Federal

5 Energy Regulatory Commission.

6 (2) The term ‘‘existing terms of operation’’

7 means any applicable statutes, executive department

8 regulations, orders, rule curves and the like, memo9 randa of agreement, and contractual arrangements

10 pertaining to a transferred hydroelectric project that

11 were in effect as of the date of enactment of this

12 Act.

13 (3) The term ‘‘transferred hydroelectric

14 project’’ means the facilities, land, and other assets

15 sold or to be sold to a transferee under this part and

16 noticed by the Secretary, including any such land,

17 facilities, or assets that comprise a project as de18 fined in section 3(11) of the Federal Power Act (16

19 U.S.C. 796(11)).

20 SEC. 9204. EVALUATION OF SALES OF SOUTHWESTERN

21 POWER ADMINISTRATION AND WESTERN

22 AREA POWER ADMINISTRATION FACILITIES.

23 (a) ENABLING FEDERAL STUDIES.—Section 505 of

24 the Energy and Water Development Appropriations Act

25 of 1993 (Public Law 102–377) is hereby repealed.
285

•HR 2491 RH

1 (b) EVALUATION OF ISSUES.—The Secretary of En2 ergy and the Secretary of the Interior shall enter into ar3 rangements with an experienced private sector firm to

4 serve as advisor to the Secretary with respect to the sale

5 of the facilities used to generate and transmit the electric

6 power marketed by the Southwestern Power Administra7 tion and the Western Area Power Administration, includ8 ing all dams, locks, reservoirs, transmission and related

9 structures, equipment, facilities and all real and tangible

10 property (including rights-of-way) which are used in con11 nection with such power generation and transmission fa12 cilities. Prior to December 31, 1996, the advisor shall pro13 vide to the Secretary and the Congress a report identifying

14 all recipients of water and power from such facilities, all

15 contracts, debt obligations, equity interests, and other

16 binding agreements which apply to the facilities concerned

17 and to the sale of electric power from such facilities, all

18 assets tangible and intangible, all applicable requirements

19 relating to environmental mitigation, Indian trust respon20 sibilities, land ownership or use rights relevant to the pro21 posed transfers which could terminate based on a transfer

22 out of Federal ownership, and navigational requirements

23 which affect the operation of such facilities. Such evalua24 tion shall also include an evaluation of the tax con25 sequences, and the revenue impacts of such consequences
286

•HR 2491 RH

1 for the United States, of possible arrangements for the

2 sale of such facilities to potential transferees. The report

3 shall also investigate alternative groupings of the facilities

4 for purposes of sale in order to determine which groupings

5 would be most desirable for purposes of effectuating such

6 sales. Proposed transfers should be structured by water7 shed or by project unless the advisor can provide satisfac8 tory information to the Secretary that another alternative

9 should be used. Asset groupings shall specifically be de10 signed to effectuate the maximum return for all of the as11 sets.

12 SEC. 9205. BONNEVILLE POWER ADMINISTRATION APPRO13 PRIATIONS REFINANCING.

14 (a) DEFINITIONS.—For the purposes of this section:

15 (1) The term ‘‘Administrator’’ means the Ad16 ministrator of the Bonneville Power Administration.

17 (2) The term ‘‘capital investment’’ means a

18 capitalized cost funded by Federal appropriations

19 that—

20 (A) is for a project, facility, or separable

21 unit or feature of a project or facility;

22 (B) is a cost for which the Administrator

23 is required by law to establish rates to repay to

24 the United States Treasury through the sale of

25 electric power, transmission, or other services;
287

•HR 2491 RH

1 (C) excludes a Federal irrigation invest2 ment; and

3 (D) excludes an investment financed by the

4 current revenues of the Administrator or by

5 bonds issued and sold, or authorized to be is6 sued and sold, by the Administrator under sec7 tion 13 of the Federal Columbia River Trans8 mission System Act (16 U.S.C. 838(k)).

9 (3) The term ‘‘new capital investment’’ means

10 a capital investment for a project, facility, or sepa11 rable unit or feature of a project or facility, placed

12 in service after September 30, 1995.

13 (4) The term ‘‘old capital investment’’ means a

14 capital investment whose capitalized cost—

15 (A) was incurred, but not repaid, before

16 October 1, 1995; and

17 (B) was for a project, facility, or separable

18 unit or feature of a project or facility, placed in

19 service before October 1, 1995.

20 (5) The term ‘‘repayment date’’ means the end

21 of the period within which the Administrator’s rates

22 are to assure the repayment of the principal amount

23 of a capital investment.

24 (6) The term ‘‘Treasury rate’’ means—
288

•HR 2491 RH

1 (A) for an old capital investment, a rate

2 determined by the Secretary of the Treasury,

3 taking into consideration prevailing market

4 yields, during the month preceding October 1,

5 1995, on outstanding interest-bearing obliga6 tions of the United States with periods to matu7 rity comparable to the period between October

8 1, 1995, and the repayment date for the old

9 capital investment; and

10 (B) for a new capital investment, a rate

11 determined by the Secretary of the Treasury,

12 taking into consideration prevailing market

13 yields, during the month preceding the begin14 ning of the fiscal year in which the related

15 project, facility, or separable unit or feature is

16 placed in service, on outstanding interest-bear17 ing obligations of the United States with peri18 ods to maturity comparable to the period be19 tween the beginning of the fiscal year and the

20 repayment date for the new capital investment.

21 (b) NEW PRINCIPAL AMOUNTS.—(1) Effective Octo22 ber 1, 1995, an old capital investment shall have a new

23 principal amount that is the sum of—

24 (A) the present value of the old payment

25 amounts for the old capital investment, calculated
289

•HR 2491 RH

1 using a discount rate equal to the Treasury rate for

2 the old capital investment; and

3 (B) an amount equal to $100,000,000 multi4 plied by a fraction whose numerator is the principal

5 amount of the old payment amounts for the old cap6 ital investment and whose denominator is the sum of

7 the principal amounts of the old payment amounts

8 for all old capital investments.

9 (2) With the approval of the Secretary of the Treas10 ury based solely on consistency with this Act, the Adminis11 trator shall determine the new principal amounts under

12 paragraph (1) and the assignment of interest rates to the

13 new principal amounts under subsection (c).

14 (3) For the purposes of this section, ‘‘old payment

15 amounts’’ means, for an old capital investment, the annual

16 interest and principal that the Administrator would have

17 paid to the United States Treasury from October 1, 1995,

18 if this section were not enacted, assuming that—

19 (A) the principal were repaid—

20 (i) on the repayment date the Adminis21 trator assigned before October 1, 1993, to the

22 old capital investment, or

23 (ii) with respect to an old capital invest24 ment for which the Administrator has not as25 signed a repayment date before October 1,
290

•HR 2491 RH

1 1993, on a repayment date the Administrator

2 shall assign to the old capital investment in ac3 cordance with paragraph 10(d)(1) of the ver4 sion of Department of Energy Order RA

5 6120.2 in effect on October 1, 1993; and

6 (B) interest were paid—

7 (i) at the interest rate the Administrator

8 assigned before October 1, 1993, to the old cap9 ital investment, or

10 (ii) with respect to an old capital invest11 ment for which the Administrator has not as12 signed an interest rate before October 1, 1993,

13 at a rate determined by the Secretary of the

14 Treasury, taking into consideration prevailing

15 market yields, during the month preceding the

16 beginning of the fiscal year in which the related

17 project, facility, or separable unit or feature is

18 placed in service, on outstanding interest-bear19 ing obligations of the United States with peri20 ods to maturity comparable to the period be21 tween the beginning of the fiscal year and the

22 repayment date for the old capital investment.

23 (c) INTEREST RATE FOR NEW PRINCIPAL

24 AMOUNTS.—As of October 1, 1995, the unpaid balance

25 on the new principal amount established for an old capital
291

•HR 2491 RH

1 investment under subsection (b) shall bear interest annu2 ally at the Treasury rate for the old capital investment

3 until the earlier of the date that the new principal amount

4 is repaid or the repayment date for the new principal

5 amount.

6 (d) REPAYMENT DATES.—As of October 1, 1995, the

7 repayment date for the new principal amount established

8 for an old capital investment under subsection (b) shall

9 be no earlier than the repayment date for the old capital

10 investment assumed in subsection (b)(3)(A).

11 (e) PREPAYMENT LIMITATIONS.—During the period

12 October 1, 1995, through September 30, 2000, the total

13 new principal amounts of old capital investments, as es14 tablished under subsection (b), that the Administrator

15 may pay before their respective repayment dates shall not

16 exceed $100,000,000.

17 (f) INTEREST RATES FOR NEW CAPITAL INVEST18 MENTS DURING CONSTRUCTION.—(1) The principal

19 amount of a new capital investment includes interest in

20 each fiscal year of construction of the related project, facil21 ity, or separable unit or feature at a rate equal to the

22 one-year rate for the fiscal year on the sum of—

23 (A) construction expenditures that were made

24 from the date construction commenced through the

25 end of the fiscal year, and
292

•HR 2491 RH

1 (B) accrued interest during construction.

2 (2) The Administrator shall not be required to pay,

3 during construction of the project, facility, or separable

4 unit or feature, the interest calculated, accrued, and cap5 italized under paragraph (1).

6 (3) For the purposes of this subsection, ‘‘one-year

7 rate’’ for a fiscal year means a rate determined by the

8 Secretary of the Treasury, taking into consideration pre9 vailing market yields, during the month preceding the be10 ginning of the fiscal year, on outstanding interest-bearing

11 obligations of the United States with periods to maturity

12 of approximately one year.

13 (g) INTEREST RATES FOR NEW CAPITAL INVEST14 MENTS.—The unpaid balance on the principal amount of

15 a new capital investment bears interest at the Treasury

16 rate for the new capital investment from the date the re17 lated project, facility, or separable unit or feature is placed

18 in service until the earlier of the date the new capital in19 vestment is repaid or the repayment date for the new cap20 ital investment.

21 (h) CREDITS TO ADMINISTRATOR’S PAYMENTS TO

22 THE UNITED STATES TREASURY.—The Confederated

23 Tribe of the Colville Reservation Grand Coulee Dam Set24 tlement Act (Public Law 103–436) is amended by striking

25 section 6 and inserting the following:
293

•HR 2491 RH

1 ‘‘SEC. 6. CREDITS TO ADMINISTRATOR’S PAYMENTS TO THE

2 UNITED STATES TREASURY.

3 ‘‘(a) IN GENERAL.—So long as the Administrator

4 makes annual payments to the tribes under the settlement

5 agreement, the Administrator shall apply against amounts

6 otherwise payable by the Administrator to the United

7 States Treasury a credit that reduces the Administrator’s

8 payment in the amount and for each fiscal year as follows:

9 $15,250,000 in fiscal year 1996; $15,860,000 in fiscal

10 year 1997; $16,490,000 in fiscal year 1998; $17,150,000

11 in fiscal year 1999; $17,840,000 in fiscal year 2000; and

12 $4,100,000 in each succeeding fiscal year.

13 ‘‘(b) DEFINITIONS.—For the purposes of this sec14 tion—

15 ‘‘(1) The term ‘settlement agreement’ means

16 that settlement agreement between the United

17 States of America and the Confederated Tribes of

18 the Colville Reservation signed by the Tribes on

19 April 16, 1994, and by the United States of America

20 on April 21, 1994, which settlement agreement re21 solves claims of the Tribes in Docket 181–D of the

22 Indian Claims Commission, which docket has been

23 transferred to the United States Court of Federal

24 Claims; and
294

•HR 2491 RH

1 ‘‘(2) The term ‘Tribes’ means the Confederated

2 Tribes of the Colville Reservation, a Federally recog3 nized Indian Tribe.’’.

4 (i) CONTRACT PROVISIONS.—In each contract of the

5 Administrator that provides for the Administrator to sell

6 electric power, transmission, or related services, and that

7 is in effect after September 30, 1995, the Administrator

8 shall offer to include, or as the case may be, shall offer

9 to amend to include, provisions specifying that after Sep10 tember 30, 1995—

11 (1) the Administrator shall establish rates and

12 charges on the basis that—

13 (A) the principal amount of an old capital

14 investment shall be no greater than the new

15 principal amount established under subsection

16 (b);

17 (B) the interest rate applicable to the un18 paid balance of the new principal amount of an

19 old capital investment shall be no greater than

20 the interest rate established under subsection

21 (c);

22 (C) any payment of principal of an old

23 capital investment shall reduce the outstanding

24 principal balance of the old capital investment
295

•HR 2491 RH

1 in the amount of the payment at the time the

2 payment is tendered; and

3 (D) any payment of interest on the unpaid

4 balance of the new principal amount of an old

5 capital investment shall be a credit against the

6 appropriate interest account in the amount of

7 the payment at the time the payment is ten8 dered;

9 (2) apart from charges necessary to repay the

10 new principal amount of an old capital investment as

11 established under subsection (b), and to pay the in12 terest on the principal amount under subsection (c),

13 no amount may be charged for return to the United

14 States Treasury as repayment for or return on an

15 old capital investment, whether by way of rate, rent,

16 lease payment, assessment, user charge, or any other

17 fee;

18 (3) amounts provided under section 1304 of

19 title 31, United States Code, shall be available to

20 pay, and shall be the sole source for payment of, a

21 judgment against or settlement by the Administrator

22 or the United States on a claim for a breach of the

23 contract provisions required by this Act; and

24 (4) the contract provisions specified in this Act

25 shall not—
296

•HR 2491 RH

1 (A) preclude the Administrator from recov2 ering, through rates or other means, any tax

3 that is generally imposed on electric utilities in

4 the United States, or

5 (B) affect the Administrator’s authority

6 under applicable law, including section 7(g) of

7 the Pacific Northwest Electric Power Planning

8 and Conservation Act (16 U.S.C. 839e(g)), to—

9 (i) allocate costs and benefits, includ10 ing but not limited to fish and wildlife

11 costs, to rates or resources, or

12 (ii) design rates.

13 (j) SAVINGS PROVISIONS.—(1) This section does not

14 affect the obligation of the Administrator to repay the

15 principal associated with each capital investment, and to

16 pay interest on the principal, only from the ‘‘Administra17 tor’s net proceeds,’’ as defined in section 13 of the Federal

18 Columbia River Transmission System Act (16 U.S.C.

19 838k(b)).

20 (2) Except as provided in subsection (e) of this sec21 tion, this section does not affect the authority of the Ad22 ministrator to pay all or a portion of the principal amount

23 associated with a capital investment before the repayment

24 date for the principal amount.
297

•HR 2491 RH

1 (k) DOE STUDY.—(1) The Administrator shall un2 dertake a study to determine the effect that increases in

3 the rates for electric power sales made by the Adminis4 trator may have on the customer base of the Bonneville

5 Power Administration. Such study shall identify other

6 sources of electric power that may be available to cus7 tomers of the Bonneville Power Administration and shall

8 estimate the level at which higher rates for power sales

9 by the Administration may result in the loss of customers

10 by the Administration.

11 (2) The Administrator shall undertake a study to de12 termine the total prior costs incurred by the Bonneville

13 Power Administration for compliance with the provisions

14 of the Endangered Species Act of 1973 and the total fu15 ture costs anticipated to be incurred by the Administration

16 for compliance with such provisions.

17 (3) The Administrator shall submit the results of the

18 studies undertaken under this section to the Congress

19 within 180 days after the date of the enactment of this

20 Act.
298

•HR 2491 RH

1 PART 2—RECLAMATION

2 SEC. 9211. PREPAYMENT OF CERTAIN REPAYMENT CON3 TRACTS BETWEEN THE UNITED STATES AND

4 THE CENTRAL UTAH WATER CONSERVANCY

5 DISTRICT.

6 The second sentence of section 210 of the Central

7 Utah Project Completion Act (106 Stat. 4624) is amended

8 to read as follows: ‘‘The Secretary of the Interior shall

9 allow for prepayment of the repayment contract between

10 the United States and the Central Utah Water Conser11 vancy District dated December 28, 1965, and supple12 mented on November 26, 1985, providing for repayment

13 of the municipal and industrial water delivery facilities for

14 which repayment is provided pursuant to such contract,

15 under such terms and conditions as the Secretary deems

16 appropriate to protect the interest of the United States,

17 which shall be similar to the terms and conditions con18 tained in the supplemental contract that provided for the

19 prepayment of the Jordan Aqueduct dated October 28,

20 1993. The District shall exercise its right to prepayment

21 pursuant to this section by the end of fiscal year 2002.’’.

22 SEC. 9212. TREATMENT OF CITY OF FOLSOM AS A CENTRAL

23 VALLEY PROJECT CONTRACTOR.

24 For the purposes of being considered eligible to be

25 a transferee of Central Valley Project water to be used

26 for municipal and industrial purposes, the city of Folsom,
299

•HR 2491 RH

1 California, shall be treated as a Central Valley Project

2 contractor as of November 1, 1990.

3 SEC. 9213. SLY PARK.

4 (a) SHORT TITLE.—This section may be cited as the

5 ‘‘Sly Park Unit Conveyance Act’’.

6 (b) DEFINITIONS.—For purposes of this section:

7 (1) The term ‘‘El Dorado Irrigation District’’

8 or ‘‘District’’ means a political subdivision of the

9 State of California duly organized, existing, and act10 ing pursuant to the laws thereof with its principal

11 place of business in the city of Placerville, El Do12 rado County, California.

13 (2) The term ‘‘Secretary’’ means the Secretary

14 of the Interior.

15 (3) The term ‘‘Sly Park Unit’’ means the Sly

16 Park Dam and Reservoir, Camp Creek Diversion

17 Dam and Tunnel and conduits and canals as author18 ized under the American River Act of October 14,

19 1949 (63 Stat. 852), together with all other facilities

20 owned by the United States including those used to

21 convey and store water delivered from Sly Park, as

22 well as all recreation facilities associated thereto.

23 (c) SALE OF THE SLY PARK UNIT.—

24 (1) IN GENERAL.—The Secretary shall, within

25 one year after the date of enactment of this Act, sell
300

•HR 2491 RH

1 and convey to the El Dorado Irrigation District the

2 Sly Park Unit. Within such one-year period, the Sec3 retary shall also transfer and assign the water rights

4 relating to the Sly Park Unit held in trust by the

5 Secretary for diversion and storage under California

6 State permits numbered 2631, 5645A, 10473, and

7 10474 to the El Dorado Irrigation District.

8 (2) SALE PRICE.—The sale price shall not ex9 ceed—

10 (A) the construction costs ($30,926,230),

11 as included in the accounts of the Secretary,

12 plus

13 (B) interest on the construction costs allo14 cated to domestic use, at the authorized rate in15 cluded in enactment of the Act of October 14,

16 1949 (63 Stat. 852), up to an agreed upon

17 date, less

18 (C) all revenues to date as collected under

19 the terms of the contract between the United

20 States and the El Dorado Irrigation District,

21 estimated at $9,146,885.

22 (3) TERMS OF PAYMENT.—The Secretary shall

23 provide for a payment of the purchase price under

24 paragraph (2) on terms not to exceed 20 years. The

25 interest rate to be paid by the District shall be the
301

•HR 2491 RH

1 authorized rate included in the Act of October 14,

2 1949 (63 Stat. 852). Section 213(c) of the Reclama3 tion Reform Act of 1982 (43 U.S.C. 390mm(c))

4 shall not apply to the purchase of the Sly Park Unit

5 under this section.

6 (4) CONVEYANCE.—Upon signing the agree7 ment to carry out the sale required by this section,

8 the Secretary shall convey and assign to the El Do9 rado Irrigation District all right, title, and interest

10 of the United States in and to the Sly Park Unit.

11 (5) NO ADDITIONAL ENVIRONMENTAL IM12 PACT.—The Congress specifically finds that (A) the

13 sale, conveyance and assignment of the Sly Park

14 Unit and water rights under this section involves the

15 transfer of the ownership and operation of an exist16 ing ongoing water project, (B) the Sly Park Unit op17 eration, facilities and water rights have been, and

18 after the sale and transfer will continue to be, com19 mitted to maximum reasonable and beneficial use for

20 existing services, and (C) the sale, conveyance and

21 assignment of the Sly Park Unit and water rights

22 does not involve any additional growth or expansion

23 of the project or other environmental impacts. Con24 sequently, the sale, conveyance and assignment of

25 the Sly Park Unit and water rights shall not be sub-
302

•HR 2491 RH

1 ject to environmental review pursuant to the Na2 tional Environmental Policy Act of 1969 (42 U.S.C.

3 4332) or endangered species review or consultation

4 pursuant to section 7 of the Endangered Species Act

5 of 1973 (16 U.S.C. 1536).

6 SEC. 9214. HETCH HETCHY DAM.

7 Section 7 of the Act of December 19, 1913 (38 Stat.

8 242), is amended—

9 (1) by striking ‘‘$30,000’’ in the first sentence

10 and inserting ‘‘$8,000,000’’, and

11 (2) by amending the second and third sentences

12 to read as follows: ‘‘These funds shall be placed in

13 a separate fund by the United States and, notwith14 standing any other provision of law, shall not be

15 available for obligation or expenditure until appro16 priated by the Congress. The highest priority use of

17 the funds shall be for annual operation of Yosemite

18 National Park, with the remainder of any funds to

19 be used to fund operations of other national parks

20 in the State of California.’’.
303

•HR 2491 RH

1 Subtitle C—National Parks,

2 Forests, and Public Lands

3 PART 1—CONCESSION REFORM

4 SEC. 9301. SHORT TITLE.

5 This part may be cited as the ‘‘Visitor Facilities and

6 Services Enhancement Act of 1995’’.

7 SEC. 9302. PURPOSE.

8 The purpose of this part is to ensure that quality visi9 tor facilities and services are provided by the Federal land

10 management agencies (Forest Service, United States Fish

11 and Wildlife Service, National Park Service, Bureau of

12 Land Management, Bureau of Reclamation and United

13 States Army Corps of Engineers). Each Federal land

14 management agency shall implement a program to encour15 age appropriate development and operation of services and

16 facilities for the accommodation of visitors. The program

17 implemented by each such agency shall consist of actions

18 which—

19 (1) recognize the importance of the private sec20 tor in providing a quality visitor experience on Fed21 eral lands by encouraging private sector investments

22 for facilities and services on Federal lands under a

23 fair and competitive process;

24 (2) establish the basis for an effective relation25 ship between the land management agencies and pri-
304

•HR 2491 RH

1 vate businesses operating on public lands and waters

2 in efforts to serve the public and to protect the re3 sources of these areas;

4 (3) measure quality and value of services pro5 vided by concessioners and provide incentives for

6 consistent excellence.

7 (4) ensure a fair return to the Federal Govern8 ment; and

9 (5) are consistent among the various agencies

10 to the extent practicable in order to increase effi11 ciency of the Federal Government and simplify re12 quirements for concessioners.

13 SEC. 9303. DEFINITIONS.

14 For the purposes of this part:

15 (1) The term ‘‘adjusted gross receipts’’ means

16 gross receipts less revenue derived from goods and

17 services provided on other than Federal lands or

18 conveyed to units of Government for hunting or fish19 ing licenses or for entrance or recreation fees, or

20 from such other exclusions as the Secretary con21 cerned might apply.

22 (2) The term ‘‘agency head’’ means the head of

23 an agency or his or her designated representative.

24 (3) The term ‘‘concessioner’’ means a person or

25 other entity acting under a concession authorization
305

•HR 2491 RH

1 which provides public services, facilities, or activities

2 on Federal lands or waters pursuant to a concession

3 services agreement or concession license.

4 (4) The term ‘‘concession license’’ means a

5 written contract between the agency head and the

6 concessioner which sets forth the terms and condi7 tions under which the concessioner is authorized to

8 provide recreation services or activities on a limited

9 basis as well as the rights and obligations of the

10 Federal Government.

11 (5) The term ‘‘concession service agreement’’

12 means a written contract between the agency head

13 and the concessioner which sets forth the terms and

14 conditions under which the concessioner is author15 ized to provide visitor services, facilities, or activities

16 as well as the rights and obligations of the Federal

17 Government.

18 (6) The term ‘‘gross receipts’’ means revenue

19 from goods or services provided by concession serv20 ices, facilities, or activities on Federal lands and wa21 ters.

22 (7) The term ‘‘performance incentive’’ means a

23 credit based on past performance toward the score

24 awarded by the Secretary to a concessioner’s pro-
306

•HR 2491 RH

1 posal submitted in response to a solicitation for the

2 reissuance of such contract.

3 (8) The term ‘‘proposal’’ means the complete

4 submission for a concession service agreement of5 fered in response to the solicitation for such conces6 sion service agreement.

7 (9) The term ‘‘prospectus’’ means a document

8 or documents issued by the Secretary concerned and

9 included with a solicitation which sets forth the min10 imum requirements for the award of a concession

11 service agreement.

12 (10) The term ‘‘Secretary concerned’’ means—

13 (A) the Secretary of the Interior with re14 spect to the United States Fish and Wildlife

15 Service, National Park Service, Bureau of Land

16 Management, and Bureau of Reclamation;

17 (B) the Secretary of Agriculture with re18 spect to the Forest Service; and

19 (C) the Secretary of the Army with respect

20 to the United States Army Corps of Engineers.

21 (11) The term ‘‘solicitation’’ means a request

22 by the Secretary concerned for proposals in response

23 to a prospectus.
307

•HR 2491 RH

1 SEC. 9304. NATURE AND TYPES OF CONCESSION AUTHOR2 IZATIONS.

3 (a) IN GENERAL.—The Secretary concerned may

4 enter into concession authorizations, as follows:

5 (1) CONCESSION SERVICES AGREEMENT.—A

6 concession service agreement shall be entered into

7 for all concessions where the Secretary concerned

8 makes a finding that the provision of concession

9 services is in the interest of the Federal Government

10 and issues either a competitive offering for conces11 sion services, facilities or activities or a noncompeti12 tive offering for such services, facilities, or activities

13 based on a finding that due to special circumstances

14 it is not in the public interest of the United States

15 to award a concession service agreement on a com16 petitive basis. Where the concessioner develops or

17 uses fixed facilities on Federal lands, the Secretary

18 concerned shall issue a lease.

19 (2) CONCESSION LICENSE.—Whenever the Sec20 retary concerned makes a finding that public enjoy21 ment of Federal lands would be enhanced through

22 the provision of concession services and that there

23 exists no need to limit the number of concessioners

24 providing such services, he shall consider entering

25 into a concession license with a qualified conces26 sioner. Activities covered under a concession license
308

•HR 2491 RH

1 would typically be one-time, intermittent, or infre2 quently scheduled. The Secretary concerned may not

3 limit the number of concession licenses issued for

4 the same types of activities in a particular geo5 graphic area. The Secretary concerned shall monitor

6 such concession licenses to determine whether issu7 ance of a concession service agreement would be a

8 more appropriate authorization.

9 (3) LANDS UNDER MULTIPLE JURISDIC10 TIONS.—The Secretaries of the Departments con11 cerned shall designate an agency to be the lead

12 agency concerning concessions which conduct a sin13 gle operation on lands or waters under the jurisdic14 tion of more than one agency. Unless otherwise

15 agreed to by each such Secretary concerned, the lead

16 agency shall be that agency under whose jurisdiction

17 the concessioner generates the greatest amount of

18 gross receipts. The agency so designated shall issue

19 a single authorization and collect a single fee under

20 paragraphs (1) and (2) for such operation. Such au21 thorization shall provide for use in a manner consist22 ent with the plans and policies for each agency.

23 (b) LEASES OF AREAS TO STATES AND STATE THIRD

24 PARTY AGREEMENT NOT COVERED.—This part does not

25 apply to leases or licenses of entire areas to States or other
309

•HR 2491 RH

1 political subdivisions or to any third party agreement is2 sued by any such State or political subdivisions with re3 spect to such entire area.

4 SEC. 9305. COMPETITIVE SELECTION PROCESS FOR CON5 CESSION SERVICE AGREEMENTS.

6 (a) AWARD TO BEST PROPOSAL.—The Secretary

7 shall enter into, and reissue, a concession service agree8 ment with the person whom the Secretary determines in

9 accordance with this section submits the best proposal

10 through a competitive process as defined in this section.

11 (b) SOLICITATION AND PROSPECTUS.—The Sec12 retary concerned shall prepare a solicitation and prospec13 tus which describes the concession service opportunity and

14 shall publish, in appropriate locations, announcements of

15 the availability of the solicitation, prospectus, and the con16 cession service opportunity. The solicitation shall include

17 (but need not be limited to) the following:

18 (1) A description of the services and facilities to

19 be provided by the concessioner.

20 (2) The level of capital investment required by

21 the concessioner (if any).

22 (3) Terms and conditions of the concession

23 service agreement.
310

•HR 2491 RH

1 (4) Minimum facilities and services to be pro2 vided by the Secretary to the concessioner and the

3 public.

4 (5) Minimum fees to the United States.

5 (c) FACTORS AND MINIMUM STANDARDS IN DETER6 MINING BEST PROPOSAL.—The prospectus shall assign a

7 weight to each factor indentified therein related to the im8 portance of such factor in the selection process. Points

9 shall be awarded for each such factor, based on the rel10 ative strength of the proposal concerning that factor. In

11 determining the best proposal, the Secretary concerned

12 shall take into consideration (but shall not be limited to)

13 the following, including whether the proposal meets the

14 minimum requirements (if any) of the Secretary for each

15 of the following:

16 (1) Responsiveness to the prospectus.

17 (2) Quality of visitor services taking into ac18 count the nature of equipment and facilities to be

19 provided.

20 (3) Experience and performance in providing

21 similar services. This factor shall account for not

22 less than 20 percent of the maximum points avail23 able under any prospectus. Where the Secretary con24 cerned determines it to be warranted to provide for

25 a high quality visitor experience, the prospectus for
311

•HR 2491 RH

1 a concession service agreement shall provide greater

2 weight to this factor based on such aspects of the

3 concession service agreement as scope or size, com4 plexity, nature of technical skills required, and site5 specific knowledge of the area. The similarity of the

6 qualifying experience outlined in the proposal to the

7 nature of the services required under the concession

8 service agreement and the length of such qualifying

9 experience shall be the basis for awarding points for

10 this factor.

11 (4) Record of resource protection (as appro12 priate for services and activities with potential to im13 pact natural or cultural resources).

14 (5) Financial capability.

15 (6) Fees to the United States.

16 (d) SELECTION PROCESS.—The process for selecting

17 the best proposal shall consist of the following:

18 (1) First, the Secretary concerned shall identify

19 those proposals which meet the minimum standards

20 (if any) for the factors identified under subsection

21 (c).

22 (2) Second, the Secretary concerned shall evalu23 ate all proposals identified under paragraph (1),

24 considering all factors identified under subsection

25 (c), as well as performance incentives earned under
312

•HR 2491 RH

1 section 9306(c) and renewal penalties incurred

2 under section 9306(d).

3 (3) Third, the Secretary concerned shall offer

4 the concession service agreement to the best quali5 fied applicant as determined by the evaluation under

6 paragraph (2).

7 (e) INAPPLICABILITY OF NEPA TO TEMPORARY EX8 TENSIONS AND SIMILAR REISSUANCE OF CONCESSIONS

9 AGREEMENTS.—The temporary extension of a concession

10 authorization, or reissuance of a concession authorization

11 to provide concession services similar in nature and

12 amount to concession services provided under the previous

13 authorization, is hereby determined to be a categorical ex14 clusion as provided for under the National Environmental

15 Policy Act of 1969 (42 U.S.C. 4331 et seq.).

16 (f) PROVISION FOR ADDITIONAL RELATED SERV17 ICES.—The Secretary concerned may modify the conces18 sion service agreement to allow concessioners to provide

19 services closely related to such agreement, if the Secretary

20 concerned determines that such changes would enhance

21 the safety or enjoyment of visitors and would not unduly

22 restrict the award of future concession service agreements.

23 SEC. 9306. CONCESSIONER EVALUATIONS.

24 (a) IN GENERAL.—The Secretary concerned shall de25 velop a program of evaluations of the concessioners oper-
313

•HR 2491 RH

1 ating under a concession service agreement who are pro2 viding visitor services in areas under the jurisdiction of

3 the Secretary. The evaluations shall be on an annual basis

4 over the duration of the concession service agreement. In

5 developing the evaluation program, the Secretary con6 cerned shall seek broad public input from concessioners,

7 State agencies, and other interested persons. The evalua8 tion program shall—

9 (1) include the four program areas of: quality

10 of visitor services provided; resource protection (as

11 applicable); financial performance; and compliance

12 with concession service agreement provisions and

13 pertinent laws and regulations;

14 (2) define three levels of performance—

15 (A) good, which shall be defined as a level

16 of performance which exceeds the requirements

17 outlined in the prospectus, but which is attain18 able;

19 (B) satisfactory, which shall be defined as

20 meeting the requirements as contained in the

21 prospectus; and

22 (C) unsatisfactory, which shall be defined

23 as not meeting the requirements contained in

24 the prospectus;

25 (3) be based on criteria which—
314

•HR 2491 RH

1 (A) are objective, measurable, and attain2 able; and

3 (B) shall include as applicable general

4 standards for all concession operations, indus5 try-specific standards, and standards developed

6 by the Secretary concerned in consultation with

7 the concessioner for each concession service

8 agreement;

9 (4) be designed in such a manner that the an10 nual evaluation represents the overall performance of

11 the concessioner without undue weight to matters of

12 limited importance; and

13 (5) take into account factors beyond the control

14 of the concessioner, such as general market and

15 other economic fluctuations, as well as weather and

16 other natural phenomena, so that such factors may

17 not be used as a justification for denial of perform18 ance incentives.

19 (b) ANNUAL EVALUATIONS.—

20 (1) REQUIREMENTS.—The Secretary concerned

21 shall at least semiannually review the performance of

22 each concessioner and shall assign an overall rating

23 for each concessioner for each year. The procedure

24 for any performance evaluation shall be provided to

25 the concessioner prior to the beginning of any eval-
315

•HR 2491 RH

1 uation period. Such procedure shall provide for ade2 quate notification of the concessioner prior to any

3 on-site evaluation and permit a representative of the

4 concessioner to observe the evaluation. The conces5 sioner shall be entitled to a complete explanation of

6 any rating given. If the Secretary’s performance

7 evaluation for any year results in an unsatisfactory

8 rating of the concessioner, the Secretary concerned

9 shall so notify the concessioner, in writing. Such no10 tification shall identify the nature of conditions

11 which require corrective action and shall provide the

12 concessioner with a list of corrective actions nec13 essary to meet the standards.

14 (2) SUSPENSION, REVOCATION, AND TERMI15 NATION OF AUTHORIZATION.—The Secretary con16 cerned may suspend, revoke, or terminate a conces17 sion authorization if the concessioner fails to correct

18 the conditions identified by the Secretary within the

19 limitations established by the Secretary at the time

20 notice of the unsatisfactory rating is provided to the

21 concessioner. The Secretary may immediately sus22 pend or revoke a concession authorization where nec23 essary to protect the public health or welfare.

24 (c) PERFORMANCE INCENTIVES.—
316

•HR 2491 RH

1 (1) In evaluating the performance of a conces2 sioner, the incumbent concessioner is entitled to a

3 performance incentive of—

4 (A) one percent of the maximum points

5 available under such evaluations for perform6 ance in each year in which the concessioner’s

7 annual performance is rated good, as specified

8 in subsection (a)(2)(A), and

9 (B) a one-time three year merit term ex10 tension upon a finding that a concessioner has

11 been rated as good in each annual performance

12 evaluation through the term of the concession

13 service agreement.

14 (2) A performance incentive awarded under

15 paragraph (1)(A) may not exceed 10 percent of the

16 maximum points available under such evaluations

17 over the life of the concession service agreement.

18 (d) RENEWAL PENALTY.—In evaluating the perform19 ance of a concessioner, a concessioner shall be penalized

20 one percent of the maximum points available under such

21 evaluation for performance in each year in which the con22 cessioner’s annual performance is found to be unsatisfac23 tory.
317

•HR 2491 RH

1 SEC. 9307. CAPITAL IMPROVEMENTS.

2 (a) PRIVATE SECTOR DEVELOPMENT.—It is the pol3 icy of the United States to encourage the private sector

4 to develop, own, and maintain to the extent possible such

5 public recreation facilities which would enhance public use

6 and enjoyment of Federal lands as are contained in ap7 proved plans developed by the Secretary concerned. Under

8 the terms of this part, concessioners may only construct

9 or finance construction under terms of section 9312 such

10 public facilities on Federal lands as are to be used by the

11 concessioner under the terms of their concession service

12 agreement or facilities which are necessary for the conces13 sioner to administer such public facilities on Federal

14 lands.

15 (b) INVESTMENT INTEREST.—

16 (1) IN GENERAL.—A concessioner, who is re17 quired or authorized under a concession service

18 agreement pursuant to this part to acquire or con19 struct any structure, improvement, or fixture pursu20 ant to such agreement on Federal lands shall have

21 an investment interest therein, to the extent pro22 vided by the agreement and this part. Such invest23 ment interest shall not be extinguished by the expi24 ration of such agreement. Such investment interest

25 may be assigned, transferred, encumbered or relin26 quished.
318

•HR 2491 RH

1 (2) LIMITATION.—Such investment interest

2 shall not be construed to include or imply any au3 thority, privilege, or right to operate or engage in

4 any business or other activity, and the use of any

5 improvement in which the concessioner has an in6 vestment interest shall be wholly subject to the ap7 plicable provisions of the concession service agree8 ment and of laws and regulations relating to the

9 area.

10 (3) FEDERAL PROPERTY.—The agreement shall

11 specify which new improvements required under

12 terms of the concession service agreement, if any,

13 shall become the property of the Federal Govern14 ment at the end of the agreement. No concession

15 service agreement shall provide for a concessioner to

16 obtain an investment interest in any building which

17 is wholly owned by the Federal Government. Title to

18 the land on which such structure, improvement, or

19 fixture is placed shall remain in the United States.

20 (c) SALE OF ASSETS.—If the existing concessioner is

21 not selected as the best qualified applicant at the time of

22 reissuance of a concession service agreement, the Sec23 retary concerned shall require the new concessioner to buy

24 the investment interest of the existing concessioner.
319

•HR 2491 RH

1 (d) CLOSURE OF CONCESSIONER FACILITIES.—In

2 the event of a decision by the Secretary concerned, that

3 the public interest, by reason of public and safety consid4 erations or for other reasons beyond the control of the con5 cessioner, requires the discontinuation or closure of facili6 ties in which the concessioner has an investment interest,

7 the Secretary shall compensate the concessioner in the

8 amount equal to the value of the investment interest.

9 (e) DETERMINATION OF VALUE OF INVESTMENT IN10 TEREST.—For purposes of this part, the investment inter11 est of any capital improvement at the end of the conces12 sion service agreement period is the actual cost of con13 struction of such capital improvement adjusted from the

14 completion of such construction by changes in the

15 Consumer Price Index (selected in the same manner as

16 such Index is selected under section 9311(c)(2)) less de17 preciation evidenced by the condition and prospective serv18 iceability in comparison with a new unit of like kind, but

19 not to exceed fair market value. Such value shall be deter20 mined by appraisal and included in any prospectus.

21 SEC. 9308. DURATION OF CONCESSION AUTHORIZATION.

22 (a) CONCESSION SERVICE AGREEMENT.—The stand23 ard term of a concession service agreement shall be ten

24 years. The Secretary concerned may issue a concession

25 service agreement for less than ten years if he determines
320

•HR 2491 RH

1 (in his discretion) that the average annual gross receipts

2 over the life of the concession service agreement would be

3 less than $100,000. The Secretary concerned may not

4 issue a concession service agreement for less than five

5 years. The Secretary concerned shall issue a concession

6 service agreement for longer than ten years if the Sec7 retary determines (in his discretion) that such longer term

8 is in the public interest or necessary due to the extent

9 of investment and associated financing requirements and

10 to meet the obligations assumed. The term for a conces11 sion service agreement may not exceed 30 years.

12 (b) CONCESSION LICENSE.—The term for a conces13 sion license may not exceed two years.

14 (c) TEMPORARY EXTENSION.—The Secretary may

15 agree to temporary extensions of concession service agree16 ments for up to two years on a noncompetitive basis to

17 avoid interruption of services to the public.

18 SEC. 9309. RATES AND CHARGES TO THE PUBLIC.

19 In general, rates and charges to the public shall be

20 set by the concessioner. For concession service agreements

21 only, a concessioner’s rates and charges to the public shall

22 be subject to the approval of the Secretary concerned in

23 those instances where the Secretary determines that suffi24 cient competition for such facilities and services does not

25 exist within or in close proximity to the area in which the
321

•HR 2491 RH

1 concessioner operates. In those instances, the concession

2 service agreement shall state that the reasonableness of

3 the concessioner’s rates and charges to the public shall

4 be reviewed and approved by the Secretary concerned pri5 marily by comparison with those rates and charges for fa6 cilities and services of comparable character under similar

7 conditions, with due consideration for length of season,

8 seasonal variations, average percentage of occupancy, ac9 cessibility, availability and costs of labor and materials,

10 type of patronage, and other factors deemed significant

11 by the Secretary concerned. Such review shall be com12 pleted within 90 days of receipt of all necessary informa13 tion, or the requirement for the Secretary’s approval shall

14 be waived and such rates and charges as proposed by the

15 concessioner considered to be approved for immediate use.

16 SEC. 9310. TRANSFERABILITY OF CONCESSION AUTHORIZA17 TIONS.

18 (a) CONCESSION SERVICE AGREEMENTS.—

19 (1) APPROVAL REQUIRED.—A concession serv20 ice agreement is transferable or assignable only upon

21 the approval of the Secretary concerned, which ap22 proval may not be unreasonably withheld or delayed.

23 The Secretary may not approve any such transfer or

24 assignment if the Secretary determines that the pro25 spective concessioner is or is likely to be unable to
322

•HR 2491 RH

1 completely satisfy all of the material requirements,

2 terms, and conditions of the agreement or that the

3 terms of the transfer or assignment would preclude

4 providing appropriate facilities or services to the

5 public at reasonable rates.

6 (2) CONSIDERATION PERIOD.—If the Secretary

7 fails to approve or disapprove a transfer or assign8 ment under paragraph (1) within 90 days after the

9 date on which the Secretary receives all necessary

10 information requested by the Secretary with respect

11 to such transfer, the transfer or assignment shall be

12 deemed approved.

13 (3) NO MODIFICATION OF TERMS AND CONDI14 TIONS.—The terms and conditions of the concessions

15 service agreement shall not be subject to modifica16 tion by reason of any transfer or assignment under

17 this section.

18 (4) PERFORMANCE INCENTIVE.—Upon approval

19 of the sale or transfer, the prospective concessioner

20 shall be entitled to the benefit of performance incen21 tives earned by the previous concessioner.

22 (b) CONCESSION LICENSE.—A concession license

23 may not be transferred.
323

•HR 2491 RH

1 SEC. 9311. FEES CHARGED BY THE UNITED STATES FOR

2 CONCESSION AUTHORIZATIONS.

3 (a) IN GENERAL.—The Secretary concerned shall

4 charge a fee for the privilege of providing concession serv5 ices pursuant to this part. The fee for any concession serv6 ice agreement may include any of the following:

7 (1) An annual cash payment for the privilege of

8 providing concession services.

9 (2) The amount required for capital improve10 ments required pursuant to section 9307(a).

11 (3) Fees for rental or lease of Government12 owned facilities or lands occupied by the conces13 sioner.

14 (4) Expenditures for maintenance of or im15 provements to Government-owned facilities occupied

16 by the concessioner.

17 (b) ESTABLISHMENT OF AMOUNT.—

18 (1) MINIMUM ACCEPTABLE FEE.—The Sec19 retary concerned shall establish a minimum fee for

20 each applicable category specified in paragraphs (1)

21 through (4) of subsection (a) which is acceptable to

22 the Secretary under this section and shall include

23 the minimum fee in the prospectus under section

24 9305. This fee shall be based on historical data,

25 where available, as well as industry-specific and
324

•HR 2491 RH

1 other market data available to the Secretary con2 cerned.

3 (2) FINAL FEE.—Except as provided by para4 graph (3), the final fee shall be the amount bid by

5 the selected applicant under section 9305.

6 (3) SUBSTANTIALLY SIMILAR SERVICES IN A

7 SPECIFIC GEOGRAPHIC AREA.—Where the Secretary

8 concerned simultaneously offers authorizations for

9 more than one river runner, outfitter, or guide con10 cession operation to provide substantially similar

11 services in a defined geographic area, the concession

12 fee for all such concessioners shall be specified by

13 the Secretary concerned in the prospectus. The Sec14 retary concerned shall base the fee on historical

15 data, where available, as well as on industry-specific

16 and other market data available to the Secretary

17 concerned or may establish a charge per user day.

18 (c) ADJUSTMENT OF FEES.—

19 (1) IN GENERAL.—The amount of any fee for

20 the term of the concession service agreement shall be

21 set at the beginning of the concession authorization

22 and may only be modified on the basis of inflation,

23 if the annual payment is not determined by a per24 centage of adjusted gross receipts (as measured by

25 changes in the Consumer Price Index), to reflect
325

•HR 2491 RH

1 substantial changes from the conditions specified in

2 the prospectus, or in the event of an unforeseen dis3 aster.

4 (2) CPI.—For the purposes of adjustments for

5 inflation under paragraph (1), the Federal agencies

6 shall select a Consumer Price Index published by the

7 Bureau of Labor Statistics and shall use such index

8 in a consistent manner.

9 (d) CONCESSION LICENSE FEE.—The fee for a con10 cession license shall at least cover the program administra11 tive costs and may not be changed over the term of the

12 license.

13 SEC. 9312. DISPOSITION OF FEES.

14 (a) CONCESSION IMPROVEMENT ACCOUNT.—

15 (1) IN GENERAL.—The Secretary concerned

16 shall, whenever the concession service agreement re17 quires or authorizes the concessioner to make capital

18 improvements or occupy Government-owned facili19 ties, require the concessioner to establish a conces20 sion improvement account. The concessioner shall

21 deposit into this account—

22 (A) all funds for capital improvements as

23 specified in the concession service agreement;
326

•HR 2491 RH

1 (B) all funds for maintenance of or im2 provements to Government-owned facilities oc3 cupied by the concessioner; and

4 (C) all amounts received from the Sec5 retary concerned pursuant to subsection (b).

6 (2) TERMS AND CONDITIONS.—The account

7 shall be maintained by the concessioner in an inter8 est bearing account in a Federally insured financial

9 institution. The concessioner shall maintain the ac10 count separately from any other funds or accounts

11 and shall not commingle the monies in the account

12 with any other moneys. The Secretary concerned

13 may establish such other terms, conditions, or re14 quirements as the Secretary determines to be nec15 essary to ensure the financial integrity of the ac16 count.

17 (3) DISBURSEMENTS.—The concessioner shall

18 make disbursements from the account for improve19 ments and other activities, only as specified in the

20 concession service agreement and subsection

21 (b)(2)(C).

22 (4) RECORDS.—The concessioner shall maintain

23 proper records for all disbursements made from the

24 account. Such records shall include (but not be lim25 ited to) invoices, bank statements, canceled checks,
327

•HR 2491 RH

1 and such other information as the Secretary con2 cerned determines to be necessary.

3 (5) ANNUAL FINANCIAL STATEMENT.—The

4 concessioner shall annually submit to the Secretary

5 concerned a statement reflecting total activity in the

6 account for the preceding financial year. The state7 ment shall reflect monthly deposits, expenditures by

8 project, interest earned, and such other information

9 as the Secretary concerned requires.

10 (6) TRANSFER OF REMAINING BALANCE.—

11 Upon the termination of a concession authorization,

12 or upon the transfer of a concession service agree13 ment, any remaining balance in the account shall be

14 transferred by the concessioner to the successor con15 cessioner, to be used solely as set forth in this sub16 section. In the event there is no successor conces17 sioner, the account balance shall be deposited in the

18 Treasury as miscellaneous receipts.

19 (b) AMOUNTS RECEIVED RELATING TO PRIVILEGE

20 OF PROVIDING CONCESSION SERVICES AND RENTAL OF

21 GOVERNMENT-OWNED FACILITIES.—

22 (1) DEPOSIT INTO TREASURY.—The Secretary

23 concerned shall deposit into the Treasury of the

24 United States as miscellaneous receipts amounts re25 ceived for a fiscal year for the privilege of providing
328

•HR 2491 RH

1 concession services and the rental of Government2 owned facilities up to the amount specified in the

3 table in paragraph (3) for the National Park Service

4 for that fiscal year. For the other agencies covered

5 under this part, the Secretary concerned shall de6 velop a schedule of anticipated receipts to be depos7 ited to the Treasury and submit such schedule to the

8 appropriate Congressional committees within 18

9 months of the date of enactment of this Act. Noth10 ing in this part shall be construed to modify any

11 provision of law relating to sharing of Federal re12 ceipts with any other level of Government.

13 (2) DEPOSIT INTO CONCESSION IMPROVEMENT

14 ACCOUNTS.—(A) Amounts received by the Secretary

15 concerned for a fiscal year for the privilege of pro16 viding concession services and the use of Govern17 ment-owned facilities which exceed the amount speci18 fied in the table in paragraph (3) for that fiscal year

19 shall be available for deposit in the succeeding fiscal

20 year into concession improvement accounts.

21 (B) Of the amounts available for deposit into

22 concession improvement accounts, the Secretary

23 shall make available to each concessioner a percent24 age of such excess amounts which bears the same

25 ratio as the amount paid by the concessioner to the
329

•HR 2491 RH

1 Secretary concerned for a fiscal year for the privi2 lege of providing concession services and the use of

3 Government-owned facilities bears to the total

4 amount paid to the Secretary concerned by all con5 cessioners for that fiscal year for such privilege on

6 an agency-wide basis.

7 (C) Amounts made available to a concessioner

8 under this paragraph may be used only for expendi9 tures on visitor services and facilities at the area at

10 which the funds were generated.

11 (3) DEPOSIT INTO CONCESSION IMPROVEMENT

12 ACCOUNTS.—The table referred to in paragraph (2),

13 expressed by fiscal year on an agency basis, is as fol14 lows:

National Park Service

Fiscal year: Amount:

1997 ................................................................... $15,800,000

1998 ................................................................... $21,100,000

1999 ................................................................... $26,700,000

2000 ................................................................... $32,300,000

2001 ................................................................... $38,200,000

2002 ................................................................... $44,400,000.

15 (c) AUDIT REQUIREMENT.—Beginning with fiscal

16 year 1998, the Inspector General of the Department con17 cerned shall conduct a biennial audit of concession fees

18 generated pursuant to this part. The Inspector General

19 shall make a determination as to whether concession fees

20 are being collected and expended in accordance with this

21 part and shall submit copies of each audit to the Commit-
330

•HR 2491 RH

1 tee on Resources of the House of Representatives and the

2 Committee on Energy and Natural Resources of the Sen3 ate.

4 SEC. 9313. DISPUTE RESOLUTION.

5 (a) BOARD OF CONTRACT APPEALS.—The Board of

6 Contract Appeals within each Department shall adjudicate

7 disputes between the Federal Government and conces8 sioners arising under this part, including disputes regard9 ing the revocation, suspension, or termination of a conces10 sion authorization, transfers of concession service agree11 ments, and performance evaluations of concessions. Such

12 disputes shall be subject to the Contract Disputes Act of

13 1978 (41 U.S.C. 601 et seq.). The expiration of a conces14 sion authorization shall not be subject to appeal to the

15 Board.

16 (b) ADMINISTRATIVE REVIEW.—Appeals of decisions

17 may be taken to the Board of Contract Appeals after one

18 level of review of decisions made within an agency.

19 (c) EXPEDITED PROCEDURE.—Appeals of decisions

20 to suspend, revoke, or terminate a concession authoriza21 tion shall be considered under an expedited procedure, as

22 provided by the Secretary concerned by regulation.

23 (d) JUDICIAL REVIEW.—

24 (1) IN GENERAL.—A person may seek judicial

25 review of decisions made by the Board. Such review
331

•HR 2491 RH

1 shall be conducted by the court with jurisdiction on

2 a de novo basis.

3 (2) CONCESSION SERVICE AGREEMENTS.—Judi4 cial review of decisions rendered by the Board re5 garding concession service agreements shall be to the

6 United States Court of Federal Claims in accord7 ance with section 1491 of title 28, United States

8 Code (commonly referred to as the ‘‘Tucker Act’’).

9 (3) CONCESSION LICENSES.—Judicial review of

10 decisions rendered by the Board regarding conces11 sion licenses shall be to the appropriate Federal Dis12 trict Court.

13 (d) INAPPLICABILITY OF CERTAIN PROVISIONS.—

14 Disputes arising under this part shall not be subject to

15 the jurisdiction of the General Accounting Office to review

16 bid protests under the Competition in Contracting Act of

17 1984.

18 SEC. 9314. RECORDKEEPING.

19 (a) MAINTENANCE AND ACCESS.—Each concessioner

20 shall keep such records as the Secretary concerned may

21 prescribe to enable the Secretary to determine that all

22 terms of the concession authorization have been and are

23 being faithfully performed, and the Secretary and his duly

24 authorized representatives shall, for the purpose of audit

25 and examination, have access at reasonable times and lo-
332

•HR 2491 RH

1 cations to such records and to other books, documents,

2 and papers of the concessioner pertinent to the concession

3 authorization and all the terms and conditions thereof.

4 (b) ACCESS BY COMPTROLLER GENERAL.—The

5 Comptroller General of the United States or any of his

6 duly authorized representatives shall, until the expiration

7 of five calendar years after the close of the business year

8 of each concessioner have access to and the right to exam9 ine any pertinent books, documents, papers, and records

10 of the concessioner related to the concession authorization

11 involved.

12 SEC. 9315. APPLICATION OF GENERAL GOVERNMENTAL AC13 QUISITION REQUIREMENTS.

14 The following laws and regulations shall not apply to

15 concession service agreements and concession licenses

16 under this part:

17 (1) Title III of the Federal Property and Ad18 ministrative Services Act of 1949 (41 U.S.C. 251–

19 266).

20 (2) The Office of Federal Procurement Policy

21 Act (41 U.S.C. 401 et seq.).

22 (3) The Federal Acquisition Streamlining Act

23 of 1994 (Public Law 103–355).

24 (4) The Brooks Automatic Data Processing Act

25 (40 U.S.C. 759).
333

•HR 2491 RH

1 (5) Chapters 137 and 141 of title 10, United

2 States Code.

3 (6) The Federal Acquisition Regulation and any

4 laws not listed in paragraphs (1) through (5) provid5 ing authority to promulgate regulations in the Fed6 eral Acquisition Regulation.

7 (7) The Act of June 20, 1936 (20 U.S.C. 107;

8 commonly referred to as the ‘‘Randolph-Sheppard

9 Act’’) and the Service Contract Act of 1965 (41

10 U.S.C. 351 et seq.).

11 SEC. 9316. RULES OF CONSTRUCTION.

12 Concession programs of an agency on Federal lands

13 and waters subject to this part shall be fully consistent

14 with the agency’s mission and laws applicable to the agen15 cy. Nothing in this part shall be construed as limiting or

16 restricting any right, title, or interest of the United States

17 in any land or resources.

18 SEC. 9317. REGULATIONS.

19 (a) IN GENERAL.—Pursuant to enactment of this

20 part, no new concession authorization may be issued, nor

21 may any existing concession authorization remain in effect

22 after two years after the date of the enactment of this

23 Act, unless regulations fully implementing this part are

24 in effect. During such two-year period, the Secretary may

25 only extend an existing concession authorization for a pe-
334

•HR 2491 RH

1 riod ending at the end of such two-year period. Such ex2 tensions shall be made in accordance with the applicable

3 provisions of law specified in section 9318, as such provi4 sions were in effect on the day before the date of the en5 actment of this Act. The Secretary of the Interior, Sec6 retary of Agriculture, and Secretary of the Army shall de7 velop a single set of regulations which specify a uniform

8 set of recordkeeping requirements for all concessioners

9 with respect to implementation of this part.

10 (b) QUALIFICATIONS OF AGENCY PERSONNEL AS11 SIGNED CONCESSION MANAGEMENT DUTIES.—The Sec12 retary, by regulation under subsection (a) and taking into

13 account the provisions of this part, shall specify the mini14 mum training and qualifications required for agency per15 sonnel assigned predominantly to concession management

16 duties, including (but not limited to) competency in busi17 ness management, public health and safety, and the deliv18 ery of quality customer services.

19 SEC. 9318. RELATIONSHIP TO OTHER EXISTING LAWS.

20 (a) REPEALS.—

21 (1) The Act entitled ‘‘An Act relating to the es22 tablishment of concession policies in the areas ad23 ministered by the National Park Service and for

24 other purposes’’ (16 U.S.C. 20–20g) approved Octo25 ber 9, 1965, is repealed.
335

•HR 2491 RH

1 (2) The last paragraph under the heading

2 ‘‘FOREST SERVICE’’ in the Act of March 4, 1915 (38

3 Stat. 1101), as amended by the Act of July 28,

4 1956 (chap. 771; 70 Stat. 708) (16 U.S.C. 497), is

5 repealed.

6 (3) Section 7 of the Act of April 24, 1950 (16

7 U.S.C. 580d) is repealed.

8 (b) SUPERSEDED PROVISIONS.—The provisions of

9 this part shall supersede the provisions of the following

10 Acts as they pertain to concessions management:

11 (1) The Federal Land Policy and Management

12 Act of 1976 (Oct. 21, 1976).

13 (2) Public Law 87–714 (16 U.S.C. 460k et

14 seq.; commonly known as the ‘‘Refuge Recreation

15 Act’’).

16 (3) The National Wildlife Refuge System Ad17 ministration Act of 1966 (16 U.S.C. 668dd).

18 (c) CONFORMING AMENDMENT.—The fourth sen19 tence of section 3 of the Act of August 25, 1916 (16

20 U.S.C. 3; 39 Stat. 535), is amended by striking all

21 through ‘‘no natural’’ and inserting in lieu thereof ‘‘No

22 natural’’.

23 (d) MODIFIED PROVISIONS.—The second sentence of

24 section 4 of the Act entitled ‘‘An Act authorizing the con25 struction of certain public works on rivers and harbors for
336

•HR 2491 RH

1 flood control, and for other purposes’’ (16 U.S.C. 460d)

2 is amended by inserting ‘‘, except for commercial conces3 sions purposes’’ the first place it appears after ‘‘public in4 terest’’.

5 (e) SAVINGS.—

6 (1) IN GENERAL.—The repeal of any provision,

7 the superseding of any provision, and the amend8 ment of any provision, of an Act referred to in sub9 sections (a), (b), or (c) shall not affect the validity

10 of any authorizations entered into under any such

11 Act. The provisions of this part shall apply to any

12 such authorizations, except to the extent such provi13 sions are inconsistent with the express terms and

14 conditions of such authorizations.

15 (2) RIGHT OF RENEWAL.—The right of renewal

16 explicitly provided for by any concession contract

17 under any such provision shall be preserved for a

18 single renewal of a contract following the enactment

19 of, or concession authorization under, this part.

20 (3) VALUE OF CAPITAL IMPROVEMENTS OR

21 POSSESSORY INTEREST.—Nothing in this part shall

22 be construed to change the value of existing capital

23 improvements or possessory interest as identified in

24 concession contracts entered into before the enact25 ment of this Act.
337

•HR 2491 RH

1 (4) ANILCA.—Nothing in this part shall be

2 construed to amend, supersede or otherwise affect

3 any provision of the Alaska National Interest Lands

4 Conservation Act (16 U.S.C. 3101 et seq.) relating

5 to revenue-producing visitor services.

6 (5) SKI AREA PERMITS.—No provision of this

7 part shall apply to any ski area permittee operating

8 on lands administered by the Forest Service.

9 (6) PROCEDURES FOR CONSIDERING EXISTING

10 CONCESSIONERS IN REISSUANCE OF CONTRACTS.—

11 In the case of any concession contract which has ex12 pired prior to the date of the enactment of this Act,

13 or within five years after the date of the enactment

14 of this Act, the incumbent concessioner shall be enti15 tled to a one-time bonus of five percent of the maxi16 mum points available in the reissuance of a previous

17 concession authorization. For any concession con18 tract entered into prior to the date of enactment of

19 this Act, which is projected to terminate five years

20 or later after the enactment of this Act, any conces21 sioner shall be entitled to a performance incentive as

22 outlined in this part. The concessioner shall be enti23 tled to an evaluation for the purposes of section

24 9306 of good for each year in which the Secretary
338

•HR 2491 RH

1 concerned does not complete an evaluation as pro2 vided for in this part.

3 PART 2—NATIONAL FOREST SKI AREAS

4 SEC. 9321. PRIVATIZATION OF FOREST SERVICE SKI AREAS.

5 (a) AUTHORIZATION TO SELL.—

6 (1) IN GENERAL.—Not later than five years

7 after the date of enactment of this part, the Sec8 retary of Agriculture shall offer to sell not less than

9 40 ski areas to the qualifying ski area operator. Any

10 such sale shall provide for continuation of public ac11 cess for diverse recreational uses. The Secretary

12 shall offer such areas for sale only after consultation

13 with State and local governments. Any such sale

14 shall be at fair market value and, subject to valid ex15 isting rights, shall transfer all right, title, and inter16 est of the United States in and to the lands. In any

17 such sale, the Secretary shall establish the minimum

18 acceptable bid based on the appraised fair market

19 value of such lands.

20 (2) QUALIFYING LANDS.—For the purposes of

21 subsection (a), lands are qualifying concession lands

22 if such lands are—

23 (A) subject to a lease on the date of the

24 enactment of this Act for use as a ski area with
339

•HR 2491 RH

1 improvements with a fair market value greater

2 than $2,000,000; and

3 (B) located either adjacent to the boundary

4 of the Federal lands or adjacent to other sig5 nificant private inholdings.

6 (b) APPRAISAL.—

7 (1) IN GENERAL.—The Secretary shall provide

8 for an independent appraisal of the lands and inter9 ests therein to be transferred pursuant to subsection

10 (a). The appraiser shall—

11 (A) utilize nationally recognized appraisal

12 standards, including to the extent appropriate

13 the uniform appraisal standards for Federal

14 land acquisition; and

15 (B) not include the value of any improve16 ment placed on the lands by the concessioner.

17 (2) APPRAISAL REPORT.—The appraiser shall

18 submit a detailed report to the Secretary.

19 (c) ADDITIONAL LANDS.—In addition to the national

20 forest ski area, the Secretary may transfer by sale or ex21 change additional National Forest System lands for the

22 purpose of adding such lands to and operating them as

23 part of a ski area sold under subsection (a). The transfer

24 of additional lands under this subsection shall be in ac-
340

•HR 2491 RH

1 cordance with this part and the laws generally applicable

2 to the National Forest System.

3 (d) USE OF PROCEEDS BY THE APPROPRIATE SEC4 RETARY.—The Secretary may retain 50 percent of the

5 funds generated through sales under this section to ac6 quire other high priority lands identified for acquisition

7 in any forest land and resource management plan. The

8 remaining 50 percent of such amount shall be deposited

9 in the Treasury as miscellaneous receipts.

10 SEC. 9322. SKI AREA PERMIT FEES AND WITHDRAWAL OF

11 SKI AREAS FROM OPERATION OF MINING

12 LAWS.

13 The National Forest Ski Area Permit Act of 1986

14 (16 U.S.C. 497b) is amended by adding at the end the

15 following new sections:

16 ‘‘SEC. 4. SKI AREA PERMIT FEES.

17 ‘‘(a) SKI AREA PERMIT FEE.—

18 ‘‘(1) IN GENERAL.—Except as provided by

19 paragraph (2), after the date of the enactment of

20 this section, the fee for all ski area permits on Na21 tional Forest System lands shall be calculated,

22 charged, and paid only as set forth in subsection (b).

23 ‘‘(2) EXCEPTION.—Paragraph (1) does not

24 apply to any ski area where the existing permit in

25 effect on the date of enactment of this section speci-
341

•HR 2491 RH

1 fies a different method to calculate the fee. In any

2 such situation the terms of such permit shall prevail,

3 unless the permit holder notifies the Forest Service

4 that the permit holder agrees to adopt the method

5 of fee calculation specified in this section. The For6 est Service should encourage such permit holders to

7 consider adopting the new method of fee calculation

8 in order to reduce its administrative costs.

9 ‘‘(b) METHOD OF CALCULATION.—

10 ‘‘(1) DETERMINATION OF ADJUSTED GROSS

11 REVENUE SUBJECT TO FEE.—The Secretary of Agri12 culture shall calculate the ski area permit fee to be

13 charged a ski area permittee by first determining

14 the permittee’s adjusted gross revenue to be subject

15 to the permit fee. The permittee’s adjusted gross

16 revenue is equal to the sum of the following:

17 ‘‘(A) The permittee’s gross revenues from

18 alpine lift ticket and alpine season pass sales

19 plus revenue from alpine ski school operations,

20 with such total multiplied by the permittee’s

21 slope transport feet percentage on National

22 Forest System lands.

23 ‘‘(B) The permittee’s gross revenues from

24 nordic ski use pass sales and nordic ski school

25 operations, with such total multiplied by the
342

•HR 2491 RH

1 permittee’s percentage of nordic trails on Na2 tional Forest System lands.

3 ‘‘(C) The permittee’s gross revenues from

4 ancillary facilities physically located on National

5 Forest System lands, including all permittee or

6 subpermittee lodging, food service, rental shops,

7 parking, and other ancillary operations.

8 ‘‘(2) DETERMINATION OF SKI AREA PERMIT

9 FEE.—The Secretary shall determine the ski area

10 permit fee to be charged a ski area permittee by

11 multiplying adjusted gross revenue determined under

12 paragraph (1) for the permittee by the following per13 centages for each revenue bracket and adding the

14 total for each revenue bracket:

15 ‘‘(A) 1.5 percent of all adjusted gross reve16 nue below $3,000,000.

17 ‘‘(B) 2.5 percent for adjusted gross reve18 nue between $3,000,000 and $15,000,000.

19 ‘‘(C) 2.75 percent for adjusted gross reve20 nue between $15,000,000 and $50,000,000.

21 ‘‘(D) 4.0 percent for the amount of ad22 justed gross revenue that exceeds $50,000,000.

23 ‘‘(3) SLOPE TRANSPORT FEET PERCENTAGE.—

24 In cases where ski areas are only partially located on

25 National Forest System lands, the slope transport
343

•HR 2491 RH

1 feet percentage on national forest land referred to in

2 paragraph (1) shall be calculated as generally de3 scribed in the Forest Service Manual in effect as of

4 January 1, 1992.

5 ‘‘(4) ANNUAL ADJUSTMENT OF ADJUSTED

6 GROSS REVENUE.—In order to insure that the ski

7 area permit fee set forth in this subsection remains

8 fair and equitable to both the United States and ski

9 area permittees, the Secretary shall adjust, on an

10 annual basis, the adjusted gross revenue figures for

11 each revenue bracket in subparagraphs (A) through

12 (D) of paragraph (2) by the percent increase or de13 crease in the national Consumer Price Index for the

14 preceding calendar year.

15 ‘‘(c) MINIMUM FEE.—In cases where an area of Na16 tional Forest System land is under a ski area permit but

17 the permittee does not have revenue or sales qualifying

18 for fee payment pursuant to subsection (a), the permittee

19 shall pay an annual minimum fee of $2 for each acre of

20 National Forest System land under permit. Rental fees

21 imposed under this subsection shall be paid at the time

22 specified in subsection (d).

23 ‘‘(d) TIME FOR PAYMENT.—The fee set forth in sub24 section (b) shall be due on June 1 of each year and shall

25 be paid or prepaid by the permittee on a monthly, quar-
344

•HR 2491 RH

1 terly, annual, or other schedule as determined appropriate

2 by the Secretary in consultation with the permittee. It is

3 the intention of Congress that unless mutually agreed oth4 erwise by the Secretary and the permittee, the payment

5 or prepayment schedule shall conform to the permittee’s

6 schedule in effect prior to the enactment of this section.

7 To simplify bookkeeping and fee calculation burdens on

8 the permittee and the Forest Service, the Secretary shall

9 each year provide the permittee with a standardized form

10 and worksheets (including annual fee calculations brackets

11 and rates) to be utilized for fee calculation and submitted

12 with the fee payment. Information provided on such forms

13 shall be compiled by the Secretary annually and kept in

14 the Office of the Chief, United States Forest Service.

15 ‘‘(e) DEFINITIONS.—To simplify bookkeeping and ad16 ministrative burdens on ski area permittees and the For17 est Service, as used in this section, the terms ‘revenue’

18 and ‘sales’ mean actual income from sales. Such terms do

19 not include sales of operating equipment, refunds, rent

20 paid to the permittee by sublessees, sponsor contributions

21 to special events or any amounts attributable to employee

22 gratuities, discounts, complimentary lift tickets, or other

23 goods or services (except for bartered goods) for which the

24 permittee does not receive money.
345

•HR 2491 RH

1 ‘‘(f) EFFECTIVE DATE FOR FEES.—The ski area per2 mit fees as provided under this section shall become effec3 tive on July 1, 1996, and cover receipts retroactive to July

4 1, 1995. If a ski area permittee has paid fees for the 12-

5 month period ending on June 30, 1996, under the grad6 uated rate fee system formula in effect prior to the date

7 of the enactment of this section, such fees shall be credited

8 toward the new ski area permit fee due for that period

9 under this section.

10 ‘‘(g) REPORT ON FAIR MARKET VALUE.—No later

11 than five years after the date of enactment of this section

12 and every 10 years thereafter, the Secretary shall submit

13 to the Committee on Energy and Natural Resources of

14 the United States Senate and the Committees of Agri15 culture and Resources of the United States House of Rep16 resentatives a report analyzing whether the ski area per17 mit fee system legislated by this section is returning a fair

18 market value rental to the United States together with any

19 recommendations the Secretary may have for modifica20 tions in the system.

21 ‘‘(h) TRANSITION PERIOD.—Where the new fee pro22 vided for in this section results in an increase in permit

23 fee greater than one percent of the permittee’s adjusted

24 gross revenue (as defined in subsection (b)(1)), the new
346

•HR 2491 RH

1 fee shall be phased in over a three year period in a manner

2 providing for increases of approximately equal increments.

3 ‘‘(i) APPLICABILITY OF NEPA TO REISSUANCE OF

4 SKI AREA PERMITS.—The reissuance of a ski area permit

5 to provide activities similar in nature and amount to the

6 activities provided under the previous permit is hereby de7 termined to be a categorical exclusion as provided for

8 under the National Environmental Policy Act of 1969 (42

9 U.S.C. 4331 et seq.).

10 ‘‘SEC. 5. WITHDRAWAL OF SKI AREAS FROM OPERATION OF

11 MINING LAWS.

12 ‘‘Subject to valid existing rights, all lands located

13 within the boundaries of ski area permits issued prior to,

14 on, or after the date of the enactment of this section pur15 suant to the authority of the Act of March 4, 1915 (16

16 U.S.C. 497), the Act of June 4, 1897 (16 U.S.C. 473 et

17 seq.), or section 3 of this Act are hereby and henceforth

18 automatically withdrawn from all forms of appropriation

19 under the mining laws and from disposition under all laws

20 pertaining to mineral and geothermal leasing. Such with21 drawal shall continue for the full term of the permit and

22 any modification, reissuance, or renewal of the permit.

23 Such withdrawal shall be canceled automatically upon ex24 piration or other termination of the permit unless, at the

25 request of the Secretary of Agriculture, the Secretary of
347

•HR 2491 RH

1 the Interior determines to continue the withdrawal. Upon

2 cancellation of the withdrawal, the land shall be automati3 cally restored to all appropriation not otherwise restricted

4 under the public land laws.’’.

5 PART 3—DOMESTIC LIVESTOCK GRAZING

6 SEC. 9331. APPLICABLE REGULATIONS.

7 (a) BLM LANDS.—Except as otherwise provided by

8 this part, grazing of domestic livestock on lands adminis9 tered by the Bureau of Land Management shall be in ac10 cordance with part 1780 and part 4100 of title 43, Code

11 of Federal Regulations, as in effect on January 1, 1995.

12 (b) FOREST SERVICE LANDS.—Except as otherwise

13 provided by this part, grazing of domestic livestock on

14 lands administered by the Forest Service shall, to the ex15 tent possible, be in accordance with regulations, which the

16 Secretary of Agriculture shall promulgate, which are sub17 stantially similar to the regulations referred to in sub18 section (a). Regulations promulgated under this sub19 section may differ from the regulations referred to in sub20 section (a) to the extent necessary to conform to the laws

21 governing the National Forest System (other than this

22 part).

23 (c) FEDERAL LANDS.—For the purposes of this part,

24 the term ‘‘Federal lands’’ means lands administered by
348

•HR 2491 RH

1 the Bureau of Land Management and lands administered

2 by the Forest Service.

3 SEC. 9332. FEES AND CHARGES.

4 (a) BASIC FEE.—The basic fee for each animal unit

5 month in a grazing fee year to be determined by the Bu6 reau of Land Management and the Forest Service shall

7 be equal to the 3-year average of the total gross value of

8 production for beef cattle, as compiled by the Economic

9 Research Service of the Department of Agriculture in ac10 cordance with subsection (b) on the basis of economic data

11 published by the Service in the Economic Indicators of the

12 Farm Sector: Cost of Production—Major Field Crops &

13 Livestock and Dairy for the 3 years preceding the grazing

14 fee year, multiplied by the 10 year average of the United

15 States Treasury Securities 6-month bill ‘‘new issue’’ rate

16 and divided by 12.

17 (b) CRITERIA.—The Economic Research Service of

18 the Department of Agriculture shall continue to compile

19 the gross production value of production of beef cattle as

20 reported in a dollar per bred cow basis in the ‘‘U.S. Cow21 Calf Production Cash Costs and Returns’’.

22 (c) SURCHARGE.—

23 (1) IN GENERAL.—A surcharge shall be added

24 to the grazing fee billings for authorized grazing of
349

•HR 2491 RH

1 livestock owned by persons other than the permittee

2 or lessee except where—

3 (A) such use is made by livestock owned by

4 a spouse, child, or grandchild or their respective

5 spouse of the permittee and lessee; or

6 (B) the permittee or lessee is unable to

7 make full grazing use, as authorized by a graz8 ing permit or lease, due to the infirmed condi9 tion or death of the permittee or lessee.

10 (2) TREATMENT AS ADDITIONAL FEE.—The

11 surcharge shall be over and above any other fees

12 that may be charged for using public land forage.

13 (3) PRIOR PAYMENT REQUIRED.—Surcharges

14 shall be paid prior to grazing use.

15 (4) AMOUNT.—The surcharge for authorized

16 pasturing of livestock owned by persons other than

17 the permittee or lessee shall be equal to 25 percent

18 of the difference between the current year’s Federal

19 grazing fee and the prior year’s private grazing land

20 lease rate per AUM for the appropriate State as

21 compiled by the National Agricultural Statistics

22 Service.

23 (5) IN GENERAL.—The Bureau of Land Man24 agement and the Forest Service shall make a deter25 mination under subsection (a) based on the following
350

•HR 2491 RH

1 information gathered by the National Agriculture

2 Statistics Service of the Department of Agriculture

3 with respect to the largest single grazing lease of

4 each grazing operator (in terms of dollars):

5 (A) Whether the operator charged—

6 (i) per acre;

7 (ii) per head per month;

8 (iii) per pound of gain;

9 (iv) per hundredweight of gain; or

10 (v) by another measure, and the rate

11 charged.

12 (B)(i) The estimated average pounds

13 gained per season for the grazing lease.

14 (ii) The total dollar amount estimated to

15 be realized from the grazing lease.

16 (iii) Grazing lease acreage.

17 (iv) The State and county where the graz18 ing lease is located.

19 (C) The classes of livestock grazed.

20 (D) The term of the grazing lease.

21 (E)(i) Whether grazing lease payments are

22 paid if no grazing occurred.

23 (ii) Whether the grazing lease contains a

24 take or pay provision.
351

•HR 2491 RH

1 (F) Additional information on whether the

2 following are provided by the landlord on a 5-

3 year basis:

4 (i) Fencing maintenance.

5 (ii) Animal management and over6 sight.

7 (iii) Water maintenance.

8 (iv) Salt and minerals.

9 (v) Other service (specified).

10 (vi) No services.

11 (vii) Hunting.

12 (viii) Fishing.

13 (ix) Other (specified).

14 (x) None.

15 (6) PRIVATE NATIVE RANGELAND.—For the

16 purpose of determining rates for grazing leases of

17 private native rangeland, rates for irrigated pasture,

18 crop aftermath, and dryland winter wheat shall be

19 excluded.

20 SEC. 9333. ANIMAL UNIT MONTH.

21 (a) DEFINITION OF ANIMAL UNIT MONTH.—The

22 term ‘‘animal unit month’’ means 1 month’s use and occu23 pancy of range by—

24 (1) 1 cow, bull, steer, heifer, horse, burro, or

25 mule, 7 sheep, or 7 goats, each of which is 6 months
352

•HR 2491 RH

1 of age or older on the date on which the animal be2 gins grazing on Federal land;

3 (2) any such animal regardless of age if the

4 animal is weaned on the date on which the animal

5 begins grazing on Federal land; and

6 (3) any such animal that will become 12

7 months of age during the period of use authorized

8 under a grazing permit or grazing lease.

9 (b) LIVESTOCK NOT COUNTED.—There shall not be

10 counted as an animal unit month the use of Federal land

11 for grazing by an animal that is less than 6 months of

12 age on the date on which the animal begins grazing on

13 Federal land and is the natural progeny of an animal on

14 which a grazing fee is paid if the animal is removed from

15 the Federal land before becoming 12 months of age.

16 SEC. 9334. TERM OF GRAZING PERMITS OR GRAZING

17 LEASES.

18 A grazing permit or grazing lease shall be issued for

19 a term of 15 years unless—

20 (1) the land is pending disposal;

21 (2) the land will be devoted to a public purpose

22 that precludes grazing prior to the end of 15 years;

23 or

24 (3) the Secretary determines that it would be in

25 the best interest of sound land management to speci-
353

•HR 2491 RH

1 fy a shorter term, if the decision to specify a shorter

2 term is supported by appropriate and accepted re3 source analysis and evaluation.

4 SEC. 9335. CONFORMANCE WITH LAND USE PLAN.

5 Livestock grazing activities and management actions

6 approved by the Secretary of the Interior or the Secretary

7 of Agriculture, as the case may be—

8 (1) may include any such activities as are not

9 clearly prohibited by a land use plan; and

10 (2) shall not require any consideration under

11 the National Environmental Policy Act of 1969 (42

12 U.S.C. 4321 et seq.) in addition to the studies sup13 porting the land use plan.

14 SEC. 9336. EFFECTIVE DATE.

15 This part shall apply to grazing on Federal lands on

16 and after the date of the enactment of this Act.

17 PART 4—REGIONAL DISPOSAL FACILITY OF

18 SOUTHWESTERN LOW LEVEL RADIOACTIVE

19 WASTE DISPOSAL COMPACT

20 SEC. 9341. CONVEYANCE OF PROPERTY.

21 (a) CONVEYANCE.—Upon the tendering of $500,000

22 on behalf of the State of California and the release of the

23 United States by the State of California from any liability

24 for claims relating to the property described in subsection

25 (b), all right, title and interest of the United States in
354

•HR 2491 RH

1 and to said lands and improvements thereon are conveyed

2 to the Department of Health Services of the State of Cali3 fornia: Provided, That the property shall revert to the

4 United States if the property is not used as a low-level

5 radioactive waste disposal facility.

6 (b) DESCRIPTION.—The lands conveyed are those de7 picted on a map designated USGS 7.5 minute quadrangle,

8 west of Flattop Mtn, CA 1984, entitled ‘‘Location Map

9 for Ward Valley Site’’, located in San Bernardino Merid10 ian, Township 9 North, Range 19 East.

11 (c) TITLE.—The Secretary of the Interior shall issue

12 evidence of title pursuant to this Act notwithstanding any

13 other provision of law. The Southwestern Low-Level Ra14 dioactive Waste Disposal Compact’s Ward Valley regional

15 disposal facility and transfer of the land are in compliance

16 with any applicable provisions of section 7 of Endangered

17 Species Act of 1973 (16 U.S.C. 1536) and the National

18 Environmental Policy Act of 1969 (42 U.S.C. 4332).

19 (d) DEPOSIT OF FUNDS.—Sums received pursuant to

20 subsection (a) shall be deposited as miscellaneous receipts

21 in the Treasury of the United States.

22 (e) EXPIRATION OF AUTHORITY.—This authority ex23 pires October 1, 2010.
355

•HR 2491 RH

1 SEC. 9342. CONVEYANCE OF EASEMENTS.

2 Concurrent with the conveyance property described in

3 section 9341(b) to the Department of Health Services of

4 the State of California, all necessary easements for utili5 ties and ingress and egress to said lands described in sec6 tion 9341(b) of this Act and the right to improve those

7 easements, are also conveyed to the Department of Health

8 Services of the State of California: Provided, That the De9 partment of Health Services right-of-way easements revert

10 to the United States if the lands referenced in section

11 9341 are not licensed and used as a low-level radioactive

12 waste disposal facility.

13 Subtitle D—Territories

14 PART 1—COMMONWEALTH OF THE NORTHERN

15 MARIANA ISLANDS

16 SEC. 9401. TERMINATION OF ANNUAL DIRECT GRANT AS17 SISTANCE.

18 (a) TERMINATION.—Pursuant to section 704(d) of

19 the Covenant to Establish a Commonwealth of the North20 ern Mariana Islands in Political Union with the United

21 States of America (48 U.S.C. 1681 note), the annual pay22 ments under section 702 of the Covenant shall terminate

23 as of September 30, 1995.

24 (b) REPEAL.—Sections 3 and 4 of the Act of March

25 24, 1976 (Public Law 94–241; 48 U.S.C. 1681 note), as

26 amended, are repealed, effective October 1, 1995.
356

•HR 2491 RH

1 (c) REMOVAL OF AUTHORITY TO OBLIGATE CERTAIN

2 FUNDS.—Amounts appropriated under title VII of the

3 Covenant to Establish a Commonwealth of the Northern

4 Mariana Islands in Political Union with the United States

5 of America, and under sections 3 and 4 of Public Law

6 94–241 (48 U.S.C. 1681), which are not obligated as of

7 the date of the enactment of this Act may not be obligated

8 after such date.

9 (d) CONFORMING AMENDMENTS.—Section 5 of such

10 Act (48 U.S.C. 1681 note) is amended—

11 (1) by striking out ‘‘agreement identified in sec12 tion 3 of this Act’’ and inserting in lieu thereof

13 ‘‘Agreement of the Special Representatives on Fu14 ture United States Financial Assistance for the Gov15 ernment of the Northern Mariana Islands, executed

16 July 10, 1985, between the special representative of

17 the President of the United States and the special

18 representatives of the Governor of the Northern

19 Mariana Islands’’; and

20 (2) by striking out ‘‘Committee on Interior and

21 Insular Affairs’’ and inserting in lieu thereof ‘‘Com22 mittee on Resources’’.
357

•HR 2491 RH

1 PART 2—TERRITORIAL ADMINISTRATIVE

2 CESSATION ACT

3 SEC. 9421. SHORT TITLE.

4 This part may be cited as the ‘‘Territorial Adminis5 trative Cessation Act’’.

6 SEC. 9422. CONGRESSIONAL FINDINGS.

7 The Congress finds that—

8 (1) each of the four political subdivisions of the

9 United Nations Trust Territory of the Pacific Is10 lands, known as the Japanese Mandated Islands,

11 have successfully entered into distinct self-governing

12 entities, thereby culminating in the final termination

13 of the Trusteeship and the end of the trusteeship re14 sponsibilities of the United States as administering

15 authority of the Trust Territory on October 1, 1994;

16 (2) the United States territories have developed

17 progressively increased local self-government over

18 the past five decades;

19 (3) the territories predominantly deal directly

20 with Federal agencies and departments, as a State

21 would;

22 (4) the administering responsibilities of the De23 partment of the Interior with respect to the insular

24 areas has declined substantially during the past five

25 decades; and
358

•HR 2491 RH

1 (5) Federal-territorial relations can be enhanced

2 and Federal fiscal conditions improved by the elimi3 nation of unnecessary Federal bureaucracy.

4 SEC. 9423. ELIMINATION OF OFFICE OF TERRITORIAL AND

5 INTERNATIONAL AFFAIRS.

6 (a) IN GENERAL.—The Office of Territorial and

7 International Affairs of the Department of the Interior,

8 established pursuant to the Order of the Secretary of the

9 Interior 3046, of February 14, 1980, as amended, is here10 by abolished.

11 (b) TERMINATION OF POSITION OF ASSISTANT SEC12 RETARY.—Section 5315 of title 5, United States Code, is

13 amended by striking ‘‘Assistant Secretaries of the Interior

14 (6)’’ and inserting ‘‘Assistant Secretaries of the Interior

15 (5)’’.

16 (c) EFFECTIVE DATE.—Subsection (a) and the

17 amendment made by subsection (b) shall take effect on

18 the first day of the first fiscal year that begins after the

19 date of the enactment of this Act.

20 SEC. 9424. CERTAIN ACTIVITIES NOT FUNDED.

21 Amounts may not be made available for the following

22 program activities for assistance to territories for fiscal

23 years beginning after September 30, 1995, as identified

24 under the appropriations account numbered 14–0412–0–

25 1–808:
359

•HR 2491 RH

1 (1) technical assistance, item 00.12;

2 (2) maintenance assistance, item 00.14;

3 (3) disaster fund, item 00.17; and

4 (4) insular management controls, item 00.19.

5 Subtitle E—Minerals

6 PART 1—HARDROCK MINING

7 SEC. 9501. FINDINGS AND PURPOSE.

8 (a) FINDINGS.—Congress finds and declares that—

9 (1) a secure and reliable supply of locatable

10 minerals is essential to the industrial base of the

11 United States, national security, and balance of

12 trade;

13 (2) many of the deposits of locatable minerals

14 that may be commercially developed are on Federal

15 lands as that term is defined in this Act, and are

16 difficult and expensive to discover, mine, extract and

17 process;

18 (3) the national need for locatable minerals will

19 continue to expand, and without a strong mining in20 dustry the demand for the minerals will exceed do21 mestic sources of supply;

22 (4) mining of locatable minerals is an extremely

23 high-risk, capital-intensive endeavor, which, to at24 tract necessary investment, requires certainty and

25 predictability in access to Federal lands in establish-
360

•HR 2491 RH

1 ment of mining titles, and in the rights of owners of

2 mining claims or sites to develop minerals;

3 (5) the national interest is to foster and encour4 age private enterprise in the development of a do5 mestic minerals industry to maintain and create

6 high-paying jobs and the various Federal, State, and

7 local taxes paid by the mining industry in the

8 United States;

9 (6) changes in the general mining laws of the

10 United States to provide more direct economic re11 turn to the United States and greater protection of

12 public resources are desirable, so long as these

13 changes do not act as a disincentive to development

14 of minerals, adversely affect employment in the min15 ing industry or in industries that provide goods and

16 services required for mining activities, interfere with

17 a secure and reliable domestic supply of minerals, or

18 adversely affect the balance of trade of the United

19 States; and

20 (7) mining claims, mill sites and tunnel sites lo21 cated under the general mining laws are property in22 terests, and any law or regulation that substantially

23 impairs existing property rights may expose the Fed24 eral Government to takings claims under the fifth

25 amendment to the United States Constitution.
361

•HR 2491 RH

1 (b) PURPOSE.—It is the purpose of this subtitle to—

2 (1) affirm and maintain the policy established

3 in section 2 of the Mining and Minerals Policy Act

4 of 1970;

5 (2) promote exploration for and the develop6 ment of a secure and reliable domestic source of

7 locatable minerals;

8 (3) provide for increased Federal revenue from

9 the location and production of locatable minerals

10 from Federal lands through patent payments and

11 royalties; and

12 (4) recognize that unpatented mining claims,

13 mill sites and tunnel sites are property rights in the

14 fullest sense and avoid, to the greatest extent pos15 sible, claims of takings of existing property rights

16 under the general mining laws that could require

17 compensation under the fifth amendment to the

18 United States Constitution.

19 SEC. 9502. PATENTS UNDER THE GENERAL MINING LAW.

20 (a) IN GENERAL.—Any patent issued by the United

21 States under the general mining laws after the date of

22 the enactment of this Act for any interest in land covered

23 by a mining claim or site under such laws shall be issued

24 only—
362

•HR 2491 RH

1 (1) upon payment by the owner of the mining

2 claim or site of the fair market value for the interest

3 in the land owned by the United States exclusive of,

4 and without regard to, the mineral deposits in the

5 land or the use of such land for mineral activities

6 unless the requirements of subsection (b) are met,

7 and

8 (2) subject to a reservation by the United

9 States of the royalty provided in section 9503(a),

10 unless the requirements in subsection (b) are met.

11 (b) PATENT TRANSITION.—(1) Subsection (a) shall

12 not apply to any mining claim or site if—

13 (A) the claimant establishes that the claim or

14 site constituted a valid mining claim as of the date

15 of the enactment of this Act; and

16 (B) the claimant has filed a patent application

17 or mineral survey application prior to the date of the

18 enactment of this Act, or files such an application

19 with the Bureau of Land Management before the

20 date 2 years after the date of the enactment of this

21 Act. A patent application or mineral survey applica22 tion referred to in this subparagraph shall be

23 deemed timely, notwithstanding that the application

24 may be corrected or supplemented and resubmitted

25 thereafter.
363

•HR 2491 RH

1 (2) During the 2-year period in paragraph (1)(B), or

2 while there is pending a mineral survey or patent applica3 tion to which this subsection applies, an owner of the min4 ing claim or site may continue work on a mining claim

5 or site directed toward establishment and confirmation of

6 entitlement to a patent, and may amend the application

7 as necessary.

8 (3) Where access to any mining claim or site has been

9 denied or impeded by the action or inaction of any Federal

10 official, agency, or court during all or part of the 5-year

11 period preceding the date of enactment of this Act, includ12 ing any mining claim or site within the area described in

13 section 106 of Public Law 103–433, and the mining claim

14 or site may require further exploration or development in

15 order for the claimant to file a patent application or a

16 mineral survey application and otherwise meet the require17 ments of paragraph (1), the claimant may, within 1 year

18 after the date of enactment of this Act, submit a certified

19 written statement to the Secretary describing the access

20 denial or impediment, and shall then have a period of 10

21 years from the date of enactment of this Act or the termi22 nation of such access denial or impediment, whichever oc23 curs first, to conduct such mineral exploration or develop24 ment activities, file a patent application or mineral survey
364

•HR 2491 RH

1 application, and otherwise meet the requirements of para2 graph (1).

3 (c) PAYMENT PLAN.—(1) Any owner grossing less

4 than $500,000 annually shall qualify for a payment plan.

5 Upon completion of the patent process, the owner of the

6 mining claim may purchase the surface estate under the

7 following conditions:

8 (A) Payment to be amortized over 5 years with

9 5 equal annual payments, including principal and in10 terest.

11 (B) Interest shall be calculated per annum at a

12 rate of 2 percent over the ‘‘Treasury Current Value

13 of Funds Rate’’ on the date of execution of the pay14 ment plan agreement.

15 (2) The purchaser shall be notified by certified mail

16 after 60 days of delinquent payments and have 90 days

17 from receipt of notification to correct the delinquency. Re18 possession shall be by and under the laws of repossession,

19 foreclosure, and replevin of the State wherein the land is

20 situated.

21 (d) REPEAL OF PATENTING MORATORIUM; PROCESS22 ING OF PATENT APPLICATIONS.—Sections ll and ll

23 of Public Law ll are hereby repealed. The Secretary

24 of the Interior shall diligently process all patent applica25 tions under the general mining laws pending on the date
365

•HR 2491 RH

1 of enactment and shall make determinations for all such

2 applications regarding patent issuance within 2 years.

3 SEC. 9503. ROYALTY UNDER THE GENERAL MINING LAW.

4 (a) IN GENERAL.—The production and sale of

5 locatable minerals (including associated minerals) from

6 any unpatented mining claim (other than those from Fed7 eral lands to which subsection 9502(b) applies) or any

8 mining claim patented under section 9502(a) shall be sub9 ject to a royalty of 3.5 percent on the net proceeds from

10 such production mined and sold from such claim.

11 (b) ROYALTY EXCLUSION.—(1) The royalty payable

12 under this section shall be waived for any person or cor13 poration with annual net proceeds from mineral produc14 tion subject to subsection (a) of less than $50,000.

15 (2) Where mining operations subject to this section

16 are conducted in 2 or more places by 1 person or corpora17 tion, the operations shall be considered a single operation

18 the aggregate net proceeds from which shall be subject

19 to the $50,000 limitation set forth in this subsection.

20 (3) No royalty shall be payable under this section

21 with respect to minerals processed at a facility by the same

22 person or entity which extracted the minerals if an urban

23 development action grant has been made under section

24 119 of the Housing and Community Development Act of

25 1974 with respect to any portion of such facility.
366

•HR 2491 RH

1 (4) The obligation to pay royalties under this section

2 shall accrue only upon the sale of locatable minerals or

3 mineral products produced from a mining claim subject

4 to such royalty, and not upon the stockpiling of the same

5 for future processing.

6 (c) DEFINITIONS.—For the purposes of this subtitle:

7 (1) The term ‘‘net proceeds’’ means gross yield,

8 less the sum of the following deductions for costs in9 curred prior to sale or value determination, and none

10 other:

11 (A) The actual cost of extracting the

12 locatable mineral.

13 (B) The actual cost of transporting the

14 locatable mineral from the claim to the place or

15 places of reduction, beneficiation, refining, and

16 sale.

17 (C) The actual cost of crushing, process18 ing, reduction, beneficiation, refining, and sale

19 of the locatable mineral.

20 (D) The actual cost of marketing and de21 livering the locatable mineral and the conver22 sion of the locatable mineral into money.

23 (E) The actual cost of maintenance and re24 pairs of—
367

•HR 2491 RH

1 (i) all machinery, equipment, appara2 tus, and facilities used in the mine;

3 (ii) all crushing, milling, leaching, re4 fining, smelting, and reduction works,

5 plants, and facilities; and

6 (iii) all facilities and equipment for

7 transportation.

8 (F) The actual cost for support personnel

9 and support services at the mine site, including

10 without limitation, accounting, assaying, draft11 ing and mapping, computer services, surveying,

12 housing, camp, and office expenses, safety, and

13 security.

14 (G) The actual cost of engineering, sam15 pling, and assaying pertaining to development

16 and production.

17 (H) The actual cost of permitting, rec18 lamation, environmental compliance and mon19 itoring.

20 (I) The actual cost of fire and other insur21 ance on the machinery, equipment, apparatus,

22 works, plants, and facilities mentioned in sub23 paragraph (E).

24 (J) Depreciation of the original capitalized

25 cost of the machinery, equipment, apparatus,
368

•HR 2491 RH

1 works, plants, and facilities listed in subpara2 graph (E). The annual depreciation charge shall

3 consist of amortization of the original cost in

4 the manner consistent with the Internal Reve5 nue Code of 1986, as amended from time to

6 time. The probable life of the property rep7 resented by the original cost must be considered

8 in computing the depreciation charge.

9 (K) All money expended for premiums for

10 industrial insurance, and the owner paid cost of

11 hospital and medical attention and accident

12 benefits and group insurance for all employees

13 engaged in the production or processing of

14 locatable minerals.

15 (L) All money paid as contributions or

16 payments under State unemployment com17 pensation law, all money paid as contributions

18 under the Federal Social Security Act, and all

19 money paid to State government in real prop20 erty taxes and severance or other taxes meas21 ured or levied on production, or Federal excise

22 tax payments and payments as fees or charges

23 for use of the Federal lands from which the

24 locatable minerals are produced.
369

•HR 2491 RH

1 (M) The actual cost of the developmental

2 work in or about the mine or upon a group of

3 mines when operated as a unit.

4 (2) The term ‘‘gross yield’’ shall having the fol5 lowing meaning:

6 (A) In the case of sales of gold and silver

7 ore, concentrates or bullion, or the sales of

8 other locatable minerals in the form of ore or

9 concentrates, the term ‘‘gross yield’’ means the

10 actual proceeds of sale of such ore, concentrates

11 or bullion.

12 (B) In the case of sales of beneficiated

13 products from locatable minerals other than

14 those subject to subparagraph (A) (including

15 cathode, anode or copper rod or wire, or other

16 products fabricated from the locatable min17 erals), the term ‘‘gross yield’’ means the gross

18 income from mining derived from the first com19 mercially marketable product determined in the

20 same manner as under section 613 of the Inter21 nal Revenue Code of 1986.

22 (C) If ore, concentrates, beneficiated or

23 fabricated products, or locatable minerals are

24 used or consumed and are not sold in an arms

25 length transaction, the term ‘‘gross yield’’
370

•HR 2491 RH

1 means the reasonable fair market value of the

2 ore, concentrates, beneficiated or fabricated

3 products at the mine or wellhead determined

4 from the first applicable of the following:

5 (i) Published or other competitive sell6 ing prices of locatable minerals of like kind

7 and grade.

8 (ii) Any proceeds of sale.

9 (iii) Value received in exchange for

10 any thing or service.

11 (iv) The value of any locatable min12 erals in kind or used or consumed in a

13 manufacturing process or in providing a

14 service.

15 Without limiting the foregoing, the profits or

16 losses incurred in connection with forward

17 sales, futures or commodity options trading,

18 metal loans, or any other price hedging or spec19 ulative activity or arrangement shall not be in20 cluded in gross yield.

21 (3) The term ‘‘Secretary’’ means the Secretary

22 of the Interior.

23 (d) LIMITATIONS AND ALLOCATIONS OF NET PRO24 CEEDS, GROSS YIELD, AND ALLOWABLE COSTS.—(1) The

25 deductions listed in subsection (c)(1) are intended to allow
371

•HR 2491 RH

1 a reasonable allowance for overhead. Such deductions shall

2 not include any expenditures for salaries, or any portion

3 of salaries, of any person not actually engaged in—

4 (A) the working of the mine;

5 (B) the operating of the leach pads, ponds,

6 plants, mills, smelters, or reduction works;

7 (C) the operating of the facilities or equipment

8 for transportation; or

9 (D) superintending the management of any of

10 those operations described in subparagraphs (A)

11 through (C).

12 (2) Ores or solutions of locatable minerals subject to

13 the royalty requirements of this section may be extracted

14 from mines comprised of mining claims and lands other

15 than mining claims and ore or solutions of locatable min16 erals subject to the royalty requirements of this section

17 may be commingled with ores or solutions from lands

18 other than mining claims. In any such case, for purposes

19 of determining the amount of royalties payable under this

20 section—

21 (A) the operator shall first sample, weigh or

22 measure, and assay the same in accordance with ac23 cepted industry standards; and

24 (B) gross yield, allowable costs and net pro25 ceeds for royalty purposes shall be allocated in pro-
372

•HR 2491 RH

1 portion to mineral products recovered from the min2 ing claims in accordance with accepted industry

3 standards.

4 (e) LIABILITY FOR ROYALTY PAYMENTS.—The

5 owner or co-owners of a mining claim subject to a royalty

6 under this section shall be liable for such royalty to the

7 extent of the interest in such claim owned. As used in this

8 subsection, the terms ‘‘owner’’ and ‘‘co-owner’’ mean the

9 person or persons owning the right to mine locatable min10 erals from such claim and receiving the net proceeds of

11 such sale. No person who makes any royalty payment at12 tributable to the interest of the owner or co-owners liable

13 therefor shall become liable to the United States for such

14 royalty as a result of making such payment on behalf of

15 such owner or co-owners.

16 (f) TIME AND MANNER OF PAYMENT.—(1) Royalty

17 payments for production from any mining claim subject

18 to the royalty payable under this section shall be due to

19 the United States at the end of the month following the

20 end of the calendar quarter in which the net proceeds from

21 the sale of such production are received by the owner or

22 co-owners. Royalty payments may be made based upon

23 good faith estimates of the gross yield, net proceeds and

24 the quantity of ore, concentrates, or other beneficiated or

25 fabricated products of locatable minerals, subject to ad-
373

•HR 2491 RH

1 justment when the actual annual gross yield, net proceeds

2 and quantity are determined by the owner of the mining

3 claim or site or co-owners.

4 (2) Each royalty payment or adjustment shall be ac5 companied by a statement containing each of the follow6 ing:

7 (A) The name and Bureau of Land Manage8 ment serial number of the mining claim or claims

9 from which ores, concentrates, solutions or

10 beneficiated products of locatable minerals subject to

11 the royalty required in this section were produced

12 and sold for the period covered by such payment or

13 adjustment.

14 (B) The estimated (or actual, if determined)

15 quantity of such ore, concentrates, solutions or

16 beneficiated or fabricated products produced and

17 sold from such mining claim or claims for such pe18 riod.

19 (C) The estimated (or actual, if determined)

20 gross yield from the production and sale of such ore,

21 concentrates, solutions or beneficiated products for

22 such period.

23 (D) The estimated (or actual, if determined)

24 net proceeds from the production and sale of such

25 ores, concentrates, solutions or beneficiated products
374

•HR 2491 RH

1 for such period, including an itemization of the ap2 plicable deductions described in subsection (c)(1).

3 (E) The estimated (or actual, if determined)

4 royalty due to the United States, or adjustment due

5 to the United States or such owner or co-owners, for

6 such period.

7 (3) In lieu of receiving a refund under subsection (h),

8 the owner or co-owners may elect to apply any adjustment

9 due to such owner or co-owners as an offset against royal10 ties due from such owner or co-owners to the United

11 States under this Act, regardless of whether such royalties

12 are due for production and sale from the same mining

13 claim or claims.

14 (g) RECORDKEEPING AND REPORTING REQUIRE15 MENTS.—(1) An owner, operator, or other person directly

16 involved in the conduct of mineral activities, transpor17 tation, purchase, or sale of locatable minerals, con18 centrates, or products derived therefrom, subject to the

19 royalty under this section, through the point of royalty

20 computation, shall establish and maintain any records,

21 make any reports, and provide any information that the

22 Secretary may reasonably require for the purposes of im23 plementing this section or determining compliance with

24 regulations or orders under this section. Upon the request

25 of the Secretary when conducting an audit or investigation
375

•HR 2491 RH

1 pursuant to subsection (i), the appropriate records, re2 ports, or information required by this subsection shall be

3 made available for inspection and duplication by the Sec4 retary.

5 (2) Records required by the Secretary under this sec6 tion shall be maintained for 3 years after the records are

7 generated unless the Secretary notifies the record holder

8 that he or she has initiated an audit or investigation spe9 cifically identifying and involving such records and that

10 such records must be maintained for a longer period.

11 When an audit or investigation is under way, such records

12 shall be maintained until the earlier of the date that the

13 Secretary releases the record holder of the obligation to

14 maintain such records or the date that the limitations pe15 riod applicable to such audit or investigation under sub16 section (i) expires.

17 (h) INTEREST ASSESSMENTS.—(1) If royalty pay18 ments under this section are not received by the Secretary

19 on the date that such payments are due, or if such pay20 ments are less than the amount due, the Secretary shall

21 charge interest on such unpaid amount. Interest under

22 this subsection shall be computed at the rate published

23 by the Department of the Treasury as the ‘‘Treasury Cur24 rent Value of Funds Rate.’’ In the case of an

25 underpayment or partial payment, interest shall be com-
376

•HR 2491 RH

1 puted and charged only on the amount of the deficiency

2 and not on the total amount, and only for the number

3 of days such payment is late. No other late payment or

4 underpayment charge or penalty shall be charged with re5 spect to royalties under this section.

6 (2) In any case in which royalty payments are made

7 in excess of the amount due, or amounts are held by the

8 Secretary pending the outcome of any appeal in which the

9 Secretary does not prevail, the Secretary shall promptly

10 refund such overpayments or pay such amounts to the per11 son or persons entitled thereto, together with interest

12 thereon for the number of days such overpayment or

13 amounts were held by the Secretary, with the addition of

14 interest charged against the United States computed at

15 the rate published by the Department of the Treasury as

16 the ‘‘Treasury Current Value of Funds Rate.’’

17 (i) AUDITS, PAYMENT DEMANDS AND LIMITA18 TIONS.—(1) The Secretary may conduct, after notice, any

19 audit reasonably necessary and appropriate to verify the

20 payments required under this section.

21 (2) The Secretary shall send or issue any billing or

22 demand letter for royalty due on locatable minerals pro23 duced and sold from any mining claim subject to royalty

24 required by this section not later than 3 years after the

25 date such royalty was due and must specifically identify
377

•HR 2491 RH

1 the production involved, the royalty allegedly due and the

2 basis for the claim. No action, proceeding or claim for roy3 alty due on locatable minerals produced and sold, or relat4 ing to such production, may be brought by the United

5 States, including but not limited to any claim for addi6 tional royalties or claim of the right to offset the amount

7 of such additional royalties against amounts owed to any

8 person by the United States, unless judicial suit or admin9 istrative proceedings are commenced to recover specific

10 amounts claimed to be due prior to the expiration of 3

11 years from the date such royalty is alleged to have been

12 due.

13 (j) TRANSITIONAL RULES.—Any mining claim for

14 which a patent is issued pursuant to section 9502(b) shall

15 not be subject to the obligation to pay the royalty pursu16 ant to this section. Royalty payments for any claim proc17 essed under section 9502(b) shall be suspended pending

18 final determination of the right to patent. For any such

19 claim that is determined not to qualify for the issuance

20 of a patent under section 9502(b), royalties shall be pay21 able under this section on production after the date of en22 actment of this Act, plus interest computed at the rate

23 published by the Department of the Treasury as the

24 ‘‘Treasury Current Value of Funds Rate’’ on production
378

•HR 2491 RH

1 after such date of enactment and before the date of such

2 determination.

3 (k) DISBURSEMENT OF REVENUES.—The receipts

4 from royalties collected under this section shall be dis5 bursed as follows:

6 (1) Two-thirds of such receipts shall be paid

7 into the Treasury of the United States and deposited

8 as miscellaneous receipts.

9 (2) One-third of such receipts shall be paid by

10 the Secretary of the Treasury to the State in which

11 the mining claim from which production occurred is

12 located.

13 (l) NO IMPLIED COVENANTS.—The owner of a min14 ing claim subject to the provisions of this title shall have

15 no obligation, express or implied, to explore for, develop,

16 produce or market locatable minerals as a result of the

17 obligation to pay a royalty hereunder, and the timing, na18 ture, extent and manner of exploring, developing, mining

19 and marketing such locatable minerals shall be in the sole

20 discretion of the claim owner.

21 SEC. 9504. MINERAL MATERIALS.

22 (a) DETERMINATIONS.—Section 3 of the Act of July

23 23, 1955 (30 U.S.C. 611), is amended as follows:

24 (1) Insert ‘‘(a)’’ before the first sentence.
379

•HR 2491 RH

1 (2) Add the following new subsection at the end

2 thereof:

3 ‘‘(b)(1) Subject to valid existing rights, after the date

4 of enactment of this subsection, notwithstanding the ref5 erence to common varieties in subsection (a) and to the

6 exception to such term relating to a deposit of materials

7 with some property giving it distinct and special value, all

8 deposits of mineral materials referred to in such sub9 section, including the block pumice referred to in such

10 subsection, shall be subject to disposal only under the

11 terms and conditions of the Materials Act of 1947.

12 ‘‘(2) For purposes of paragraph (1), the term ‘valid

13 existing rights’ means that a mining claim located for any

14 such mineral material had some property giving it the dis15 tinct and special value referred to in subsection (a), or

16 as the case may be, met the definition of block pumice

17 referred to in such subsection, was properly located and

18 maintained under the general mining laws prior to the

19 date of the enactment of this subsection, and was sup20 ported by a discovery of a valuable mineral deposit within

21 the meaning of the general mining laws as in effect imme22 diately prior to such date of enactment and that such

23 claim continues to be valid under this Act.’’.

24 (b) IDENTIFIED DEPOSITS.—In order to assure that

25 the Secretary has the authority to provide for the develop-
380

•HR 2491 RH

1 ment of mineral materials which, in order to justify the

2 investment necessary for the development of the appro3 priate mine, quarry or other workings and related facili4 ties, may require longer and more secure tenure than is

5 provided by sales contracts under the Act entitled ‘‘An Act

6 to provide for the disposal of materials on the public lands

7 of the United States’’, approved July 31, 1947 (30 U.S.C.

8 602), and in order to provide flexibility with regard to the

9 manner of disposition of mineral materials section 2 of

10 such Act is amended by adding at the end the following:

11 ‘‘(b) IDENTIFIED DEPOSITS.—(1) Lands known to

12 contain valuable deposits of mineral materials subject to

13 this Act and subsequent amendments and not covered by

14 any contract, permit, or lease under this section shall also

15 be subject to disposition by lease under this Act by the

16 Secretary of the Interior through advertisement, competi17 tive bidding, or such other methods as he may by general

18 regulations adopt, and in such reasonably compact areas

19 as he shall fix.

20 ‘‘(2) All leases will be conditioned upon—

21 ‘‘(A) the payment by the lessee of such royalty

22 as may be fixed in the lease, not less than two per23 cent of the quantity or gross value of the output of

24 mineral materials, and
381

•HR 2491 RH

1 ‘‘(B) the payment in advance of a rental of 25

2 cents per acre for the first calendar year or fraction

3 thereof; 50 cents per acre for the second, third,

4 fourth, and fifth years, respectively; and $1 per acre

5 per annum thereafter during the continuance of the

6 lease, such rental for that year being credited

7 against royalties accruing for that year.

8 ‘‘(3)(A) Any lease issued under this subsection shall

9 be for a term of 20 years and so long thereafter as the

10 lessee complies with the terms and conditions of the lease

11 and upon the further condition that at the end of each

12 20-year period succeeding the date of the lease such rea13 sonable adjustment of the terms and conditions thereof

14 may be made therein as may be prescribed by the Sec15 retary of the Interior unless otherwise provided by law at

16 the expiration of such periods.

17 ‘‘(B) Leases shall be conditioned upon a minimum

18 annual production or the payment of a minimum royalty

19 in lieu thereof, except when production is interrupted by

20 strikes, the elements, or casualties not attributable to the

21 lessee.

22 ‘‘(C) The Secretary of the Interior may permit sus23 pension of operations under any such leases when market24 ing conditions are such that the leases cannot be operated

25 except at a loss.
382

•HR 2491 RH

1 ‘‘(D) The Secretary upon application by the lessee

2 prior to the expiration of any existing lease in good stand3 ing shall amend such lease to provide for the same tenure

4 and to contain the same conditions, including adjustment

5 at the end of each 20-year period succeeding the date of

6 said lease, as provided for in this subsection.

7 ‘‘(c) OTHER LANDS.—(1) The Secretary of the Inte8 rior is hereby authorized, under such rules and regulations

9 as he may prescribe, to grant to any qualified applicant

10 a prospecting permit which shall give the exclusive right

11 to prospect for mineral materials in lands belonging to the

12 United States which are not subject to subsection (b), and

13 are not covered by a contract, permit, or lease under this

14 Act, except that a prospecting permit shall not exceed a

15 period of 2 years and the area to be included in such a

16 permit shall not exceed 2,560 acres of land in reasonably

17 compact form.

18 ‘‘(2) The Secretary of the Interior shall reserve and

19 may exercise the authority to cancel any prospecting per20 mit upon failure by the permittee to exercise due diligence

21 in the prosecution of the prospecting work in accordance

22 with the terms and conditions stated in the permit, and

23 shall insert in every such permit issued under the provi24 sions of this Act appropriate provisions for its cancellation

25 by him.
383

•HR 2491 RH

1 ‘‘(3) Upon showing to the satisfaction of the Sec2 retary of the Interior that valuable deposits of one of the

3 mineral materials subject to the Materials Act of 1947

4 have been discovered by the permittee within the area cov5 ered by his permit, and that such land is valuable therefor,

6 the permittee shall be entitled to a lease for any or all

7 of the land embraced in the prospecting permit, at a roy8 alty of not less than two percent of the quantity or gross

9 value of the output of the mineral materials at the point

10 of shipment to market, such lease to be taken in compact

11 form by legal subdivisions of the public land surveys, or

12 if the land be not surveyed, by survey executed at the cost

13 of the permittee in accordance with regulations prescribed

14 by the Secretary of the Interior.’’.

15 (d) MINERAL MATERIALS DISPOSAL CLARIFICA16 TION.—Section 4 of the Act of July 23, 1955 (30 U.S.C.

17 612), as amended as follows:

18 (1) In subsection (b) insert ‘‘and mineral mate19 rial’’ after ‘‘vegetative’’.

20 (2) In subsection (c) insert ‘‘and mineral mate21 rial’’ after ‘‘vegetative’’.

22 (e) CONFORMING AMENDMENT.—Section 1 of the

23 Act of July 31, 1947, entitled ‘‘An Act to provide for the

24 disposal of materials on the public lands of the United
384

•HR 2491 RH

1 States’’ (30 U.S.C. 601 and following) is amended by

2 striking ‘‘common varieties of’’ in the first sentence.

3 (f) SHORT TITLES.—

4 (1) SURFACE RESOURCES.—The Act of July

5 23, 1955, is amended by inserting after section 7

6 the following new section:

7 ‘‘SEC. 8. This Act may be cited as the ‘Surface Re8 sources Act of 1955’.’’.

9 (2) MINERAL MATERIALS.—The Act of July 31,

10 1947, entitled ‘‘An Act to provide for the disposal of

11 materials on the public lands of the United States’’

12 (30 U.S.C. 601 and following) is amended by insert13 ing after section 4 the following new section:

14 ‘‘SEC. 5. This Act may be cited as the ‘Materials Act

15 of 1947’.’’.

16 (g) REPEALS.—(1) Subject to valid existing rights,

17 the Act of August 4, 1892 (27 Stat. 348, 30 U.S.C. 161),

18 commonly known as the Building Stone Act, is hereby re19 pealed.

20 (2) Subject to valid existing rights, the Act of Janu21 ary 31, 1901 (30 U.S.C. 162), commonly known as the

22 Saline Placer Act, is hereby repealed.

23 (h) AUTHORIZATION FOR DISPOSAL OF MINERAL

24 MATERIALS BY CONTRACT.—Section 2(a) of the Act enti25 tled ‘‘An Act to provide for the disposal of materials on
385

•HR 2491 RH

1 the public lands of the United States’’, approved July 31,

2 1947 (30 U.S.C. 602(a)), is amended—

3 (1) by striking the period at the end of para4 graph (3) and inserting ‘‘or, if’’; and

5 (2) by adding after paragraph (3) the following:

6 ‘‘(4) the material is a mineral material.’’.

7 (i) SODIUM.—Section 24 of the Mineral Leasing Act

8 (30 U.S.C. 181 et seq.) is amended by inserting after ‘‘2

9 per centum’’ in each place it appears the following: ‘‘and

10 not greater than five and one-half per centum’’. Any rate

11 under section 24 of the Mineral Leasing Act (30 U.S.C.

12 181) in excess of five and one-half per centum shall not

13 be allowed unless the following conditions are met:

14 (1) the Secretary, in consultation with the Sec15 retary of Commerce and the United States Trade

16 Representative, finds that any increase in the royalty

17 rate for sodium will not have an adverse effect on

18 the export of domestically produced soda ash;

19 (2) the Secretary reports this finding of no ‘‘ad20 verse effect’’ to Congress and recommends an addi21 tional proposed royalty rate increase; and

22 (3) the Congress, within 360 days, approves the

23 Secretary’s recommendation.
386

•HR 2491 RH

1 The Secretary shall, within 90 days, offer for competitive

2 bid all tracts for which there are applications pending on

3 sodium leases.

4 SEC. 9505. CLAIM MAINTENANCE REQUIREMENTS.

5 (a) MAINTENANCE FEES.—

6 (1) ANNUAL MAINTENANCE FEE.—After the

7 date of enactment of this Act, the owner of each

8 unpatented mining claim or site located pursuant to

9 the general mining laws, whether located before or

10 after the enactment of this Act, shall pay to the Sec11 retary in advance on or before September 1 of each

12 year, until a patent has been issued therefor, an an13 nual maintenance fee per mining claim or site.

14 (2) INITIAL MAINTENANCE FEE.—The owner of

15 each unpatented mining claim or site located after

16 the date of enactment of this Act pursuant to the

17 general mining laws shall pay to the Secretary, at

18 the time the copy of the notice or certificate of loca19 tion is filed with the Bureau of Land Management

20 pursuant to section 314(b) of the Federal Land Pol21 icy and Management Act of 1976 (43 U.S.C.

22 1744(b)), the location fee required under subsection

23 (i) of this section, in lieu of the annual maintenance

24 fee of $100 per mining claim or site for the assess-
387

•HR 2491 RH

1 ment year which includes the date of location of

2 such mining claim or site.

3 (3) EXEMPTION.—The owner of any mining

4 claim or site who certifies in writing to the Secretary

5 on or before the first day of any assessment year

6 that access to such mining claim or site was denied

7 or impeded during the prior assessment year by the

8 action or inaction of any local, State, or Federal

9 governmental officer, agency, or court, or by any In10 dian tribal authority, shall be exempt from the an11 nual maintenance fee requirements of paragraph (1)

12 for the assessment year following the filing of the

13 certification.

14 (4) AMOUNT OF ANNUAL MAINTENANCE FEE.—

15 For each assessment year the annual maintenance

16 fee payable under paragraph (1) for a claim or site

17 referred to in paragraph (1) shall be in the amount

18 specified in Table 1.

TABLE 1

Assessment Year Amount of Fee Per Site

or Claim

1 through 3 ................................................................. $100 per year

4 through 5 ................................................................. $150 per year

6 through 10 ............................................................... $200 per year

11 through 15 ............................................................. $300 per year

16 and thereafter ........................................................ $500 per year

19 For purposes of applying Table 1 in the case of claims

20 filed before the enactment of this Act, the portion of the
388

•HR 2491 RH

1 assessment year in which this Act is enacted shall be treat2 ed as the first assessment year.

3 (5) EFFECT OF FORFEITURE.—No owner or co4 owner of a mining claim or site which has been for5 feited because the maintenance fee has not been paid

6 and no person who is a related person of any such

7 owner or co-owner may relocate a new claim on any

8 part of lands located within the forfeited claim for

9 a period of 18 months after the date of forfeiture.

10 (6) DEPOSIT OF FEES.—The full amount of all

11 fees paid under this subsection shall be deposited in

12 the General Fund of the Treasury.

13 (b) ANNUAL LABOR.—(1) Amounts expended on ac14 tivities that qualify as annual labor under the general min15 ing laws may be credited on a dollar for dollar basis to16 wards up to 75 percent of the annual maintenance fee pay17 able under this section for the following assessment year.

18 (2) Subject to the 75 percent limit set forth in para19 graph (1), the excess of amounts expended for annual

20 labor performed in any one year over such 75 percent limit

21 may be applied to the maintenance fee due in subsequent

22 years for a period of up to three years.

23 (3) In order to receive credit under this subsection

24 for annual labor work or excess annual labor, the descrip25 tion and value of the work must be included in the state-
389

•HR 2491 RH

1 ment required in subsection (e) and the statement must

2 be timely filed.

3 (4) Annual labor performed on an individual mining

4 claim or site within a group of contiguous claims may be

5 credited towards the aggregate amount of maintenance

6 fees due on all of the contiguous claims within that group.

7 (c) WORK QUALIFYING AS ANNUAL LABOR.—(1)

8 Only work which directly benefits or develops a mining

9 claim or facilitates the extraction of ore qualifies as annual

10 labor. Acceptable labor and improvements include any of

11 the following:

12 (A) Drilling or excavating, including ore extrac13 tion.

14 (B) Mining costs directly associated with the

15 production of ore.

16 (C) Prospecting work which benefits the loca17 tion or a contiguous location.

18 (D) Development work toward an actual mine,

19 such as shafts, tunnels, crosscuts and drifts, settling

20 ponds and dams.

21 (E) Bringing in water for direct mining or mill22 ing purposes.

23 (F) Clearing of brush, timber, debris, or over24 burden where necessary to facilitate the extraction

25 or processing of minerals.
390

•HR 2491 RH

1 (G) Construction of trails, roads, or landing

2 strips providing access to claims.

3 (H) Construction costs of worker housing, mills,

4 and equipment storage buildings where reasonably

5 necessary for the development of the location.

6 (I) Reasonable value of the use of equipment

7 for prospecting, mining, or development purposes on

8 the location.

9 (J) Repairs of equipment used for prospecting,

10 sampling, or production of minerals provided that

11 such equipment has been on site during the assess12 ment year.

13 (K) Cost of moving workers, materials, and

14 equipment among contiguous locations.

15 (L) Watchman services of a bona fide employed

16 watchman on the property where reasonably nec17 essary to protect mining equipment of substantial

18 value.

19 (M) Activities covered under section 1 of the

20 Act of September 2, 1958 (30 U.S.C. 28–1), as

21 amended.

22 (N) Reclamation conducted pursuant to State

23 or Federal surface management regulations.

24 (O) Other activities which the Secretary may

25 determine qualify as annual labor.
391

•HR 2491 RH

1 (2) The following activities do not qualify as annual

2 labor:

3 (A) Work involved in maintaining the location

4 such as brushing and marking boundaries or replac5 ing corner posts and location notices.

6 (B) Transportation of workers to or from the

7 location.

8 (C) Prospecting or exploration work not con9 ducted within the location or a contiguous location.

10 (d) AMENDMENTS OF PUBLIC LAW 85–876.—The

11 Act of September 2, 1958 (Public Law 85–876; 30 U.S.C.

12 28–1), is amended as follows:

13 (1) Section 1 is amended by inserting ‘‘mineral

14 activities, environmental baseline monitoring, and’’

15 after ‘‘without being limited to’’ and before ‘‘geologi16 cal, geochemical and geophysical surveys’’ and by

17 striking ‘‘Such’’ at the beginning of the last sentence

18 and inserting ‘‘Airborne’’.

19 (2) Section 2(d) is amended by inserting ‘‘envi20 ronmental baseline monitoring or’’ after ‘‘experience

21 to conduct’’ and before ‘‘geological, geochemical or

22 geophysical surveys’’.

23 (3) Section 2 is amended by adding at the end

24 of the following new subsection at the end thereof:
392

•HR 2491 RH

1 ‘‘(e) The term ‘environmental baseline monitoring’

2 means activities for collecting, reviewing and analyzing in3 formation concerning soil, vegetation, wildlife, mineral,

4 air, water, cultural, historical, archaeological or other re5 sources related to planning for or complying with Federal

6 and State environmental or permitting requirements appli7 cable to potential or proposed mineral activities on the

8 claim(s).’’.

9 (e) MAINTENANCE FEE STATEMENT.—Each pay10 ment under subsection (a) of this section shall be accom11 panied by a statement which reasonably identifies the min12 ing claim or site for which the maintenance fee is being

13 paid. The statement required under this subsection shall

14 be in lieu of any annual filing requirements for mining

15 claims or sites, under any other Federal law, but shall not

16 supersede any such filing requirement under applicable

17 State law.

18 (f) ANNUAL LABOR REPORT.—When the value of an19 nual labor is credited towards part or all of the mainte20 nance fee, subject to the 75-percent limit set forth in sub21 section (b)(1), the following shall apply:

22 (1) The maintenance fee statement required in

23 subsection (e) must also state the dates of perform24 ance of the labor, describe the character and total

25 value of the improvements made or the labor per-
393

•HR 2491 RH

1 formed, the amount of labor used as a credit toward

2 the maintenance fee for the current year, and the

3 value of excess labor performed in previous years

4 which is to be applied to the maintenance fee for the

5 current year.

6 (2) Documentation which reasonably supports

7 the activities or improvements claimed must accom8 pany the maintenance fee statement. Such docu9 mentation may include, but is not limited to, copies

10 of maps showing sample locations, drill locations, or

11 survey data; environmental baseline data; reports on

12 geology, geochemistry, or geophysics by qualified ex13 perts; drill results; or engineering reports by quali14 fied engineers.

15 (3) All supporting material filed pursuant to

16 paragraph (2) shall remain confidential in accord17 ance with section 552 of title 5 of the United States

18 Code as long as the location is maintained and for

19 a period of one year after the location is abandoned,

20 after which all data filed shall be considered public

21 information.

22 (g) EFFECT OF COMPLIANCE AS AGAINST SUBSE23 QUENT LOCATORS.—(1) Except as provided in paragraph

24 (2), after the date of enactment of this Act, compliance

25 with the requirements of this section shall, from the time
394

•HR 2491 RH

1 the location notice or certificate is posted on the land

2 under applicable State law, confer upon the owner of any

3 unpatented mining claim or site, whether located before

4 or after the date of enactment of this Act, an exclusive

5 right of possession, as against subsequent locators, of the

6 land included in such mining claim or site under the gen7 eral mining laws. If more than one mining claim or site

8 owned or controlled by the same claim or site owner covers

9 substantially the same land, by reason of the location of

10 one or more mining claims or sites on such land, the

11 amendment or relocation of any such mining claim or site,

12 or otherwise, such exclusive right of possession shall ex13 tend to all such mining claims or sites, effective from the

14 time the location notice or certificate for the initial mining

15 claim or site was posted on such land under applicable

16 State law. The order of location, amendment, or relocation

17 of any such mining claims or sites on such land shall not

18 affect the validity of any such mining claim or site. Such

19 owner of the mining claim or site shall not be required

20 to be in actual, physical occupation of such land and shall

21 not be required to exclude rival locators from such land.

22 Such exclusive right of possession shall be subject to appli23 cable Federal law, including the Multiple Mineral Develop24 ment Act of 1954 (30 U.S.C. 521–31), the Materials Act

25 of 1947 (30 U.S.C. 601–604) and the Surface Resources
395

•HR 2491 RH

1 Act of 1955 (30 U.S.C. 611–15) to the extent applicable,

2 and shall neither enlarge nor diminish any rights of such

3 owner of the mining claim or site as against the United

4 States in such land. This paragraph shall supersede the

5 common law doctrine of pedis possessio.

6 (2) Conflicts over the right of exclusive possession of

7 land included in any mining claim or site shall be deter8 mined in proceedings between owners of mining claims or

9 sites under the provisions of section 910 of the Revised

10 Statutes (30 U.S.C. 53) and other applicable law, includ11 ing but not limited to each of the following:

12 (A) Any conflict based upon circumstances ex13 isting as of the date of enactment of this Act be14 tween mining claims or sites located before the date

15 of enactment of this Act, shall be resolved under the

16 law in effect on the day prior to the date of enact17 ment of this Act, including the common law doctrine

18 of pedis possessio.

19 (B) Any conflict arising on or after the date of

20 enactment of this Act between mining claims or sites

21 located before, on or after the date of enactment

22 over whether either owner of the mining claim or

23 site has complied with the requirements of this sec24 tion, shall be resolved under this Act.
396

•HR 2491 RH

1 (h) FAILURE OF CO-OWNER TO CONTRIBUTE.—

2 Upon the failure of any one or more of several co-owners

3 of any mining claim or site to contribute such co-owner

4 or owners’ portion of any location or maintenance fee pay5 able under this section, any co-owner who has paid such

6 fee may, after the payment due date, serve the delinquent

7 co-owner or owners with notice of such failure in writing

8 or, if such delinquent co-owner or owners cannot be lo9 cated after reasonable efforts, by publication in a general

10 circulation newspaper published in a location nearest the

11 mining claim or site at least once a week for at least 90

12 days. If at the expiration of 90 days after such notice in

13 writing or by publication, any delinquent co-owner fails or

14 refuses to contribute the owed portion, such co-owner or

15 owners’ interest shall become the property of the owner

16 or co-owners who have paid the required fee.

17 (i) LOCATION FEE.—The owner of each unpatented

18 mining claim or site located on or after the date of enact19 ment of this Act pursuant to the general mining laws shall

20 pay to the Secretary, at the time the notice or certificate

21 of location is filed with the Bureau of Land Management

22 pursuant to subsection 314(b) of the Federal Land Policy

23 and Management Act of 1976 (43 U.S.C. 1744(b)), a loca24 tion fee of $25.00 per mining claim or site. The full

25 amount of all fees paid under this subsection shall be de-
397

•HR 2491 RH

1 posited in the General Fund of the Treasury. Effective

2 on the date of the enactment of this Act, section 10102

3 of the Omnibus Budget Reconciliation Act of 1993 (107

4 Stat. 406; 30 U.S.C. 28g) is repealed.

5 (j) CREDIT AGAINST MAINTENANCE FEE.—(1) Ex6 cept as provided in paragraph (2), the annual maintenance

7 fee payable for any unpatented mining claim or site for

8 any assessment year shall be reduced by the amount of

9 royalty paid by such claimholder for such mining claim

10 or site, or for any contiguous mining claim or site, during

11 the prior assessment year.

12 (2) Royalties paid during any assessment year prior

13 to the first full assessment year commencing after the en14 actment of this Act shall not reduce the amount of any

15 maintenance fee.

16 (k) OIL SHALE CLAIMS SUBJECT TO CLAIM MAINTE17 NANCE FEE UNDER ENERGY POLICY ACT OF 1992.—

18 This section shall not apply to any oil shale claims for

19 which a fee is required to be paid under paragraph

20 2511(e)(2) of the Energy Policy Act of 1992 (30 U.S.C.

21 242(e)(2)).

22 (l) FAILURE TO COMPLY.—The failure of the owner

23 of the mining claim or site to pay any claim maintenance

24 fee or location fee for a mining claim or site on or before

25 the date such payment is due under this section shall con-
398

•HR 2491 RH

1 stitute forfeiture of the mining claim or site and such min2 ing claim or site shall be null and void, effective as of the

3 day after the date such payment is due, except that if such

4 maintenance fee or location fee is paid or tendered on or

5 before the 30th day after such payment was due under

6 subsection of this section, such mining claim or site shall

7 not be forfeited or null or void, and such maintenance fee

8 or location fee shall be deemed timely paid.

9 (m) AMENDMENT OF FLPMA FILING REQUIRE10 MENTS.—(1) Section 314(a) of the Federal Land Policy

11 and Management Act of 1976 (43 U.S.C. 1744(a)) is

12 hereby repealed.

13 (2) Section 314(c) of the Federal Land Policy and

14 Management Act of 1976 (43 U.S.C. 1744(c)) is amended

15 to read as follows:

16 ‘‘(c) FAILURE TO FILE AS CONSTITUTING FORFEIT17 URE; DEFECTIVE OR UNTIMELY FILING.—The failure to

18 timely file the copy of the notice or certificate of location

19 as required by subsection (b) shall constitute forfeiture of

20 the mining claim and such claim shall be null and void

21 by operation of law; except that it shall not be considered

22 a failure to file if the notice or certificate of location is

23 defective or not timely filed for record under other State

24 or Federal laws permitting or requiring the filing or re25 cording thereof, or if the copy of the notice or certificate
399

•HR 2491 RH

1 is filed by or on behalf of some but not all of the owners

2 of the claim.’’.

3 (n) RELATED PERSONS.—As used in this section, the

4 term ‘‘related persons’’ includes—

5 (1) the spouse and dependent children (as de6 fined in section 152 of the Internal Revenue Code of

7 1986), of the owner of the mining claim or site; and

8 (2) a person controlled by, controlling, or under

9 common control with the owner of the mining claim

10 or site.

11 (o) REPEAL.—Section 10101 of the Omnibus Budget

12 Reconciliation Act of 1993 (107 Stat. 406; 30 U.S.C. 28g)

13 is repealed, effective with respect to assessment year com14 mencing after the enactment of this Act.

15 (p) PERIODIC REVIEW OF FEE STRUCTURE.—Begin16 ning in the year 2005 and at 10 year intervals thereafter,

17 the Secretary shall review the costs incurred by the Sec18 retary to administer mining claims for locatable minerals

19 under the general mining laws and the structure and level

20 of maintenance and location fees received by the Secretary

21 with respect to such claims. The Secretary shall determine

22 if the revenues from such fees is adequate to cover such

23 costs, taking inflation and other appropriate factors into

24 account. The Secretary shall submit the results of each
400

•HR 2491 RH

1 such review to the Congress, together with such legislative

2 recommendations as the Secretary deems appropriate.

3 PART 2—FEDERAL OIL AND GAS ROYALTIES

4 SEC. 9511. SHORT TITLE.

5 This part may be cited as the ‘‘Federal Oil and Gas

6 Royalty Simplification and Fairness Act of 1995’’.

7 SEC. 9512. DEFINITIONS.

8 (a) IN GENERAL.—Section 3 of the Federal Oil and

9 Gas Royalty Management Act of 1982 (30 U.S.C. 1701

10 et seq.) is amended—

11 (1) by amending paragraph (7) to read as fol12 lows:

13 ‘‘(7) ‘lessee’ means any person to whom the

14 United States, an Indian tribe, or an Indian allottee

15 issues a lease or any person to whom operating

16 rights have been assigned;’’; and

17 (2) by striking ‘‘and’’ at the end of paragraph

18 (15), by striking the period at the end of paragraph

19 (16) and inserting a semicolon, and by adding at the

20 end the following:

21 ‘‘(17) ‘adjustment’ means an amendment to a

22 previously filed report on an obligation, and any ad23 ditional payment or credit, if any, applicable thereto,

24 to rectify an underpayment or overpayment on a

25 lease;
401

•HR 2491 RH

1 ‘‘(18) ‘administrative proceeding’ means any

2 agency process in which a demand, decision or order

3 issued by the Secretary is subject to appeal or has

4 been appealed;

5 ‘‘(19) ‘assessment’ means any fee or charge lev6 ied or imposed by the Secretary or the United States

7 other than—

8 ‘‘(A) the principal amount of any royalty,

9 minimum royalty, rental, bonus, net profit

10 share or proceed of sale;

11 ‘‘(B) any interest; or

12 ‘‘(C) any civil or criminal penalty;

13 ‘‘(20) ‘commence’ means—

14 ‘‘(A) with respect to a judicial proceeding,

15 the service of a complaint, petition, counter16 claim, crossclaim, or other pleading seeking af17 firmative relief or seeking credit or recoupment;

18 or

19 ‘‘(B) with respect to a demand, the receipt

20 by the Secretary or a lessee of the demand;

21 ‘‘(21) ‘credit’ means the application of an over22 payment (in whole or in part) against an obligation

23 which has become due to discharge, cancel or reduce

24 the obligation;

25 ‘‘(22) ‘demand’ means—
402

•HR 2491 RH

1 ‘‘(A) an order to pay issued by the Sec2 retary; or

3 ‘‘(B) a separate written request by a lessee

4 which asserts an obligation due the lessee,

5 but does not mean any royalty or production report,

6 or any information contained therein, required by

7 the Secretary;

8 ‘‘(23) ‘obligation’ means—

9 ‘‘(A) any duty of the Secretary or the

10 United States—

11 ‘‘(i) to take oil or gas royalty in kind;

12 or

13 ‘‘(ii) to pay, refund, offset, or credit

14 monies including but not limited to—

15 ‘‘(I) the principal amount of any

16 royalty, minimum royalty, rental,

17 bonus, net profit share or proceed of

18 sale; or

19 ‘‘(II) any interest;

20 ‘‘(B) any duty of a lessee—

21 ‘‘(i) to deliver oil or gas royalty in

22 kind; or

23 ‘‘(ii) to pay, offset or credit monies in24 cluding but not limited to—
403

•HR 2491 RH

1 ‘‘(I) the principal amount of any

2 royalty, minimum royalty, rental,

3 bonus, net profit share or proceed of

4 sale;

5 ‘‘(II) any interest;

6 ‘‘(III) any penalty; or

7 ‘‘(IV) any assessment,

8 which arises from or relates to any lease adminis9 tered by the Secretary for, or any mineral leasing

10 law related to, the exploration, production and devel11 opment of oil or gas on Federal lands or the Outer

12 Continental Shelf;

13 ‘‘(24) ‘order to pay’ means a written order is14 sued by the Secretary or the United States which—

15 ‘‘(A) asserts a definite and quantified obli16 gation; and

17 ‘‘(B) specifically identifies the obligation by

18 lease, production month and amount of such

19 obligation ordered to be paid, as well as the rea20 son or reasons such obligation is claimed to be

21 due,

22 but such term does not include any other commu23 nication or action by or on behalf of the Secretary

24 or the United States;
404

•HR 2491 RH

1 ‘‘(25) ‘overpayment’ means any payment by a

2 lessee in excess of an amount legally required to be

3 paid on an obligation and includes the portion of any

4 estimated payment for a production month that is in

5 excess of the royalties due for that month;

6 ‘‘(26) ‘payment’ means satisfaction, in whole or

7 in part, of an obligation;

8 ‘‘(27) ‘penalty’ means a statutorily authorized

9 civil fine levied or imposed by the Secretary or the

10 United States for a violation of this Act, any mineral

11 leasing law, or a term or provision of a lease admin12 istered by the Secretary;

13 ‘‘(28) ‘refund’ means the return of an overpay14 ment by the Secretary or the United States by the

15 drawing of funds from the United States Treasury;

16 ‘‘(29) ‘State concerned’ means, with respect to

17 a lease, a State which receives a portion of royalties

18 under this Act from such lease; and

19 ‘‘(30) ‘underpayment’ means any payment or

20 nonpayment by a lessee that is less than the amount

21 legally required to be paid on an obligation.’’.

22 (b) LESSEE LIABILITY.—Section 102(a) of the Fed23 eral Oil and Gas Royalty Management Act of 1982 (30

24 U.S.C. 1712(a)) is amended to read as follows:
405

•HR 2491 RH

1 ‘‘(a) A lessee who is required to make any royalty

2 or other payment under a lease or under the mineral leas3 ing laws, shall make such payments in the time and man4 ner as may be specified by the Secretary. A lessee may

5 designate a person to act on the lessee’s behalf and shall

6 notify the Secretary in writing of such designation. The

7 person to whom the United States issues a lease or the

8 person by whom operating rights are currently owned, but

9 not both, shall remain primarily liable for its obligations.’’.

10 SEC. 9513. LIMITATION PERIODS.

11 (a) IN GENERAL.—The Federal Oil and Gas Royalty

12 Management Act of 1982 (30 U.S.C. 1701 et seq.) is

13 amended by adding after section 114 the following new

14 section:

15 ‘‘SEC. 115. LIMITATION PERIODS AND AGENCY ACTIONS.

16 ‘‘(a) IN GENERAL.—A judicial proceeding or demand

17 which arises from, or relates to an obligation, shall be

18 commenced within six years from the date on which the

19 obligation becomes due and if not so commenced shall be

20 barred, except as otherwise provided by this section.

21 ‘‘(b) OBLIGATION BECOMES DUE.—

22 ‘‘(1) IN GENERAL.—For purposes of this Act,

23 an obligation becomes due when the right to enforce

24 the obligation is fixed.
406

•HR 2491 RH

1 ‘‘(2) ROYALTY OBLIGATIONS.—The right to en2 force the royalty obligation for a production month

3 for a lease is fixed for purposes of this Act on the

4 last day of the calendar month following the month

5 in which oil or gas is produced.

6 ‘‘(3) ROYALTY PAYMENT.—The right to collect

7 a royalty payment for an obligation for a production

8 month for a lease is fixed for purposes of this Act

9 on the last day of the second calendar month follow10 ing the month in which gas is produced, to be

11 phased in by the Secretary in a manner which does

12 not have a negative impact on the Federal budget.

13 ‘‘(c) TOLLING OF LIMITATION PERIOD.—The run14 ning of the limitation period under subsection (a) shall

15 not be suspended, tolled, extended, or enlarged for any ob16 ligation for any reason by any action, including an action

17 by the Secretary or the United States, other than the fol18 lowing:

19 ‘‘(1) TOLLING AGREEMENT.—A written agree20 ment executed during the limitation period between

21 the Secretary and a lessee which tolls the limitation

22 period for the amount of time during which the

23 agreement is in effect.

24 ‘‘(2) SUBPOENA.—The issuance of a subpoena

25 in accordance with the provisions of section 107(c)
407

•HR 2491 RH

1 shall toll the limitation period with respect to the ob2 ligation which is the subject of a subpoena only for

3 the period beginning on the date the lessee receives

4 the subpoena and ending on the date on which (A)

5 the lessee has produced such subpoenaed records for

6 the subject obligation, (B) the Secretary receives

7 written notice that the subpoenaed records for the

8 subject obligation are not in existence or are not in

9 the lessee’s possession or control, or (C) a court has

10 determined in a final decision that such records are

11 not required to be produced, whichever occurs first.

12 ‘‘(3) FRAUD OR CONCEALMENT.—Any fraud or

13 concealment by a lessee in an attempt to defeat or

14 evade an obligation in which case the limitation pe15 riod shall be tolled for the period of such fraud or

16 such concealment.

17 ‘‘(4) TOLLING REQUEST.—A written tolling re18 quest from a lessee based upon the lessee’s represen19 tation that the lessee’s entitlement to an overpay20 ment has not been finally determined. The limitation

21 period shall be tolled pursuant to this paragraph

22 from the date the Secretary receives the tolling re23 quest until the earlier of the end of the requested

24 period or 12 months after the date the Secretary re25 ceives the tolling request, but is subject to successive
408

•HR 2491 RH

1 12-month renewals by the lessee made prior to the

2 expiration of the then applicable 12-month period.

3 The tolling request shall be sufficient if it identi4 fies—

5 ‘‘(A) the person who made the potential

6 overpayment;

7 ‘‘(B) the leases and production months in8 volved in the potential overpayment; and

9 ‘‘(C) the reasons the lessee believes that it

10 may later be entitled to a refund of the over11 payment.

12 ‘‘(5) ORDER TO PERFORM A RESTRUCTURED

13 ACCOUNTING.—The issuance of a notice under sec14 tion 107(d)(4) that the lessee has not adequately

15 performed a restructured accounting shall toll the

16 limitation period with respect to the obligation which

17 is the subject of the notice only for the period begin18 ning on the date the lessee receives the notice and

19 ending on the date on which (A) the Secretary re20 ceives written notice the accounting or other require21 ment has been performed, or (B) a court has deter22 mined in a final decision that the lessee is not re23 quired to perform the accounting, whichever occurs

24 first.
409

•HR 2491 RH

1 ‘‘(d) TERMINATION OF LIMITATIONS PERIOD.—The

2 limitations period shall be terminated in the event—

3 ‘‘(1) the Secretary has notified the lessee in

4 writing that a time period is closed to further audit;

5 or

6 ‘‘(2) the Secretary and a lessee have so agreed

7 in writing.

8 ‘‘(e) FINAL AGENCY ACTION.—

9 ‘‘(1) 3-YEAR PERIOD.—The Secretary shall

10 issue a final decision in any administrative proceed11 ing, including any administrative proceedings pend12 ing on the date of enactment of the Federal Oil and

13 Gas Royalty Simplification and Fairness Act of

14 1995, within three years from the date such pro15 ceeding was initiated or three years from the date of

16 such enactment, whichever is later. The three-year

17 period may be extended by any period of time agreed

18 upon in writing by the Secretary and the lessee.

19 ‘‘(2) EFFECT OF FAILURE TO ISSUE DECI20 SION.—

21 ‘‘(A) IN GENERAL.—If no such decision

22 has been issued by the Secretary within the

23 three-year period referred to in paragraph (1)—

24 ‘‘(i) the Secretary shall be deemed to

25 have issued and granted a decision in favor
410

•HR 2491 RH

1 of the lessee or lessees as to any

2 nonmonetary obligation and any monetary

3 obligation the principal amount of which is

4 less than $2,500; and

5 ‘‘(ii) the Secretary shall be deemed to

6 have issued a final decision in favor of the

7 Secretary, which decision shall be deemed

8 to affirm those issues for which the agency

9 rendered a decision prior to the end of

10 such period, as to any monetary obligation

11 the principal amount of which is $2,500 or

12 more, and the lessee shall have a right to

13 a de novo judicial review of such deemed

14 final decision.

15 ‘‘(B) NO PRECEDENTIAL EFFECT ON

16 OTHER PROCEEDINGS.—Deemed decisions

17 under subparagraph (A) shall have no

18 precedential effect in any judicial or administra19 tive proceeding or for any other purpose.

20 ‘‘(f) ADMINISTRATIVE SETTLEMENT.—During the

21 pendency of any administrative proceeding, the parties

22 shall hold at least one settlement consultation for the pur23 pose of discussing disputed matters between the parties.

24 For purposes of settlement, the Secretary may take such

25 action as is appropriate to compromise and settle a dis-
411

•HR 2491 RH

1 puted obligation, including interest and allowing offsetting

2 of obligations among leases. The Secretary and the State

3 concerned shall seek to resolve disputes with a lessee in

4 as expeditious a manner as possible, through settlement

5 negotiations and other alternative dispute resolution proc6 esses methods. If any dispute involving an obligation due

7 is not resolved by the end of the six-year period beginning

8 on the date the obligation became due, the amount of in9 terest otherwise payable with respect to the obligation

10 shall accrue after such six-year period at the rate—

11 ‘‘(1) for purposes of section 111(h), reduced

12 each year thereafter by two additional percentage

13 points from the rate in effect under this subsection

14 for the previous year (but not less than zero); and

15 ‘‘(2) for purposes of section 111(a), reduced

16 each year thereafter by one additional percentage

17 point from the rate in effect under this subsection

18 for the previous year (but not less than zero).

19 ‘‘(g) LIMITATION ON CERTAIN ACTIONS.—When an

20 action on or enforcement of an obligation under the min21 eral leasing laws is barred under this section—

22 ‘‘(1) no other or further action regarding that

23 obligation, including (but not limited to) the issu24 ance of any order, request, demand or other commu25 nication seeking any document, accounting, deter-
412

•HR 2491 RH

1 mination, calculation, recalculation, payment, prin2 cipal, interest, assessment, or penalty or the initi3 ation, pursuit or completion of an audit with respect

4 to that obligation may be taken; and

5 ‘‘(2) no other equitable or legal remedy, wheth6 er under statute or common law, with respect to an

7 action on or an enforcement of said obligation may

8 be pursued.

9 ‘‘(h) JUDICIAL REVIEW.—In the event a demand sub10 ject to this section is timely commenced, a judicial pro11 ceeding challenging the final agency action with respect

12 to such demand shall be deemed timely so long as such

13 judicial proceeding is commenced within 180 days from

14 receipt of notice by the lessee of the final agency action.

15 ‘‘(i) IMPLEMENTATION OF FINAL DECISION.—In the

16 event a judicial proceeding or demand subject to this sec17 tion is timely commenced and thereafter the limitation pe18 riod in this section lapses during the pendency of such

19 proceeding, any party to such proceeding shall not be

20 barred from taking such action as is required or necessary

21 to implement a final unappealable judicial or administra22 tive decision, including any action required or necessary

23 to implement such decision by the recovery or recoupment

24 of an underpayment or overpayment by means of refund

25 or credit.
413

•HR 2491 RH

1 ‘‘(j) STAY OF PAYMENT OBLIGATION PENDING RE2 VIEW.—Any party ordered by the Secretary or the United

3 States to pay any obligation (other than an assessment)

4 shall be entitled to a stay of such payment without bond

5 or other surety instrument pending an administrative or

6 judicial proceeding if the party periodically demonstrates

7 to the satisfaction of the Secretary that such party is fi8 nancially solvent or otherwise able to pay the obligation.

9 In the event the party is not able to so demonstrate, the

10 Secretary may require a bond or other surety instrument

11 satisfactory to cover the obligation. Any party ordered by

12 the Secretary to pay an assessment shall be entitled to

13 a stay without bond or other surety instrument.

14 ‘‘(k) INAPPLICABILITY OF THE OTHER STATUTES OF

15 LIMITATION.—The limitations set forth in sections 2401,

16 2415, 2416, and 2462 of title 28, United States Code,

17 section 42 of the Mineral Leasing Act (30 U.S.C. 226-

18 2) and section 3716 of title 31, United States Code, shall

19 not apply to any obligation to which this Act applies.’’.

20 (b) SUBPOENA.—Section 107 of the Federal Oil and

21 Gas Royalty Management Act of 1982 (30 U.S.C. 1717)

22 is amended by adding at the end the following:

23 ‘‘(c) RULES REGARDING ISSUANCE OF SUBPOENA

24 RELATING TO REPORTING AND PAYMENT OF AN OBLIGA25 TION DUE.—
414

•HR 2491 RH

1 ‘‘(1) IN GENERAL.—A subpoena which requires

2 a lessee to produce records necessary to determine

3 the proper reporting and payment of an obligation

4 due the Secretary may be issued under this section

5 only by an Assistant Secretary of the Interior and

6 an acting Assistant Secretary of the Interior who is

7 a schedule C employee (as defined by section

8 213.3301 of title 5, Code of Federal Regulations)

9 and may not be delegated.

10 ‘‘(2) PRIOR WRITTEN REQUEST REQUIRED.—A

11 subpoena described in paragraph (1) may only be is12 sued against a lessee during the limitation period

13 provided in section 115 and only after the Secretary

14 has in writing requested the records from the lessee

15 related to the obligation which is the subject of the

16 subpoena and has determined that—

17 ‘‘(A) the lessee has failed to respond within

18 a reasonable period of time to the Secretary’s

19 written request for such records necessary for

20 an audit, investigation or other inquiry made in

21 accordance with the Secretary’s responsibilities

22 under this Act;

23 ‘‘(B) the lessee has in writing denied the

24 Secretary’s written request to produce such

25 records in the lessee’s possession or control nec-
415

•HR 2491 RH

1 essary for an audit, investigation or other in2 quiry made in accordance with the Secretary’s

3 responsibilities under this Act; or

4 ‘‘(C) the lessee has unreasonably delayed

5 in producing records necessary for an audit, in6 vestigation or other inquiry made in accordance

7 with the Secretary’s responsibilities under this

8 Act after the Secretary’s written request.

9 ‘‘(3) REASONABLE PERIOD FOR COMPLIANCE

10 WITH WRITTEN REQUEST.—In seeking records, the

11 Secretary shall afford the lessee a reasonable period

12 of time after a written request by the Secretary in

13 which to provide such records prior to the issuance

14 of any subpoena.’’.

15 (c) RESTRUCTURED ACCOUNTING.—Section 107 of

16 the Federal Oil and Gas Royalty Management Act of 1982

17 (30 U.S.C. 1717), as amended by subsection (b) of this

18 section, is amended by adding at the end the following:

19 ‘‘(d) RESTRUCTURED ACCOUNTING.—

20 ‘‘(1) IN GENERAL.—The Secretary shall issue

21 an order to perform a restructured accounting when

22 the Secretary determines during an in-depth audit of

23 a lessee that the lessee should recalculate royalty

24 due on an obligation based upon the Secretary’s

25 finding that the lessee has made identified under-
416

•HR 2491 RH

1 payments or overpayments which are demonstrated

2 by the Secretary to be based upon repeated, systemic

3 reporting errors for a significant number of leases or

4 a single lease for a significant number of reporting

5 months with the same type of error which con6 stitutes a pattern of violations and which are likely

7 to result in either significant underpayments or over8 payments.

9 ‘‘(2) DELEGATION.—The power of the Sec10 retary to issue an order to perform a restructured

11 accounting may not be delegated below the most

12 senior career professional position having respon13 sibility for the royalty management program, which

14 position is currently designated as the ‘Associate Di15 rector for Royalty Management’. An order to per16 form a restructured accounting shall—

17 ‘‘(A) be issued within a reasonable period

18 of time from when the audit identifies the sys19 temic, reporting errors;

20 ‘‘(B) specify the reasons and factual bases

21 for such order; and

22 ‘‘(C) be specifically identified as an ‘order

23 to perform a restructured accounting’.

24 ‘‘(3) ORDER TO PERFORM.—An order to per25 form a restructured accounting shall not include any
417

•HR 2491 RH

1 other communication or action by or on behalf of the

2 Secretary or the United States.

3 ‘‘(4) NOTICE.—If a lessee fails to adequately

4 perform a restructured accounting pursuant to this

5 subsection, a notice shall be issued to the lessee that

6 the restructured accounting has not been adequately

7 performed. Such notice may be issued under this

8 section only by an Assistant Secretary of the Inte9 rior or an acting Assistant Secretary of the Interior

10 who is a schedule C employee (as defined by section

11 213.3301 of title 5, Code of Federal Regulations)

12 and may not be delegated.’’.

13 (d) STATE SUITS.—Section 204 of the Federal Oil

14 and Gas Royalty Management Act of 1982 (30 U.S.C.

15 1751) is amended by adding at the end the following:

16 ‘‘(d) With respect to an obligation, a State bringing

17 an action under this section shall enjoy no greater rights

18 than the Secretary enjoys under this Act.’’.

19 (e) CLERICAL AMENDMENT.—The table of contents

20 in section 1 of such Act (30 U.S.C. 1701) is amended by

21 adding after the item relating to section 114 the following

22 new item:

‘‘Sec. 115. Limitation periods and agency actions.’’.

23 SEC. 9514. ADJUSTMENT AND REFUNDS.

24 (a) IN GENERAL.—The Federal Oil and Gas Royalty

25 Management Act of 1982 (30 U.S.C. 1701 et seq.) is
418

•HR 2491 RH

1 amended by adding after section 111 the following new

2 section:

3 ‘‘SEC. 111A. ADJUSTMENTS AND REFUNDS.

4 ‘‘(a) ADJUSTMENTS.—

5 ‘‘(1) If, during the adjustment period, a lessee

6 determines that an adjustment or refund request is

7 necessary to correct an underpayment or overpay8 ment of an obligation, the lessee shall make such ad9 justment or request a refund within a reasonable pe10 riod of time and only during the adjustment period.

11 The filing of a royalty report which reflects the

12 underpayment or overpayment of an obligation shall

13 constitute prior written notice to the Secretary of an

14 adjustment.

15 ‘‘(2)(A) For any adjustment, the lessee shall

16 calculate and report the interest due attributable to

17 such adjustment at the same time the lessee adjusts

18 the principal amount of the subject obligation, ex19 cept as provided by subparagraph (B).

20 ‘‘(B) In the case of a lessee on whom the Sec21 retary determines that subparagraph (A) would im22 pose a hardship, the Secretary shall calculate the in23 terest due and notify the lessee within a reasonable

24 time of the amount of interest due, unless such les-
419

•HR 2491 RH

1 see elects to calculate and report interest in accord2 ance with subparagraph (A).

3 ‘‘(3) An adjustment or a request for a refund

4 for an obligation may be made after the adjustment

5 period only upon written notice to and approval by

6 the Secretary during an audit of the period which

7 includes the production month for which the adjust8 ment is being made. If an overpayment is identified

9 during an audit, then the Secretary shall allow a

10 credit or refund in the amount of the overpayment.

11 ‘‘(4) For purposes of this section, the adjust12 ment period for any obligation shall be the five-year

13 period following the date on which an obligation be14 came due. The adjustment period shall be sus15 pended, tolled, extended, enlarged, or terminated by

16 the same actions as the limitation period in section

17 115.

18 ‘‘(b) REFUNDS.—

19 ‘‘(1) IN GENERAL.—A request for refund is suf20 ficient if it—

21 ‘‘(A) is made in writing to the Secretary

22 and, for purposes of section 115, is specifically

23 identified as a demand;

24 ‘‘(B) identifies the person entitled to such

25 refund;
420

•HR 2491 RH

1 ‘‘(C) provides the Secretary information

2 that reasonably enables the Secretary to iden3 tify the overpayment for which such refund is

4 sought; and

5 ‘‘(D) provides the reasons why the pay6 ment was an overpayment.

7 ‘‘(2) PAYMENT BY SECRETARY OF THE TREAS8 URY.—The Secretary shall certify the amount of the

9 refund to be paid under paragraph (1) to the Sec10 retary of the Treasury who shall make such refund.

11 Such refund shall be paid from amounts received as

12 current receipts from sales, bonuses, royalties (in13 cluding interest charges collected under this section)

14 and rentals of the public lands and the Outer Con15 tinental Shelf under the provisions of the Mineral

16 Leasing Act and the Outer Continental Shelf Lands

17 Act, which are not payable to a State or the Rec18 lamation Fund. The portion of any such refund at19 tributable to any amounts previously disbursed to a

20 State, the Reclamation Fund, or any recipient pre21 scribed by law shall be deducted from the next dis22 bursements to that recipient made under the appli23 cable law. Such amounts deducted from subsequent

24 disbursements shall be credited to miscellaneous re25 ceipts in the Treasury.
421

•HR 2491 RH

1 ‘‘(3) PAYMENT PERIOD.—A refund under this

2 subsection shall be paid or denied (with an expla3 nation of the reasons for the denial) within 120 days

4 of the date on which the request for refund is re5 ceived by the Secretary. Such refund shall be subject

6 to later audit by the Secretary and subject to the

7 provisions of this Act.

8 ‘‘(4) PROHIBITION AGAINST REDUCTION OF RE9 FUNDS OR CREDITS.—In no event shall the Sec10 retary directly or indirectly claim any amount or

11 amounts against, or reduce any refund or credit (or

12 interest accrued thereon) by the amount of any obli13 gation the enforcement of which is barred by section

14 115.’’.

15 (b) CLERICAL AMENDMENT.—The table of contents

16 in section 1 of such Act (30 U.S.C. 1701) is amended by

17 adding after the item relating to section 111 the following

18 new item:

‘‘Sec. 111A. Adjustments and refunds.’’.

19 SEC. 9515. REQUIRED RECORDKEEPING.

20 Section 103 of the Federal Oil and Gas Royalty Man21 agement Act of 1982 (30 U.S.C. 1713(b)) is amended by

22 adding at the end the following:

23 ‘‘(c) Records required by the Secretary for the pur24 pose of determining compliance with any applicable min25 eral leasing law, lease provision, regulation or order with
422

•HR 2491 RH

1 respect to oil and gas leases from Federal lands or the

2 Outer Continental Shelf shall be maintained for the same

3 period of time during which a judicial proceeding or de4 mand may be commenced under section 115(a). If a judi5 cial proceeding or demand is timely commenced, the

6 record holder shall maintain such records until the final

7 nonappealable decision in such judicial proceeding is

8 made, or with respect to that demand is rendered, unless

9 the Secretary authorizes in writing an earlier release of

10 the requirement to maintain such records. Notwithstand11 ing anything herein to the contrary, under no cir12 cumstance shall a record holder be required to maintain

13 or produce any record relating to an obligation for any

14 time period which is barred by the applicable limitation

15 in section 115.’’.

16 SEC. 9516. ROYALTY INTEREST, PENALTIES, AND PAY17 MENTS.

18 (a) PERIOD.—Section 111(f) of the Federal Oil and

19 Gas Royalty Management Act of 1982 (30 U.S.C.

20 1721(f)) is amended to read as follows:

21 ‘‘(f) Upon a determination that it will further the ef22 fective and efficient performance of his duties and respon23 sibilities, the Secretary may waive or forego such interest

24 in whole or in part. Interest shall be charged under this

25 section only for the number of days a payment is late.’’.
423

•HR 2491 RH

1 (b) LESSEE INTEREST.—Section 111 of the Federal

2 Oil and Gas Royalty Management Act of 1982 (30 U.S.C.

3 1721) is amended by adding after subsection (g) the fol4 lowing:

5 ‘‘(h) Interest shall be allowed and the Secretary shall

6 pay or credit such interest on any overpayment, with such

7 interest to accrue from the date such overpayment was

8 made, at the rate obtained by applying the provisions of

9 subparagraphs (A) and (B) of section 6621(a)(1) of the

10 Internal Revenue Code of 1986. Interest which has ac11 crued on any overpayment may be applied to reduce an

12 underpayment. This subsection applies to overpayments

13 made later than six months after the date of enactment

14 of this subsection or September 1, 1996, whichever is

15 later. Such interest shall be paid from amounts received

16 as current receipts from sales, bonuses, royalties (includ17 ing interest charges collected under this section) and rent18 als of the public lands and the Outer Continental Shelf

19 under the provisions of the Mineral Leasing Act, and the

20 Outer Continental Shelf Lands Act, which are not payable

21 to a State or the Reclamation Fund. The portion of any

22 such interest payment attributable to any amounts pre23 viously disbursed to a State, the Reclamation Fund, or

24 any other recipient designated by law shall be deducted

25 from the next disbursements to that recipient made under
424

•HR 2491 RH

1 the applicable law. Such amounts deducted from subse2 quent disbursements shall be credited to miscellaneous re3 ceipts in the Treasury.’’.

4 (c) LIMITATION ON INTEREST.—Section 111 of such

5 Act, as amended by subsection (b) of this Act, is further

6 amended by adding at the end the following:

7 ‘‘(i) Upon a determination by the Secretary that an

8 excessive overpayment (based upon all obligations of a les9 see for a given reporting month) was made for the sole

10 purpose of receiving interest, interest shall not be paid on

11 the excessive amount of such overpayment. For purposes

12 of this Act, an ‘excessive overpayment’ shall be the amount

13 that any overpayment a lessee pays for a given reporting

14 month (excluding payments for demands for obligations

15 as a result of judicial or administrative proceedings for

16 settlement agreements and for other similar payments) for

17 the aggregate of all of its Federal leases exceeds 25 per18 cent of the total royalties paid that month for those

19 leases.’’.

20 (d) ESTIMATED PAYMENT.—Section 111 of such Act,

21 as amended by subsections (b) and (c) of this Act, is fur22 ther amended by adding at the end the following:

23 ‘‘(j) A lessee may make a payment for the approxi24 mate amount of royalties (hereinafter in this subsection

25 ‘estimated payment’) that would otherwise be due to the
425

•HR 2491 RH

1 Secretary for such lease to avoid underpayment or

2 nonpayment interest charges. When an estimated payment

3 is made, actual royalties become due at the end of the

4 month following the period covered by the estimated pay5 ment. If the lessee makes a payment for such actual royal6 ties, the lessee may apply the estimated payment to future

7 royalties. Any estimated payment may be adjusted, re8 couped, or reinstated at any time by the lessee.’’.

9 (e) VOLUME ALLOCATION OF OIL AND GAS PRODUC10 TION.—Section 111 of such Act (30 U.S.C. 1721), as

11 amended by subsections (b) through (d) of this Act, is

12 amended by adding at the end the following:

13 ‘‘(k)(1) Except as otherwise provided by this sub14 section—

15 ‘‘(A) a lessee of a lease in a unit or

16 communitization agreement which contains only

17 Federal leases with the same royalty rate and funds

18 distribution must report and pay royalties on oil and

19 gas production for each production month based on

20 the actual volume of production sold by or on behalf

21 of that lessee;

22 ‘‘(B) a lessee of a lease in any other unit or

23 communitization agreement must report and pay

24 royalties on oil and gas production for each produc25 tion month based on the volume of oil and gas pro-
426

•HR 2491 RH

1 duced from such agreement and allocated to the

2 lease in accordance with the terms of the agreement;

3 and

4 ‘‘(C) a lessee of a lease that is not contained in

5 a unit or communitization agreement must report

6 and pay royalties on oil and gas production for each

7 production month based on the actual volume of pro8 duction sold by or on behalf of that lessee.

9 ‘‘(2) This subsection applies only to requirements for

10 reporting and paying royalties. Nothing in this subsection

11 is intended to alter a lessee’s liability for royalties on oil

12 or gas production based on the share of production allo13 cated to the lease in accordance with the terms of the

14 lease, a unit or communitization agreement, or any other

15 agreement.

16 ‘‘(3) For any unit or communitization agreement, if

17 all lessees contractually agree to an alternative method of

18 royalty reporting and payment, the lessees may submit

19 such alternative method to the Secretary for approval and

20 make payments in accordance with such approved alter21 native method so long as such alternative method does not

22 reduce the amount of the royalty obligation.

23 ‘‘(4) The Secretary shall grant an exception from the

24 reporting and payment requirements for marginal prop25 erties by allowing for any calendar year or portion thereof
427

•HR 2491 RH

1 royalties to be paid each month based on the volume of

2 production sold. Interest shall not accrue on the difference

3 for the entire calendar year or portion thereof between the

4 amount of oil and gas actually sold and the share of pro5 duction allocated to the lease until the beginning of the

6 month following calendar year or portion thereof. Any ad7 ditional royalties due or overpaid royalties and associated

8 interest shall be paid, refunded, or credited within six

9 months after the end of each calendar year in which royal10 ties are paid based on volumes of production sold. For

11 the purpose of this subsection, the term ‘marginal prop12 erty’ means a lease that produces on average the combined

13 equivalent of less than 15 barrels of oil per day or 90 thou14 sand cubic feet of gas per day, or a combination thereof,

15 determined by dividing the average daily production of do16 mestic crude oil and domestic natural gas from producing

17 wells on such lease by the number of such wells, unless

18 the Secretary, together with the State concerned, deter19 mines that a different production is more appropriate.

20 ‘‘(5) Not later than two years after the date of the

21 enactment of this subsection, the Secretary shall issue any

22 appropriate demand for all outstanding royalty payment

23 disputes regarding who is required to report and pay roy24 alties on production from units and communitization

25 agreements outstanding on the date of the enactment of
428

•HR 2491 RH

1 this subsection, and collect royalty amounts owed on such

2 production.’’.

3 (f) PRODUCTION ALLOCATION.—Section 111 of such

4 Act (30 U.S.C. 1721), as amended by subsections (b)

5 through (e) of this Act, is amended by adding at the end

6 the following:

7 ‘‘(l) The Secretary shall issue all determinations of

8 allocations of production for units and communitization

9 agreements within 120 days of a request for determina10 tion. If the Secretary fails to issue a determination within

11 such 120-day period, the Secretary shall waive interest

12 due on obligations subject to the determination until the

13 end of the month following the month in which the deter14 mination is made.’’.

15 SEC. 9517. LIMITATION ON ASSESSMENTS.

16 Section 111 of the Federal Oil and Gas Royalty Man17 agement Act of 1982 (30 U.S.C. 1721), as amended by

18 section 9516, is further amended by adding at the end

19 the following:

20 ‘‘(m)(1) After the date of enactment of this sub21 section, the Secretary shall not impose any assessment for

22 any late payment or underpayment. After the date of en23 actment of this subsection, the Secretary may impose an

24 assessment only for erroneous reports submitted by lessees

25 subject to the limitations of paragraph (2). Nothing in this
429

•HR 2491 RH

1 section shall prohibit the Secretary from imposing pen2 alties or interest under other sections of this Act for late

3 payments or underpayments.

4 ‘‘(2) No assessment for erroneous reports shall be im5 posed for 18 months following the date of enactment of

6 this subsection, or until the Secretary issues a final rule

7 which provides for imposition of an assessment only on

8 a lessee who chronically submits erroneous reports and

9 which establishes what constitutes chronic errors for a les10 see, whichever is later. However, if the Secretary deter11 mines during that 18-month period that the reporting

12 error rate for all reporters for all Federal leases has in13 creased by one-third for three consecutive report months

14 for either production reporting or royalty reporting over

15 the 12 months preceding the date of enactment of this

16 subsection, the Secretary may impose an assessment for

17 erroneous reports only for the increased category of report

18 under regulations in effect on the date of enactment of

19 this subsection.’’.

20 SEC. 9518. ALTERNATIVES FOR MARGINAL PROPERTIES.

21 (a) IN GENERAL.—The Federal Oil and Gas Royalty

22 Management Act of 1982 (30 U.S.C. 1701 et seq.), as

23 amended by section 9513 of this Act, is further amended

24 by adding at the end the following:
430

•HR 2491 RH

1 ‘‘SEC. 116. ALTERNATIVES FOR MARGINAL PROPERTIES.

2 ‘‘(a) SELLING THE REVENUE STREAM.—

3 ‘‘(1) IN GENERAL.—Notwithstanding the provi4 sions of any lease to the contrary, upon request of

5 the lessee or a State under section 205(g), the Sec6 retary shall authorize a lessee for a marginal prop7 erty and for a lease, the administration of which is

8 not cost-effective for the Secretary to administer, to

9 make a prepayment in lieu of royalty payments

10 under the lease for the remainder of the lease term.

11 For the purposes of this section, the term ‘marginal

12 property’ has the same meaning given such term in

13 section 111(k)(4), unless the Secretary, together

14 with each State in which such marginal production

15 occurs, determines that a different definition of mar16 ginal property better achieves the purpose of this

17 section.

18 ‘‘(2) MARGINAL PROPERTIES.—For marginal

19 properties, prepayments under paragraph (1) shall

20 begin—

21 ‘‘(A) in the case of those properties pro22 ducing on average $500 or less per month in

23 total royalties to the United States, two years

24 after the date of the enactment of this section;

25 ‘‘(B) in the case of those properties pro26 ducing on average more than $500 but $1,000
431

•HR 2491 RH

1 or less per month in total royalties to the Unit2 ed States, three years after the date of the en3 actment of this section;

4 ‘‘(C) in the case of those properties pro5 ducing on average more than $1,000 but

6 $1,500 or less per month in total royalties to

7 the United States, four years after the date of

8 the enactment of this section; and

9 ‘‘(D) in the case of those properties not de10 scribed in subparagraphs (A) through (C), five

11 years after the date of the enactment of this

12 section.

13 ‘‘(3) ADMINISTRATION NOT COST-EFFECTIVE.—

14 For a lease, the administration of which is not cost15 effective for the Secretary to administer, prepay16 ments under paragraph (1) shall begin on the date

17 of the enactment of this section.

18 ‘‘(4) SATISFACTION OF ROYALTY OBLIGA19 TION.—A lessee who makes a prepayment under this

20 section shall have satisfied in full its obligation to

21 pay royalty on production from the lease or a por22 tion of a lease and shall not be required to submit

23 any royalty reports to the Secretary. The prepay24 ment shall be shared by the Secretary with any
432

•HR 2491 RH

1 State or other recipient to the same extent as any

2 royalty payment for such lease.

3 ‘‘(5) VALUATION.—The prepayment authorized

4 under this section shall only occur if the Secretary,

5 the State concerned, and the lessee determine that

6 such prepayment is based on the present value of

7 the projected remaining royalties from the produc8 tion from the lease, based on appropriate nominal

9 discount rate for a comparable term. Prior to ac10 cepting such prepayment, the Secretary and State

11 concerned shall agree that such prepayment is in the

12 best interest of the United States and the State con13 cerned.

14 ‘‘(b) ALTERNATIVE ACCOUNTING AND AUDITING RE15 QUIREMENTS.—

16 ‘‘(1) IN GENERAL.—Within one year after the

17 date of the enactment of this section, for the mar18 ginal properties referenced in subsection (a)(1), the

19 Secretary shall provide accounting, reporting, and

20 auditing relief that will encourage lessees to continue

21 to produce and develop such properties: Provided,

22 That such relief will only be available to lessees in

23 a State that concurs. Prior to granting such relief,

24 the Secretary and the State concerned shall agree

25 that the type of marginal wells and relief provided
433

•HR 2491 RH

1 under this paragraph is in the best interest of the

2 United States and the State concerned.

3 ‘‘(2) PAYMENT DATE.—For leases subject to

4 this section, the Secretary may allow royalties to be

5 paid later than the time specified in the lease.’’.

6 (b) CLERICAL AMENDMENT.—The table of contents

7 in section 1 of such Act (30 U.S.C. 1701) is amended by

8 adding after the item relating to section 115 the following

9 new item:

‘‘Sec. 116. Alternatives for marginal properties.’’.

10 SEC. 9519. ROYALTY IN KIND.

11 (a) IN GENERAL.—

12 (1) OCS.—Section 27(a)(1) of the Outer Con13 tinental Shelf Lands Act (43 U.S.C. 1353(a)(1)) is

14 amended by adding at the end the following:

15 ‘‘Any royalty or net profit share of oil or gas accruing

16 to the United States under any such lease, at the Sec17 retary’s option, may be taken in kind at or near the lease

18 (unless the lease expressly provides for delivery at a dif19 ferent location) upon prior written notice given reasonably

20 in advance by the Secretary to the lessee. Once the United

21 States has commenced taking royalty in kind, it shall con22 tinue to do so until a reasonable time after the Secretary

23 has provided written notice reasonably in advance to the

24 lessee that it will resume taking royalty in value. Delivery
434

•HR 2491 RH

1 of royalty in kind by the lessee shall satisfy in full the

2 lessee’s royalty obligation. Once the oil or gas is delivered,

3 the lessee shall not be subject to the reporting and record4 keeping requirements under section 103 for its share of

5 oil and gas production other than records necessary to ver6 ify the quantity of oil or gas delivered.’’.

7 (2) ONSHORE.—Section 36 of the Mineral

8 Leasing Act (30 U.S.C. 192) is amended by adding

9 at the end the following undesignated paragraph:

10 ‘‘Notwithstanding the provisions of the previous para11 graph, any royalty or net profit share of oil or gas accru12 ing to the United States under any lease issued or main13 tained by the Secretary for the exploration, production

14 and development of oil and gas on Federal lands, at the

15 Secretary’s option, may be taken in kind at or near the

16 lease (unless the lease expressly provides for delivery at

17 a different location) after prior written notice given rea18 sonably in advance by the Secretary to the lessee. Once

19 the United States has commenced taking royalty in kind,

20 it shall continue to do so until a reasonable time after the

21 Secretary has provided written notice reasonably in ad22 vance to the lessee that it will resume taking royalty in

23 value. Delivery of royalty in kind by the lessee shall satisfy

24 in full the lessee’s royalty obligation. Once the oil or gas

25 is delivered, the lessee shall not be subject to the reporting
435

•HR 2491 RH

1 and recordkeeping requirements under section 103 for its

2 share of oil and gas production other than records nec3 essary to verify the quantity of oil or gas delivered.’’.

4 (b) SALE.—Sections 27(b)(1) and (c)(1) of the Outer

5 Continental Shelf Lands Act (43 U.S.C. 1353(c)(1)) are

6 each amended by striking ‘‘competitive bidding for not

7 more than its regulated price, or, if no regulated price ap8 plies, not less than its fair market value’’ and inserting

9 ‘‘competitive bidding or private sale’’.

10 SEC. 9520. ROYALTY SIMPLIFICATION AND COST-EFFEC11 TIVE AUDIT AND COLLECTION REQUIRE12 MENTS.

13 (a) IN GENERAL.—Section 101 of the Federal Oil

14 and Gas Royalty Management Act of 1982 (30 U.S.C.

15 1711) is amended by adding at the end the following:

16 ‘‘(d)(1) For the purpose of reducing costs and in17 creasing net royalties to the United States and the States,

18 the Secretary, in consultation with States concerned, shall,

19 within one year after the date of the enactment of this

20 subsection, streamline and simplify current royalty man21 agement requirements and practices, including royalty re22 porting, instructions, audits and collections. This stream23 lining and simplification shall specifically include—

24 ‘‘(A) elimination of all unnecessary royalty and

25 production reports;
436

•HR 2491 RH

1 ‘‘(B) modification and simplification of remain2 ing reports and associated instructions to eliminate

3 redundant or unnecessary reports and information

4 that are provided or can be obtained from other re5 quired reports, forms, computer databases or gov6 ernment agencies;

7 ‘‘(C) elimination or modifications of accounting,

8 reporting, audit and collection requirements that are

9 not cost-effective, particularly those associated with

10 de minimis monetary amounts;

11 ‘‘(D) implementation of specific recommenda12 tions and comments contained in Secretarial spon13 sored teams, rulemakings, and studies or those par14 ticipated in by the Secretary to the extent these rec15 ommendations simplify and streamline royalty man16 agement requirements without adversely affecting

17 the Secretary’s ability to meet obligations under this

18 Act or other mineral leasing statutes;

19 ‘‘(E) recommendations and comments submit20 ted by interested parties to the extent these rec21 ommendations and comments simplify and stream22 line royalty management requirements without ad23 versely affecting the Secretary’s ability to meet obli24 gations under this Act or other mineral leasing stat25 utes.
437

•HR 2491 RH

1 ‘‘(2) The Secretary shall submit to the Congress a

2 progress report on the implementation of this section with3 in six months from date of enactment of this Act, and

4 a final report within 12 months from date of enactment

5 of this Act. These reports shall include—

6 ‘‘(A) a description of the extent to which the

7 Secretary has implemented the requirements in

8 paragraph (1), including a list of specific initiatives

9 implemented;

10 ‘‘(B) a list and description of additional initia11 tives identified by the Secretary to simplify and

12 streamline royalty management requirements and

13 practices; and

14 ‘‘(C) cost savings of implemented initiatives in15 cluding impact on net-receipts sharing for States.

16 ‘‘(3) If the Secretary and the State concerned deter17 mines that the cost of accounting and auditing for and

18 collecting of any obligation due for any oil and gas produc19 tion exceeds the amount of the obligation to be collected,

20 the Secretary shall waive such obligation.

21 ‘‘(4) The Secretary and the State concerned shall not

22 perform accounting, reporting, or audit activities if the

23 Secretary and the State concerned determines that the

24 cost of conducting the activity exceeds the expected

25 amount to be collected by the activity.
438

•HR 2491 RH

1 ‘‘(5) The Secretary and the State concerned shall de2 velop a reporting and audit strategy which eliminates mul3 tiple or redundant reporting of information.’’.

4 (b) PAPERWORK REDUCTION.—Section 107 of the

5 Federal Oil and Gas Royalty Management Act of 1982

6 (30 U.S.C. 1717), as amended by section 9513(b) and (c),

7 is amended by adding at the end the following:

8 ‘‘(e) PAPERWORK REDUCTION.—Administrative ac9 tions and investigations (including, but not limited to, ac10 counting collection and audits) under this Act involving

11 obligations shall be subject to section 3518(c)(1)(B) of

12 title 44, United States Code.’’.

13 SEC. 9521. REPEALS.

14 (a) FOGRMA.—Section 307 of the Federal Oil and

15 Gas Royalty Management Act of 1982 (30 U.S.C. 1755),

16 is repealed. Section 1 of such Act (relating to the table

17 of contents) is amended by striking out the item relating

18 to section 307.

19 (b) OCSLA.—Effective on the date of the enactment

20 of this Act, section 10 of the Outer Continental Shelf

21 Lands Act (43 U.S.C. 1339) is repealed.

22 SEC. 9522. DELEGATION TO STATES.

23 (a) GENERAL AUTHORITY.—Section 205(a) of the

24 Federal Oil and Gas Royalty Management Act of 1982

25 (30 U.S.C. 1735(a)) is amended to read as follows:
439

•HR 2491 RH

1 ‘‘(a) Upon written request of any State, the Secretary

2 is authorized to delegate, in accordance with the provisions

3 of this section, all or part of the authorities and respon4 sibilities of the Secretary under this Act to conduct inspec5 tions, such production and royalty accounting duties and

6 responsibilities as the Secretary determines are legally del7 egable, all audit coverage, and investigations to any State

8 with respect to all Federal lands within the State.’’.

9 (b) STANDARDIZED REPORTING.—Section 205(b) of

10 such Act (30 U.S.C. 1735(b)) is amended—

11 (1) by striking ‘‘and’’ at the end of paragraph

12 (2);

13 (2) by striking the comma at the end of para14 graph (3) and inserting ‘‘; and’’; and

15 (3) by inserting after paragraph (3) the follow16 ing:

17 ‘‘(4) the State agrees to adopt Federal stand18 ardized reporting for Federal royalty accounting and

19 collection purposes,’’.

20 (c) COST EFFECTIVE COLLECTION OF DE MINIMIS

21 ROYALTY AMOUNTS.—Section 205 of such Act (30 U.S.C.

22 1735) is amended by adding at the end the following:

23 ‘‘(g) Upon written request of any State, the Secretary

24 is authorized to delegate for any year the responsibility

25 to collect royalties from all Federal leases within the State
440

•HR 2491 RH

1 if the average amount per year of mineral revenues re2 ceived by the State on all such leases under all Federal

3 mineral leasing laws for the previous five years is less than

4 $100,000. The State may also request that the Secretary

5 sell the revenue stream from all or part of the Federal

6 leases within the State in accordance with section 116 of

7 the Federal Oil and Gas Royalty Management Act of

8 1982, as added by section 9518 of the Federal Oil and

9 Gas Royalty Simplification and Fairness Act of 1995.’’.

10 SEC. 9523. PERFORMANCE STANDARD.

11 Section 109 of the Federal Oil and Gas Royalty Man12 agement Act of 1982 (30 U.S.C. 1719) is amended in sub13 sections (c) and (d), by striking ‘‘knowingly or willfully’’

14 and inserting ‘‘by willful misconduct or gross negligence’’

15 each place it appears.

16 SEC. 9524. INDIAN LANDS.

17 The amendments made by this part shall not apply

18 with respect to Indian lands, and the provisions of the

19 Federal Oil and Gas Royalty Management Act of 1982

20 as in effect on the day before the date of enactment of

21 this Act shall continue to apply after such date with re22 spect to Indian lands.

23 SEC. 9525. PRIVATE LANDS.

24 This part shall not apply to any privately owned min25 erals.
441

•HR 2491 RH

1 SEC. 9526. EFFECTIVE DATE.

2 Except as provided by section 115(e), section 111(h),

3 section 111(k)(5), and section 116 of the Federal Oil and

4 Gas Royalty Management Act of 1982 (as added by this

5 part), this part, and the amendments made by this part,

6 shall apply with respect to the production of oil and gas

7 after the first day of the month following the date of the

8 enactment of this Act.

9 Subtitle F—Indian Gaming and

10 Health

11 PART 1—INDIAN GAMING

12 SEC. 9601. INDIAN GAMING.

13 (a) COMMISSION FUNDING.—Section 18(a) of the In14 dian Gaming Regulatory Act (25 U.S.C. 2717(a)) is

15 amended by striking out ‘‘$1,500,000’’ each place it ap16 pears and inserting in lieu thereof ‘‘$2,500,000’’.

17 (b) AUTHORIZATION OF APPROPRIATIONS.—Section

18 19(a) of the Indian Gaming Regulatory Act (25 U.S.C.

19 2718(a)) is amended by striking out all after ‘‘(a)’’ and

20 inserting in lieu thereof the following: ‘‘Notwithstanding

21 the provisions of section 18, no funds may be authorized

22 to be appropriated for the operation of the Commission.’’.
442

•HR 2491 RH

1 PART 2—INDIAN HEALTH: MEDICAID

2 SEC. 9611. HEALTH CARE FACILITIES.

3 (a) TREATMENT OF PAYMENTS.—Section 402 of the

4 Indian Health Care Improvement Act (25 U.S.C. 1642)

5 is amended—

6 (1) in the first sentence of subsection (a), by in7 serting ‘‘, Indian Tribe, tribal organization, or urban

8 Indian organization’’ after ‘‘Service’’ each place it

9 appears; and

10 (2) in the second sentence of subsection (a), by

11 inserting ‘‘, Indian Tribe, tribal organization, or

12 urban Indian organization’’ after ‘‘facilities of the

13 Service’’.

14 (b) ELIGIBILITY FOR REIMBURSEMENT.—Section

15 1911 of the Social Security Act (42 U.S.C. 1396j) is

16 amended in subsection (a), by inserting ‘‘, Indian Tribe,

17 tribal organization, or urban Indian organization’’ after

18 ‘‘Indian Health Service’’.

19 SEC. 9612. PROVIDER REIMBURSEMENT.

20 Section 402 of the Indian Health Care Improvement

21 Act (25 U.S.C. 1642) is amended by adding the following

22 new subsections:

23 ‘‘(c) Notwithstanding any other provision of law, a

24 health program of the Indian Health Service, an Indian

25 tribe, tribal organization, or urban Indian organization,

26 that is eligible for reimbursement for medical assistance
443

•HR 2491 RH

1 under title XIX of the Social Security Act shall be eligible

2 to participate in, and receive reimbursement for medical

3 assistance provided to individuals served under any State

4 plan authorized under any law which succeeds such title

5 XIX on the same basis as any other health care provider

6 in the State in which the health program of the Indian

7 Health Service, an Indian tribe, tribal organization, or

8 urban Indian organization is operated.

9 ‘‘(d) Nothing in this section, or any other law, shall

10 prevent an Indian eligible for services through an Indian

11 health program from participating in any State plan au12 thorized under any law which succeeds such title XIX.

13 ‘‘(e) Nothing in this section, or any other law, shall

14 authorize a State to deny or limit payments to any pro15 vider for medical assistance for items or services to Indi16 ans.

17 ‘‘(f) Any State that authorizes a health plan under

18 any law which succeeds such title XIX or applies for a

19 waiver under section 1115 of title XIX of the Social Secu20 rity Act shall consult with the Indian tribes located within

21 the State in the development of the health plan’s stand22 ards.’’.

23 SEC. 9613. STUDY.

24 The Secretary of Health and Human Services shall

25 conduct a comprehensive study of the number of Indians
444

•HR 2491 RH

1 eligible to receive services under title XIX of the Social

2 Security Act, the number of Indians actually receiving

3 such services, and the effect upon Indians of eliminating

4 the entitlement status of title XIX and transferring fund5 ing under that title to the States, and shall provide rec6 ommendations for the improvement of such services to eli7 gible Indians. The Secretary shall submit the report to

8 Congress no later than June 1, 1996.

9 PART 3—INDIAN HEALTH: MEDICARE

10 SEC. 9621. HEALTH CARE FACILITIES.

11 (a) TRIBAL FACILITIES.—Section 401(a) of the In12 dian Health Care Improvement Act (25 U.S.C 1641(a))

13 is amended by striking ‘‘a hospital or skilled nursing facil14 ity of the Service (whether operated by the Service or by

15 an Indian tribe or tribal organization pursuant to a con16 tract under the Indian Self-Determination Act)’’ and in17 serting ‘‘facility of the Service, Indian tribe, tribal organi18 zation, or urban Indian organization’’.

19 (b) ELIGIBILITY FOR REIMBURSEMENT.—Section

20 1880(a) of the Social Security Act (42 U.S.C. 1395qq)

21 is amended—

22 (1) by striking ‘‘hospital or skilled nursing’’;

23 (2) by inserting ‘‘, Indian Tribe, tribal organi24 zation, or urban Indian organization’’ after ‘‘Indian

25 Health Service’’; and
445

•HR 2491 RH

1 (3) by striking ‘‘generally to hospitals or skilled

2 nursing facilities (as the case may be)’’.

3 SEC. 9622. PROVIDER REIMBURSEMENT.

4 Section 401 of the Indian Health Care Improvement

5 Act (25 U.S.C. 1641) is amended by adding the following

6 new subsection:

7 ‘‘(c) Notwithstanding any other provision of law, a

8 health program of the Indian Health Service, an Indian

9 tribe, tribal organization, or urban Indian organization,

10 that is eligible for reimbursement for medical assistance

11 under title XVIII of the Social Security Act shall be eligi12 ble to participate in, and receive reimbursement for medi13 cal assistance provided to individuals served under any

14 plan offered under the Medicare Plus plan on the same

15 basis as any other health care provider in the State in

16 which the health program of the Indian Health Service,

17 an Indian tribe, tribal organization, or urban Indian orga18 nization is operated.’’.

19 Subtitle G—Consultation

20 SEC. 9701. CONSULTATION.

21 Section 7(d) of the Endangered Species Act of 1973

22 (16 U.S.C. 1536(d)) is amended to read as follows:

23 ‘‘(d) LIMITATION ON COMMITMENT OF RE24 SOURCES.—After initiation of consultation required under

25 subsection (a)(2) of this section, the Federal agency and
446

•HR 2491 RH

1 the permit or license applicant shall not make any irre2 versible or irretrievable commitment of resources with re3 spect to the agency action which has the effect of foreclos4 ing the formulation or implementation of any reasonable

5 and prudent alternative measures which would not violate

6 subsection (a)(2) of this section. This limitation on the

7 commitment of resources is only applicable to consulta8 tions regarding site-specific projects and activities, and

9 shall not apply to any consultation regarding an agency’s

10 periodic or long-term planning activities, mission or policy

11 statements, programmatic documents, or general policies,

12 regulations, or activities, whether or not such consultation

13 has previously been initiated pursuant to a court order,

14 and regardless of the date on which consultation was or15 dered or initiated.’’.

16 Subtitle H—Mapping

17 SEC. 9801. SHORT TITLE.

18 This subtitle may be cited as the ‘‘Department of the

19 Interior Surveying and Mapping Efficiency and Economic

20 Opportunity Act of 1995’’.

21 SEC. 9802. SURVEYING AND MAPPING CONTRACTING PRO22 GRAM.

23 In order to provide private firms, including small and

24 small disadvantaged businesses, ample opportunities to

25 provide quality services to the Department of the Interior
447

•HR 2491 RH

1 (hereinafter referred to as the ‘‘Department’’), the Sec2 retary of the Interior (hereinafter referred to as the ‘‘Sec3 retary’’) shall conduct a surveying and mapping contract4 ing program.

5 SEC. 9803. INVENTORY OF ACTIVITIES.

6 (a) PUBLICATION OF INVENTORY.—Not later than

7 90 days after the date of enactment of this Act, the Sec8 retary, in consultation with the Administrator of the Of9 fice of Federal Procurement Policy, the Administrator of

10 the Small Business Administration and the trade associa11 tion of private surveying and mapping firms, shall publish

12 an inventory of surveying and mapping activities in the

13 Department of the Interior for the last fiscal year com14 pleted prior to the date of enactment of this Act.

15 (b) ITEMS INCLUDED.—The inventory shall include

16 each of the following:

17 (1) The total dollar value of surveying and

18 mapping activities in each agency of the Depart19 ment.

20 (2) The total dollar value of surveying and

21 mapping activities in each agency of the Department

22 performed by contract with private sector firms.

23 (3) The total dollar value of surveying and

24 mapping activities in each agency of the Department

25 performed by personnel of the Department.
448

•HR 2491 RH

1 (4) The total dollar value of surveying and

2 mapping activities in each agency of the Department

3 performed for any other department or agency of the

4 Federal Government.

5 (5) The total dollar value of surveying and

6 mapping activities in each agency of the Department

7 performed for any State or political subdivision

8 thereof, or for any foreign government.

9 (6) The total number of personnel involved in

10 surveying and mapping activities in each agency of

11 the Department.

12 SEC. 9804. PLAN TO INCREASE USE OF CONTRACTS.

13 (a) ESTABLISHMENT.—Based on the inventory con14 ducted pursuant to section 9803 of this Act, not later than

15 180 days after the date of enactment of this Act, the Sec16 retary, in consultation with the Administrator of the Of17 fice of Federal Procurement Policy, the Administrator of

18 the Small Business Administration and the trade associa19 tion of private surveying and mapping firms, shall develop

20 and implement a plan to increase the use of contracts with

21 private firms for surveying and mapping services.

22 (b) ITEMS INCLUDED IN PLAN.—The plan estab23 lished pursuant to subsection (a) of this section shall in24 clude, but not be limited to each of the following:
449

•HR 2491 RH

1 (1) A reduction of surveying and mapping ac2 tivities by personnel in the Department that dupli3 cate capabilities available by contract from the pri4 vate sector.

5 (2) A reduction of acquisition and maintenance

6 of surveying and mapping equipment that duplicate

7 capabilities and capital investment already made by

8 the private sector.

9 (3) The elimination of unfair Government com10 petition in activities in which the Department uses

11 its personnel to perform surveying and mapping for

12 which it shares the cost with, is reimbursed for, or

13 makes a grant to any other agency of the Federal

14 Government, a State or political subdivision thereof,

15 or a foreign government, for such activities, when

16 such activities can be obtained by contract from the

17 private sector.

18 (4) The use of contracts to perform surveying

19 and mapping requirements of the Department cre20 ated through attrition.

21 (5) The enhancement of the leadership role of

22 the Department of the Interior in—

23 (A) the preparation of standards and spec24 ifications;
450

•HR 2491 RH

1 (B) research in surveying and mapping in2 strumentation and procedures, and the prompt

3 transfer of technology to the private sector;

4 (C) providing technical guidance, coordina5 tion, cost sharing, cooperative efforts and ad6 ministration in the use of Federal funds for

7 surveying and mapping activities, and the devel8 opment of geographic information systems, that

9 are performed by the private sector by the con10 tract to Federal, State, and local government

11 agencies;

12 (D) establishing a schedule with quantifi13 able goals for increasing the use of contracts

14 with private sector for current and future sur15 veying and mapping activities; and

16 (E) using Department personnel to per17 form only those surveying and mapping activi18 ties that are inherently governmental in nature,

19 necessary to keep current the skills of such per20 sonnel for evaluating contractor performance

21 and administering contracts, and to perform

22 basic research.

23 SEC. 9805. REPORTS.

24 The Secretary shall transmit to the Committee on

25 Resources of the House of Representatives and the Com-
451

•HR 2491 RH

1 mittee on Energy and Natural Resources of the Senate

2 a report on implementation of the program not later than

3 January 15 of each year.

4 SEC. 9806. DEFINITIONS.

5 As used in this subtitle:

6 (1) The term ‘‘surveying and mapping’’ means

7 collecting, storing, retrieving, or disseminating

8 graphical or digital data depicting natural or man9 made physical features, phenomena and boundaries

10 of the earth and any information related thereto, in11 cluding but not limited to data shown on or in rela12 tion to surveys, maps, and charts.

13 (2) The ‘‘contract’’ means an instrument to re14 tain private firms with licensed, certified, or other15 wise qualified professionals in such fields as survey16 ing, photogrammetry, cartography, and geodesy,

17 which shall be awarded in accordance with the selec18 tion procedures in title IX of the Federal Property

19 and Administrative Services Act of 1949 (40 U.S.C.

20 541 and following).

21 Subtitle I—National Park System

22 Reform

23 SEC. 9901. SHORT TITLE.

24 This subtitle may be cited as the ‘‘National Park Sys25 tem Reform Act of 1995’’.
452

•HR 2491 RH

1 SEC. 9902. DEFINITIONS.

2 As used in this subtitle:

3 (1) The term ‘‘Secretary’’ means the Secretary

4 of the Interior.

5 (2) The term ‘‘Plan’’ means the National Park

6 System Plan developed under section 101.

7 (3) The term ‘‘Commission’’ means the Na8 tional Park System Review Commission established

9 pursuant to section 103.

10 (4) The term ‘‘Congressional resources commit11 tees’’ means the Committee on Resources of the

12 House of Representatives and the Committee on En13 ergy and Natural Resources of the Senate.

14 PART 1—NATIONAL PARK SYSTEM PLAN

15 SEC. 9911. PREPARATION OF NATIONAL PARK SYSTEM

16 PLAN.

17 (a) PREPARATION OF PLAN.—The Secretary of the

18 Interior, acting through the Director of the National Park

19 Service, shall prepare a National Park System Plan to

20 guide the direction of the National Park System into the

21 next century. The Plan shall include each of the following:

22 (1) Identification of goals and objectives for use

23 in defining the mission and role of the National

24 Park Service and the National Park System in pre25 serving our Nation’s heritage, relative to other ef26 forts at the Federal, State, local, and private levels.
453

•HR 2491 RH

1 This statement shall include a refinement for the

2 definition of ‘‘nationally significant’’ for purposes of

3 inclusion in the National Park System.

4 (2) Criteria to be used in determining which

5 themes and types of resources are appropriate for

6 representation in the National Park System, as well

7 as criteria for judging individual sites, areas, and

8 themes that are appropriate for inclusion as units of

9 the National Park System.

10 (3) Identification of what constitutes adequate

11 representation of a particular resource type or theme

12 in the National Park System.

13 (4) Identification of which aspects of the Na14 tion’s heritage are adequately represented in the ex15 isting National Park System.

16 (5) Identification of appropriate aspects of the

17 Nation’s heritage not currently or adequately rep18 resented in the National Park System.

19 (6) Priorities of the themes and types of re20 sources which should be added to the National Park

21 System in order to provide more complete represen22 tation of our Nation’s heritage.

23 (7) A thorough analysis of the role of the Na24 tional Park System and the National Park Service

25 with respect to (but not limited to) conservation of
454

•HR 2491 RH

1 natural areas and ecosystems; preservation of indus2 trial America; preservation of intangible cultural

3 heritage such as arts, music, and folklife; presi4 dential sites; open space protection; and provision of

5 outdoor recreation opportunities.

6 (8) A comprehensive financial management plan

7 for the National Park System which identifies all

8 funding available to the agency, how funds will be

9 allocated to support various programs, and the level

10 of service to be provided.

11 (b) PUBLIC PARTICIPATION AND CONSULTATION.—

12 During the preparation of the Plan under subsection (a),

13 the Secretary shall ensure broad public participation in a

14 manner which, at a minimum, consists of the following

15 two elements:

16 (1) Solicitation of the views of the American

17 public with regard to the future of the National

18 Park System. Opportunities for public participation

19 shall be made available throughout the planning

20 process and shall include specific regional public

21 meetings.

22 (2) Consultation with other Federal land man23 agement agencies, State and local officials, resource

24 management, recreation and scholarly organizations,
455

•HR 2491 RH

1 and other interested parties as the Secretary deems

2 advisable.

3 (c) TRANSMITTAL OF REPORT.—Prior to the end of

4 the second complete fiscal year commencing after the date

5 of enactment of this Act, the Secretary shall transmit the

6 Plan developed under this section to the Congressional re7 sources committees.

8 (d) CONGRESSIONAL APPROVAL.—Unless Congress

9 enacts a joint resolution rejecting all or modifying part

10 of the Plan within 180 calendar days after the date of

11 its transmittal to Congress, the Plan shall be deemed ap12 proved.

13 (e) IDENTIFICATION OF UNITS OF THE NATIONAL

14 PARK SYSTEM.—The Secretary shall submit to the Con15 gressional resources committees an official list of areas or

16 units of the National Park System within 180 days after

17 the date of the enactment of this Act. The Secretary shall

18 establish a set of criteria for the purpose of developing

19 such list and shall transmit those criteria to the Congres20 sional resources committees.

21 (f) AUTHORITY TO ESTABLISH UNITS OF THE NA22 TIONAL PARK SYSTEM.—After the enactment of this Act,

23 units or areas of the National Park System may only be

24 established pursuant to an Act of Congress or by Presi25 dential action in accordance with the Act entitled ‘‘An Act
456

•HR 2491 RH

1 for the preservation of American antiquities’’ (16 U.S.C.

2 431 et seq.).

3 SEC. 9912. MANAGEMENT REVIEW OF NATIONAL PARK

4 SYSTEM.

5 (a) SELECTION CRITERIA.—(1) The Secretary shall,

6 not later than 45 days after transmittal of the Plan under

7 section 9911(c), publish in the Federal Register and

8 transmit to the Congressional resources committees the

9 criteria proposed to be used by the Department of the In10 terior in reviewing existing units of the National Park Sys11 tem under this section. The Secretary shall provide an op12 portunity for public comment on the proposed criteria for

13 a period of at least 30 days.

14 (2)(A) The Secretary shall, within 60 days of the

15 transmittal of proposed criteria under paragraph (1), pub16 lish in the Federal Register and transmit to the Congres17 sional resources committees the final criteria to be used

18 in carrying out this section. Except as provided in sub19 paragraph (B), such criteria shall be the final criteria to

20 be used unless disapproved by a joint resolution of Con21 gress enacted not more than 30 legislative days after re22 ceipt of the final criteria. For the purpose of the preceding

23 sentence, the term ‘‘legislative day’’ means a day on which

24 both Houses of Congress are in session.
457

•HR 2491 RH

1 (B) The Secretary may amend such criteria, but such

2 amendments may not become effective until they have

3 been published in the Federal Register, opened to public

4 comment for at least 30 days, and transmitted to the Con5 gressional resources committees in final form.

6 (b) REVIEW.—(1)(A) Using the Plan deemed to be

7 approved pursuant to section 9911(d) and the criteria de8 veloped pursuant to subsection (a), the Secretary shall re9 view the existing National Park System to determine

10 whether any existing units or significant portions of such

11 units do not conform to the Plan. For any such areas,

12 the Secretary shall determine whether there are more ap13 propriate alternatives for managing all or a portion of

14 such units, including through partnerships or direct man15 agement by States, local governments, other agencies and

16 the private sector.

17 (B) The Secretary shall develop a report which con18 tains a list of any unit of the National Park System where

19 National Park Service management should be terminated

20 and a list of any portion of units where National Park

21 Service management should be modified as a result of

22 nonconformance with the Plan. No area or portion of an

23 area which Congress has designated as a national park

24 may be included in the report.
458

•HR 2491 RH

1 (2) Should any such unit or portion of such unit not

2 be recommended for continued National Park Service

3 management, the Secretary shall make recommendations

4 regarding management by an entity or entities other than

5 the National Park Service.

6 (3) For any such unit or portion of such unit deter7 mined to have national significance, prior to including

8 such unit or portion of such unit on a list under paragraph

9 (1), the Secretary shall identify feasible alternatives to

10 National Park Service management which will protect the

11 resources of and assure continued public access to the

12 unit.

13 (c) CONSULTATION.—In developing the report re14 ferred to in subsection (b), the Secretary shall consult with

15 other Federal land management agencies, State and local

16 officials, resource management, recreation and scholarly

17 organizations, and other interested parties as the Sec18 retary deems advisable.

19 (d) TRANSMITTAL.—Not later than 18 months after

20 the Plan has been deemed approved, the Secretary shall

21 transmit the report developed under this section simulta22 neously to the Congressional resources committees and the

23 Commission. The report shall contain the recommenda24 tions of the Secretary for termination of National Park

25 Service management for any unit of the National Park
459

•HR 2491 RH

1 System that is determined not to conform with the Plan,

2 a list of portions of units where National Park Service

3 management should be modified, and the recommenda4 tions for alternative management by an entity or entities

5 other than the National Park Service for such unit.

6 SEC. 9913. NATIONAL PARK SYSTEM REVIEW COMMISSION.

7 (a) ESTABLISHMENT OF COMMISSION; DUTIES.—(1)

8 Following completion of the Plan as specified in section

9 9911, a National Park System Review Commission shall

10 be established.

11 (2) The Commission shall either review the report de12 veloped under section 9912 or, if the Secretary fails to

13 develop and transmit such report, develop the report itself.

14 In conducting its review (or developing the report, if nec15 essary), the Commission shall be subject to the provisions

16 of sections 9912(b) and (c) in the same manner as such

17 provisions apply to the Secretary. If the Secretary develops

18 and transmits the report, the review of the Commission

19 shall be limited to the manner in which the criteria have

20 been applied to the existing National Park System. In ad21 dition the Commission shall seek broad public input and

22 ensure the opportunity for input from persons who would

23 be directly affected by recommendations regarding Na24 tional Park System units identified in its report.
460

•HR 2491 RH

1 (3) Within 2 years after the date of its establishment,

2 the Commission shall prepare and transmit to the Con3 gressional resources committees a report of its work under

4 paragraph (2) in which the Commission recommends a list

5 of National Park System units where National Park Serv6 ice management should be terminated and a list of por7 tions of units where National Park Service management

8 should be modified.

9 (b) MEMBERSHIP AND APPOINTMENT.—The Com10 mission shall consist of 11 members, each of whom shall

11 have substantial familiarity with, and understanding of,

12 the National Park System and related fields. In addition,

13 the Commission members shall have expertise in natural

14 sciences, history, archaeology, and outdoor recreation.

15 Five members of the Commission, one of whom shall be

16 the Director of the National Park Service, shall be ap17 pointed by the Secretary. Two members shall be appointed

18 by the Speaker of the United States House of Representa19 tives in consultation with the chairman of the Committee

20 on Resources, and one member shall be appointed by the

21 Minority Leader of the House of Representatives in con22 sultation with the ranking minority member of the Com23 mittee on Resources. Two members shall be appointed by

24 the President pro tempore of the United States Senate,

25 in consultation with the chairman of the Committee on
461

•HR 2491 RH

1 Energy and Natural Resources and one member shall be

2 appointed by the Minority Leader of the Senate in con3 sultation with the ranking minority member of the Com4 mittee on Energy and Natural Resources. Each member

5 shall be appointed within three months after the comple6 tion of the Plan as specified in section 101.

7 (c) CHAIR.—The Commission shall elect a chair from

8 among its members.

9 (d) VACANCIES.—Vacancies occurring on the Com10 mission shall not affect the authority of the remaining

11 members of the Commission to carry out the functions of

12 the Commission. Any vacancy in the Commission shall be

13 promptly filled in the same manner in which the original

14 appointment was made.

15 (e) QUORUM.—A simple majority of Commission

16 members shall constitute a quorum.

17 (f) MEETINGS.—The Commission shall meet at least

18 quarterly or upon the call of the chair or a majority of

19 the members of the Commission.

20 (g) COMPENSATION.—Members of the Commission

21 shall serve without compensation as such. Members of the

22 Commission, when engaged in official Commission busi23 ness, shall be entitled to travel expenses, including per

24 diem in lieu of subsistence, in the same manner as persons
462

•HR 2491 RH

1 employed intermittently in government service under sec2 tion 5703 of title 5, United States Code.

3 (h) TERMINATION.—The Commission established

4 pursuant to this section shall terminate 90 days after the

5 transmittal of the report to Congress as provided in sub6 section (a).

7 (i) LIMITATION ON NATIONAL PARK SERVICE

8 STAFF.—The Commission may hire staff to carry out its

9 assigned responsibilities. Not more than one-half of the

10 professional staff of the Commission shall be made up of

11 current employees of the National Park Service.

12 (j) STAFF OF OTHER AGENCIES.—Upon the request

13 of the Commission, the head of any Federal agency may

14 detail, on a reimbursable basis, any of the personnel of

15 such agency to the Commission to assist the Commission.

16 (k) EXPERTS AND CONSULTANTS.—Subject to such

17 rules as may be adopted by the Commission, the Commis18 sion may procure temporary and intermittent services to

19 the same extent as authorized by section 3109(b) of title

20 5, United States Code, but at rates determined by the

21 Commission to be advisable.

22 (l) POWERS OF THE COMMISSION.—(1) The Commis23 sion shall for the purpose of carrying out this title hold

24 such public hearings, sit and act at such times and places,
463

•HR 2491 RH

1 take such testimony, and receive such evidence as the

2 Commission deems advisable.

3 (2) The Commission may make such bylaws, rules,

4 and regulations, consistent with this part, as it considers

5 necessary to carry out its functions under this part.

6 (3) When so authorized by the Commission, any

7 member or agent of the Commission may take any action

8 which the Commission is authorized to take by this sec9 tion.

10 (4) The Commission may use the United States mails

11 in the same manner and upon the same conditions as

12 other departments and agencies of the United States.

13 (5) The Secretary shall provide to the Commission

14 any information available to the Secretary and requested

15 by the Commission regarding the Plan and any other in16 formation requested by the Commission which is relevant

17 to the duties of the Commission and available to the Sec18 retary.

19 SEC. 9914. SUBSEQUENT ACT OF CONGRESS REQUIRED TO

20 MODIFY OR TERMINATE A PARK.

21 Nothing in this part shall be construed as modifying

22 or terminating any unit of the National Park System with23 out a subsequent Act of Congress. This limitation shall

24 not limit any existing authority of the Secretary.
464

•HR 2491 RH

1 SEC. 9915. AUTHORIZATION OF APPROPRIATIONS.

2 There are hereby authorized to be appropriated

3 $2,000,000 to carry out the purposes of this part.

4 SEC. 9916. COMMENDATION AND PROTECTION OF NA5 TIONAL PARK RANGERS.

6 (a) FINDING.—The Congress recognizes the dedica7 tion, expertise and courage of the men and women who

8 serve as rangers and other employees of the National Park

9 Service and finds their service to the protection of our

10 park resources and the safety of the hundreds of millions

11 of Americans who visit our national parks each year to

12 be indispensable.

13 (b) PROTECTION OF NATIONAL PARK SERVICE EM14 PLOYEES.—As soon as possible as part of the report devel15 oped under section 9911, the Secretary shall report on the

16 procedures that have been instituted to report to the Unit17 ed States Attorney or other appropriate law enforcement

18 official any intimidation, threats, or acts of violence

19 against employees of the National Park Service related to

20 their duties.

21 PART 2—NEW AREA ESTABLISHMENT

22 SEC. 9921. STUDY OF NEW PARK SYSTEM AREAS.

23 Section 8 of the Act of August 18, 1970, entitled ‘‘An

24 Act to improve the Administration of the National Park

25 System by the Secretary of the Interior, and to clarify the

26 authorities applicable to the system, and for other pur-
465

•HR 2491 RH

1 poses’’ (16 U.S.C. 1a–1 and following) is amended as fol2 lows:

3 (1) By inserting ‘‘GENERAL AUTHORITY.—’’

4 after ‘‘(a)’’.

5 (2) By striking the second through the sixth

6 sentences of subsection (a).

7 (3) By redesignating the last two sentences of

8 subsection (a) as subsection (f) and inserting in the

9 first of such sentences before the words ‘‘For the

10 purposes of carrying’’ the following: ‘‘(f) AUTHOR11 IZATION OF APPROPRIATIONS.—’’.

12 (4) By striking subsection (b).

13 (5) By inserting the following after subsection

14 (a):

15 ‘‘(b) STUDIES OF AREAS FOR POTENTIAL ADDI16 TION.—(1) At the beginning of each calendar year, along

17 with the annual budget submission, the Secretary shall

18 submit to the Committee on Resources of the House of

19 Representatives and to the Committee on Energy and

20 Natural Resources of the United States Senate a list of

21 areas recommended for study for potential inclusion in the

22 National Park System.

23 ‘‘(2) In developing the list to be submitted under this

24 subsection, the Secretary shall give consideration to those

25 areas that have the greatest potential to meet the estab-
466

•HR 2491 RH

1 lished criteria of national significance, suitability, and fea2 sibility. The Secretary shall give special consideration to

3 themes, sites, and resources not already adequately rep4 resented in the National Park System as identified in the

5 National Park System Plan to be developed under section

6 101 of the National Park System Reform Act of 1995.

7 ‘‘(3) No study of the potential of an area for inclusion

8 in the National Park System may be initiated after the

9 date of enactment of this subsection, except as provided

10 by specific authorization of an Act of Congress.

11 ‘‘(4) Nothing in this Act shall limit the authority of

12 the National Park Service to conduct preliminary resource

13 assessments, gather data on potential study areas, provide

14 technical and planning assistance, prepare or process

15 nominations for administrative designations, update pre16 vious studies, or complete reconnaissance surveys of indi17 vidual areas requiring a total expenditure of less than

18 $25,000.

19 ‘‘(5) Nothing in this section shall be construed to

20 apply to or to affect or alter the study of any river segment

21 for potential addition to the national wild and scenic rivers

22 system or to apply to or to affect or alter the study of

23 any trail for potential addition to the national trails sys24 tem.
467

•HR 2491 RH

1 ‘‘(c) REPORT.—(1) The Secretary shall complete the

2 study for each area for potential inclusion in the National

3 Park System within 3 complete fiscal years following the

4 date of enactment of specific legislation providing for the

5 study of such area. Each study under this section shall

6 be prepared with appropriate opportunity for public in7 volvement, including at least one public meeting in the vi8 cinity of the area under study, and after reasonable efforts

9 to notify potentially affected landowners and State and

10 local governments.

11 ‘‘(2) In conducting the study, the Secretary shall con12 sider whether the area under study—

13 ‘‘(A) possesses nationally significant natural or

14 cultural resources, or outstanding recreational op15 portunities, and that the area represents one of the

16 most important examples of a particular resource

17 type in the country; and

18 ‘‘(B) is a suitable and feasible addition to the

19 system.

20 ‘‘(3) Each study—

21 ‘‘(A) shall consider the following factors with

22 regard to the area being studied—

23 ‘‘(i) the rarity and integrity of the re24 sources;

25 ‘‘(ii) the threats to those resources;
468

•HR 2491 RH

1 ‘‘(iii) whether similar resources are already

2 protected in the National Park System or in

3 other public or private ownership;

4 ‘‘(iv) the public use potential;

5 ‘‘(v) the interpretive and educational po6 tential;

7 ‘‘(vi) costs associated with acquisition, de8 velopment and operation;

9 ‘‘(vii) the socioeconomic impacts of any

10 designation;

11 ‘‘(viii) the level of local and general public

12 support, and

13 ‘‘(ix) whether the area is of appropriate

14 configuration to ensure long-term resource pro15 tection and visitor use;

16 ‘‘(B) shall consider whether direct National

17 Park Service management or alternative protection

18 by other public agencies or the private sector is ap19 propriate for the area;

20 ‘‘(C) shall identify what alternative or combina21 tion of alternatives would in the professional judg22 ment of the Director of the National Park Service

23 be most effective and efficient in protecting signifi24 cant resources and providing for public enjoyment;

25 and
469

•HR 2491 RH

1 ‘‘(D) may include any other information which

2 the Secretary deems to be relevant.

3 ‘‘(4) Each study shall be completed in compliance

4 with the National Environmental Policy Act of 1969.

5 ‘‘(5) The letter transmitting each completed study to

6 Congress shall contain a recommendation regarding the

7 Secretary’s preferred management option for the area.

8 ‘‘(d) NEW AREA STUDY OFFICE.—The Secretary

9 shall establish a single office to be assigned to prepare

10 all new area studies and to implement other functions of

11 this section.

12 ‘‘(e) LIST OF AREAS.—At the beginning of each cal13 endar year, along with the annual budget submission, the

14 Secretary shall submit to the Committee on Resources of

15 the House of Representatives and to the Committee on

16 Energy and Natural Resources of the United States Sen17 ate a list of areas which have been previously studied

18 which contain primarily historical resources, and a list of

19 areas which have been previously studied which contain

20 primarily natural resources, in numerical order of priority

21 for addition to the National Park System. In developing

22 the lists, the Secretary should consider threats to resource

23 values, cost escalation factors, and other factors listed in

24 subsection (c) of this section. The Secretary should only
470

•HR 2491 RH

1 include on the lists areas for which the supporting data

2 is current and accurate.’’.

3 TITLE X—COMMITTEE ON

4 TRANSPORTATION AND IN5 FRASTRUCTURE

6 Subtitle A—Water Resources

7 SEC. 10001. COMMERCIAL CONCESSIONS AT CORPS OF EN8 GINEERS PROJECTS.

9 Notwithstanding part 1 of subtitle C of title IX of

10 this Act, the Secretary of the Army shall not modify any

11 concession service agreement, concession license, or simi12 lar instrument (or any policy or procedure relating to such

13 agreement, license, or agreement) except to the extent that

14 such modification is permitted under laws in effect on the

15 day before the date of the enactment of this Act.

16 SEC. 10002. PROHIBITION ON SALE OF CORPS OF ENGI17 NEERS PROJECTS.

18 (a) PROHIBITION.—Notwithstanding part 1 of sub19 title B of title IX of this Act, the sale of any project or

20 project feature operated by the Corps of Engineers (in21 cluding any dam, lock, reservoir, related transmission and

22 generation structures, equipment, facilities, and real prop23 erty) is prohibited.

24 (b) COOPERATION WITH PURCHASERS OF ELECTRIC

25 POWER.—
471

•HR 2491 RH

1 (1) IN GENERAL.—Subject to paragraph (2),

2 the Secretary of the Army shall cooperate, to the

3 maximum extent practicable, with a non-Federal

4 purchaser of electric power generated at any project

5 under the jurisdiction of the Secretary to facilitate

6 the purchaser’s access to, operation of, and mainte7 nance, repair, rehabilitation, and replacement of hy8 droelectric power facilities at the project.

9 (2) CONTINUED EFFECTIVENESS OF PROJECT

10 PURPOSES.—In carrying out paragraph (1), the Sec11 retary shall take such actions as may be necessary

12 to ensure that each project referred to in paragraph

13 (1) continues to operate in accordance with the au14 thorized purpose or purposes of the project.

15 SEC. 10003. FEMA RADIOLOGICAL EMERGENCY PREPARED16 NESS FEES.

17 (a) IN GENERAL.—The Director of the Federal

18 Emergency Management Agency may assess and collect

19 fees applicable to persons subject to radiological emer20 gency preparedness regulations issued by the Director.

21 (b) REQUIREMENTS.—The assessment and collection

22 of fees by the Director under subsection (a) shall be fair

23 and equitable and shall reflect the full amount of costs

24 to the Agency of providing radiological emergency plan25 ning, preparedness, response, and associated services.
472

•HR 2491 RH

1 Such fees shall be assessed by the Director in a manner

2 which reflects the use of resources of the Agency for class3 es of regulated persons and the administrative costs of col4 lecting such fees.

5 (c) AMOUNT OF FEES.—The aggregate amount of

6 fees assessed under subsection (a) in a fiscal year shall

7 approximate, but not be less than, 100 percent of the

8 amounts anticipated by the Director to be obligated for

9 the radiological emergency preparedness program of the

10 Agency for such fiscal year.

11 (d) DEPOSIT OF FEES IN TREASURY.—Fees received

12 pursuant to subsection (a) shall be deposited in the gen13 eral fund of the Treasury as offsetting receipts.

14 (e) EXPIRATION OF AUTHORITY.—The authority of

15 the Director to assess and collect fees under subsection

16 (a) shall expire on September 30, 2002.

17 Subtitle B—Ocean Shipping

18 Reform

19 SEC. 10201. SHORT TITLE.

20 This subtitle may be cited as the ‘‘Ocean Shipping

21 Reform Act of 1995’’.

22 CHAPTER 1—OCEAN SHIPPING REFORM

23 SEC. 10211. PURPOSES.

24 Section 2 of the Shipping Act of 1984 (46 U.S.C.

25 App. 1701) is amended—
473

•HR 2491 RH

1 (1) by striking ‘‘and’’ at the end of paragraph

2 (2);

3 (2) by striking the period at the end of para4 graph (3) and inserting ‘‘; and’’; and

5 (3) by adding at the end the following:

6 ‘‘(4) to permit carriers and shippers to develop

7 transportation arrangements to meet their specific

8 needs.’’.

9 SEC. 10212. DEFINITIONS.

10 Section 3 of the Shipping Act of 1984 (46 U.S.C.

11 App. 1702) is amended—

12 (1) effective January 1, 1997—

13 (A) by striking paragraph (9); and

14 (B) by redesignating paragraphs (10)

15 through (19) as paragraphs (9) through (18),

16 respectively; and

17 (2) effective June 1, 1997—

18 (A) by striking paragraph (4);

19 (B) in paragraph (7) by striking ‘‘a com20 mon tariff;’’ and inserting ‘‘a common schedule

21 of transportation rates, charges, classifications,

22 rules, and practices;’’;

23 (C) by striking paragraph (10) (as redesig24 nated by paragraph (1) of this section);
474

•HR 2491 RH

1 (D) by striking paragraph (13) (as redesig2 nated by paragraph (1) of this section);

3 (E) by striking paragraph (16) (as redesig4 nated by paragraph (1) of this section);

5 (F) by striking paragraph (18) (as redesig6 nated by paragraph (1) of this section) and in7 serting the following:

8 ‘‘(18) ‘ocean freight forwarder’ means a person

9 that—

10 ‘‘(A)(i) in the United States, dispatches

11 shipments from the United States via a com12 mon carrier and books or otherwise arranges

13 space for those shipments on behalf of shippers;

14 or

15 ‘‘(ii) processes the documentation or per16 forms related activities incident to those ship17 ments; or

18 ‘‘(B) acts as a common carrier that does

19 not operate the vessels by which the ocean

20 transportation is provided, and is a shipper in

21 its relationship with an ocean common car22 rier.’’;

23 (G) by striking paragraph (21);

24 (H) in paragraph (23)—
475

•HR 2491 RH

1 (i) by striking ‘‘or’’ the second place

2 it appears and inserting a comma; and

3 (ii) by striking the period and insert4 ing ‘‘, a shippers’ association, or an ocean

5 freight forwarder that accepts responsibil6 ity for payment of the ocean freight.’’;

7 (I) by striking paragraph (24) and insert8 ing the following:

9 ‘‘(24) ‘shippers’ association’ means a group of

10 shippers that consolidates or distributes freight, on

11 a nonprofit basis for the members of the group in

12 order to secure carload, truckload, or other volume

13 rates or ocean transportation contracts.’’; and

14 (J) by inserting after paragraph (18) (as

15 redesignated by paragraph (1) of this section)

16 the following:

17 ‘‘(19) ‘ocean transportation contract’ means a

18 contract in writing separate from the bill of lading

19 or receipt between 1 or more common carriers or a

20 conference and 1 or more shippers to provide speci21 fied services under specified rates and conditions.’’.

22 SEC. 10213. AGREEMENTS WITHIN THE SCOPE OF THE ACT.

23 Effective June 1, 1997, section 4(a) of the Shipping

24 Act of 1984 (46 U.S.C. App. 1703(a)) is amended—
476

•HR 2491 RH

1 (1) in paragraph (5) by striking ‘‘non-vessel-op2 erating common carriers’’ and inserting ‘‘ocean

3 freight forwarders’’; and

4 (2) by striking paragraph (7) and inserting the

5 following:

6 ‘‘(7) discuss any matter related to ocean trans7 portation contracts, and enter ocean transportation

8 contracts and agreements related to those con9 tracts.’’.

10 SEC. 10214. AGREEMENTS.

11 Section 5 of the Shipping Act of 1984 (46 U.S.C.

12 App. 1704) is amended—

13 (1) effective January 1, 1997—

14 (A) in subsection (b)(4) by striking ‘‘at the

15 request of any member, require an independent

16 neutral body to police fully’’ and inserting

17 ‘‘state the provisions, if any, for the policing

18 of’’;

19 (B) in subsection (b)(7) by striking ‘‘and’’

20 at the end;

21 (C) in subsection (b)(8) by striking the pe22 riod and inserting ‘‘; and’’; and

23 (D) by adding at the end of subsection (b)

24 the following:
477

•HR 2491 RH

1 ‘‘(9) provide that a member of the conference

2 may enter individual and independent negotiations

3 and may conclude individual and independent service

4 contracts under section 8 of this Act.’’;

5 (2) effective June 1, 1997—

6 (A) by striking subsection (b)(8) and in7 serting the following:

8 ‘‘(8) provide that any member of the conference

9 may take independent action on any rate or service

10 item agreed upon by the conference for transpor11 tation provided under section 8(a) of this Act upon

12 not more than 3 business days’ notice to the con13 ference, and that the conference will provide the new

14 rate or service item for use by that member, effec15 tive no later than 3 business days after receipt of

16 that notice, and by any other member that notifies

17 the conference that it elects to adopt the independ18 ent rate or service item on or after its effective date,

19 in lieu of the existing conference provision for that

20 rate or service item;’’;

21 (B) in subsection (b)(9) by striking ‘‘serv22 ice’’ and inserting ‘‘ocean transportation’’ and

23 by striking the period at the end and inserting

24 ‘‘; and’’;
478

•HR 2491 RH

1 (C) by adding at the end of subsection (b)

2 the following:

3 ‘‘(10) prohibit the conference from—

4 ‘‘(A) prohibiting or restricting the mem5 bers of the conference from engaging in individ6 ual negotiations for ocean transportation con7 tracts under section 8(b) with 1 or more ship8 pers; and

9 ‘‘(B) issuing mandatory rules or require10 ments affecting ocean transportation contracts

11 that may be entered by 1 or more members of

12 the conference, except that a conference may

13 require that a member of the conference dis14 close the existence of an existing individual

15 ocean transportation contract or negotiations on

16 an ocean transportation contract, when the con17 ference enters negotiations on an ocean trans18 portation contract with the same shipper.’’; and

19 (D) in subsection (e) by striking ‘‘carrier

20 that are required to be set forth in a tariff,’’

21 and inserting ‘‘carrier,’’.

22 SEC. 10215. EXEMPTION FROM ANTITRUST LAWS.

23 Section 7 of the Shipping Act of 1984 (46 U.S.C.

24 App. 1706) is amended—
479

•HR 2491 RH

1 (1) by striking subsection (a)(6) and inserting

2 the following:

3 ‘‘(6) subject to section 20(e)(2) of this Act, any

4 agreement, modification, or cancellation, in effect be5 fore the effective date of this Act and any tariff,

6 rate, fare, charge, classification, rule, or regulation

7 explanatory thereof implementing that agreement,

8 modification, or cancellation.’’; and

9 (2) in subsection (c)(1) by striking ‘‘agency’’

10 and inserting ‘‘agency, department,’’.

11 SEC. 10216. COMMON AND CONTRACT CARRIAGE.

12 (a) IN GENERAL.—Effective June 1, 1997—

13 (1) section 502 of the High Seas Driftnet Fish14 eries Enforcement Act (46 U.S.C. App. 1707a) is re15 pealed; and

16 (2) section 8 of the Shipping Act of 1984 (46

17 U.S.C. App. 1707) is amended to read as follows:

18 ‘‘SEC. 8. COMMON AND CONTRACT CARRIAGE.

19 ‘‘(a) COMMON CARRIAGE.—

20 ‘‘(1) A common carrier and a conference shall

21 make available a schedule of transportation rates

22 which shall include the rates, terms, and conditions

23 for transportation services not governed by an ocean

24 transportation contract, and shall provide the sched25 ule of transportation rates, in writing, upon the re-
480

•HR 2491 RH

1 quest of any person. A common carrier and a con2 ference may assess a reasonable charge for comply3 ing with a request for a rate, term, and condition,

4 except that the charge may not exceed the cost of

5 providing the information requested.

6 ‘‘(2) A dispute between a common carrier or

7 conference and a person as to the applicability of the

8 rates, terms, and conditions for ocean transportation

9 services shall be decided in an appropriate State or

10 Federal court of competent jurisdiction, unless the

11 parties otherwise agree.

12 ‘‘(3) A claim concerning a rate for ocean trans13 portation services which involves false billing, false

14 classification, false weighing, false report of weight,

15 or false measurement shall be decided in an appro16 priate State or Federal court of competent jurisdic17 tion, unless the parties otherwise agree.

18 ‘‘(b) CONTRACT CARRIAGE.—

19 ‘‘(1) 1 or more common carriers or a conference

20 may enter into an ocean transportation contract

21 with 1 or more shippers. A common carrier may

22 enter into ocean transportation contracts without

23 limitations concerning the number of ocean trans24 portation contracts or the amount of cargo or space

25 involved. The status of a common carrier as an
481

•HR 2491 RH

1 ocean common carrier is not affected by the number

2 or terms of ocean transportation contracts entered.

3 ‘‘(2) A party to an ocean transportation con4 tract entered under this section shall have no duty

5 in connection with services provided under the con6 tract other than the duties specified by the terms of

7 the contract.

8 ‘‘(3)(A) An ocean transportation contract or the

9 transportation provided under that contract may not

10 be challenged in any court on the grounds that the

11 contract violates a provision of this Act.

12 ‘‘(B) The exclusive remedy for an alleged

13 breach of an ocean transportation contract is an ac14 tion in an appropriate State or Federal court of

15 competent jurisdiction, unless the parties otherwise

16 agree.

17 ‘‘(4) The requirements and prohibitions con18 cerning contracting by conferences contained in sec19 tions 5(b)(9) and (10) of this Act shall also apply

20 to any agreement among one or more ocean common

21 carriers that is filed under section 5(a) of this Act.’’.

22 (b) CONFIDENTIALITY OF CONTRACTS.—Effective

23 January 1, 1998, section 8(b) of the Shipping Act of 1984

24 (46 U.S.C. App. 1707(b)), as amended by subsection (a)
482

•HR 2491 RH

1 of this section, is amended by adding at the end the

2 following:

3 ‘‘(5) A contract entered under this section may

4 be made on a confidential basis, upon agreement of

5 the parties. An ocean common carrier that is a

6 member of a conference agreement may not be pro7 hibited or restricted from agreeing with 1 or more

8 shippers that the parties to the contract will not dis9 close the rates, services, terms, or conditions of that

10 contract to any other member of the agreement, to

11 the conference, to any other carrier, shipper, con12 ference, or to any other third party.’’.

13 SEC. 10217. PROHIBITED ACTS.

14 Section 10 of the Shipping Act of 1984 (46 U.S.C.

15 App. 1709) is amended—

16 (1) effective January 1, 1997, in subsection

17 (b)—

18 (A) by striking paragraph (1) and insert19 ing the following:

20 ‘‘(1) except for service contracts, subject a per21 son, place, port, or shipper to unreasonable discrimi22 nation;’’; and

23 (B) by striking paragraphs (2), (3), (4),

24 and (8);
483

•HR 2491 RH

1 (2) effective June 1, 1997, by striking sub2 section (b) and inserting the following:

3 ‘‘(b) COMMON CARRIERS.—No common carrier, ei4 ther alone or in conjunction with any other person, directly

5 or indirectly, may—

6 ‘‘(1) except for ocean transportation contracts,

7 subject a person, place, port, or shipper to unreason8 able discrimination;

9 ‘‘(2) retaliate against any shipper by refusing,

10 or threatening to refuse, cargo space accommoda11 tions when available, or resort to other unfair or un12 justly discriminatory methods because the shipper

13 has patronized another carrier or has filed a com14 plaint, or for any other reason;

15 ‘‘(3) employ any fighting ship;

16 ‘‘(4) subject any particular person, locality,

17 class, or type of shipper or description of traffic to

18 an unreasonable refusal to deal;

19 ‘‘(5) refuse to negotiate with a shippers’ asso20 ciation;

21 ‘‘(6) knowingly and willfully accept cargo from

22 or transport cargo for the account of an ocean

23 freight forwarder that does not have a bond, insur24 ance, or other surety as required by section 19;
484

•HR 2491 RH

1 ‘‘(7) knowingly and willfully enter into an ocean

2 transportation contract with an ocean freight for3 warder or in which an ocean freight forwarder is

4 listed as an affiliate that does not have a bond, in5 surance, or other surety as required by section 19;

6 or

7 ‘‘(8)(A) knowingly disclose, offer, solicit, or re8 ceive any information concerning the nature, kind,

9 quantity, destination, consignee, or routing of any

10 property tendered or delivered to a common carrier

11 without the consent of the shipper or consignee if

12 that information—

13 ‘‘(i) may be used to the detriment or preju14 dice of the shipper or consignee;

15 ‘‘(ii) may improperly disclose its business

16 transaction to a competitor; or

17 ‘‘(iii) may be used to the detriment or prej18 udice of any common carrier;

19 except that nothing in this paragraph shall be con20 strued to prevent providing the information, in re21 sponse to legal process, to the United States, or to

22 an independent neutral body operating within the

23 scope of its authority to fulfill the policing obliga24 tions of the parties to an agreement effective under

25 this Act. Nor shall it be prohibited for any ocean
485

•HR 2491 RH

1 common carrier that is a party to a conference

2 agreement approved under this Act, or any receiver,

3 trustee, lessee, agent, or employee of that carrier, or

4 any other person authorized by that carrier to re5 ceive information, to give information to the con6 ference or any person, firm, corporation, or agency

7 designated by the conference or to prevent the con8 ference or its designee from soliciting or receiving

9 information for the purpose of determining whether

10 a shipper or consignee has breached an agreement

11 with a conference or for the purpose of determining

12 whether a member of the conference has breached

13 the conference agreement or for the purpose of com14 piling statistics of cargo movement, but the use of

15 that information for any other purpose prohibited by

16 this Act or any other Act is prohibited; and

17 ‘‘(B) after December 31, 1997, the rates, serv18 ices, terms, and conditions of an ocean transpor19 tation contract may not be disclosed under this

20 paragraph if the contract has been made on a con21 fidential basis under section 8(b) of this Act.

22 The exclusive remedy for a disclosure under this para23 graph shall be an action for breach of contract as provided

24 in section 8(b)(3) of this Act.’’;

25 (3) effective June 1, 1997—
486

•HR 2491 RH

1 (A) by striking subsection (c)(1) and in2 serting the following:

3 ‘‘(1) boycott, take any concerted action re4 sulting in an unreasonable refusal to deal, or

5 implement a policy or practice that results in

6 an unreasonable refusal to deal;’’;

7 (B) in subsection (c)(5) by inserting ‘‘as

8 defined in section 3(14)(A) of this Act’’ after

9 ‘‘freight forwarder’’; and

10 (C) in subsection (c)(6) by striking ‘‘a

11 service contract.’’ and inserting ‘‘an ocean

12 transportation contract.’’; and

13 (4) effective June 1, 1997, in subsection (d)(3)

14 by striking ‘‘subsection (b) (11), (12), and (16)’’

15 and inserting ‘‘paragraphs (1), (4), and (8) of sub16 section (b)’’.

17 SEC. 10218. REPARATIONS.

18 Effective June 1, 1997, section 11(g) of the Shipping

19 Act of 1984 (46 U.S.C. App. 1710(g)) is amended—

20 (1) by inserting ‘‘or counter-complainant’’ after

21 ‘‘complainant’’ the second place it appears;

22 (2) by striking ‘‘10(b) (5) or (7)’’ and inserting

23 ‘‘10(b) (2) or (3)’’; and

24 (3) by striking the last sentence.
487

•HR 2491 RH

1 SEC. 10219. FOREIGN LAWS AND PRACTICES.

2 Effective on June 1, 1997, section 10002 of the For3 eign Shipping Practices Act of 1988 (46 U.S.C. App.

4 1710a) is amended—

5 (1) in subsection (a)(1)—

6 (A) by striking ‘‘ ‘non-vessel-operating

7 common carrier’,’’; and

8 (B) by inserting ‘‘ ‘ocean freight for9 warder’,’’ after ‘‘ ‘ocean common carrier’,’’;

10 (2) in subsection (a)(4) by striking ‘‘non-vessel11 operating common carrier operations,’’;

12 (3) in subsection (e)(1) by striking subpara13 graphs (B), (C), and (D) and inserting the follow14 ing:

15 ‘‘(B) suspension, in whole or in part, of the

16 right of an ocean common carrier to operate under

17 any agreement filed with the Secretary, including

18 agreements authorizing preferential treatment at

19 terminals, preferential terminal leases, space char20 tering, or pooling of cargo or revenues with other

21 ocean common carriers; and

22 ‘‘(C) a fee, not to exceed $1,000,000 per voy23 age.’’; and

24 (4) in subsection (h) by striking ‘‘section

25 13(b)(5) of the Shipping Act of 1984 (46 U.S.C.

26 App. 1712(b)(5))’’ and inserting ‘‘section 13(b)(2)
488

•HR 2491 RH

1 of the Shipping Act of 1984 (46 U.S.C. App.

2 1712(b)(2))’’.

3 SEC. 10220. PENALTIES.

4 Effective June 1, 1997, section 13 of the Shipping

5 Act of 1984 (46 U.S.C. App. 1712) is amended—

6 (1) in subsection (b)—

7 (A) by striking paragraphs (1) and (3) and

8 redesignating paragraphs (2), (4), (5), and (6)

9 as paragraphs (1), (2), (3), and (4), respec10 tively;

11 (B) by striking paragraph (1), as so redes12 ignated, and inserting the following:

13 ‘‘(1) If the Secretary finds, after notice and an

14 opportunity for a hearing, that a common carrier

15 has failed to supply information ordered to be pro16 duced or compelled by subpoena under section 12 of

17 this Act, the Secretary may request that the Sec18 retary of the Treasury refuse or revoke any clear19 ance required for a vessel operated by that common

20 carrier. Upon request by the Secretary, the Sec21 retary of the Treasury shall, with respect to the ves22 sel concerned, refuse or revoke any clearance re23 quired by section 4197 of the Revised Statutes of

24 the United States (46 U.S.C. App. 91).’’; and
489

•HR 2491 RH

1 (C) in paragraph (3), as so redesignated,

2 by striking ‘‘finds appropriate,’’ and all that

3 follows through the period at the end and in4 serting ‘‘finds appropriate including the imposi5 tion of the penalties authorized under para6 graph (2).’’; and

7 (2) in subsection (f)(1) by striking ‘‘section 10

8 (a)(1), (b)(1), or (b)(4)’’ and inserting ‘‘section

9 10(a)(1)’’.

10 SEC. 10221. REPORTS.

11 (a) IN GENERAL.—Effective January 1, 1997, sec12 tion 15 of the Shipping Act of 1984 (46 U.S.C. App.

13 1714) is amended—

14 (1) in the section heading by striking ‘‘AND

15 CERTIFICATES’’;

16 (2) by striking ‘‘(a) REPORTS.—’’; and

17 (3) by striking subsection (b).

18 (b) CLERICAL AMENDMENT.—The table of contents

19 contained in the first section of such Act (46 U.S.C. App.

20 1701) is amended by striking the item relating to section

21 15 and inserting the following:

‘‘Sec. 15. Reports.’’.

22 SEC. 10222. REGULATIONS.

23 Section 17 of the Shipping Act of 1984 (46 U.S.C.

24 App. 1716) is amended—

25 (1) by striking ‘‘(a)’’; and
490

•HR 2491 RH

1 (2) by striking subsection (b).

2 SEC. 10223. REPEAL.

3 (a) REPEAL.—Section 18 of the Shipping Act of

4 1984 (46 U.S.C. App. 1717) is repealed.

5 (b) CLERICAL AMENDMENT.—The table of contents

6 contained in the first section of such Act (46 U.S.C. App.

7 1701) is amended by striking the item relating to section

8 18.

9 SEC. 10224. OCEAN FREIGHT FORWARDERS.

10 Effective June 1, 1997, section 19 of the Shipping

11 Act of 1984 (46 U.S.C. App. 1718) is amended—

12 (1) by striking subsection (a) and inserting the

13 following:

14 ‘‘(a) LICENSE.—No person in the United States may

15 act as an ocean freight forwarder unless that person holds

16 a license issued by the Commission. The Commission shall

17 issue a forwarder’s license to any person that the Commis18 sion determines to be qualified by experience and char19 acter to render forwarding services.’’;

20 (2) by redesignating subsections (b), (c), and

21 (d) as subsections (c), (d), and (e), respectively;

22 (3) by inserting after subsection (a) the follow23 ing:

24 ‘‘(b) FINANCIAL RESPONSIBILITY.—
491

•HR 2491 RH

1 ‘‘(1) No person may act as an ocean freight for2 warder unless that person furnishes a bond, proof of

3 insurance, or other surety in a form and amount de4 termined by the Commission to insure financial re5 sponsibility that is issued by a surety company

6 found acceptable by the Secretary of the Treasury.

7 ‘‘(2) A bond, insurance, or other surety ob8 tained pursuant to this section shall be available to

9 pay any judgment for damages against an ocean

10 freight forwarder arising from its transportation-re11 lated activities under this Act or order for reparation

12 issued pursuant to section 11 or 14 of this Act.

13 ‘‘(3) An ocean freight forwarder not domiciled

14 in the United States shall designate a resident agent

15 in the United States for receipt of service of judicial

16 and administrative process, including subpoenas.’’;

17 (4) in subsection (c), as redesignated by para18 graph (2) of this section, by striking ‘‘a bond in ac19 cordance with subsection (a)(2)’’ and inserting ‘‘a

20 bond, proof of insurance, or other surety in accord21 ance with subsection (b)(1)’’; and

22 (5) in subsection (e), as redesignated by para23 graph (2) of this section—

24 (A) by striking paragraph (3) and redesig25 nating paragraph (4) as paragraph (3); and
492

•HR 2491 RH

1 (B) by adding at the end the following:

2 ‘‘(4) No conference or group of 2 or more ocean

3 common carriers in the foreign commerce of the

4 United States that is authorized to agree upon the

5 level of compensation paid to an ocean freight for6 warder, as defined in section 3(18)(A) of this Act,

7 may—

8 ‘‘(A) deny to any member of the con9 ference or group the right, upon notice of not

10 more than 3 business days, to take independent

11 action on any level of compensation paid to an

12 ocean freight forwarder; or

13 ‘‘(B) agree to limit the payment of com14 pensation to an ocean freight forwarder, as de15 fined in section 3(18)(A) of this Act, to less

16 than 1.25 percent of the aggregate of all rates

17 and charges which are applicable under a com18 mon schedule of transportation rates provided

19 under section 8(a) of this Act, and which are

20 assessed against the cargo on which the for21 warding services are provided.’’.

22 SEC. 10225. EFFECTS ON CERTAIN AGREEMENTS AND CON23 TRACTS.

24 Section 20(e) of the Shipping Act of 1984 (46 U.S.C.

25 App. 1719) is amended to read as follows:
493

•HR 2491 RH

1 ‘‘(e) SAVINGS PROVISIONS.—

2 ‘‘(1) Each service contract entered into by a

3 shipper and an ocean common carrier or conference

4 before the date of the enactment of the Ocean Ship5 ping Reform Act of 1995 may remain in full force

6 and effect according to its terms.

7 ‘‘(2) This Act and the amendments made by

8 this Act shall not affect any suit—

9 ‘‘(A) filed before the date of the enactment

10 of the Ocean Shipping Reform Act of 1995;

11 ‘‘(B) with respect to claims arising out of

12 conduct engaged in before the date of the en13 actment of the Ocean Shipping Reform Act of

14 1995, filed within 1 year after the date of the

15 enactment of the Ocean Shipping Reform Act

16 of 1995;

17 ‘‘(C) with respect to claims arising out of

18 conduct engaged in after the date of the enact19 ment of the Ocean Shipping Reform Act of

20 1995 but before January 1, 1997, pertaining to

21 a violation of section 10(b) (1), (2), (3), (4), or

22 (8), as in effect before January 1, 1997, filed

23 by June 1, 1997;

24 ‘‘(D) with respect to claims pertaining to

25 the failure of a common carrier or conference to
494

•HR 2491 RH

1 file its tariffs or service contracts in accordance

2 with this Act in the period beginning January

3 1, 1997, and ending June 1, 1997, filed by De4 cember 31, 1997; or

5 ‘‘(E) with respect to claims arising out of

6 conduct engaged in on or after the date of the

7 enactment of the Ocean Shipping Reform Act

8 of 1995 but before June 1, 1997, filed by De9 cember 31, 1997.’’.

10 SEC. 10226. REPEAL.

11 (a) REPEAL.—Effective June 1, 1997, section 23 of

12 the Shipping Act of 1984 (46 U.S.C. App. 1721) is re13 pealed.

14 (b) CLERICAL AMENDMENT.—Effective June 1,

15 1997, the table of contents contained in the first section

16 of such Act (46 U.S.C. App. 1701) is amended by striking

17 the item relating to section 23.

18 SEC. 10227. MARINE TERMINAL OPERATOR SCHEDULES.

19 (a) IN GENERAL.—Effective June 1, 1997, the Ship20 ping Act of 1984 (46 U.S.C. App. 1701 et seq.) is amend21 ed by adding at the end the following:

22 ‘‘SEC. 24. MARINE TERMINAL OPERATOR SCHEDULES.

23 ‘‘A marine terminal operator shall make available to

24 the public a schedule of rates, regulations, and practices,

25 including limitations of liability, pertaining to receiving,
495

•HR 2491 RH

1 delivering, handling, or storing property at its marine ter2 minal. The schedule shall be enforceable as an implied

3 contract, without proof of actual knowledge of its provi4 sions, for any activity by the marine terminal operator

5 that is taken to—

6 ‘‘(1) efficiently transfer property between trans7 portation modes;

8 ‘‘(2) protect property from damage or loss;

9 ‘‘(3) comply with any governmental require10 ment; or

11 ‘‘(4) store property in excess of the terms of

12 any other contract or agreement, if any, entered into

13 by the marine terminal operator.’’.

14 (b) CLERICAL AMENDMENT.—The table of contents

15 contained in the first section of such Act (46 U.S.C. App.

16 1701) is amended by adding at the end the following:

‘‘Sec. 24. Marine terminal operator schedules.’’.

17 CHAPTER 2—CONTROLLED CARRIERS

18 AMENDMENTS

19 SEC. 10231. CONTROLLED CARRIERS.

20 Effective June 1, 1997, section 9 of the Shipping Act

21 of 1984 (46 U.S.C. App. 1708) is amended—

22 (1)(A) in the first sentence of subsection (a)—

23 (i) by striking ‘‘in its tariffs or service con24 tracts filed with the Commission’’; and
496

•HR 2491 RH

1 (ii) by striking ‘‘in those tariffs or service

2 contracts’’; and

3 (B) in the last sentence of subsection (a) by

4 striking ‘‘filed by a controlled carrier’’;

5 (2) in paragraphs (1) and (2) of subsection (b)

6 by striking ‘‘filed’’ and inserting ‘‘published’’;

7 (3) in subsection (c) by striking the first sen8 tence;

9 (4) by striking subsection (d) and inserting the

10 following:

11 ‘‘(d) Within 120 days of the receipt of information

12 requested by the Secretary under this section, the Sec13 retary shall determine whether the rates, charges, classi14 fications, rules, or regulations of a controlled carrier may

15 be unjust and unreasonable. If so, the Secretary shall

16 issue an order to the controlled carrier to show cause why

17 those rates, charges, classifications, rules, or regulations

18 should not be approved. Pending a determination, the Sec19 retary may suspend the rates, charges, classifications,

20 rules, or regulations at any time. No period of suspension

21 may be greater than 180 days. Whenever the Secretary

22 has suspended any rates, charges, classifications, rules, or

23 regulations under this subsection, the affected carrier may

24 publish and, after notification to the Secretary, assess new

25 rates, charges, classifications, rules, or regulations—ex-
497

•HR 2491 RH

1 cept that the Secretary may reject the new rates, charges,

2 classifications, rules, or regulations if the Secretary deter3 mines that they are unreasonable.’’;

4 (5) in subsection (f) by striking ‘‘This’’ and in5 serting ‘‘Subject to subsection (g), this’’; and

6 (6) by adding at the end the following:

7 ‘‘(g) The rate standards, information submissions,

8 remedies, reviews, and penalties in this section shall also

9 apply to ocean common carriers that are not controlled,

10 but who have been determined by the Secretary to be

11 structurally or financially affiliated with nontransporta12 tion entities or organizations (government or private) in

13 such a way as to affect their pricing or marketplace behav14 ior in an unfair, predatory, or anticompetitive way that

15 disadvantages an ocean common carrier or carriers. The

16 Secretary may make such determinations upon request of

17 any person or upon the Secretary’s own motion, after con18 ducting an investigation and a public hearing.

19 ‘‘(h) The Secretary shall issue regulations by June

20 1, 1997, that prescribe the procedures and requirements

21 that would govern how price and other information is to

22 be submitted by controlled carriers and carriers subject

23 to determinations made under subsection (g) when such

24 information would be needed to determine whether prices
498

•HR 2491 RH

1 charged by these carriers are unfair, predatory, or anti2 competitive.

3 ‘‘(i) In any instance where information provided to

4 the Secretary under this section does not result in an af5 firmative finding or enforcement action by the Secretary

6 that information may not be made public and shall be ex7 empt from disclosure under section 552 of title 5, United

8 States Code, except as may be relevant to an administra9 tive or judicial action or proceeding. This section does not

10 prevent disclosure to either body of Congress or to a duly

11 authorized committee or subcommittee of Congress.’’.

12 SEC. 10232. NEGOTIATING STRATEGY TO REDUCE GOVERN13 MENT OWNERSHIP AND CONTROL OF COM14 MON CARRIERS.

15 Not later than January 1, 1997, the Secretary of

16 Transportation shall develop, submit to Congress, and

17 begin implementing a negotiation strategy to persuade for18 eign governments to divest themselves of ownership and

19 control of ocean common carriers (as that term is defined

20 in section 3(18) of the Shipping Act of 1984 (46 U.S.C.

21 App. 1702).

22 SEC. 10233. ANNUAL REPORT BY THE SECRETARY.

23 Not later than September 30, 1998, and annually

24 thereafter, the Secretary shall report to Congress on the

25 actions taken under the Foreign Shipping Practices Act
499

•HR 2491 RH

1 (46 U.S.C. App. 1708), section 9 of the Shipping Act of

2 1984 (46 U.S.C. App. 1708), and section 10232 of this

3 Act and the effect on United States maritime employment

4 of laws, rules, regulations, policies, or practices of foreign

5 governments, or any practices of foreign carriers or other

6 persons providing maritime or maritime-related services in

7 a foreign country that result in the existence of conditions

8 that adversely affect the operations of United States car9 riers in United States oceanborne trade.

10 CHAPTER 3—ELIMINATION OF THE

11 FEDERAL MARITIME COMMISSION

12 SEC. 10241. PLAN FOR AGENCY TERMINATION.

13 (a) IN GENERAL.—No later than 30 days after the

14 date of the enactment of this Act, the Director of the Of15 fice of Management and Budget, in consultation with the

16 Secretary of Transportation, shall submit to Congress a

17 plan to eliminate the Federal Maritime Commission no

18 later than October 1, 1997. The plan shall include a time19 table for the transfer of remaining functions of the Fed20 eral Maritime Commission to the Secretary of Transpor21 tation beginning as soon as feasible in fiscal year 1996.

22 The plan shall also address matters related to personnel

23 and other resources necessary for the Secretary of Trans24 portation to perform the remaining functions of the Fed25 eral Maritime Commission.
500

•HR 2491 RH

1 (b) IMPLEMENTATION.—The Director of the Office of

2 Management and Budget shall implement the plan to

3 eliminate the Federal Maritime Commission submitted to

4 Congress under subsection (a) beginning as soon as fea5 sible in fiscal year 1996.

6 (c) AUTHORIZATION OF APPROPRIATIONS.—There

7 are authorized to be appropriated such sums as may be

8 necessary to carry out this subtitle and the amendments

9 made by this subtitle.

10 Subtitle C—Midewin National

11 Tallgrass Prairie

12 CHAPTER 1—GENERAL PROVISIONS

13 SEC. 10301. SHORT TITLE.

14 This subtitle may be cited as the ‘‘Illinois Land Con15 servation Act of 1995’’.

16 SEC. 10302. DEFINITIONS.

17 For purposes of this subtitle, the following definitions

18 apply:

19 (1) ADMINISTRATOR.—The term ‘‘Adminis20 trator’’ means the Administrator of the United

21 States Environmental Protection Agency.

22 (2) AGRICULTURAL PURPOSES.—The term ‘‘ag23 ricultural purposes’’ means the use of land for row

24 crops, pasture, hay, and grazing.
501

•HR 2491 RH

1 (3) ARSENAL.—The term ‘‘Arsenal’’ means the

2 Joliet Army Ammunition Plant located in the State

3 of Illinois.

4 (4) CERCLA.—The term ‘‘CERCLA’’ means

5 the Comprehensive Environmental Response, Com6 pensation, and Liability Act of 1980 (42 U.S.C.

7 9601 et seq.).

8 (5) DEFENSE ENVIRONMENTAL RESTORATION

9 PROGRAM.—The term ‘‘Defense Environmental Res10 toration Program’’ means the program of environ11 mental restoration for defense installations estab12 lished by the Secretary of Defense under section

13 2701 of title 10, United States Code.

14 (6) ENVIRONMENTAL LAW.—The term ‘‘envi15 ronmental law’’ means all applicable Federal, State,

16 and local laws, regulations, and requirements related

17 to protection of human health, natural and cultural

18 resources, or the environment, including CERCLA,

19 the Solid Waste Disposal Act (42 U.S.C. 6901 et

20 seq.), the Federal Water Pollution Control Act (33

21 U.S.C. 1251 et seq.), the Clean Air Act (42 U.S.C.

22 7401 et seq.), the Federal Insecticide, Fungicide,

23 and Rodenticide Act (7 U.S.C. 136 et seq.), the

24 Toxic Substances Control Act (15 U.S.C. 2601 et
502

•HR 2491 RH

1 seq.), and the Safe Drinking Water Act (42 U.S.C.

2 300f et seq.).

3 (7) HAZARDOUS WASTE.—The term ‘‘hazardous

4 substance’’ has the meaning given such term by sec5 tion 101(14) of CERCLA (42 U.S.C. 9601(14)).

6 (8) MNP.—The term ‘‘MNP’’ means the

7 Midewin National Tallgrass Prairie established pur8 suant to section 10314 and managed as a part of

9 the National Forest System.

10 (9) NATIONAL CEMETERY.—The term ‘‘national

11 cemetery’’ means a cemetery established and oper12 ated as part of the National Cemetery System of the

13 Department of Veterans Affairs and subject to the

14 provisions of chapter 24 of title 38, United States

15 Code.

16 (10) PERSON.—The term ‘‘person’’ has the

17 meaning given such term by section 101(21) of

18 CERCLA (42 U.S.C. 9601(21)).

19 (11) POLLUTANT OR CONTAMINANT.—The term

20 ‘‘pollutant or contaminant’’ has the meaning given

21 such term by section 101(33) of CERCLA (42

22 U.S.C. 9601(33)).

23 (12) RELEASE.—The term ‘‘release’’ has the

24 meaning given such term by section 101(22) of

25 CERCLA (42 U.S.C. 9601(22)).
503

•HR 2491 RH

1 (13) RESPONSE ACTION.—The term ‘‘response

2 action’’ has the meaning given the term ‘‘response’’

3 by section 101(25) of CERCLA (42 U.S.C.

4 9601(25)).

5 CHAPTER 2—CONVERSION OF JOLIET ARMY AM6 MUNITION PLANT TO MIDEWIN NATIONAL

7 TALLGRASS PRAIRIE

8 SEC. 10311. PRINCIPLES OF TRANSFER.

9 (a) LAND USE PLAN.—The Congress ratifies in prin10 ciple the proposals generally identified by the land use

11 plan which was developed by the Joliet Arsenal Citizen

12 Planning Commission and unanimously approved on May

13 30, 1995.

14 (b) TRANSFER WITHOUT REIMBURSEMENT.—The

15 area constituting the Midewin National Tallgrass Prairie

16 shall be transferred, without reimbursement, to the Sec17 retary of Agriculture.

18 (c) MANAGEMENT OF MNP.—Management by the

19 Secretary of Agriculture of those portions of the Arsenal

20 transferred to the Secretary under this subtitle shall be

21 in accordance with sections 10314 and 10315 regarding

22 the Midewin National Tallgrass Prairie.

23 (d) SECURITY MEASURES.—The Secretary of the

24 Army and the Secretary of Agriculture shall each provide

25 and maintain physical and other security measures on
504

•HR 2491 RH

1 such portion of the Arsenal as is under the administrative

2 jurisdiction of such Secretary. Such security measures

3 (which may include fences and natural barriers) shall in4 clude measures to prevent members of the public from

5 gaining unauthorized access to such portions of the Arse6 nal as are under the administrative jurisdiction of such

7 Secretary and that may endanger health or safety.

8 (e) COOPERATIVE AGREEMENTS.—The Secretary of

9 the Army, the Secretary of Agriculture, and the Adminis10 trator are individually and collectively authorized to enter

11 into cooperative agreements and memoranda of under12 standing among each other and with other affected Fed13 eral agencies, State and local governments, private organi14 zations, and corporations to carry out the purposes for

15 which the Midewin National Tallgrass Prairie is estab16 lished.

17 (f) INTERIM ACTIVITIES OF THE SECRETARY OF AG18 RICULTURE.—Prior to transfer and subject to such rea19 sonable terms and conditions as the Secretary of the Army

20 may prescribe, the Secretary of Agriculture may enter

21 upon the Arsenal property for purposes related to plan22 ning, resource inventory, fish and wildlife habitat manipu23 lation (which may include prescribed burning), and other

24 such activities consistent with the purposes for which the

25 Midewin National Tallgrass Prairie is established.
505

•HR 2491 RH

1 SEC. 10312. TRANSFER OF MANAGEMENT RESPONSIBIL2 ITIES AND JURISDICTION OVER ARSENAL.

3 (a) INITIAL TRANSFER OF JURISDICTION.—Within 6

4 months after the date of the enactment of this Act, the

5 Secretary of the Army shall effect the transfer of those

6 portions of the Arsenal property identified for transfer to

7 the Secretary of Agriculture pursuant to subsection (d).

8 The Secretary of the Army shall transfer to the Secretary

9 of Agriculture only those portions of the Arsenal for which

10 the Secretary of the Army and the Administrator concur

11 that no further action is required under any environmental

12 law and which therefore have been eliminated from the

13 areas to be further studied pursuant to the Defense Envi14 ronmental Restoration Program for the Arsenal. Within

15 4 months after the date of the enactment of this Act, the

16 Secretary of the Army and the Administrator shall provide

17 to the Secretary of Agriculture all existing documentation

18 supporting such finding and all existing information relat19 ing to the environmental conditions of the portions of the

20 Arsenal to be transferred to the Secretary of Agriculture

21 pursuant to this subsection.

22 (b) ADDITIONAL TRANSFERS.—The Secretary of the

23 Army shall transfer to the Secretary of Agriculture in ac24 cordance with section 10316(c) any portion of the prop25 erty generally identified in subsection (d) and not trans26 ferred under subsection (a) after the Secretary of the
506

•HR 2491 RH

1 Army and the Administrator concur that no further action

2 is required at that portion of property under any environ3 mental law and that such portion is therefore eliminated

4 from the areas to be further studied pursuant to the De5 fense Environmental Restoration Program for the Arse6 nal. At least 2 months before any transfer under this sub7 section, the Secretary of the Army and the Administrator

8 shall provide to the Secretary of Agriculture all existing

9 documentation supporting such finding and all existing in10 formation relating to the environmental conditions of the

11 portion of the Arsenal to be transferred. Transfer of juris12 diction pursuant to this subsection may be accomplished

13 on a parcel-by-parcel basis.

14 (c) EFFECT ON CONTINUED RESPONSIBILITIES AND

15 LIABILITY OF SECRETARY OF THE ARMY.—Subsections

16 (a) and (b), and their requirements, shall not in any way

17 affect the responsibilities and liabilities of the Secretary

18 of the Army specified in section 10313.

19 (d) IDENTIFICATION OF PORTIONS FOR TRANSFER

20 FOR MNP.—The lands to be transferred to the Secretary

21 of Agriculture under subsections (a) and (b) shall be iden22 tified on a map or maps which shall be agreed to by the

23 Secretary of the Army and the Secretary of Agriculture.

24 Generally, the land to be transferred to the Secretary of

25 Agriculture shall be all the real property and improve-
507

•HR 2491 RH

1 ments comprising the Arsenal, except for lands and facili2 ties described in subsection (e) or designated for transfer

3 or disposal under section 10316 or chapter 3.

4 (e) PROPERTY USED FOR ENVIRONMENTAL CLEAN5 UP.—

6 (1) RETENTION.—The Secretary of the Army

7 shall retain jurisdiction, authority, and control over

8 real property at the Arsenal to be used for—

9 (A) water treatment;

10 (B) the treatment, storage, or disposal of

11 any hazardous substance, pollutant or contami12 nant, hazardous material, or petroleum prod13 ucts or their derivatives;

14 (C) other purposes related to any response

15 action at the Arsenal; and

16 (D) other actions required at the Arsenal

17 under any environmental law to remediate con18 tamination or conditions of noncompliance with

19 any environmental law.

20 (2) CONDITIONS.—The Secretary of the Army

21 shall consult with the Secretary of Agriculture re22 garding the identification and management of the

23 real property retained under this subsection and en24 sure that activities carried out on that property are

25 consistent, to the extent practicable, with the pur-
508

•HR 2491 RH

1 poses for which the Midewin National Tallgrass

2 Prairie is established, as specified in section

3 10314(c), and with the other provisions of sections

4 10314 and 10315.

5 (3) PRIORITY OF RESPONSE ACTIONS.—In the

6 case of any conflict between management of the

7 property by the Secretary of Agriculture and any re8 sponse action, or any other action required under

9 any other environmental law, including actions to re10 mediate petroleum products of their derivatives, the

11 response action or other action shall take priority.

12 (f) SURVEYS.—All costs of necessary surveys for the

13 transfer of jurisdiction of Arsenal property from the Sec14 retary of the Army to the Secretary of Agriculture shall

15 be borne by the Secretary of Agriculture.

16 SEC. 10313. CONTINUATION OF RESPONSIBILITY AND LI17 ABILITY OF SECRETARY OF THE ARMY FOR

18 ENVIRONMENTAL CLEANUP.

19 (a) RESPONSIBILITY.—The liabilities and responsibil20 ities of the Secretary of the Army under any environ21 mental law shall not transfer under any circumstances to

22 the Secretary of Agriculture as a result of the property

23 transfers made under section 10312 or section 10316, or

24 as a result of interim activities of the Secretary of Agri25 culture on Arsenal property under section 10311(f). With
509

•HR 2491 RH

1 respect to the real property at the Arsenal, the Secretary

2 of the Army shall remain liable for and continue to carry

3 out—

4 (1) all response actions required under

5 CERCLA at or related to the property;

6 (2) all remediation actions required under any

7 other environmental law at or related to the prop8 erty; and

9 (3) all actions required under any other envi10 ronmental law to remediate petroleum products or

11 their derivatives (including motor oil and aviation

12 fuel) at or related to the property.

13 (b) LIABILITY.—

14 (1) IN GENERAL.—Nothing in this Act shall be

15 construed to effect, modify, amend, repeal, alter,

16 limit, or otherwise change, directly or indirectly, the

17 responsibilities or liabilities under any environmental

18 law of any person (including the Secretary of Agri19 culture), except as provided in paragraph (3) with

20 respect to the Secretary of Agriculture.

21 (2) LIABILITY OF SECRETARY OF THE ARMY.—

22 The Secretary of the Army shall retain any obliga23 tion or other liability at the Arsenal that the Sec24 retary may have under CERCLA and other environ25 mental laws. Following transfer of any portions of
510

•HR 2491 RH

1 the Arsenal pursuant to this Act, the Secretary of

2 the Army shall be accorded all easements and access

3 to such property as may be reasonably required to

4 carry out such obligation or satisfy such liability.

5 (3) SPECIAL RULES FOR SECRETARY OF AGRI6 CULTURE.—The Secretary of Agriculture shall not

7 be responsible or liable under any environmental law

8 for matters which are in any way related directly or

9 indirectly to activities of the Secretary of the Army,

10 or any party acting under the authority of the Sec11 retary in connection with the Defense Environmental

12 Restoration Program, at the Arsenal and which are

13 for any of the following:

14 (A) Costs of response actions required

15 under CERCLA at or related to the Arsenal.

16 (B) Costs, penalties, or fines related to

17 noncompliance with any environmental law at

18 or related to the Arsenal or related to the pres19 ence, release, or threat of release of any hazard20 ous substance, pollutant, contaminant, hazard21 ous waste or hazardous material of any kind at

22 or related to the Arsenal, including contamina23 tion resulting from migration of hazardous sub24 stances, pollutants, contaminants, hazardous

25 materials, or petroleum products or their de-
511

•HR 2491 RH

1 rivatives disposed during activities of the De2 partment of the Army.

3 (C) Costs of actions necessary to remedy

4 such noncompliance or other problem specified

5 in subparagraph (B).

6 (c) PAYMENT OF RESPONSE ACTION COSTS.—Any

7 Federal department or agency that had or has operations

8 at the Arsenal resulting in the release or threatened re9 lease of hazardous substances, pollutants, or contaminants

10 shall pay the cost of related response actions, or related

11 actions under other environmental laws, including actions

12 to remediate petroleum products or their derivatives.

13 (d) CONSULTATION.—The Secretary of Agriculture

14 shall consult with the Secretary of the Army with respect

15 to the Secretary of Agriculture’s management of real prop16 erty included in the Midewin National Tallgrass Prairie

17 subject to any response action or other action at the Arse18 nal being carried out by or under the authority of the Sec19 retary of the Army under any environmental law. The Sec20 retary of Agriculture shall consult with the Secretary of

21 the Army prior to undertaking any activities on the

22 Midewin National Tallgrass Prairie that may disturb the

23 property to ensure that such activities will not exacerbate

24 contamination problems or interfere with performance by

25 the Secretary of the Army of response actions at the prop-
512

•HR 2491 RH

1 erty. In carrying out response actions at the Arsenal, the

2 Secretary of the Army shall consult with the Secretary of

3 Agriculture to ensure that such actions are carried out in

4 a manner consistent with the purposes for which the

5 Midewin National Tallgrass Prairie is established, as spec6 ified in section 10314(c), and the other provisions of sec7 tions 10314 and 10315.

8 SEC. 10314. ESTABLISHMENT AND ADMINISTRATION OF

9 MIDEWIN NATIONAL TALLGRASS PRAIRIE.

10 (a) ESTABLISHMENT.—On the effective date of the

11 initial transfer of jurisdiction of portions of the Arsenal

12 to the Secretary of Agriculture under section 10312(a),

13 the Secretary of Agriculture shall establish the Midewin

14 National Tallgrass Prairie. The MNP shall—

15 (1) be administered by the Secretary of Agri16 culture; and

17 (2) consist of the real property so transferred

18 and such other portions of the Arsenal subsequently

19 transferred under section 10312(b) or 10316.

20 (b) ADMINISTRATION.—

21 (1) IN GENERAL.—The Secretary of Agriculture

22 shall manage the Midewin National Tallgrass Prairie

23 as a part of the National Forest System in accord24 ance with this Act and the laws, rules, and regula25 tions pertaining to the National Forest System, ex-
513

•HR 2491 RH

1 cept that the Bankhead-Jones Farm Tenant Act of

2 1937 (7 U.S.C. 1010–1012) shall not apply to the

3 MNP.

4 (2) INITIAL MANAGEMENT ACTIVITIES.—In

5 order to expedite the administration and public use

6 of the Midewin National Tallgrass Prairie, the Sec7 retary of Agriculture may conduct management ac8 tivities at the MNP to effectuate the purposes for

9 which the MNP is established, as specified in sub10 section (c), in advance of the development of a land

11 and resource management plan for the MNP.

12 (3) LAND AND RESOURCE MANAGEMENT

13 PLAN.—In developing a land and resource manage14 ment plan for the Midewin National Tallgrass Prai15 rie, the Secretary of Agriculture shall consult with

16 the Illinois Department of Conservation and local

17 governments adjacent to the MNP and provide an

18 opportunity for public comment. Any parcel trans19 ferred to the Secretary of Agriculture under this Act

20 after the development of a land and resource man21 agement plan for the MNP may be managed in ac22 cordance with such plan without need for an amend23 ment to the plan.

24 (c) PURPOSES OF THE MIDEWIN NATIONAL

25 TALLGRASS PRAIRIE.—The Midewin National Tallgrass
514

•HR 2491 RH

1 Prairie is established to be managed for National Forest

2 System purposes, including the following:

3 (1) To manage the land and water resources of

4 the MNP in a manner that will conserve and en5 hance the native populations and habitats of fish,

6 wildlife, and plants.

7 (2) To provide opportunities for scientific, envi8 ronmental, and land use education and research.

9 (3) To allow the continuation of agricultural

10 uses of lands within the MNP consistent with sec11 tion 10315(b).

12 (4) To provide a variety of recreation opportu13 nities that are not inconsistent with the preceding

14 purposes.

15 (d) OTHER LAND ACQUISITION FOR MNP.—

16 (1) LAND ACQUISITION FUNDS.—Notwithstand17 ing section 7 of the Land and Water Conservation

18 Fund Act of 1965 (16 U.S.C. 460l–9), monies ap19 propriated from the Land and Water Conservation

20 Fund established under section 2 of such Act (16

21 U.S.C. 460l–5) shall be available for acquisition of

22 lands and interests in land for inclusion in the

23 Midewin National Tallgrass Prairie.

24 (2) ACQUISITION OF PRIVATE LANDS.—Acquisi25 tion of private lands for inclusion in the Midewin
515

•HR 2491 RH

1 National Tallgrass Prairie shall be on a willing seller

2 basis only.

3 (e) COOPERATION WITH STATES, LOCAL GOVERN4 MENTS AND OTHER ENTITIES.—In the management of

5 the Midewin National Tallgrass Prairie, the Secretary of

6 Agriculture is authorized and encouraged to cooperate

7 with appropriate Federal, State, and local governmental

8 agencies, private organizations and corporations. Such co9 operation may include cooperative agreements as well as

10 the exercise of the existing authorities of the Secretary

11 under the Cooperative Forestry Assistance Act of 1978

12 and the Forest and Rangeland Renewable Resources Re13 search Act of 1978. The objects of such cooperation may

14 include public education, land and resource protection and

15 cooperative management among government, corporate,

16 and private landowners in a manner which furthers the

17 purposes for which the Midewin National Tallgrass Prairie

18 is established.

19 SEC. 10315. SPECIAL MANAGEMENT REQUIREMENTS FOR

20 MIDEWIN NATIONAL TALLGRASS PRAIRIE.

21 (a) PROHIBITION AGAINST THE CONSTRUCTION OF

22 NEW THROUGH ROADS.—No new construction of any

23 highway, public road, or any part of the interstate system,

24 whether Federal, State, or local, shall be permitted

25 through or across any portion of the Midewin National
516

•HR 2491 RH

1 Tallgrass Prairie. Nothing herein shall preclude construc2 tion and maintenance of roads for use within the MNP

3 or the granting of authorizations for utility rights-of-way

4 under applicable Federal law or preclude such access as

5 is necessary. Nothing herein shall preclude necessary ac6 cess by the Secretary of the Army for purposes of restora7 tion and cleanup as provided in this subtitle.

8 (b) AGRICULTURAL LEASES AND SPECIAL USE AU9 THORIZATIONS.—Within the Midewin National Tallgrass

10 Prairie, use of the lands for agricultural purposes shall

11 be permitted subject to the following terms and conditions:

12 (1) If, at the time of transfer of jurisdiction

13 under section 10312, there exists any lease issued by

14 the Department of the Army, Department of De15 fense, or any other agency thereof, for agricultural

16 purposes upon the parcel transferred, the Secretary

17 of Agriculture, upon transfer of jurisdiction, shall

18 convert the lease to a special use authorization, the

19 terms of which shall be identical in substance to the

20 lease that existed prior to the transfer, including the

21 expiration date and any payments owed the United

22 States.

23 (2) The Secretary of Agriculture may issue spe24 cial use authorizations to persons for use of the

25 Midewin National Tallgrass Prairie for agricultural
517

•HR 2491 RH

1 purposes. Special use authorizations issued pursuant

2 to this paragraph shall include terms and conditions

3 as the Secretary of Agriculture may deem appro4 priate.

5 (3) No agricultural special use authorization

6 shall be issued for agricultural purposes which has

7 a term extending beyond the date 20 years from the

8 date of the enactment of this Act, except that noth9 ing in this Act shall preclude the Secretary of Agri10 culture from issuing agricultural special use author11 izations or grazing permits which are effective after

12 20 years from the date of the enactment of this Act

13 for purposes primarily related to erosion control,

14 provision for food and habitat for fish and wildlife,

15 or other resource management activities consistent

16 with the purposes of the Midewin National Tallgrass

17 Prairie.

18 (c) TREATMENT OF RENTAL FEES.—Monies received

19 pursuant to subsection (b) shall be subject to distribution

20 to the State of Illinois and affected counties pursuant to

21 the Acts of May 23, 1908, and March 1, 1911 (16 U.S.C.

22 500). All such monies not distributed pursuant to such

23 Acts shall be deposited into the Treasury and shall con24 stitute a special fund, which shall be available to the Sec25 retary of Agriculture, in such amounts as are provided in
518

•HR 2491 RH

1 advance in appropriation Acts, to cover the cost to the

2 United States of such prairie-improvement work as the

3 Secretary may direct. Any portion of any deposit made

4 to the fund which the Secretary determines to be in excess

5 of the cost of doing such work shall be transferred, upon

6 such determination, to miscellaneous receipts, Forest

7 Service Fund, as a National Forest receipt of the fiscal

8 year in which such transfer is made.

9 (d) USER FEES.—The Secretary of Agriculture is au10 thorized to charge reasonable fees for the admission, occu11 pancy, and use of the Midewin National Tallgrass Prairie

12 and may prescribe a fee schedule providing for reduced,

13 or a waiver of, fees for persons or groups engaged in au14 thorized activities including those providing volunteer

15 services, research, or education. The Secretary shall per16 mit admission, occupancy, and use at no additional charge

17 for persons possessing a valid Golden Eagle Passport or

18 Golden Age Passport.

19 (e) SALVAGE OF IMPROVEMENTS.—The Secretary of

20 Agriculture may sell for salvage value any facilities and

21 improvements which have been transferred to the Sec22 retary pursuant to this subtitle.

23 (f) TREATMENT OF USER FEES AND SALVAGE RE24 CEIPTS.—Monies collected pursuant to subsections (d)

25 and (e) shall be covered into the Treasury and constitute
519

•HR 2491 RH

1 a special fund to be known as the Midewin National

2 Tallgrass Prairie Restoration Fund. Deposits in the

3 Midewin National Tallgrass Prairie Restoration Fund

4 shall be available to the Secretary of Agriculture, in such

5 amounts as are provided in advance in appropriation Acts,

6 for restoration and administration of the Midewin Na7 tional Tallgrass Prairie, including construction of a visitor

8 and education center, restoration of ecosystems, construc9 tion of recreational facilities (such as trails), construction

10 of administrative offices, and operation and maintenance

11 of the MNP.

12 SEC. 10316. SPECIAL DISPOSAL RULES FOR CERTAIN ARSE13 NAL PARCELS INTENDED FOR MNP.

14 (a) DESCRIPTION OF PARCELS.—Except as provided

15 in subsection (b), the following areas are designated for

16 transfer or disposal pursuant to subsection (c):

17 (1) Manufacturing Area—Study Area 1—

18 Southern Ash Pile, Study Area 2—Explosive Burn19 ing Ground, Study Area 3—Flashing Grounds,

20 Study Area 4—Lead Azide Area, Study Area 10—

21 Toluene Tank Farms, Study Area 11—Landfill,

22 Study Area 12—Sellite Manufacturing Area, Study

23 Area 14—Former Pond Area, Study Area 15—Sew24 age Treatment Plant.
520

•HR 2491 RH

1 (2) Load Assemble Packing Area—Group 61:

2 Study Area L1, Explosive Burning Ground: Study

3 Area L2, Demolition Area: Study Area L3, Landfill

4 Area: Study Area L4, Salvage Yard: Study Area L5,

5 Group 1: Study Area L7, Group 2: Study Area L8,

6 Group 3: Study Area L9, Group 3A: Study Area

7 L10, Group 4: Study Area L14, Group 5: Study

8 Area L15, Group 8: Study Area L18, Group 9:

9 Study Area L19, Group 27: Study Area L23, Group

10 62: Study Area L25, PVC Area: Study Area L33,

11 including all associated inventoried buildings and

12 structures as identified in the Joliet Army Ammuni13 tion Plant Plantwide Building and Structures Re14 port and the contaminate study sites for both the

15 Manufacturing and Load Assembly and Packing

16 sides of the Joliet Arsenal as delineated in the

17 Dames and Moore Final Report, Proposed Future

18 Land Use Map, dated May 30, 1995.

19 (b) EXCEPTION.—The parcels described in subsection

20 (a) shall not include the property at the Arsenal des21 ignated for disposal under chapter 3.

22 (c) INITIAL OFFER TO SECRETARY OF AGRI23 CULTURE.—Within 6 months after the construction and

24 installation of any remedial design approved by the Ad25 ministrator and required for any lands described in sub-
521

•HR 2491 RH

1 section (a), the Administrator shall provide to the Sec2 retary of Agriculture all existing information regarding

3 the implementation of such remedy, including information

4 regarding its effectiveness. Within 3 months after the Ad5 ministrator provides such information to the Secretary of

6 Agriculture, the Secretary of the Army shall offer the Sec7 retary of Agriculture the option of accepting a transfer

8 of the areas described in subsection (a), without reim9 bursement, to be added to the Midewin National Tallgrass

10 Prairie and subject to the terms and conditions, including

11 the limitations on liability, contained in this subtitle. In

12 the event the Secretary of Agriculture declines such offer,

13 the property may be disposed of as the Secretary of the

14 Army would ordinarily dispose of such property under ap15 plicable provisions of law. Any sale or other transfer of

16 property conducted pursuant to this subsection may be ac17 complished on a parcel-by-parcel basis.

18 CHAPTER 3—OTHER REAL PROPERTY DISPOSALS

19 INVOLVING JOLIET ARMY AMMUNITION PLANT

20 SEC. 10321. DISPOSAL OF CERTAIN REAL PROPERTY AT AR21 SENAL FOR A NATIONAL CEMETERY.

22 (a) TRANSFER REQUIRED.—Subject to section

23 10331, the Secretary of the Army shall transfer, without

24 reimbursement, to the Secretary of Veterans Affairs the
522

•HR 2491 RH

1 parcel of real property at the Arsenal described in sub2 section (b) for use as a national cemetery.

3 (b) DESCRIPTION OF PROPERTY.—The real property

4 to be transferred under subsection (a) is a parcel of real

5 property at the Arsenal consisting of approximately 982

6 acres, the approximate legal description of which includes

7 part of sections 30 and 31 Jackson Township, T34N

8 R10E, and part of sections 25 and 36 Channahon Town9 ship, T34N R9E, Will County, Illinois, as depicted in the

10 Arsenal Land Use Concept.

11 (c) SECURITY MEASURES.—The Secretary of Veter12 ans Affairs shall provide and maintain physical and other

13 security measures on the real property transferred under

14 subsection (a). Such security measures (which may include

15 fences and natural barriers) shall include measures to pre16 vent members of the public from gaining unauthorized ac17 cess to the portion of the Arsenal that is under the admin18 istrative jurisdiction of the Secretary of Veterans Affairs

19 and that may endanger health or safety.

20 (d) SURVEYS.—All costs of necessary surveys for the

21 transfer of jurisdiction of Arsenal properties from the Sec22 retary of the Army to the Secretary of Veterans Affairs

23 shall be borne solely by the Secretary of Veterans Affairs.
523

•HR 2491 RH

1 SEC. 10322. DISPOSAL OF CERTAIN REAL PROPERTY AT AR2 SENAL FOR A COUNTY LANDFILL.

3 (a) TRANSFER REQUIRED.—Subject to section

4 10331, the Secretary of the Army shall transfer, without

5 compensation, to Will County, Illinois, all right, title, and

6 interest of the United States in and to the parcel of real

7 property at the Arsenal described in subsection (b), which

8 shall be operated as a landfill by the County.

9 (b) DESCRIPTION OF PROPERTY.—The real property

10 to be transferred under subsection (a) is a parcel of real

11 property at the Arsenal consisting of approximately 455

12 acres, the approximate legal description of which includes

13 part of sections 8 and 17, Florence Township, T33N

14 R10E, Will County, Illinois, as depicted in the Arsenal

15 Land Use Concept.

16 (c) CONDITION ON CONVEYANCE.—The conveyance

17 shall be subject to the condition that the Army (or its

18 agents or assigns) may use the landfill established on the

19 real property transferred under subsection (a) for the dis20 posal of construction debris, refuse, and other

21 nonhazardous materials from the restoration and cleanup

22 of the Arsenal property as provided for in this Act. Such

23 use shall be at no cost to the Federal Government.

24 (d) REVERSIONARY INTEREST.—During the 5-year

25 period beginning on the date the Secretary of the Army

26 makes the conveyance under subsection (a), if the Sec-
524

•HR 2491 RH

1 retary of the Army determines that the conveyed real

2 property is not being operated as a landfill or that Will

3 County, Illinois, is in violation of the condition specified

4 in subsection (c), then, at the option of the United States,

5 all right, title, and interest in and to the property, includ6 ing improvements thereon, shall be subject to reversion to

7 the United States. In the event the United States exercises

8 its option to cause the property to revert, the United

9 States shall have the right of immediate entry onto the

10 property. Any determination of the Secretary of the Army

11 under this subsection shall be made on the record after

12 an opportunity for a hearing.

13 (e) SURVEYS.—All costs of necessary surveys for the

14 transfer of real property under this section shall be borne

15 by Will County, Illinois.

16 (f) ADDITIONAL TERMS AND CONDITIONS.—The Sec17 retary of the Army may require such additional terms and

18 conditions in connection with the conveyance under this

19 section as the Secretary of the Army considers appropriate

20 to protect the interests of the United States.

21 SEC. 10323. DISPOSAL OF CERTAIN REAL PROPERTY AT AR22 SENAL FOR ECONOMIC DEVELOPMENT.

23 (a) TRANSFER REQUIRED.—Subject to section

24 10331, the Secretary of the Army shall transfer to the

25 State of Illinois, all right, title, and interest of the United
525

•HR 2491 RH

1 States in and to the parcel of real property at the Arsenal

2 described in subsection (b), which shall be used for eco3 nomic redevelopment to replace all or a part of the eco4 nomic activity lost at the Arsenal.

5 (b) DESCRIPTION OF PROPERTY.—The real property

6 to be transferred under subsection (a) is a parcel of real

7 property at the Arsenal consisting of—

8 (1) approximately 1,900 acres, the approximate

9 legal description of which includes part of section

10 30, Jackson Township, Township 34 North, Range

11 10 East, and sections or parts of sections 24, 25,

12 26, 35, and 36, Township 34 North, Range 9 East,

13 in Channahon Township, an area of 9.77 acres

14 around the Des Plaines River Pump Station located

15 in the southeast quarter of section 15, Township 34

16 North, Range 9 East of the Third Principal Merid17 ian, in Channahon Township, and an area of 511

18 feet by 596 feet around the Kankakee River Pump

19 Station in the Northwest Quarter of section 5,

20 Township 33 North, Range 9 East, east of the

21 Third Principal Meridian in Wilmington Township,

22 containing 6.99 acres, located along the easterly side

23 of the Kankakee Cut-Off in Will County, Illinois, as

24 depicted in the Arsenal Re-Use Concept, and the

25 connecting piping to the northern industrial site, as
526

•HR 2491 RH

1 described by the United States Army Report of

2 Availability, dated 13 December 1993; and

3 (2) approximately 1,100 acres, the approximate

4 legal description of which includes part of sections

5 16, 17, 18 Florence Township, Township 33 North,

6 Range 10 East, Will County, Illinois, as depicted in

7 the Arsenal Land Use Concept.

8 (c) CONSIDERATION.—The transfer under subsection

9 (a) shall be made without consideration. However, the

10 transfer shall be subject to the condition that, if the State

11 of Illinois reconveys all or any part of the transferred

12 property to a non-Federal entity, the State shall pay to

13 the United States an amount equal to the fair market

14 value of the reconveyed property. The Secretary of the

15 Army shall determine the fair market value of any prop16 erty reconveyed by the State as of the time of the

17 reconveyance, excluding the value of improvements made

18 to the property by the State. The Secretary may treat a

19 lease of the property as a reconveyance if the Secretary

20 determines that the lease was used in an effort to avoid

21 operation of this subsection. Amounts received under this

22 subsection shall be deposited in the general fund of the

23 Treasury for purposes of deficit reduction.

24 (d) OTHER CONDITIONS OF CONVEYANCE.—
527

•HR 2491 RH

1 (1) REDEVELOPMENT AUTHORITY.—The trans2 fer under subsection (a) shall be subject to the fur3 ther condition that the Governor of the State of Illi4 nois establish a redevelopment authority to be re5 sponsible for overseeing the economic redevelopment

6 of the transferred land.

7 (2) TIME FOR ESTABLISHMENT.—To satisfy the

8 condition specified in paragraph (1), the redevelop9 ment authority shall be established within 1 year

10 after the date of the enactment of this Act.

11 (e) REVERSIONARY INTEREST.—During the 20-year

12 period beginning on the date the Secretary of the Army

13 makes the transfer under subsection (a), if the Secretary

14 determines that a condition specified in subsection (c) or

15 (d) is not being satisfied or that the transferred land is

16 not being used for economic development purposes, then,

17 at the option of the United States, all right, title, and in18 terest in and to the property, including improvements

19 thereon, shall be subject to reversion to the United States.

20 In the event the United States exercises its option to cause

21 the property to revert, the United States shall have the

22 right of immediate entry onto the property. Any deter23 mination of the Secretary under this subsection shall be

24 made on the record after an opportunity for a hearing.
528

•HR 2491 RH

1 (f) SURVEYS.—All costs of necessary surveys for the

2 transfer of real property under this section shall be borne

3 by the State of Illinois.

4 (g) ADDITIONAL TERMS AND CONDITIONS.—The

5 Secretary of the Army may require such additional terms

6 and conditions in connection with the transfer under this

7 section as the Secretary considers appropriate to protect

8 the interests of the United States.

9 CHAPTER 4—MISCELLANEOUS PROVISIONS

10 SEC. 10331. DEGREE OF ENVIRONMENTAL CLEANUP.

11 (a) IN GENERAL.—Nothing in this Act shall be con12 strued to restrict or lessen the degree of cleanup at the

13 Arsenal required to be carried out under provisions of any

14 environmental law.

15 (b) RESPONSE ACTION.—The establishment of the

16 Midewin National Tallgrass Prairie under chapter 2 and

17 the additional real property transfers and disposals re18 quired under chapter 3 shall not restrict or lessen in any

19 way any response action or degree of cleanup under

20 CERCLA or other environmental law, or any response ac21 tion required under any environmental law to remediate

22 petroleum products or their derivatives (including motor

23 oil and aviation fuel), required to be carried out under the

24 authority of the Secretary of the Army at the Arsenal and
529

•HR 2491 RH

1 surrounding areas, except to the extent otherwise allow2 able under such laws.

3 (c) ENVIRONMENTAL QUALITY OF PROPERTY.—Any

4 contract for sale, deed, or other transfer of real property

5 under chapter 3 shall be carried out in compliance with

6 all applicable provisions of section 120(h) of CERCLA and

7 other environmental laws.

8 Subtitle D—Miscellaneous

9 Provisions

10 SEC. 10401. EXTENSION OF HIGHER VESSEL TONNAGE DU11 TIES.

12 (a) EXTENSION OF DUTIES.—Section 36 of the Act

13 of August 5, 1909 (36 Stat. 111; 46 App. U.S.C. 121),

14 is amended by striking ‘‘for fiscal years 1991, 1992, 1993,

15 1994, 1995, 1996, 1997, 1998,’’ each place it appears and

16 inserting ‘‘for fiscal years through fiscal year 2002,’’.

17 (b) CONFORMING AMENDMENT.—The Act entitled

18 ‘‘An Act concerning tonnage duties on vessels entering

19 otherwise than by sea’’, approved March 8, 1910 (36 Stat.

20 234; 46 App. U.S.C. 132), is amended by striking ‘‘for

21 fiscal years 1991, 1992, 1993, 1994, 1995, 1996, 1997,

22 and 1998,’’ and inserting ‘‘for fiscal years through fiscal

23 year 2002,’’.
530

•HR 2491 RH

1 SEC. 10402. SALE OF GOVERNORS ISLAND, NEW YORK.

2 (a) IN GENERAL.—Notwithstanding any other provi3 sion of law, the Administrator of General Services shall

4 dispose of by sale at fair market value all rights, title, and

5 interests of the United States in and to the land of, and

6 improvements to, Governors Island, New York.

7 (b) RIGHT OF FIRST REFUSAL.—Before a sale is

8 made under subsection (a) to any other parties, the State

9 of New York and the city of New York shall be given the

10 right of first refusal to purchase all or part of Governors

11 Island. Such right may be exercised by either the State

12 of New York or the city of New York or by both parties

13 acting jointly.

14 (c) PROCEEDS.—Proceeds from the disposal of Gov15 ernors Island under subsection (a) shall be deposited in

16 the general fund of the Treasury and credited as mis17 cellaneous receipts.

18 SEC. 10403. SALE OF AIR RIGHTS.

19 (a) IN GENERAL.—Notwithstanding any other provi20 sion of law, the Administrator of General Services shall

21 sell, at fair market value and in a manner to be deter22 mined by the Administrator, the air rights adjacent to

23 Washington Union Station described in subsection (b), in24 cluding air rights conveyed to the Administrator under

25 subsection (d). The Administrator shall complete the sale

26 by such date as is necessary to ensure that the proceeds
531

•HR 2491 RH

1 from the sale will be deposited in accordance with sub2 section (c).

3 (b) DESCRIPTION.—The air rights referred to in sub4 section (a) total approximately 16.5 acres and are depicted

5 on the plat map of the District of Columbia as follows:

6 (1) Part of lot 172, square 720.

7 (2) Part of lots 172 and 823, square 720.

8 (3) Part of lot 811, square 717.

9 (c) PROCEEDS.—Before September 30, 1996, pro10 ceeds from the sale of air rights under subsection (a) shall

11 be deposited in the general fund of the Treasury and cred12 ited as miscellaneous receipts.

13 (d) CONVEYANCE OF AMTRAK AIR RIGHTS.—

14 (1) GENERAL RULE.—As a condition of future

15 Federal financial assistance, Amtrak shall convey to

16 the Administrator of General Services on or before

17 December 31, 1995, at no charge, all of the air

18 rights of Amtrak described in subsection (b).

19 (2) FAILURE TO COMPLY.—If Amtrak does not

20 meet the condition established by paragraph (1),

21 Amtrak shall be prohibited from obligating Federal

22 funds after March 1, 1996.

23 SEC. 10404. COLLECTION OF PARKING FEES.

24 (a) IN GENERAL.—The Administrator of General

25 Services shall issue regulations requiring each Executive
532

•HR 2491 RH

1 agency to collect fees for the use of all parking facilities

2 provided for the agency at Federal expense.

3 (b) SPECIFIC REQUIREMENTS.—The regulations—

4 (1) shall include provisions under which any

5 such user fee shall be computed based on the fair

6 market value of the use of the parking facility in7 volved; and

8 (2) shall take effect on or before the 90th day

9 after the date of enactment of this Act.

10 (c) FEES TO BE DEPOSITED IN THE TREASURY.—

11 All user fees collected under this section shall be deposited

12 in the Treasury of the United States as miscellaneous re13 ceipts.

14 (d) PROHIBITION ON USE OF FEDERAL FUNDS.—No

15 Federal funds may be used to pay any user fee collected

16 under this section.

17 (e) EXECUTIVE AGENCY DEFINED.—In this section,

18 the term ‘‘Executive agency’’ has the meaning given such

19 term by section 105 of title 5, United States Code.

20 Subtitle E—Economic Development

21 Administration and Appalach22 ian Regional Commission

23 SEC. 10501. SHORT TITLE; EFFECTIVE DATE.

24 (a) SHORT TITLE.—This subtitle may be cited as the

25 ‘‘Economic Development Partnership Act of 1995’’.
533

•HR 2491 RH

1 (b) EFFECTIVE DATE.—Except as otherwise ex2 pressly provided, this subtitle and the amendments made

3 by this subtitle shall take effect 6 months after the date

4 of the enactment of this Act.

5 CHAPTER 1—TRANSFER OF FUNCTIONS

6 OF ECONOMIC DEVELOPMENT ADMIN7 ISTRATION

8 SEC. 10511. REAUTHORIZATION OF PUBLIC WORKS AND

9 ECONOMIC DEVELOPMENT ACT OF 1965.

10 The Public Works and Economic Development Act of

11 1965 (40 U.S.C. 3131 et seq.) is amended by striking all

12 after the first section and inserting the following:

13 ‘‘SEC. 2. FINDINGS AND DECLARATION.

14 ‘‘(a) FINDINGS.—Congress finds that—

15 ‘‘(1) the maintenance of the national economy

16 at a high level is vital to the best interests of the

17 United States, but that some of our regions, coun18 ties, and communities are suffering substantial and

19 persistent unemployment and underemployment that

20 cause hardship to many individuals and their fami21 lies, and waste invaluable human resources;

22 ‘‘(2) to overcome this problem the Federal Gov23 ernment, in cooperation with the States, should help

24 areas and regions of substantial and persistent un25 employment and underemployment to take effective
534

•HR 2491 RH

1 steps in planning and financing their public works

2 and economic development;

3 ‘‘(3) Federal financial assistance, including

4 grants for public works and development facilities to

5 communities, industries, enterprises, and individuals

6 in areas needing development should enable such

7 areas to help themselves achieve lasting improve8 ment and enhance the domestic prosperity by the es9 tablishment of stable and diversified local economies

10 and improved local conditions, if such assistance is

11 preceded by and consistent with sound, long-range

12 economic planning; and

13 ‘‘(4) under the provisions of this Act, new em14 ployment opportunities should be created by develop15 ing and expanding new and existing public works

16 and other facilities and resources rather than by

17 merely transferring jobs from one area of the United

18 States to another.

19 ‘‘(b) DECLARATION.—Congress declares that, in fur20 therance of maintaining the national economy at a high

21 level—

22 ‘‘(1) the assistance authorized by this Act

23 should be made available to both rural and urban

24 areas;
535

•HR 2491 RH

1 ‘‘(2) such assistance should be made available

2 for planning for economic development prior to the

3 actual occurrences of economic distress in order to

4 avoid such condition; and

5 ‘‘(3) such assistance should be used for long6 term economic rehabilitation in areas where long7 term economic deterioration has occurred or is tak8 ing place.

9 ‘‘TITLE I—ECONOMIC

10 DEVELOPMENT COMMISSION

11 ‘‘SEC. 101. ESTABLISHMENT OF ECONOMIC DEVELOPMENT

12 COMMISSION.

13 ‘‘(a) ESTABLISHMENT.—There is established an Eco14 nomic Development Commission which shall be an inde15 pendent establishment in the executive branch.

16 ‘‘(b) APPOINTMENT OF FEDERAL COCHAIRMAN.—

17 The Commission shall headed by a Federal Cochairman

18 of the Economic Development Commission (hereinafter in

19 this Act referred to as the ‘Federal Cochairman’) who

20 shall be appointed by the President by and with the advice

21 and consent of the Senate.

22 ‘‘(c) DUTIES.—It shall be the duty of the Federal Co23 chairman to carry out duties vested in the Federal Co24 chairman under this Act.
536

•HR 2491 RH

1 ‘‘SEC. 102. ESTABLISHMENT OF REGIONAL COMMISSIONS.

2 ‘‘(a) ESTABLISHMENT.—The Federal Cochairman

3 shall establish for each region established by section 106

4 an Economic Development Regional Commission (herein5 after in this Act referred to as a ‘Regional Commission’).

6 ‘‘(b) MEMBERSHIP.—

7 ‘‘(1) IN GENERAL.—Each Regional Commission

8 shall be composed of 1 Federal member and 1 State

9 member from each participating State in the region

10 represented by the Regional Commission.

11 ‘‘(2) FEDERAL COCHAIRMAN.—The Federal

12 member of each Regional Commission shall be the

13 Federal Cochairman.

14 ‘‘(3) STATE MEMBERS.—Each State member of

15 a Regional Commission shall be the chief executive

16 officer of the State. The State members of a Re17 gional Commission shall elect a Cochairman from

18 among such State members for a term of not less

19 than 1 year.

20 ‘‘(4) ALTERNATES.—

21 ‘‘(A) STATE ALTERNATES.—Each State

22 member of a Regional Commission may have a

23 single alternate appointed by the chief executive

24 officer of the State from among members of the

25 chief executive officer’s cabinet or the chief ex26 ecutive officer’s personal staff.
537

•HR 2491 RH

1 ‘‘(B) FEDERAL ALTERNATE.—The Presi2 dent, by and with the advice and consent of the

3 Senate, shall appoint an alternate for the Fed4 eral Cochairman.

5 ‘‘(C) DUTIES.—An alternate shall vote in

6 the event of the absence, death, disability, re7 moval, or resignation of the State or Federal

8 representative for which he or she is an alter9 nate. A State alternate shall not be counted to10 ward the establishment of a quorum of the

11 Commission in any instance in which a quorum

12 of the State members is required to be present.

13 ‘‘(c) DECISIONMAKING.—

14 ‘‘(1) VOTING.—Decisions by a Regional Com15 mission shall require an affirmative vote of the Fed16 eral Cochairman (or the Federal Cochairman’s alter17 nate) and of the majority of the State members.

18 ‘‘(2) QUORUM.—No decision of a Regional

19 Commission involving Commission policy, developing

20 investment strategies, or allocating funds among

21 States may be made without the Federal Cochair22 man (or the Federal Cochairman’s alternate) and a

23 quorum of the State members present. For purposes

24 of this Act, the Federal Cochairman (or the Federal
538

•HR 2491 RH

1 Cochairman’s alternate) and a majority of the State

2 members shall constitute a quorum.

3 ‘‘(d) PAY.—

4 ‘‘(1) FEDERAL COCHAIRMAN.—The Federal Co5 chairman shall be compensated by the Federal Gov6 ernment at the rate prescribed for level III of the

7 Executive Schedule under section 5314 of title 5,

8 United States Code.

9 ‘‘(2) FEDERAL COCHAIRMAN’S ALTERNATE.—

10 The Federal Cochairman’s alternate shall be com11 pensated by the Federal Government at the rate pre12 scribed for level V of the Executive Schedule under

13 section 5316 of title 5, United States Code, and

14 when not serving as an alternate for the Federal Co15 chairman shall perform such functions and duties as

16 are delegated by the Federal Cochairman.

17 ‘‘(3) STATE MEMBERS AND THEIR ALTER18 NATES.—Each State member and the State mem19 ber’s alternate shall be compensated by the State

20 which they represent at the rate established by law

21 of such State.

22 ‘‘SEC. 103. COOPERATION OF FEDERAL AGENCIES.

23 ‘‘Each Federal department and agency, in accordance

24 with applicable laws and within the limits of available

25 funds, shall cooperate with each Regional Commission in
539

•HR 2491 RH

1 order to assist the Regional Commission in carrying out

2 the functions of the Regional Commission.

3 ‘‘SEC. 104. ADMINISTRATIVE EXPENSES.

4 ‘‘(a) PAYMENT BY STATES.—Fifty percent of the ad5 ministrative expenses of a Regional Commission (other

6 than the expenses of the Federal Cochairman) shall be

7 paid by the States in the region represented by the Re8 gional Commission and the remaining 50 percent of such

9 expenses shall be paid by the Federal Government. The

10 expenses of the Federal Cochairman, the Federal Cochair11 man’s alternate, and the Federal Cochairman’s staff shall

12 be paid solely by the Federal Government.

13 ‘‘(b) DETERMINATION OF STATE SHARE.—The share

14 of the administrative expenses to be paid by each State

15 shall be determined by the Regional Commission. The

16 Federal Cochairman shall not participate or vote in such

17 determination.

18 ‘‘(c) DELINQUENT PAYMENTS.—No assistance au19 thorized by this Act shall be furnished to any State or

20 to any political subdivision or resident of a State, nor shall

21 the State member of a Regional Commission participate

22 or vote in any determination by the Regional Commission,

23 while such State is delinquent in the payment of such

24 State’s share of the administrative expenses of the Re25 gional Commission.
540

•HR 2491 RH

1 ‘‘SEC. 105. ADMINISTRATIVE POWERS.

2 ‘‘To carry out its duties under this Act, consistent

3 with regulations issued by the Federal Cochairman, a Re4 gional Commission may take any of the following actions:

5 ‘‘(1) Adopt, amend, and repeal bylaws and rules

6 governing the conduct of the Regional Commission’s

7 business and the performance of its functions.

8 ‘‘(2) Appoint and fix the pay of an executive di9 rector and such other personnel as may be necessary

10 to enable the Regional Commission to carry out its

11 functions; except that the compensation for any indi12 vidual so appointed shall not exceed the rate of basic

13 pay for level V of the Executive Schedule and no

14 member, officer, or employee of the Regional Com15 mission, other than the Federal Cochairman, the

16 Federal Cochairman’s alternate, employees of the

17 Federal Cochairman, and any Federal employees de18 tailed under paragraph (3), shall be deemed a Fed19 eral employee for any purpose.

20 ‘‘(3) Request the head of a Federal department

21 or agency to detail to temporary duty with the Re22 gional Commission such personnel within the admin23 istrative jurisdiction of such head as the Regional

24 Commission may need for carrying out its functions,

25 and each such detail shall be without loss of senior26 ity, pay, or other employee status.
541

•HR 2491 RH

1 ‘‘(4) Arrange for the services of personnel from

2 any State or local government or any subdivision or

3 agency thereof, or any intergovernmental agency.

4 ‘‘(5) Make arrangements, including contracts,

5 with any participating State government for inclu6 sion in a suitable retirement and employee benefits

7 system of such of its personnel as may not be eligi8 ble for, or continue in, another governmental retire9 ment or employee benefit system, or otherwise pro10 vide for such coverage of its personnel. The Director

11 of the Office of Personnel Management is authorized

12 to contract with a Regional Commission for contin13 ued coverage of any Regional Commission employee

14 who, on a date in the 6-month period ending on the

15 date of Regional Commission employment, was a

16 Federal employee, in the retirement program and

17 other employee benefit programs of the Federal Gov18 ernment.

19 ‘‘(6) Accept, use, and dispose of gifts or dona20 tions of services or property, real, personal, or

21 mixed, tangible or intangible.

22 ‘‘(7) Subject to the requirements of the Federal

23 Property and Administrative Services Act of 1949,

24 enter into and perform such contracts, leases, coop25 erative agreements, or other transactions as may be
542

•HR 2491 RH

1 necessary in carrying out the Regional Commission’s

2 functions and on such terms as the Regional Com3 mission may deem appropriate, with any depart4 ment, agency, or instrumentality of the United

5 States, or with any person, firm, association, or cor6 poration.

7 ‘‘(8) Take such other actions and incur such

8 other expenses as may be necessary and appropriate.

9 ‘‘SEC. 106. ESTABLISHMENT OF REGIONS.

10 ‘‘(a) IN GENERAL.—For the purposes of this Act,

11 there are established 8 regions of the United States as

12 follows:

13 ‘‘(1) REGION I.—Region I shall be composed of

14 the States of Alabama, Florida, Georgia, Kentucky,

15 Mississippi, North Carolina, South Carolina, and

16 Tennessee.

17 ‘‘(2) REGION II.—Region II shall be composed

18 of the States of Arkansas, Louisiana, New Mexico,

19 Oklahoma, and Texas.

20 ‘‘(3) REGION III.—Region III shall be composed

21 of the States of Illinois, Indiana, Michigan, Min22 nesota, Ohio, and Wisconsin.

23 ‘‘(4) REGION IV.—Region IV shall be composed

24 of the States of Colorado, Iowa, Kansas, Missouri,
543

•HR 2491 RH

1 Montana, Nebraska, North Dakota, South Dakota,

2 Utah, and Wyoming.

3 ‘‘(5) REGION V.—Region V shall be composed

4 of the State of California.

5 ‘‘(6) REGION VI.—Region VI shall be composed

6 of the States of Alaska, Arizona, Hawaii, Idaho, Ne7 vada, Oregon, and Washington and American

8 Samoa, Guam, the Marshall Islands, Micronesia,

9 and the Northern Mariana Islands.

10 ‘‘(7) REGION VII.—Region VII shall be com11 posed of the States of Delaware, Maryland, New

12 Jersey, New York, Pennsylvania, Virginia, and West

13 Virginia and the District of Columbia.

14 ‘‘(8) REGION VIII.—Region VIII shall be com15 posed of the States of Connecticut, Maine, Massa16 chusetts, New Hampshire, Rhode Island, and Ver17 mont and Puerto Rico and the Virgin Islands.

18 ‘‘(b) PARTICIPATION NOT REQUIRED.—No State

19 shall be required to participate in any program under this

20 Act.
544

•HR 2491 RH

1 ‘‘TITLE II—GRANTS FOR PUBLIC

2 WORKS AND DEVELOPMENT

3 FACILITIES

4 ‘‘SEC. 201. DIRECT AND SUPPLEMENTARY GRANTS.

5 ‘‘(a) IN GENERAL.—Upon the application of any eli6 gible recipient, a Regional Commission may—

7 ‘‘(1) make direct grants for the acquisition or

8 development of land and improvements for public

9 works, public service, or development facility usage,

10 and the acquisition, design and engineering, con11 struction, rehabilitation, alteration, expansion, or im12 provement of such facilities, including related ma13 chinery and equipment, within an area described in

14 section 502(a), if the Regional Commission finds

15 that—

16 ‘‘(A) the project for which financial assist17 ance is sought will directly or indirectly—

18 ‘‘(i) tend to improve the opportunities,

19 in the area where such project is or will be

20 located, for the successful establishment or

21 expansion of industrial or commercial

22 plants or facilities;

23 ‘‘(ii) otherwise assist in the creation

24 of additional long-term employment oppor25 tunities for such area; or
545

•HR 2491 RH

1 ‘‘(iii) primarily benefit the long-term

2 unemployed and members of low-income

3 families;

4 ‘‘(B) the project for which a grant is re5 quested will fulfill a pressing need of the area,

6 or part thereof, in which it is, or will be, lo7 cated;

8 ‘‘(C) the area for which a project is to be

9 undertaken has an approved investment strat10 egy as provided by section 503 and such project

11 is consistent with such strategy; and

12 ‘‘(D) in the case of an area described in

13 section 502(a)(4), the project to be undertaken

14 will provide immediate useful work to unem15 ployed and underemployed persons in that area;

16 and

17 ‘‘(2) make supplementary grants in order to en18 able the States and other entities within areas de19 scribed in section 502(a) to take maximum advan20 tage of designated Federal grant-in-aid programs (as

21 defined in subsection (c)(4)), direct grants-in-aid au22 thorized under this section, and Federal grant-in-aid

23 programs authorized by the Watershed Protection

24 and Flood Prevention Act (68 Stat. 666), and the

25 11 watersheds authorized by the Flood Control Act
546

•HR 2491 RH

1 of December 22, 1944 (58 Stat. 887), for which

2 they are eligible but for which, because of their eco3 nomic situation, they cannot supply the required

4 matching share.

5 ‘‘(b) COST SHARING.—Subject to subsection (c), the

6 amount of any direct grant under this subsection for any

7 project shall not exceed 50 percent of the cost of such

8 project.

9 ‘‘(c) REQUIREMENTS APPLICABLE TO SUPPLE10 MENTARY GRANTS.—

11 ‘‘(1) AMOUNT OF SUPPLEMENTARY GRANTS.—

12 ‘‘(A) IN GENERAL.—Except as provided by

13 subparagraph (B), the amount of any supple14 mentary grant under this section for any

15 project shall not exceed the applicable percent16 age established by regulations promulgated by

17 the Federal Cochairman, but in no event shall

18 the non-Federal share of the aggregate cost of

19 any such project (including assumptions of

20 debt) be less than 20 percent of such cost.

21 ‘‘(B) EXCEPTIONS.—Notwithstanding sub22 paragraph (A)—

23 ‘‘(i) in the case of a grant to an In24 dian tribe, a Regional Commission may re25 duce the non-Federal share below the per-
547

•HR 2491 RH

1 centage specified in subparagraph (A) or

2 may waive the non-Federal share;

3 ‘‘(ii) in the case of any State or a po4 litical subdivision of the State which the

5 Regional Commission determines has ex6 hausted its effective taxing and borrowing

7 capacity, the Regional Commission shall

8 reduce the non-Federal share below the

9 percentage specified in subparagraph (A)

10 or shall waive the non-Federal share in the

11 case of such a grant for a project in an

12 area described in section 502(a)(4); and

13 ‘‘(iii) in case of any community devel14 opment corporation which the Regional

15 Commission determines has exhausted its

16 effective borrowing capacity, the Regional

17 Commission may reduce the non-Federal

18 share below the percentage specified in

19 subparagraph (A) or waive the non-Federal

20 share in the case of such a grant for a

21 project in an area described in section

22 502(a)(4).

23 ‘‘(2) FORM OF SUPPLEMENTARY GRANTS.—

24 Supplementary grants shall be made by a Regional

25 Commission, in accordance with such regulations as
548

•HR 2491 RH

1 the Federal Cochairman may prescribe, by increas2 ing the amounts of direct grants authorized under

3 this section or by the payment of funds appropriated

4 under this Act to the heads of the departments,

5 agencies, and instrumentalities of the Federal Gov6 ernment responsible for the administration of the

7 applicable Federal programs.

8 ‘‘(3) FEDERAL SHARE LIMITATIONS SPECIFIED

9 IN OTHER LAWS.—Notwithstanding any requirement

10 as to the amount or sources of non-Federal funds

11 that may otherwise be applicable to the Federal pro12 gram involved, funds provided under this subsection

13 shall be used for the sole purpose of increasing the

14 Federal contribution to specific projects in areas de15 scribed in section 502(a) under such programs above

16 the fixed maximum portion of the cost of such

17 project otherwise authorized by the applicable law.

18 ‘‘(4) DESIGNATED FEDERAL GRANT-IN-AID

19 PROGRAMS DEFINED.—In this subsection, the term

20 ‘designated Federal grant-in-aid programs’ means

21 such existing or future Federal grant-in-aid pro22 grams assisting in the construction or equipping of

23 facilities as the Federal Cochairman may, in further24 ance of the purposes of this Act, designate as eligi25 ble for allocation of funds under this section.
549

•HR 2491 RH

1 ‘‘(5) CONSIDERATION OF RELATIVE NEED IN

2 DETERMINING AMOUNT.—In determining the

3 amount of any supplementary grant available to any

4 project under this section, a Regional Commission

5 shall take into consideration the relative needs of the

6 area and the nature of the projects to be assisted.

7 ‘‘(d) REGULATIONS.—The Federal Cochairman shall

8 prescribe rules, regulations, and procedures to carry out

9 this section which will assure that adequate consideration

10 is given to the relative needs of eligible areas. In prescrib11 ing such rules, regulations, and procedures the Federal

12 Cochairman shall consider among other relevant factors—

13 ‘‘(1) the severity of the rates of unemployment

14 in the eligible areas and the duration of such unem15 ployment; and

16 ‘‘(2) the income levels of families and the extent

17 of underemployment in eligible areas.

18 ‘‘(e) REVIEW AND COMMENT UPON PROJECTS BY

19 LOCAL GOVERNMENTAL AUTHORITIES.—The Federal Co20 chairman shall prescribe regulations which will assure that

21 appropriate local governmental authorities have been given

22 a reasonable opportunity to review and comment upon

23 proposed projects under this section.
550

•HR 2491 RH

1 ‘‘SEC. 202. CONSTRUCTION COST INCREASES.

2 ‘‘In any case where a grant (including a supplemental

3 grant) has been made by a Regional Commission under

4 this title for a project and after such grant has been made

5 but before completion of the project, the cost of such

6 project based upon the designs and specifications which

7 were the basis of the grant has been increased because

8 of increases in costs, the amount of such grant may be

9 increased by an amount equal to the percentage increase,

10 as determined by the Regional Commission, in such costs,

11 but in no event shall the percentage of the Federal share

12 of such project exceed that originally provided for in such

13 grant.

14 ‘‘SEC. 203. USE OF FUNDS IN PROJECTS CONSTRUCTED

15 UNDER PROJECTED COST.

16 ‘‘In any case where a grant (including a supplemental

17 grant) has been made by a Regional Commission under

18 this title for a project, and after such grant has been made

19 but before completion of the project, the cost of such

20 project based upon the designs and specifications which

21 were the basis of the grant has decreased because of de22 creases in costs, such underrun funds may be used to im23 prove the project either directly or indirectly as deter24 mined by the Regional Commission.
551

•HR 2491 RH

1 ‘‘SEC. 204. CHANGED PROJECT CIRCUMSTANCES.

2 ‘‘In any case where a grant (including a supplemental

3 grant) has been made by a Regional Commission under

4 this title for a project, and after such grant has been made

5 but before completion of the project, the purpose or scope

6 of such project based upon the designs and specifications

7 which were the basis of the grant has changed, the Re8 gional Commission may approve the use of grant funds

9 on such changed project if the Regional Commission deter10 mines that such changed project meets the requirements

11 of this title and that such changes are necessary to en12 hance economic development in the area.

13 ‘‘TITLE III—SPECIAL ECONOMIC

14 DEVELOPMENT AND ADJUST15 MENT ASSISTANCE

16 ‘‘SEC. 301. STATEMENT OF PURPOSE.

17 ‘‘The purpose of this title to provide special economic

18 development and adjustment assistance programs to help

19 State and local areas meet special needs arising from ac20 tual or threatened severe unemployment arising from eco21 nomic dislocation, including unemployment arising from

22 actions of the Federal Government and from compliance

23 with environmental requirements which remove economic

24 activities from a locality, and economic adjustment prob25 lems resulting from severe changes in economic conditions

26 (including long-term economic deterioration), and to en-
552

•HR 2491 RH

1 courage cooperative intergovernmental action to prevent

2 or solve economic adjustment problems. Nothing in this

3 title is intended to replace the efforts of the economic ad4 justment program of the Department of Defense.

5 ‘‘SEC. 302. GRANTS BY REGIONAL COMMISSIONS.

6 ‘‘(a) IN GENERAL.—A Regional Commission is au7 thorized to make grants directly to any eligible recipient

8 in an area which the Regional Commission determines, in

9 accordance with criteria to be established by the Federal

10 Cochairman by regulation—

11 ‘‘(1) has experienced, or may reasonably be

12 foreseen to be about to experience, a special need to

13 meet an expected rise in unemployment, or other

14 economic adjustment problems (including those

15 caused by any action or decision of the Federal Gov16 ernment); or

17 ‘‘(2) has demonstrated long-term economic de18 terioration.

19 ‘‘(b) PURPOSES.—Amounts from grants under sub20 section (a) shall be used by an eligible recipient to carry

21 out or develop an investment strategy which—

22 ‘‘(1) meets the requirements of section 503; and

23 ‘‘(2) is approved by the Regional Commission.

24 ‘‘(c) TYPES OF ASSISTANCE.—In carrying out an in25 vestment strategy using amounts from grants under sub-
553

•HR 2491 RH

1 section (a), an eligible recipient may provide assistance for

2 any of the following:

3 ‘‘(1) Public facilities.

4 ‘‘(2) Public services.

5 ‘‘(3) Business development.

6 ‘‘(4) Planning.

7 ‘‘(5) Research and technical assistance.

8 ‘‘(6) Administrative expenses.

9 ‘‘(7) Training.

10 ‘‘(8) Relocation of individuals and businesses.

11 ‘‘(9) Other assistance which demonstrably fur12 thers the economic adjustment objectives of this

13 title.

14 ‘‘(d) DIRECT EXPENDITURE OR REDISTRIBUTION BY

15 RECIPIENT.—Amounts from grants under subsection (a)

16 may be used in direct expenditures by the eligible recipient

17 or through redistribution by the eligible recipient to public

18 and private entities in grants, loans, loan guarantees, pay19 ments to reduce interest on loan guarantees, or other ap20 propriate assistance, but no grant shall be made by an

21 eligible recipient to a private profit-making entity.

22 ‘‘(e) COORDINATION.—A Regional Commission to the

23 extent practicable shall coordinate the activities relating

24 to the requirements for investment strategies and making

25 grants and loans under this title with other Federal pro-
554

•HR 2491 RH

1 grams, States, economic development districts, and other

2 appropriate planning and development organizations.

3 ‘‘(f) BASE CLOSINGS AND REALIGNMENTS.—

4 ‘‘(1) LOCATION OF PROJECTS.—In any case in

5 which a Regional Commission determines a need for

6 assistance under subsection (a) due to the closure or

7 realignment of a military installation, the Regional

8 Commission may make such assistance available for

9 projects to be carried out on the military installation

10 and for projects to be carried out in communities ad11 versely affected by the closure or realignment.

12 ‘‘(2) INTEREST IN PROPERTY.—Notwithstand13 ing any other provision of law, a Regional Commis14 sion may provide to an eligible recipient any assist15 ance available under this Act for a project to be car16 ried out on a military installation that is closed or

17 scheduled for closure or realignment without requir18 ing that the eligible recipient have title to the prop19 erty or a leasehold interest in the property for any

20 specified term.

21 ‘‘SEC. 303. ANNUAL REPORTS BY RECIPIENT.

22 ‘‘Each eligible recipient which receives assistance

23 under this title from a Regional Commission shall annu24 ally during the period such assistance continue to make

25 a full and complete report to the Regional Commission,
555

•HR 2491 RH

1 in such manner as the Regional Commission shall pre2 scribe, and such report shall contain an evaluation of the

3 effectiveness of the economic assistance provided under

4 this title in meeting the need it was designed to alleviate

5 and the purposes of this title.

6 ‘‘SEC. 304. SALE OF FINANCIAL INSTRUMENTS IN REVOLV7 ING LOAN FUNDS.

8 ‘‘Any loan, loan guarantee, equity, or other financial

9 instrument in the portfolio of a revolving loan fund, in10 cluding any financial instrument made available using

11 amounts from a grant made before the effective date of

12 the Economic Development Partnership Act of 1995, may

13 be sold, encumbered, or pledged at the discretion of the

14 grantee of the Fund, to a third party provided that the

15 net proceeds of the transaction—

16 ‘‘(1) shall be deposited into the Fund and may

17 only be used for activities which are consistent with

18 the purposes of this title; and

19 ‘‘(2) shall be subject to the financial manage20 ment, accounting, reporting, and auditing standards

21 which were originally applicable to the grant.

22 ‘‘SEC. 305. TREATMENT OF REVOLVING LOAN FUNDS.

23 ‘‘(a) IN GENERAL.—Amounts from grants made

24 under this title which are used by an eligible recipient to

25 establish a revolving loan fund shall not be treated, except
556

•HR 2491 RH

1 as provided by subsection (b), as amounts derived from

2 Federal funds for the purposes of any Federal law after

3 such amounts are loaned from the fund to a borrower and

4 repaid to the fund.

5 ‘‘(b) EXCEPTIONS.—Amounts described in subsection

6 (a) which are loaned from a revolving loan fund to a bor7 rower and repaid to the fund—

8 ‘‘(1) may only be used for activities which are

9 consistent with the purposes of this title; and

10 ‘‘(2) shall be subject to the financial manage11 ment, accounting, reporting, and auditing standards

12 which were originally applicable to the grant.

13 ‘‘(c) REGULATIONS.—Not later than 30 days after

14 the effective date of the Economic Development Partner15 ship Act of 1995, the Federal Cochairman shall issue reg16 ulations to carry out subsection (a).

17 ‘‘(d) PUBLIC REVIEW AND COMMENT.—Before issu18 ing any final guidelines or administrative manuals govern19 ing the operation of revolving loan funds established using

20 amounts from grants under this title, the Federal Cochair21 man shall provide reasonable opportunity for public review

22 of and comment on such guidelines and administrative

23 manuals.

24 ‘‘(e) APPLICABILITY TO PAST GRANTS.—The re25 quirements of this section applicable to amounts from
557

•HR 2491 RH

1 grants made under this title shall also apply to amounts

2 from grants made, before the effective date of the Eco3 nomic Development Partnership Act of 1995, under title

4 I of this Act, as in effect on the day before such effective

5 date.

6 ‘‘TITLE IV—TECHNICAL ASSIST7 ANCE, RESEARCH, AND IN8 FORMATION

9 ‘‘SEC. 401. TECHNICAL ASSISTANCE.

10 ‘‘(a) IN GENERAL.—In carrying out its duties under

11 this Act, a Regional Commission may provide technical as12 sistance which would be useful in alleviating or preventing

13 conditions of excessive unemployment or

14 underemployment to areas which the Regional Commis15 sion finds have substantial need for such assistance. Such

16 assistance shall include project planning and feasibility

17 studies, management and operational assistance, estab18 lishment of business outreach centers, and studies evaluat19 ing the needs of, and development potentialities for, eco20 nomic growth of such areas.

21 ‘‘(b) PROCEDURES AND TERMS.—

22 ‘‘(1) MANNER OF PROVIDING ASSISTANCE.—As23 sistance may be provided by a Regional Commission

24 through—
558

•HR 2491 RH

1 ‘‘(A) members of the Regional Commis2 sion’s staff;

3 ‘‘(B) the payment of funds authorized for

4 this section to departments or agencies of the

5 Federal Government;

6 ‘‘(C) the employment of private individ7 uals, partnerships, firms, corporations, or suit8 able institutions under contracts entered into

9 for such purposes; or

10 ‘‘(D) grants-in-aid to appropriate public or

11 private nonprofit State, area, district, or local

12 organizations.

13 ‘‘(2) REPAYMENT TERMS.—A Regional Com14 mission, in its discretion, may require the repayment

15 of assistance provided under this subsection and pre16 scribe the terms and conditions of such repayment.

17 ‘‘(c) GRANTS COVERING ADMINISTRATIVE EX18 PENSES.—

19 ‘‘(1) IN GENERAL.—A Regional Commission

20 may make grants to defray not to exceed 75 percent

21 of the administrative expenses of organizations

22 which the Regional Commission determines to be

23 qualified to receive grants-in-aid under subsections

24 (a) and (b); except that in the case of a grant under

25 this subsection to an Indian tribe, the Regional
559

•HR 2491 RH

1 Commission is authorized to defray up to 100 per2 cent of such expenses.

3 ‘‘(2) DETERMINATION OF NON-FEDERAL

4 SHARE.—In determining the amount of the non-Fed5 eral share of such costs or expenses, a Regional

6 Commission shall give due consideration to all con7 tributions both in cash and in kind, fairly evaluated,

8 including contributions of space, equipment, and

9 services.

10 ‘‘(3) USE OF GRANTS WITH PLANNING

11 GRANTS.—Where practicable, grants-in-aid author12 ized under this subsection shall be used in conjunc13 tion with other available planning grants to assure

14 adequate and effective planning and economical use

15 of funds.

16 ‘‘(d) AVAILABILITY OF TECHNICAL INFORMATION;

17 FEDERAL PROCUREMENT.—A Regional Commission shall

18 aid areas described in section 502(a) and other areas by

19 furnishing to interested individuals, communities, indus20 tries, and enterprises within such areas any assistance,

21 technical information, market research, or other forms of

22 assistance, information, or advice which would be useful

23 in alleviating or preventing conditions of excessive unem24 ployment or underemployment within such areas. The Re25 gional Commission may furnish the procurement divisions
560

•HR 2491 RH

1 of the various departments, agencies, and other instru2 mentalities of the Federal Government with a list contain3 ing the names and addresses of business firms which are

4 located in areas described in section 502(a) and which are

5 desirous of obtaining Government contracts for the fur6 nishing of supplies or services, and designating the sup7 plies and services such firms are engaged in providing.

8 ‘‘SEC. 402. ECONOMIC DEVELOPMENT PLANNING.

9 ‘‘(a) DIRECT GRANTS.—

10 ‘‘(1) IN GENERAL.—A Regional Commission

11 may, upon application of any State, or city, or other

12 political subdivision of a State, or sub-State plan13 ning and development organization (including an

14 area described in section 502(a) or an economic de15 velopment district), make direct grants to such

16 State, city, or other political subdivision, or organi17 zation to pay up to 80 percent of the cost for eco18 nomic development planning.

19 ‘‘(2) PLANNING PROJECTS SPECIFICALLY IN20 CLUDED.—The planning for cities, other political

21 subdivisions, and sub-State planning and develop22 ment organizations (including areas described in sec23 tion 502(a) and economic development districts) as24 sisted under this section shall include systematic ef25 forts to reduce unemployment and increase incomes.
561

•HR 2491 RH

1 ‘‘(3) PLANNING PROCESS.—The planning shall

2 be a continuous process involving public officials and

3 private citizens in analyzing local economies, defin4 ing development goals, determining project opportu5 nities, and formulating and implementing a develop6 ment program.

7 ‘‘(4) COORDINATION OF ASSISTANCE UNDER

8 SECTION 401(c).—The assistance available under

9 this section may be provided in addition to assist10 ance available under section 401(c) but shall not

11 supplant such assistance.

12 ‘‘(b) COMPLIANCE WITH REVIEW PROCEDURE.—The

13 planning assistance authorized under this title shall be

14 used in conjunction with any other available Federal plan15 ning assistance to assure adequate and effective planning

16 and economical use of funds.

17 ‘‘TITLE V—ELIGIBILITY AND

18 INVESTMENT STRATEGIES

19 ‘‘PART A—ELIGIBILITY

20 ‘‘SEC. 501. ELIGIBLE RECIPIENT DEFINED.

21 ‘‘In this Act, the term ‘eligible recipient’ means an

22 area described in section 502(a), an economic development

23 district designated under section 510, an Indian tribe, a

24 State, a city or other political subdivision of a State, or

25 a consortium of such political subdivisions, or a public or
562

•HR 2491 RH

1 private nonprofit organization or association acting in co2 operation with officials of such political subdivisions.

3 ‘‘SEC. 502. AREA ELIGIBILITY.

4 ‘‘(a) CERTIFICATION.—In order to be eligible for as5 sistance under title II, an applicant seeking assistance to

6 undertake a project in an area shall certify, as part of

7 an application for such assistance, that the area on the

8 date of submission of such application meets 1 or more

9 of the following criteria:

10 ‘‘(1) The area has a per capita income of 80

11 percent or less of the national average.

12 ‘‘(2) The area has an unemployment rate 1 per13 cent above the national average percentage for the

14 most recent 24-month period for which statistics are

15 available.

16 ‘‘(3) The area has experienced or is about to

17 experience a sudden economic dislocation resulting

18 in job loss that is significant both in terms of the

19 number of jobs eliminated and the effect upon the

20 employment rate of the area.

21 ‘‘(4) The area is a community or neighborhood

22 (defined without regard to political or other subdivi23 sions or boundaries) which the Federal Cochairman

24 determines has one or more of the following condi25 tions:
563

•HR 2491 RH

1 ‘‘(A) A large concentration of low-income

2 persons.

3 ‘‘(B) Rural areas having substantial out4 migration.

5 ‘‘(C) Substantial unemployment.

6 ‘‘(b) DOCUMENTATION.—A certification made under

7 subsection (a) shall be supported by Federal data, when

8 available, and in other cases by data available through the

9 State government. Such documentation shall be accepted

10 by a Regional Commission unless it is determined to be

11 inaccurate. The most recent statistics available shall be

12 used.

13 ‘‘(c) SPECIAL RULE.—An area which a Regional

14 Commission determines has 1 or more of the conditions

15 described in subsection (a)(4)—

16 ‘‘(1) shall not be subject to the requirements of

17 subparagraphs (A) and (C) of section 201(a)(1); and

18 ‘‘(2) shall not be eligible to meet the require19 ments of section 510(a)(1)(B).

20 ‘‘(d) PRIOR DESIGNATIONS.—Any designation of a

21 redevelopment area made before the effective date of the

22 Economic Development Partnership Act of 1995 shall not

23 be effective after such effective date.
564

•HR 2491 RH

1 ‘‘SEC. 503. INVESTMENT STRATEGY.

2 ‘‘A Regional Commission may provide assistance

3 under titles II and III to an applicant for a project only

4 if the applicant submits to the Regional Commission, as

5 part of an application for such assistance, and the Re6 gional Commission approves an investment strategy

7 which—

8 ‘‘(1) identifies the economic development prob9 lems to be addressed using such assistance;

10 ‘‘(2) identifies past, present, and projected fu11 ture economic development investments in the area

12 receiving such assistance and public and private par13 ticipants and sources of funding for such invest14 ments;

15 ‘‘(3) sets forth a strategy for addressing the

16 economic problems identified pursuant to paragraph

17 (1) and describes how the strategy will solve such

18 problems;

19 ‘‘(4) provides a description of the project nec20 essary to implement the strategy, estimates of costs,

21 and timetables; and

22 ‘‘(5) provides a summary of public and private

23 resources expected to be available for the project.

24 ‘‘SEC. 504. APPROVAL OF PROJECTS.

25 ‘‘Only applications for grants or other assistance

26 under this Act for specific projects shall be approved which
565

•HR 2491 RH

1 are certified by the State member of the Regional Com2 mission representing such applicant and determined by

3 the Federal Cochairman—

4 ‘‘(1) to be included in a State investment strat5 egy approved by the Regional Commission;

6 ‘‘(2) to have adequate assurance that the

7 project will be properly administered, operated, and

8 maintained; and

9 ‘‘(3) to otherwise meet the requirements for as10 sistance under this Act.

11 ‘‘PART B—ECONOMIC DEVELOPMENT DISTRICTS

12 ‘‘SEC. 510. DESIGNATION OF ECONOMIC DEVELOPMENT

13 DISTRICTS AND ECONOMIC DEVELOPMENT

14 CENTERS.

15 ‘‘(a) IN GENERAL.—In order that economic develop16 ment projects of broader geographic significance may be

17 planned and carried out, a Regional Commission may—

18 ‘‘(1) designate appropriate ‘economic develop19 ment districts’ within the United States with the

20 concurrence of the States in which such districts will

21 be wholly or partially located, if—

22 ‘‘(A) the proposed district is of sufficient

23 size or population, and contains sufficient re24 sources, to foster economic development on a
566

•HR 2491 RH

1 scale involving more than a single area de2 scribed in section 502(a);

3 ‘‘(B) the proposed district contains at least

4 1 area described in section 502(a);

5 ‘‘(C) the proposed district contains 1 or

6 more areas described in section 502(a) or eco7 nomic development centers identified in an ap8 proved district investment strategy as having

9 sufficient size and potential to foster the eco10 nomic growth activities necessary to alleviate

11 the distress of the areas described in section

12 502(a) within the district; and

13 ‘‘(D) the proposed district has a district

14 investment strategy which includes adequate

15 land use and transportation planning and con16 tains a specific program for district cooperation,

17 self-help, and public investment and is approved

18 by the State or States affected and by the Re19 gional Commission;

20 ‘‘(2) designate as ‘economic development cen21 ters’, in accordance with such regulations as the

22 Federal Cochairman shall prescribe, such areas as

23 the Regional Commission may deem appropriate,

24 if—
567

•HR 2491 RH

1 ‘‘(A) the proposed center has been identi2 fied and included in an approved district invest3 ment strategy and recommended by the State

4 or States affected for such special designation;

5 ‘‘(B) the proposed center is geographically

6 and economically so related to the district that

7 its economic growth may reasonably be expected

8 to contribute significantly to the alleviation of

9 distress in the areas described in section 502(a)

10 of the district; and

11 ‘‘(C) the proposed center does not have a

12 population in excess of 250,000 according to

13 the most recent Federal census.

14 ‘‘(3) provide financial assistance in accordance

15 with the criteria of this Act, except as may be herein

16 otherwise provided, for projects in economic develop17 ment centers designated under subsection (a)(2),

18 if—

19 ‘‘(A) the project will further the objectives

20 of the investment strategy of the district in

21 which it is to be located:

22 ‘‘(B) the project will enhance the economic

23 growth potential of the district or result in ad24 ditional long-term employment opportunities
568

•HR 2491 RH

1 commensurate with the amount of Federal fi2 nancial assistance requested; and

3 ‘‘(C) the amount of Federal financial as4 sistance requested is reasonably related to the

5 size, population, and economic needs of the dis6 trict;

7 ‘‘(4) subject to the 20 percent non-Federal

8 share required for any project by section 201(c), in9 crease the amount of grant assistance authorized by

10 section 201 for projects within areas described in

11 section 502(a), by an amount not to exceed 10 per12 cent of the aggregate cost of any such project, in ac13 cordance with such regulations as the Federal Co14 chairman shall prescribe if—

15 ‘‘(A) the area described in section 502(a)

16 is situated within a designated economic devel17 opment district and is actively participating in

18 the economic development activities of the dis19 trict; and

20 ‘‘(B) the project is consistent with an ap21 proved investment strategy.

22 ‘‘(b) AUTHORITIES.—In designating economic devel23 opment districts and approving district investment strate24 gies under subsection (a), a Regional Commission may,
569

•HR 2491 RH

1 under regulations prescribed by the Federal Cochair2 man—

3 ‘‘(1) invite the several States to draw up pro4 posed district boundaries and to identify potential

5 economic development centers;

6 ‘‘(2) cooperate with the several States—

7 ‘‘(A) in sponsoring and assisting district

8 economic planning and development groups;

9 and

10 ‘‘(B) in assisting such district groups to

11 formulate district investment strategies; and

12 ‘‘(3) encourage participation by appropriate

13 local governmental authorities in such economic de14 velopment districts.

15 ‘‘(c) TERMINATION OR MODIFICATION OF DESIGNA16 TIONS.—The Federal Cochairman shall by regulation pre17 scribe standards for the termination or modification of

18 economic development districts and economic development

19 centers designated under the authority of this section.

20 ‘‘(d) DEFINITIONS.—In this Act, the following defini21 tions apply:

22 ‘‘(1) ECONOMIC DEVELOPMENT DISTRICT.—The

23 term ‘economic development district’ refers to any

24 area within the United States composed of cooperat25 ing areas described in section 502(a) and, where ap-
570

•HR 2491 RH

1 propriate, designated economic development centers

2 and neighboring counties or communities, which has

3 been designated by a Regional Commission as an

4 economic development district. Such term includes

5 any economic development district designated under

6 section 403 of this Act, as in effect on the day be7 fore the effective date of the Economic Development

8 Partnership Act of 1995.

9 ‘‘(2) ECONOMIC DEVELOPMENT CENTER.—The

10 term ‘economic development center’ refers to any

11 area within the United States which has been identi12 fied as an economic development center in an ap13 proved investment strategy and which has been des14 ignated by a Regional Commission as eligible for fi15 nancial assistance under this Act in accordance with

16 the provisions of this section.

17 ‘‘(3) LOCAL GOVERNMENT.—The term ‘local

18 government’ means any city, county, town, parish,

19 village, or other general-purpose political subdivision

20 of a State.

21 ‘‘(e) PARTS OF ECONOMIC DEVELOPMENT DISTRICTS

22 NOT WITHIN AREAS DESCRIBED IN SECTION 502(a).—

23 A Regional Commission is authorized to provide the finan24 cial assistance which is available to an area described in

25 section 502(a) under this Act to those parts of an eco-
571

•HR 2491 RH

1 nomic development district which are not within an area

2 described in section 502(a), when such assistance will be

3 of a substantial direct benefit to an area described in sec4 tion 502(a) within such district. Such financial assistance

5 shall be provided in the same manner and to the same

6 extent as is provided in this Act for an area described in

7 section 502(a); except that nothing in this subsection shall

8 be construed to permit such parts to receive the increase

9 in the amount of grant assistance authorized subsection

10 (a)(4).

11 ‘‘TITLE VI—ADMINISTRATION

12 ‘‘SEC. 601. FUNCTIONS OF ECONOMIC DEVELOPMENT COM13 MISSION.

14 ‘‘In administering the Economic Development Com15 mission, the Federal Cochairman shall ensure that the

16 Commission—

17 ‘‘(1) serves as a central information clearing18 house on matters relating to economic development,

19 economic adjustment, disaster recovery, and defense

20 conversion programs and activities of the Federal

21 and State governments, including political subdivi22 sions of the States; and

23 ‘‘(2) helps potential and actual applicants for

24 economic development, economic adjustment, disas25 ter recovery, and defense conversion assistance
572

•HR 2491 RH

1 under Federal, State, and local laws in locating and

2 applying for such assistance, including financial and

3 technical assistance.

4 ‘‘SEC. 602. CONSULTATION WITH OTHER PERSONS AND

5 AGENCIES.

6 ‘‘(a) CONSULTATION ON PROBLEMS RELATING TO

7 EMPLOYMENT.—The Federal Cochairman is authorized

8 from time to time to call together and confer with any

9 persons, including representatives of labor, management,

10 agriculture, and government, who can assist in meeting

11 the problems of area and regional unemployment or

12 underemployment.

13 ‘‘(b) CONSULTATION ON ADMINISTRATION OF ACT.—

14 The Federal Cochairman may make provisions for such

15 consultation with interested departments and agencies as

16 the Federal Cochairman may deem appropriate in the per17 formance of the functions vested in the Federal Cochair18 man by this Act.

19 ‘‘SEC. 603. ADMINISTRATION, OPERATION, AND MAINTE20 NANCE.

21 ‘‘No Federal assistance shall be approved under this

22 Act unless the Federal Cochairman is satisfied that the

23 project for which Federal assistance is granted will be

24 properly and efficiently administered, operated, and main25 tained.
573

•HR 2491 RH

1 ‘‘SEC. 604. TREATMENT OF ECONOMIC DEVELOPMENT AD2 MINISTRATION EMPLOYEES.

3 ‘‘In considering applications for employment at the

4 Economic Development Commission or in a Regional Com5 mission, preference shall be given to individuals who are

6 employees of the Economic Development Administration

7 on the effective date of the Economic Development Part8 nership Act of 1995.

9 ‘‘TITLE VII—MISCELLANEOUS

10 ‘‘SEC. 701. POWERS OF FEDERAL COCHAIRMAN.

11 ‘‘(a) IN GENERAL.—In performing the Federal Co12 chairman’s duties under this Act, the Federal Cochairman

13 is authorized to—

14 ‘‘(1) adopt, alter, and use a seal, which shall be

15 judicially noticed;

16 ‘‘(2) subject to the civil-service and classifica17 tion laws, select, employ, appoint, and fix the com18 pensation of such personnel as may be necessary to

19 carry out the provisions of this Act;

20 ‘‘(3) hold such hearings, sit and act at such

21 times and places, and take such testimony, as the

22 Federal Cochairman may deem advisable;

23 ‘‘(4) request directly from any executive depart24 ment, bureau, agency, board, commission, office,

25 independent establishment, or instrumentality infor26 mation, suggestions, estimates, and statistics needed
574

•HR 2491 RH

1 to carry out the purposes of this Act; and each de2 partment, bureau, agency, board, commission, office,

3 establishment, or instrumentality is authorized to

4 furnish such information, suggestions, estimates,

5 and statistics directly to the Federal Cochairman;

6 ‘‘(5) under regulations prescribed by the Fed7 eral Cochairman, assign or sell at public or private

8 sale, or otherwise dispose of for cash or credit, in

9 the Federal Cochairman’s discretion and upon such

10 terms and conditions and for such consideration as

11 the Federal Cochairman determines to be reason12 able, any evidence of debt, contract, claim, personal

13 property, or security assigned to or held by the Fed14 eral Cochairman in connection with assistance ex15 tended under this Act, and collect or compromise all

16 obligations assigned to or held by the Federal Co17 chairman in connection with such assistance until

18 such time as such obligations may be referred to the

19 Attorney General for suit or collection;

20 ‘‘(6) deal with, complete, renovate, improve,

21 modernize, insure, rent, or sell for cash or credit,

22 upon such terms and conditions and for such consid23 eration as the Federal Cochairman determines to be

24 reasonable, any real or personal property conveyed

25 to, or otherwise acquired by the Federal Cochairman
575

•HR 2491 RH

1 in connection with assistance extended under this

2 Act;

3 ‘‘(7) pursue to final collection, by way of com4 promise or other administrative action, prior to ref5 erence to the Attorney General, all claims against

6 third parties assigned to the Federal Cochairman in

7 connection with assistance extended this Act;

8 ‘‘(8) acquire, in any lawful manner and in ac9 cordance with the requirements of the Federal Prop10 erty and Administrative Services Act of 1949, any

11 property (real, personal, or mixed, tangible or intan12 gible), whenever necessary or appropriate to the con13 duct of the activities authorized under this Act;

14 ‘‘(9) in addition to any powers, functions, privi15 leges, and immunities otherwise vested in the Fed16 eral Cochairman, take any action, including the pro17 curement of the services of attorneys by contract,

18 determined by the Federal Cochairman to be nec19 essary or desirable in making, purchasing, servicing,

20 compromising, modifying, liquidating, or otherwise

21 administratively dealing with assets held in connec22 tion with financial assistance extended under this

23 Act;

24 ‘‘(10) employ experts and consultants or organi25 zations as authorized by section 3109 of title 5,
576

•HR 2491 RH

1 United States Code, compensate individuals so em2 ployed at rates not in excess of $100 per diem, in3 cluding travel time, and allow them, while away from

4 their homes or regular places of business, travel ex5 penses (including per diem in lieu of subsistence) as

6 authorized by section 5703 of title 5, United States

7 Code, for persons in the Government service em8 ployed intermittently, while so employed, except that

9 contracts for such employment may be renewed an10 nually;

11 ‘‘(11) sue and be sued in any court of record

12 of a State having general jurisdiction or in any Unit13 ed States district court, and jurisdiction is conferred

14 upon such district court to determine such con15 troversies without regard to the amount in con16 troversy; but no attachment, injunction, garnish17 ment, or other similar process, mesne or final, shall

18 be issued against the Federal Cochairman or the

19 Federal Cochairman’s property;

20 ‘‘(12) make discretionary grants, pursuant to

21 authorities otherwise available to a Regional Com22 mission under this Act and without regard to the re23 quirements of section 504, to implement significant

24 regional initiatives, to take advantage of special de25 velopment opportunities, or to respond to emergency
577

•HR 2491 RH

1 economic distress in the region from the funds with2 held from distribution to the Regional Commissions;

3 except that the aggregate amount of such discre4 tionary grants in any fiscal year may not exceed 10

5 percent of the amounts appropriated under title VIII

6 for such fiscal year; and

7 ‘‘(13) establish such rules, regulations, and pro8 cedures as the Federal Cochairman considers appro9 priate in carrying out the provisions of this Act.

10 ‘‘(b) DEFICIENCY JUDGMENTS.—The authority

11 under subsection (a)(7) to pursue claims shall include the

12 authority to obtain deficiency judgments or otherwise in

13 the case of mortgages assigned to the Federal Cochair14 man.

15 ‘‘(c) INAPPLICABILITY OF CERTAIN OTHER RE16 QUIREMENTS.—Section 3709 of the Revised Statutes of

17 the United States shall not apply to any contract of haz18 ard insurance or to any purchase or contract for services

19 or supplies on account of property obtained by the Federal

20 Cochairman as a result of assistance extended under this

21 Act if the premium for the insurance or the amount of

22 the insurance does not exceed $1,000.

23 ‘‘(d) POWERS OF CONVEYANCE AND EXECUTION.—

24 The power to convey and to execute, in the name of the

25 Federal Cochairman, deeds of conveyance, deeds of re-
578

•HR 2491 RH

1 lease, assignments and satisfactions of mortgages, and any

2 other written instrument relating to real or personal prop3 erty or any interest therein acquired by the Federal Co4 chairman pursuant to the provisions of this Act may be

5 exercised by the Federal Cochairman, or by any officer

6 or agent appointed by the Federal Cochairman for such

7 purpose, without the execution of any express delegation

8 of power or power of attorney.

9 ‘‘SEC. 702. ALLOCATION OF FUNDS.

10 The Federal Cochairman shall establish a formula for

11 the equitable allocation among the Regional Commissions

12 of amounts appropriated to carry out this Act.

13 ‘‘SEC. 703. PERFORMANCE MEASURES.

14 ‘‘The Federal Cochairman shall establish perform15 ance measures for grants and other assistance provided

16 under this Act. Such performance measures shall be used

17 to evaluate project proposals and conduct evaluations of

18 projects receiving such assistance.

19 ‘‘SEC. 704. MAINTENANCE OF STANDARDS.

20 ‘‘The Federal Cochairman shall continue to imple21 ment and enforce the provisions of section 712 of this Act,

22 as in effect on the day before the effective date of the

23 Economic Development Partnership Act of 1995.
579

•HR 2491 RH

1 ‘‘SEC. 705. TRANSFER OF FUNCTIONS.

2 ‘‘The functions, powers, duties, and authorities and

3 the assets, funds, contracts, loans, liabilities, commit4 ments, authorizations, allocations, and records which are

5 vested in or authorized to be transferred to the Secretary

6 of the Treasury under section 29(b) of the Area Redevel7 opment Act, and all functions, powers, duties, and authori8 ties under section 29(c) of such Act are hereby vested in

9 the Federal Cochairman.

10 ‘‘SEC. 706. DEFINITION OF STATE.

11 ‘‘In this Act, the terms ‘State’, ‘States’, and ‘United

12 States’ include the several States and each of the other

13 political entities included in a region established by section

14 106.

15 ‘‘SEC. 707. ANNUAL REPORT TO CONGRESS.

16 ‘‘The Federal Cochairman shall transmit a com17 prehensive and detailed annual report to Congress of the

18 Federal Cochairman’s and each Regional Commission’s

19 operations under this Act for each fiscal year beginning

20 with the fiscal year ending September 30, 1996. Such re21 port shall be printed and shall be transmitted to Congress

22 not later than April 1 of the year following the fiscal year

23 with respect to which such report is made.

24 ‘‘SEC. 708. USE OF OTHER FACILITIES.

25 ‘‘(a) DELEGATION OF FUNCTIONS TO OTHER FED26 ERAL DEPARTMENTS AND AGENCIES.—The Federal Co-
580

•HR 2491 RH

1 chairman may delegate to the heads of other departments

2 and agencies of the Federal Government any of the Fed3 eral Cochairman’s functions, powers, and duties under this

4 Act as the Federal Cochairman may deem appropriate,

5 and to authorize the redelegation of such functions, pow6 ers, and duties by the heads of such departments and

7 agencies.

8 ‘‘(b) DEPARTMENT AND AGENCY EXECUTION OF

9 DELEGATED AUTHORITY.—Departments and agencies of

10 the Federal Government shall exercise their powers, du11 ties, and functions in such manner as will assist in carry12 ing out the objectives of this Act.

13 ‘‘(c) TRANSFER BETWEEN DEPARTMENTS.—Funds

14 authorized to be appropriated under this Act may be

15 transferred between departments and agencies of the Gov16 ernment, if such funds are used for the purposes for which

17 they are specifically authorized and appropriated.

18 ‘‘(d) FUNDS TRANSFERRED FROM OTHER DEPART19 MENTS AND AGENCIES.—In order to carry out the objec20 tives of this Act, the Federal Cochairman may accept

21 transfers of funds from other departments and agencies

22 of the Federal Government if the funds are used for the

23 purposes for which (and in accordance with the terms

24 under which) the funds are specifically authorized and ap25 propriated. Such transferred funds shall remain available
581

•HR 2491 RH

1 until expended, and may be transferred to and merged

2 with the appropriations under the heading ‘salaries and

3 expenses’ by the Federal Cochairman to the extent nec4 essary to administer the program.

5 ‘‘SEC. 709. PENALTIES.

6 ‘‘(a) FALSE STATEMENTS; SECURITY OVER7 VALUATION.—Whoever makes any statement knowing it

8 to be false, or whoever willfully overvalues any security,

9 for the purpose of obtaining for such person or for any

10 applicant any financial assistance under this Act or any

11 extension of such assistance by renewal, deferment or ac12 tion, or otherwise, or the acceptance, release, or substi13 tution of security for such assistance, or for the purpose

14 of influencing in any way the action of the Federal Co15 chairman or a Regional Commission or for the purpose

16 of obtaining money, property, or anything of value, under

17 this Act, shall be fined under title 18, United States Code,

18 imprisoned for not more than 5 years, or both.

19 ‘‘(b) EMBEZZLEMENT AND FRAUD-RELATED

20 CRIMES.—Whoever, being connected in any capacity with

21 the Federal Cochairman or a Regional Commission, in the

22 administration of this Act—

23 ‘‘(1) embezzles, abstracts, purloins, or willfully

24 misapplies any moneys, funds, securities, or other
582

•HR 2491 RH

1 things of value, whether belonging to such person or

2 pledged or otherwise entrusted to such person;

3 ‘‘(2) with intent to defraud the Federal Co4 chairman or a Regional Commission or any other

5 body politic or corporate, or any individual, or to de6 ceive any officer, auditor, or examiner, makes any

7 false entry in any book, report, or statement of or

8 to the Federal Cochairman or a Regional Commis9 sion, or without being duly authorized draws any or10 ders or issues, puts forth, or assigns any note, de11 benture, bond, or other obligation, or draft, bill of

12 exchange, mortgage, judgment, or decree thereof;

13 ‘‘(3) with intent to defraud participates or

14 shares in or receives directly or indirectly any

15 money, profit, property, or benefit through any

16 transaction, loan, grant, commission, contract, or

17 any other act of the Federal Cochairman or a Re18 gional Commission; or

19 ‘‘(4) gives any unauthorized information con20 cerning any future action of plan of the Federal Co21 chairman or a Regional Commission which might af22 fect the value of securities, or having such knowl23 edge invests or speculates, directly or indirectly, in

24 the securities or property of any company or cor25 poration receiving loans, grants, or other assistance
583

•HR 2491 RH

1 from the Federal Cochairman or a Regional Com2 mission,

3 shall be fined under title 18, United States Code, impris4 oned for not more than 5 years, or both.

5 ‘‘SEC. 710. EMPLOYMENT OF EXPEDITERS AND ADMINIS6 TRATIVE EMPLOYEES.

7 ‘‘No financial assistance shall be extended by a Re8 gional Commission under this Act to any business enter9 prise unless the owners, partners, or officers of such busi10 ness enterprise—

11 ‘‘(1) certify to the Regional Commission the

12 names of any attorneys, agents, and other persons

13 engaged by or on behalf of such business enterprise

14 for the purpose of expediting applications made to

15 the Regional Commission for assistance of any sort,

16 under this Act, and the fees paid or to be paid to

17 any such person; and

18 ‘‘(2) execute an agreement binding such busi19 ness enterprise, for a period of 2 years after such

20 assistance is rendered by the Regional Commission

21 to such business enterprise, to refrain from employ22 ing, tendering any office or employment to, or re23 taining for professional services, any person who, on

24 the date such assistance or any part thereof was

25 rendered, or within the 1-year period ending on such
584

•HR 2491 RH

1 date, shall have served as an officer, attorney, agent,

2 or employee, occupying a position or engaging in ac3 tivities which the Regional Commission determines

4 involves discretion with respect to the granting of

5 assistance under this Act.

6 ‘‘SEC. 711. PERSONAL FINANCIAL INTERESTS.

7 ‘‘(a) IN GENERAL.—Except as permitted by sub8 section (b), no State member or alternate and no officer

9 or employee of a Regional Commission shall participate

10 personally and substantially as member, alternate, officer,

11 or employee, through decision, approval, disapproval, rec12 ommendation, the rendering of advice, investigation, or

13 otherwise, in any proceeding, application, request for a

14 ruling or other determination, contract, claim, con15 troversy, or other particular matter in which, to the indi16 vidual’s knowledge, the individual, the individual’s spouse,

17 minor child, partner, organization (other than a State or

18 political subdivision thereof) in which the individual is

19 serving as officer, director, trustee, partner, or employee,

20 or any person or organization with whom the individual

21 is serving as officer, director, trustee, partner, or em22 ployee, or any person or organization with whom the indi23 vidual is negotiating or has any arrangement concerning

24 prospective employment, has a financial interest. Any indi25 vidual who shall violate the provisions of this subsection
585

•HR 2491 RH

1 shall be fined under title 18, United States Code, impris2 oned for not more than 2 years, or both.

3 ‘‘(b) EXCEPTION.—Subsection (a) shall not apply if

4 the State member, alternate, officer, or employee first ad5 vises the Regional Commission of the nature and cir6 cumstances of the proceeding, application, request for a

7 ruling or other determination, contract, claim, con8 troversy, or other particular matter and makes full disclo9 sure of the financial interest and receives in advance a

10 written determination made by the Regional Commission

11 that the interest is not so substantial as to be deemed like12 ly to affect the integrity of the services which the Regional

13 Commission may expect from such State member, alter14 nate, officer, or employee.

15 ‘‘(c) SALARIES.—No State member or alternate of a

16 Regional Commission shall receive any salary, or any con17 tribution to or supplementation of salary for the individ18 ual’s services on the Regional Commission from any

19 source other than the State of the individual. No individ20 ual detailed to serve the Regional Commission under au21 thority of section 105 shall receive any salary or any con22 tribution to or supplementation of salary for the individ23 ual’s services on the Regional Commission from any

24 source other than the State, local, or intergovernmental

25 department or agency from which he was detailed or from
586

•HR 2491 RH

1 the Regional Commission. Any individual who shall violate

2 the provisions of this subsection shall be fined under title

3 18, United States Code, imprisoned for not more than 1

4 year, or both.

5 ‘‘(d) NONAPPLICABILITY TO FEDERAL OFFICIALS.—

6 Notwithstanding any other provision of this section, the

7 Federal Cochairman (or the Federal Cochairman’s alter8 nate) and any Federal officers or employees detailed to

9 duty with a Regional Commission pursuant to section 105

10 shall not be subject to such provisions but shall remain

11 subject to sections 202 through 209 of title 18, United

12 States Code.

13 ‘‘(e) AUTHORITY TO RESCIND CERTAIN AGREE14 MENTS.—A Regional Commission may, in the Regional

15 Commission’s discretion, declare void and rescind any

16 agreement to extend financial assistance under this Act

17 entered into by the Regional Commission in relation to

18 which the Regional Commission finds that there has been

19 a violation of subsection (a) or (c) of this section or any

20 of the provisions of sections 202 through 209 of title 18,

21 United States Code.
587

•HR 2491 RH

1 ‘‘SEC. 712. MAINTENANCE OF RECORDS OF APPROVED AP2 PLICATIONS FOR FINANCIAL ASSISTANCE;

3 PUBLIC INSPECTION.

4 ‘‘(a) MAINTENANCE OF RECORD REQUIRED.—The

5 Federal Cochairman shall maintain as a permanent part

6 of the records of the Economic Development Commission

7 a list of applications approved for financial assistance

8 under this Act, which shall be kept available for public

9 inspection during the regular business hours of the Eco10 nomic Development Commission.

11 ‘‘(b) POSTING TO LIST.—The following information

12 shall be posted in such list as soon as each application

13 is approved:

14 ‘‘(1) The name of the applicant and, in the case

15 of corporate applications, the names of the officers

16 and directors thereof.

17 ‘‘(2) The amount and duration of the financial

18 assistance for which application is made.

19 ‘‘(3) The purposes for which the proceeds of the

20 financial assistance are to be used.

21 ‘‘SEC. 713. RECORDS AND AUDIT.

22 ‘‘(a) RECORDKEEPING AND DISCLOSURE REQUIRE23 MENTS.—Each recipient of assistance under this Act shall

24 keep such records as the Federal Cochairman shall pre25 scribe, including records which fully disclose the amount

26 and the disposition by such recipient of the proceeds of
588

•HR 2491 RH

1 such assistance, the total cost of the project or undertak2 ing in connection with which such assistance is given or

3 used, and the amount and nature of that portion of the

4 cost of the project or undertaking supplied by other

5 sources, and such other records as will facilitate an effec6 tive audit.

7 ‘‘(b) ACCESS TO BOOKS FOR EXAMINATION AND

8 AUDIT.—The Federal Cochairman and the Comptroller

9 General of the United States, or any of their duly author10 ized representatives, shall have access for the purpose of

11 audit and examination to any books, documents, papers,

12 and records of the recipient that are pertinent to assist13 ance received under this Act.

14 ‘‘SEC. 714. PROHIBITION AGAINST A STATUTORY CON15 STRUCTION WHICH MIGHT CAUSE DIMINU16 TION IN OTHER FEDERAL ASSISTANCE.

17 ‘‘All financial and technical assistance authorized

18 under this Act shall be in addition to any Federal assist19 ance previously authorized, and no provision of this Act

20 shall be construed as authorizing or permitting any reduc21 tion or diminution in the proportional amount of Federal

22 assistance to which any State or other entity eligible under

23 this Act would otherwise be entitled under the provisions

24 of any other Act.
589

•HR 2491 RH

1 ‘‘SEC. 715. ACCEPTANCE OF APPLICANTS’ CERTIFICATIONS.

2 ‘‘A Regional Commission may accept, when deemed

3 appropriate, the applicants’ certifications to meet the re4 quirements of this Act.

5 ‘‘TITLE VIII—FUNDING

6 ‘‘SEC. 801. AUTHORIZATION OF APPROPRIATIONS

7 ‘‘There is authorized to be appropriated to carry out

8 this Act $340,000,000 per fiscal year for each of fiscal

9 years 1996, 1997, 1998, 1999, and 2000. Such sums shall

10 remain available until expended.

11 ‘‘SEC. 802. DEFENSE CONVERSION ACTIVITIES.

12 ‘‘In addition to the appropriations authorized by sec13 tion 801, there are authorized to be appropriated to carry

14 out this Act such sums as may be necessary to provide

15 assistance for defense conversion activities. Such funding

16 may include pilot projects for privatization and economic

17 development activities for closed or realigned military in18 stallations. Such sums shall remain available until ex19 pended.’’.

20 SEC. 10512. CONFORMING AMENDMENTS.

21 Title 5, United States Code, is amended—

22 (1) in section 5314 by adding at the end the

23 following:

24 ‘‘Federal Cochairman of the Economic Develop25 ment Commission.’’; and

26 (2) in section 5316—
590

•HR 2491 RH

1 (A) by striking the following:

2 ‘‘Administrator for Economic Development.’’;

3 and

4 (B) by adding at the end the following:

5 ‘‘Alternate for the Federal Cochairman of the

6 Economic Development Commission.’’.

7 SEC. 10513. SAVINGS PROVISIONS.

8 (a) LEGAL DOCUMENTS.—All orders, determinations,

9 rules, regulations, permits, grants, loans, contracts, agree10 ments, certificates, licenses, and privileges—

11 (1) that have been issued, made, granted, or al12 lowed to become effective by the President, the Sec13 retary of Commerce, any officer or employee of any

14 office transferred by this chapter, or any other Gov15 ernment official, or by a court of competent jurisdic16 tion, in the performance of any function that is

17 transferred by this chapter; and

18 (2) that are in effect on the effective date of

19 such transfer (or become effective after such date

20 pursuant to their terms as in effect on such effective

21 date),

22 shall continue in effect according to their terms until

23 modified, terminated, superseded, set aside, or revoked in

24 accordance with law by the President, any other author-
591

•HR 2491 RH

1 ized official, a court of competent jurisdiction, or operation

2 of law.

3 (b) PROCEEDINGS.—This chapter shall not affect any

4 proceedings or any application for any benefits, service,

5 license, permit, certificate, or financial assistance pending

6 on the date of the enactment of this Act before an office

7 transferred by this chapter, but such proceedings and ap8 plications shall be continued. Orders shall be issued in

9 such proceedings, appeals shall be taken therefrom, and

10 payments shall be made pursuant to such orders, as if this

11 chapter had not been enacted, and orders issued in any

12 such proceeding shall continue in effect until modified, ter13 minated, superseded, or revoked by a duly authorized offi14 cial, by a court of competent jurisdiction, or by operation

15 of law. Nothing in this subsection shall be considered to

16 prohibit the discontinuance or modification of any such

17 proceeding under the same terms and conditions and to

18 the same extent that such proceeding could have been dis19 continued or modified if this chapter had not been en20 acted.

21 (c) SUITS.—This chapter shall not affect suits com22 menced before the date of the enactment of this Act, and

23 in all such suits, proceeding shall be had, appeals taken,

24 and judgments rendered in the same manner and with the

25 same effect as if this chapter had not been enacted.
592

•HR 2491 RH

1 (d) NONABATEMENT OF ACTIONS.—No suit, action,

2 or other proceeding commenced by or against the Depart3 ment of Commerce or the Secretary of Commerce, or by

4 or against any individual in the official capacity of such

5 individual as an officer or employee of an office trans6 ferred by this chapter, shall abate by reason of the enact7 ment of this chapter.

8 (e) CONTINUANCE OF SUITS.—If any officer of the

9 Department of Commerce in the official capacity of such

10 officer is party to a suit with respect to a function of the

11 officer, and under this chapter such function is transferred

12 to any other officer or office, then such suit shall be con13 tinued with the other officer or the head of such other

14 office, as applicable, substituted or added as a party.

15 SEC. 10514. REFERENCES.

16 Any reference in any other Federal law, Executive

17 order, rule, regulation, or delegation of authority, or any

18 document of or pertaining to an office from which a func19 tion is transferred by this chapter—

20 (1) to the Secretary of Commerce or an officer

21 of the Department of Commerce, is deemed to refer

22 to the head of the department or office to which

23 such function is transferred; or

24 (2) to the Department of Commerce or an

25 agency in the Department of Commerce is deemed
593

•HR 2491 RH

1 to refer to the department or office to which such

2 function is transferred.

3 CHAPTER 2—APPALACHIAN REGIONAL

4 DEVELOPMENT

5 SEC. 10521. FINDINGS AND PURPOSES.

6 Section 2 of the Appalachian Regional Development

7 Act of 1965 (40 U.S.C. App. 2) is amended by adding

8 at the end the following:

9 ‘‘(c) 1995 FINDINGS AND PURPOSES.—The Congress

10 further finds and declares that, while substantial progress

11 has been made in fulfilling many of the objectives of this

12 Act, rapidly changing national and global economies over

13 the past decade have created new problems and challenges

14 for rural areas throughout the Nation and especially for

15 the Appalachian region. It is, therefore, also the purpose

16 of this Act to assist the region in providing the infrastruc17 ture necessary for economic and human resource develop18 ment, in developing its industry, in building entrepreneur19 ial communities, in generating a diversified regional econ20 omy, and in making its industrial and commercial re21 sources more competitive in national and world markets.

22 It is further the purpose of this Act to provide a frame23 work for coordinating Federal, State, and local initiatives

24 to respond to the economic competitive challenge through

25 improving the skills of the region’s workforce, adapting
594

•HR 2491 RH

1 and applying new technologies for the region’s businesses,

2 and improving the access of the region’s businesses to the

3 technical and financial resources necessary to their devel4 opment. Finally, it is the purpose of this Act to address

5 the needs of severely and persistently distressed and un6 derdeveloped areas of the region so as to provide a fairer

7 opportunity for the people of the region to share the qual8 ity of life generally enjoyed by citizens across this Na9 tion.’’.

10 SEC. 10522. MEETINGS.

11 (a) ANNUAL MEETING REQUIREMENT.—Section

12 101(a) of the Appalachian Regional Development Act of

13 1965 (40 U.S.C. App. 101(a)) is amended by adding at

14 the end the following: ‘‘The Commission shall conduct at

15 least one meeting each year with the Federal Cochairman

16 and at least a majority of the State members present.’’.

17 (b) ADDITIONAL MEETINGS BY ELECTRONIC

18 MEANS.—Section 101 of such Act (40 U.S.C. App. 101)

19 is amended—

20 (1) in subsection (a), as amended by subsection

21 (a) of this section, by adding at the end the follow22 ing: ‘‘The Commission may conduct such additional

23 meetings by electronic means as the Commission

24 considers advisable, including meetings to decide

25 matters requiring an affirmative vote.’’; and
595

•HR 2491 RH

1 (2) in subsection (c) by striking ‘‘to be present’’

2 at the end of the fourth sentence.

3 (c) DECISIONS REQUIRING A QUORUM.—Section

4 101(b) of such Act (40 U.S.C. App. 101(b)) is amended

5 by striking the third sentence and inserting the following:

6 ‘‘No decision involving Commission policy, approval of

7 State, regional, or subregional development plans or imple8 menting investment programs, any modification or revi9 sion of the Appalachian Regional Commission Code, any

10 allocation of funds among the State, or any designation

11 of a distressed county or an economically competitive

12 county may be made without a quorum of State mem13 bers.’’.

14 SEC. 10523. AUTHORIZATIONS FOR ADMINISTRATIVE EX15 PENSES.

16 Section 105(b) of the Appalachian Regional Develop17 ment Act of 1965 (40 U.S.C. App. 105(b)) is amended

18 to read as follows:

19 ‘‘(b) AUTHORIZATION OF APPROPRIATIONS.—

20 ‘‘(1) IN GENERAL.—There is authorized to be

21 appropriated to carry out this section $3,645,000

22 per fiscal year for each of fiscal years 1996 through

23 2000. Such sums shall remain available until ex24 pended.
596

•HR 2491 RH

1 ‘‘(2) EXPENSES OF FEDERAL COCHAIRMAN.—

2 Of the amounts appropriated pursuant to paragraph

3 (1), not to exceed $1,245,000 per fiscal year for

4 each of fiscal years 1996 through 2000 shall be

5 available for expenses of the Federal Cochairman,

6 the Federal Cochairman’s alternate, and the Federal

7 Cochairman’s staff.’’.

8 SEC. 10524. ADMINISTRATIVE POWERS OF COMMISSION.

9 (a) AUTHORITY TO LEASE.—Section 106(7) of the

10 Appalachian Regional Development Act of 1965 (40

11 U.S.C. App. 106(7)) is amended—

12 (1) by inserting ‘‘subject to the requirements of

13 the Federal Property and Administrative Services

14 Act of 1949,’’ after ‘‘(7)’’;

15 (2) by striking ‘‘notwithstanding any other pro16 vision of law,’’; and

17 (3) by striking ‘‘1982’’ and inserting ‘‘2000’’.

18 (b) AUTHORITY TO MAINTAIN TEMPORARY OF19 FICE.—Section 106(8) of such Act (40 U.S.C. App.

20 106(8)) is amended by inserting ‘‘subject to the require21 ments of the Federal Property and Administrative Serv22 ices Act of 1949,’’ after ‘‘(8)’’.

23 SEC. 10525. HIGHWAY SYSTEM.

24 (a) AUTHORIZATION OF APPROPRIATIONS.—Section

25 201(g) of the Appalachian Regional Development Act of
597

•HR 2491 RH

1 1965 (40 U.S.C. App. 201(g)) is amended to read as fol2 lows:

3 ‘‘(g) AUTHORIZATION OF APPROPRIATIONS.—There

4 is authorized to be appropriated to carry out this section

5 $90,000,000 per fiscal year for each of fiscal years 1996

6 through 2000. Such sums shall remain available until ex7 pended.’’.

8 (b) COST SHARING.—

9 (1) IN GENERAL.—Section 201(h)(1) of such

10 Act (40 U.S.C. App. 201(h)(1)) is amended by strik11 ing ‘‘70 per centum’’ and inserting ‘‘80 percent’’.

12 (2) APPLICABILITY.—The amendment made by

13 paragraph (1) shall apply to projects approved after

14 March 31, 1979.

15 SEC. 10526. COST SHARING OF DEMONSTRATION HEALTH

16 PROJECTS.

17 (a) OPERATION COSTS.—Section 202(c) of the Appa18 lachian Regional Development Act of 1965 (40 U.S.C.

19 App. 202(c)) is amended in the first sentence by striking

20 ‘‘100 per centum of the costs thereof’’ and all that follows

21 through the period at the end of the second sentence and

22 inserting ‘‘50 percent of the costs thereof (or 80 percent

23 of such costs in the case of a project to be carried out

24 in a county for which a distressed county designation is

25 in effect under section 226).’’.
598

•HR 2491 RH

1 (b) COST SHARING.—Section 202 of such Act (40

2 U.S.C. App. 202) is amended by adding at the end the

3 following:

4 ‘‘(f) MAXIMUM COMMISSION CONTRIBUTION AFTER

5 SEPTEMBER 30, 1995.—After September 30, 1995, not

6 more than 50 percent of any project cost eligible for finan7 cial assistance under this section may be provided from

8 funds appropriated to carry out this Act; except that such

9 maximum Commission contribution may be increased to

10 80 percent, or to the percentage of the maximum Federal

11 contribution authorized by this section, whichever is less,

12 for a project to be carried out in a county for which a

13 distressed county designation is in effect under section

14 226.’’.

15 SEC. 10527. REPEAL OF LAND STABILIZATION, CONSERVA16 TION, AND EROSION CONTROL PROGRAM.

17 Section 203 of the Appalachian Regional Develop18 ment Act of 1965 (40 U.S.C. App. 203) is repealed.

19 SEC. 10528. REPEAL OF TIMBER DEVELOPMENT PROGRAM.

20 Section 204 of the Appalachian Regional Develop21 ment Act of 1965 (40 U.S.C. App. 204) is repealed.

22 SEC. 10529. REPEAL OF MINING AREA RESTORATION PRO23 GRAM.

24 Section 205 of the Appalachian Regional Develop25 ment Act of 1965 (40 U.S.C. App. 205) is repealed.
599

•HR 2491 RH

1 SEC. 10530. REPEAL OF WATER RESOURCE SURVEY.

2 Section 206 of the Appalachian Regional Develop3 ment Act of 1965 (40 U.S.C. App. 206) is repealed.

4 SEC. 10531. COST SHARING OF HOUSING PROJECTS.

5 (a) LOANS.—Section 207(b) of the Appalachian Re6 gional Development Act of 1965 (40 U.S.C. App. 207(b))

7 is amended by striking ‘‘80 per centum’’ and inserting ‘‘50

8 percent (or 80 percent in the case of a project to be carried

9 out in a county for which a distressed county designation

10 is in effect under section 226)’’.

11 (b) GRANTS.—Section 207(c)(1) of such Act (40

12 U.S.C. 207(c)(1)) is amended by striking ‘‘80 per cen13 tum’’ and inserting ‘‘50 percent (or 80 percent in the case

14 of a project to be carried out in a county for which a dis15 tressed county designation is in effect under section

16 226)’’.

17 SEC. 10532. REPEAL OF AIRPORT SAFETY IMPROVEMENTS

18 PROGRAM.

19 Section 208 of the Appalachian Regional Develop20 ment Act of 1965 (40 U.S.C. App. 208) is repealed.

21 SEC. 10533. COST SHARING OF VOCATIONAL EDUCATION

22 AND EDUCATION DEMONSTRATION

23 PROJECTS.

24 (a) OPERATION COSTS.—Section 211(b)(3) of the

25 Appalachian Regional Development Act of 1965 (40

26 U.S.C. App. 211(b)(3)) is amended in the first sentence
600

•HR 2491 RH

1 by striking ‘‘100 per centum of the costs thereof’’ and all

2 that follows through the period at the end of the second

3 sentence and inserting ‘‘50 percent of the costs thereof

4 (or 80 percent of such costs in the case of a project to

5 be carried out in a county for which a distressed county

6 designation is in effect under section 226).’’

7 (b) COST SHARING.—Section 211 of such Act (40

8 U.S.C. App. 211) is amended by adding at the end the

9 following:

10 ‘‘(c) MAXIMUM COMMISSION CONTRIBUTION AFTER

11 SEPTEMBER 30, 1995.—After September 30, 1995, not

12 more than 50 percent of any project cost eligible for finan13 cial assistance under this section may be provided from

14 funds appropriated to carry out this Act; except that such

15 maximum Commission contribution may be increased to

16 80 percent, or to the percentage of the maximum Federal

17 contribution authorized by this section, whichever is less,

18 for a project to be carried out in a county for which a

19 distressed county designation is in effect under section

20 226.’’.

21 SEC. 10534. SEWAGE TREATMENT WORKS PROGRAM.

22 Section 212 of the Appalachian Regional Develop23 ment Act of 1965 (40 U.S.C. App. 212) is repealed.
601

•HR 2491 RH

1 SEC. 10535. REPEAL OF AMENDMENTS TO HOUSING ACT OF

2 1954.

3 Section 213 of the Appalachian Regional Develop4 ment Act of 1965 (40 U.S.C. App. 213) is repealed.

5 SEC. 10536. SUPPLEMENTS TO FEDERAL GRANT-IN-AID

6 PROGRAMS.

7 (a) AVAILABILITY OF AMOUNTS.—The first sentence

8 of section 214(a) of the Appalachian Regional Develop9 ment Act of 1965 (40 U.S.C. App. 214(a)) is amended

10 by striking ‘‘the President is authorized to provide funds

11 to the Federal Cochairman to be used’’ and inserting ‘‘the

12 Federal Cochairman may use amounts made available to

13 carry out this section’’.

14 (b) COST SHARING.—Section 214(b) of such Act (40

15 U.S.C. App. 214(b)) is amended—

16 (1) by striking ‘‘(b)’’ and inserting ‘‘(b)(1)’’;

17 and

18 (2) by adding at the end the following:

19 ‘‘(2) After September 30, 1995, not more than 50

20 percent of any project cost eligible for financial assistance

21 under this section may be provided from funds appro22 priated to carry out this Act; except that such maximum

23 Commission contribution may be increased to 80 percent

24 for a project to be carried out in a county for which a

25 distressed county designation is in effect under section

26 226.’’.
602

•HR 2491 RH

1 (c) FEDERAL GRANT-IN-AID PROGRAMS DEFINED.—

2 The first sentence of section 214(c) of such Act (40 U.S.C.

3 App. 214(c)) is amended by striking ‘‘on or before Decem4 ber 31, 1980,’’.

5 (d) LIMITATION ON COVERED ROAD PROJECTS.—

6 The second sentence of section 214(c) of such Act is

7 amended by inserting ‘‘authorized by title 23, United

8 States Code’’ after ‘‘road construction’’.

9 SEC. 10537. PROGRAM DEVELOPMENT CRITERIA.

10 (a) CONSIDERATIONS.—Section 224(a) of the Appa11 lachian Regional Development Act of 1965 (40 U.S.C.

12 App. 224(a)) is amended by inserting before the semicolon

13 at the end of paragraph (1) the following: ‘‘or in a severely

14 and persistently distressed and underdeveloped county or

15 area’’.

16 (b) OUTCOME MEASUREMENTS.—Section 224(a) of

17 such Act is further amended—

18 (1) by striking the period at the end of para19 graph (5) and inserting ‘‘; and’’; and

20 (2) by adding at the end the following:

21 ‘‘(6) the extent to which the project design pro22 vides for detailed outcome measurements by which

23 grant expenditures may be justified.’’.
603

•HR 2491 RH

1 (c) REMOVAL OF LIMITATIONS.—Section 224(b) of

2 such Act (40 U.S.C. App. 224(b)) is amended to read as

3 follows:

4 ‘‘(b) LIMITATION.—No financial assistance made

5 available under this Act may be used to assist establish6 ments relocating from one area to another.’’.

7 SEC. 10538. DISTRESSED AND ECONOMICALLY COMPETI8 TIVE COUNTIES.

9 Part C of title II of the Appalachian Regional Devel10 opment Act of 1965 (40 U.S.C. App. 221–225) is amend11 ed by adding at the end the following:

12 ‘‘SEC. 226. DISTRESSED AND ECONOMICALLY COMPETITIVE

13 COUNTIES.

14 ‘‘(a) DESIGNATIONS.—Not later than 90 days after

15 the effective date of the Economic Development Partner16 ship Act of 1995, and annually thereafter, the Commis17 sion, in accordance with such criteria as the Commission

18 may establish, shall—

19 ‘‘(1) designate as ‘distressed counties’ those

20 counties in the region that are the most severely and

21 persistently distressed and underdeveloped; and

22 ‘‘(2) designate as ‘economically competitive

23 counties’ those counties in the region which have at24 tained substantial economic parity with the rest of

25 the Nation.
604

•HR 2491 RH

1 ‘‘(b) PERIOD OF EFFECTIVENESS.—In making an2 nual designations under subsection (a), the Commission

3 may discontinue an existing designation at the discretion

4 of the Commission; except that any designation of a dis5 tressed county shall remain in effect for the 3-year period

6 beginning on the date of the designation.

7 ‘‘(c) FUNDING PROHIBITION FOR PROJECTS LO8 CATED IN ECONOMICALLY COMPETITIVE COUNTIES.—

9 ‘‘(1) IN GENERAL.—Except as provided by

10 paragraph (2), no funds may be provided under this

11 Act for a project located in a county for which an

12 economically competitive county designation is in ef13 fect under this section.

14 ‘‘(2) EXCEPTIONS.—The prohibition established

15 by paragraph (1) shall not apply to—

16 ‘‘(A) projects on the Appalachian develop17 ment highway system authorized by section

18 201;

19 ‘‘(B) local development district administra20 tive projects authorized by section 302(a)(1); or

21 ‘‘(C) discretionary grants authorized by

22 section 302(a).’’.
605

•HR 2491 RH

1 SEC. 10539. GRANTS FOR ADMINISTRATIVE EXPENSES AND

2 COMMISSION PROJECTS.

3 (a) AVAILABILITY OF AMOUNTS.—Section 302(a) of

4 the Appalachian Regional Development Act of 1965 (40

5 U.S.C. App. 302(a)) is amended—

6 (1) by striking ‘‘The President’’ and inserting

7 ‘‘The Commission’’; and

8 (2) in paragraphs (1), (2), and (3) by striking

9 ‘‘to the Commission’’ each place it appears.

10 (b) COST SHARING.—Section 302(a) of such Act is

11 further amended—

12 (1) in paragraph (1) by striking ‘‘75 per cen13 tum’’ and inserting ‘‘50 percent’’; and

14 (2) by adding at the end the following: ‘‘After

15 September 30, 1995, not more than 50 percent of

16 the cost of any activity eligible for financial assist17 ance under this section may be provided from funds

18 appropriated to carry out this Act (or 80 percent of

19 such costs in the case of a project to be carried out

20 in a county for which a distressed county designa21 tion is in effect under section 226); except that dis22 cretionary grants by the Commission to implement

23 significant regional initiatives, to take advantage of

24 special development opportunities, or to respond to

25 emergency economic distress in the region may be

26 made without regard to such percentage limitations.
606

•HR 2491 RH

1 The aggregate amount of discretionary grants re2 ferred to in the preceding sentence in any fiscal year

3 shall not exceed 10 percent of the amounts appro4 priated under section 401 for such fiscal year.’’.

5 (c) REPEALS.—Section 302 of such Act (40 U.S.C.

6 App. 302) is amended—

7 (1) by striking paragraphs (3) and (4) of sub8 section (b);

9 (2) by striking subsection (d); and

10 (3) by striking subsection (e).

11 SEC. 10540. AUTHORIZATION OF APPROPRIATIONS FOR

12 GENERAL PROGRAM.

13 Section 401 of the Appalachian Regional Develop14 ment Act of 1965 (40 U.S.C. App. 401) is amended to

15 read as follows:

16 ‘‘SEC. 401. AUTHORIZATION OF APPROPRIATIONS.

17 ‘‘In addition to the appropriations authorized by sec18 tion 105 for administrative expenses and by section 201(g)

19 for the Appalachian development highway system and

20 local access roads, there is authorized to be appropriated

21 to the Commission to carry out this Act $88,355,000 per

22 fiscal year for each of fiscal years 1996 through 2000.

23 Such sums shall remain available until expended.’’.
607

•HR 2491 RH

1 SEC. 10541. EXTENSION OF TERMINATION DATE.

2 Section 405 of the Appalachian Regional Develop3 ment Act of 1965 (40 U.S.C. App. 405) is amended by

4 striking ‘‘1982’’ and inserting ‘‘2000’’.

5 TITLE XI—COMMITTEE ON

6 VETERANS’ AFFAIRS

7 SEC. 11001. SHORT TITLE; TABLE OF CONTENTS.

8 (a) SHORT TITLE.—This title may be cited as the

9 ‘‘Veterans Reconciliation Act of 1995’’.

10 (b) TABLE OF CONTENTS.—The contents of this title

11 are as follows:

TITLE XI—COMMITTEE ON VETERANS’ AFFAIRS

Sec. 11001. Short title; table of contents.

Subtitle A—Extension of Temporary Authorities

Sec. 11011. Authority to require that certain veterans agree to make

copayments in exchange for receiving health-care benefits.

Sec. 11012. Medical care cost recovery authority.

Sec. 11013. Income verification authority.

Sec. 11014. Limitation on pension for certain recipients of medicaid-covered

nursing home care.

Sec. 11015. Home loan fees.

Sec. 11016. Procedures applicable to liquidation sales on defaulted home loans

guaranteed by the Department of Veterans Affairs.

Subtitle B—Other Matters

Sec. 11021. Revision to prescription drug copayment.

Sec. 11022. Rounding down of cost-of-living adjustments in compensation and

DIC rates.

Sec. 11023. Revised standard for liability for injuries resulting from Department of Veterans Affairs treatment.

Sec. 11024. Enhanced loan asset sale authority.

Sec. 11025. Withholding of payments and benefits.

Subtitle C—Health Care Eligibility Reform

Sec. 11031. Hospital care and medical services.

Sec. 11032. Extension of authority to priority health care for Persian Gulf veterans.

Sec. 11033. Prosthetics.

Sec. 11034. Management of health care.
608

•HR 2491 RH

Sec. 11035. Improved efficiency in health care resource management.

Sec. 11036. Sharing agreements for specialized medical resources.

Sec. 11037. Personnel furnishing shared resources.

1 Subtitle A—Extension of

2 Temporary Authorities

3 SEC. 11011. AUTHORITY TO REQUIRE THAT CERTAIN VET4 ERANS AGREE TO MAKE COPAYMENTS IN EX5 CHANGE FOR RECEIVING HEALTH-CARE BEN6 EFITS.

7 (a) HOSPITAL AND MEDICAL CARE.—Section

8 8013(e) of the Omnibus Budget Reconciliation Act of

9 1990 (38 U.S.C. 1710 note) is amended by striking out

10 ‘‘September 30, 1998’’ and inserting in lieu thereof ‘‘Sep11 tember 30, 2002’’.

12 (b) OUTPATIENT MEDICATIONS.—Section 1722A(c)

13 of title 38, United States Code, is amended by striking

14 out ‘‘September 30, 1998’’ and inserting in lieu thereof

15 ‘‘September 30, 2002’’.

16 SEC. 11012. MEDICAL CARE COST RECOVERY AUTHORITY.

17 Section 1729(a)(2)(E) of title 38, United States

18 Code, is amended by striking out ‘‘before October 1,

19 1998,’’ and inserting ‘‘before October 1, 2002,’’.

20 SEC. 11013. INCOME VERIFICATION AUTHORITY.

21 (a) TITLE 38.—Section 5317(g) of title 38, United

22 States Code, is amended by striking out ‘‘September 30,

23 1998’’ and inserting in lieu thereof ‘‘September 30,

24 2002’’.
609

•HR 2491 RH

1 (b) INTERNAL REVENUE CODE OF 1986.—Section

2 6103(l)(7)(D) of the Internal Revenue Code of 1986 is

3 amended by striking out ‘‘Clause (viii) shall not apply

4 after September 30, 1998’’ and inserting in lieu thereof

5 ‘‘Clause (viii) shall not apply after September 30, 2002’’.

6 SEC. 11014. LIMITATION ON PENSION FOR CERTAIN RECIPI7 ENTS OF MEDICAID-COVERED NURSING

8 HOME CARE.

9 Section 5503(f)(7) of title 38, United States Code,

10 is amended by striking out ‘‘September 30, 1998’’ and in11 serting in lieu thereof ‘‘September 30, 2002’’.

12 SEC. 11015. HOME LOAN FEES.

13 Section 3729(a) of title 38, United States Code, is

14 amended—

15 (1) in paragraph (4), by striking out ‘‘October

16 1, 1998’’ and inserting in lieu thereof ‘‘October 1,

17 2002’’; and

18 (2) in paragraph (5)(C), by striking out ‘‘Octo19 ber 1, 1998’’ and inserting in lieu thereof ‘‘October

20 1, 2002’’.
610

•HR 2491 RH

1 SEC. 11016. PROCEDURES APPLICABLE TO LIQUIDATION

2 SALES ON DEFAULTED HOME LOANS GUAR3 ANTEED BY THE DEPARTMENT OF VETERANS

4 AFFAIRS.

5 Section 3732(c)(11) of title 38, United States Code,

6 is amended by striking out ‘‘October 1, 1998’’ and insert7 ing ‘‘October 1, 2002’’.

8 Subtitle B—Other Matters

9 SEC. 11021. REVISION TO PRESCRIPTION DRUG

10 COPAYMENT.

11 (a) INCREASE IN AMOUNT OF COPAYMENT.—Section

12 1722A(a) of title 38, United States Code, is amended—

13 (1) in paragraph (1), by striking out ‘‘$2’’ and

14 inserting in lieu thereof ‘‘$3’’;

15 (2) by striking out paragraph (2); and

16 (3) by redesignating paragraph (3) as para17 graph (2).

18 (b) RECOVERY OF INDEBTEDNESS.—(1) Section

19 5302 of such title is amended by adding at the end the

20 following new subsection:

21 ‘‘(f) The Secretary may not waive under this section

22 the recovery of any payment or the collection of any in23 debtedness owed under section 1722A of this title.’’.

24 (2) The amendment made by paragraph (1) shall

25 apply with respect to amounts that become due to the

26 United States under section 1722A of title 38, United
611

•HR 2491 RH

1 States Code, on or after the date of the enactment of this

2 Act.

3 SEC. 11022. ROUNDING DOWN OF COST-OF-LIVING ADJUST4 MENTS IN COMPENSATION AND DIC RATES.

5 (a) FISCAL YEAR 1996 COLA.—(1) Effective as of

6 December 1, 1995, the Secretary of Veterans Affairs shall

7 recompute any increase in an adjustment that is otherwise

8 provided by law to be effective during fiscal year 1996 in

9 the rates of disability compensation and dependency and

10 indemnity compensation paid by the Secretary as such

11 rates were in effect on November 30, 1995. The recom12 putation shall provide for the same percentage increase

13 as provided under such law, but with amounts so recom14 puted (if not a whole dollar amount) rounded down to the

15 next lower whole dollar amount (rather than to the nearest

16 whole dollar amount) and with each old-law DIC rate in17 creased by the amount by which the new-law DIC rate

18 is increased (rather than by a uniform percentage).

19 (2) For purposes of paragraph (1):

20 (A) The term ‘‘old-law DIC rate’’ means a dol21 lar amount in effect under section 1311(a)(3) of title

22 38, United States Code.

23 (B) The term ‘‘new-law DIC rate’’ means the

24 dollar amount in effect under section 1311(a)(1) of

25 title 38, United States Code.
612

•HR 2491 RH

1 (b) OUT-YEAR COMPENSATION COLAS.—(1) Chap2 ter 11 of title 38, United States Code, is amended by in3 serting after section 1102 the following new section:

4 ‘‘§ 1103. Cost-of-living adjustments

5 ‘‘(a) In the computation of cost-of-living adjustments

6 for fiscal years 1997 through 2002 in the rates of, and

7 dollar limitations applicable to, compensation payable

8 under this chapter, such adjustments shall be made by a

9 uniform percentage that is no more than the percentage

10 equal to the social security increase for that fiscal year,

11 with all increased monthly rates and limitations (other

12 than increased rates or limitations equal to a whole dollar

13 amount) rounded down to the next lower whole dollar

14 amount.

15 ‘‘(b) For purposes of this section, the term ‘social se16 curity increase’ means the percentage by which benefit

17 amounts payable under title II of the Social Security Act

18 (42 U.S.C. 401 et seq.) are increased for any fiscal year

19 as a result of a determination under section 215(i) of such

20 Act (42 U.S.C. 415(i)).’’.

21 (2) The table of sections at the beginning of such

22 chapter is amended by inserting after the item relating

23 to section 1102 the following new item:

‘‘1103. Cost-of-living adjustments.’’.
613

•HR 2491 RH

1 (c) OUT-YEAR DIC COLAS.—(1) Chapter 13 of title

2 38, United States Code, is amended by inserting after sec3 tion 1302 the following new section:

4 ‘‘§ 1303. Cost-of-living adjustments

5 ‘‘(a) In the computation of cost-of-living adjustments

6 for fiscal years 1997 through 2002 in the rates of depend7 ency and indemnity compensation payable under this

8 chapter, such adjustments (except as provided in sub9 section (b)) shall be made by a uniform percentage that

10 is no more than the percentage equal to the social security

11 increase for that fiscal year, with all increased monthly

12 rates (other than increased rates equal to a whole dollar

13 amount) rounded down to the next lower whole dollar

14 amount.

15 ‘‘(b)(1) Cost-of-living adjustments for each of fiscal

16 years 1997 through 2002 in old-law DIC rates shall be

17 in a whole dollar amount that is no greater than the

18 amount by which the new-law DIC rate is increased for

19 that fiscal year as determined under subsection (a).

20 ‘‘(2) For purposes of paragraph (1):

21 ‘‘(A) The term ‘old-law DIC rates’ means the

22 dollar amounts in effect under section 1311(a)(3) of

23 this title.
614

•HR 2491 RH

1 ‘‘(B) The term ‘new-law DIC rate’ means the

2 dollar amount in effect under section 1311(a)(1) of

3 this title.

4 ‘‘(c) For purposes of this section, the term ‘social se5 curity increase’ means the percentage by which benefit

6 amounts payable under title II of the Social Security Act

7 (42 U.S.C. 401 et seq.) are increased for any fiscal year

8 as a result of a determination under section 215(i) of such

9 Act (42 U.S.C. 415(i)).’’.

10 (2) The table of sections at the beginning of such

11 chapter is amended by inserting after the item relating

12 to section 1302 the following new item:

‘‘1303. Cost-of-living adjustments.’’.

13 SEC. 11023. REVISED STANDARD FOR LIABILITY FOR INJU14 RIES RESULTING FROM DEPARTMENT OF

15 VETERANS AFFAIRS TREATMENT.

16 (a) REVISED STANDARD.—Section 1151 of title 38,

17 United States Code, is amended—

18 (1) by designating the second sentence as sub19 section (c);

20 (2) by striking out the first sentence and insert21 ing in lieu thereof the following:

22 ‘‘(a) Compensation under this chapter and depend23 ency and indemnity compensation under chapter 13 of this

24 title shall be awarded for a qualifying additional disability

25 of a veteran or the qualifying death of a veteran in the
615

•HR 2491 RH

1 same manner as if such disability or death were service2 connected.

3 ‘‘(b)(1) For purposes of this section, a disability or

4 death is a qualifying additional disability or a qualifying

5 death only if the disability or death—

6 ‘‘(A) was caused by Department health care

7 and was a proximate result of—

8 ‘‘(i) negligence on the part of the Depart9 ment in furnishing the Department health care;

10 or

11 ‘‘(ii) an event not reasonably foreseeable;

12 or

13 ‘‘(B) was incurred as a proximate result of the

14 provision of training and rehabilitation services by

15 the Secretary (including by a service-provider used

16 by the Secretary for such purpose under section

17 3115 of this title) as part of an approved rehabilita18 tion program under chapter 31 of this title.

19 ‘‘(2) For purposes of this section, the term ‘Depart20 ment health care’ means hospital care, medical or surgical

21 treatment, or an examination that is furnished under any

22 law administered by the Secretary to a veteran by a De23 partment employee or in a Department facility (as defined

24 in section 1701(3)(A) of this title).
616

•HR 2491 RH

1 ‘‘(3) A disability or death of a veteran which is the

2 result of the veteran’s willful misconduct is not a qualify3 ing disability or death for purposes of this section.’’; and

4 (3) by adding at the end the following:

5 ‘‘(d) Effective with respect to injuries, aggravations

6 of injuries, and deaths occurring after September 30,

7 2002, a disability or death is a qualifying additional dis8 ability or a qualifying death for purposes of this section

9 (notwithstanding the provisions of subsection (b)(1)) if the

10 disability or death—

11 ‘‘(1) was the result of Department health care;

12 or

13 ‘‘(2) was the result of the pursuit of a course

14 of vocational rehabilitation under chapter 31 of this

15 title.’’.

16 (b) CONFORMING AMENDMENTS.—Subsection (c) of

17 such section, as designated by subsection (a)(1), is amend18 ed—

19 (1) by striking out ‘‘, aggravation,’’ both places

20 it appears; and

21 (2) by striking out ‘‘sentence’’ and inserting in

22 lieu thereof ‘‘subsection’’.

23 (c) EFFECTIVE DATE.—The amendments made by

24 this section shall apply to any administrative or judicial

25 determination of eligibility for benefits under section 1151
617

•HR 2491 RH

1 of title 38, United States Code, based on a claim that is

2 received by the Secretary on or after October 1, 1995, in3 cluding any such determination based on an original appli4 cation or an application seeking to reopen, revise, recon5 sider, or otherwise readjudicate any claim for benefits

6 under section 1151 of that title or any predecessor provi7 sion of law.

8 SEC. 11024. ENHANCED LOAN ASSET SALE AUTHORITY.

9 Section 3720(h)(2) of title 38, United States Code,

10 is amended by striking out ‘‘December 31, 1995’’ and in11 serting in lieu thereof ‘‘September 30, 1996’’.

12 SEC. 11025. WITHHOLDING OF PAYMENTS AND BENEFITS.

13 (a) NOTICE REQUIRED IN LIEU OF CONSENT OR

14 COURT ORDER.—Section 3726 of title 38, United States

15 Code, is amended by striking out ‘‘unless’’ and all that

16 follows and inserting in lieu thereof the following: ‘‘unless

17 the Secretary provides such veteran or surviving spouse

18 with notice by certified mail with return receipt requested

19 of the authority of the Secretary to waive the payment

20 of indebtedness under section 5302(b) of this title. If the

21 Secretary does not waive the entire amount of the liability,

22 the Secretary shall then determine whether the veteran or

23 surviving spouse should be released from liability under

24 section 3713(b) of this title. If the Secretary determines

25 that the veteran or surviving spouse should not be released
618

•HR 2491 RH

1 from liability, the Secretary shall notify the veteran or sur2 viving spouse of that determination and provide a notice

3 of the procedure for appealing that determination, unless

4 the Secretary has previously made such determination and

5 notified the veteran or surviving spouse of the procedure

6 for appealing the determination.’’.

7 (b) CONFORMING AMENDMENT.—Section 5302(b) of

8 such title is amended by inserting ‘‘with return receipt re9 quested’’ after ‘‘certified mail’’.

10 (c) EFFECTIVE DATE.—The amendments made by

11 this section shall apply with respect to any indebtedness

12 to the United States arising pursuant to chapter 37 of

13 title 38, United States Code, before, on, or after the date

14 of the enactment of this Act.

15 Subtitle C—Health Care Eligibility

16 Reform

17 SEC. 11031. HOSPITAL CARE AND MEDICAL SERVICES.

18 (a) ELIGIBILITY FOR CARE.—Section 1710(a) of title

19 38, United States Code, is amended by striking out para20 graphs (1) and (2) and inserting the following:

21 ‘‘(a)(1) The Secretary shall, to the extent and in the

22 amount provided in advance in appropriations Acts for

23 these purposes, provide hospital care and medical services,

24 and may provide nursing home care, which the Secretary

25 determines is needed to any veteran—
619

•HR 2491 RH

1 ‘‘(A) with a compensable service-connected dis2 ability;

3 ‘‘(B) whose discharge or release from active

4 military, naval, or air service was for a compensable

5 disability that was incurred or aggravated in the line

6 of duty;

7 ‘‘(C) who is in receipt of, or who, but for a sus8 pension pursuant to section 1151 of this title (or

9 both a suspension and the receipt of retired pay),

10 would be entitled to disability compensation, but

11 only to the extent that such veteran’s continuing eli12 gibility for such care is provided for in the judgment

13 or settlement provided for in such section;

14 ‘‘(D) who is a former prisoner of war;

15 ‘‘(E) of the Mexican border period or of World

16 War I;

17 ‘‘(F) who was exposed to a toxic substance, ra18 diation, or environmental hazard, as provided in sub19 section (e); and

20 ‘‘(G) who is unable to defray the expenses of

21 necessary care as determined under section 1722(a)

22 of this title.

23 ‘‘(2) In the case of a veteran who is not described

24 in paragraph (1), the Secretary may, to the extent re25 sources and facilities are available and subject to the pro-
620

•HR 2491 RH

1 visions of subsection (f), furnish hospital care, medical

2 services, and nursing home care which the Secretary deter3 mines is needed.’’.

4 (b) CONFORMING AMENDMENTS.—(1) Section

5 1710(e) of such title is amended—

6 (A) in paragraph (1), by striking out ‘‘hospital

7 care and nursing home care’’ in subparagraphs (A),

8 (B), and (C) and inserting in lieu thereof ‘‘hospital

9 care, medical services, and nursing home care’’;

10 (B) in paragraph (2), by inserting ‘‘and medical

11 services’’ after ‘‘Hospital and nursing home care’’;

12 and

13 (C) by striking out ‘‘subsection (a)(1)(G) of

14 this section’’ each place it appears and inserting in

15 lieu thereof ‘‘subsection (a)(1)(F)’’.

16 (2) Chapter 17 of such title is amended—

17 (A) by redesignating subsection (g) of section

18 1710 as subsection (h); and

19 (B) by transferring subsection (f) of section

20 1712 of such title to section 1710 so as to appear

21 after subsection (f), redesignating such subsection as

22 subsection (g), and amending such subsection by

23 striking out ‘‘section 1710(a)(2) of this title’’ in

24 paragraph (1) and inserting in lieu thereof ‘‘sub25 section (a)(2) of this section’’.
621

•HR 2491 RH

1 (3) Section 1712 of such title is amended—

2 (A) by striking out subsections (a) and (i); and

3 (B) by redesignating subsections (b), (c), (d),

4 (h) and (j), as subsections (a), (b), (c), (d), and (e),

5 respectively.

6 SEC. 11032. EXTENSION OF AUTHORITY TO PRIORITY

7 HEALTH CARE FOR PERSIAN GULF VETER8 ANS.

9 Section 1710(e)(3) of title 38, United States Code,

10 is amended by striking out ‘‘December 31, 1995’’ and in11 serting in lieu thereof ‘‘December 31, 1998’’.

12 SEC. 11033. PROSTHETICS.

13 (a) ELIGIBILITY FOR PROSTHETICS.—Section

14 1701(6)(A)(i) of title 38, United States Code, is amend15 ed—

16 (1) by striking out ‘‘(in the case of a person

17 otherwise receiving care or services under this chap18 ter)’’ and ‘‘(except under the conditions described in

19 section 1712(a)(5)(A) of this title),’’;

20 (2) by inserting ‘‘(in the case of a person other21 wise receiving care or services under this chapter)’’

22 before ‘‘wheelchairs,’’; and

23 (3) by inserting ‘‘except that the Secretary may

24 not furnish sensori-neural aids other than in accord-
622

•HR 2491 RH

1 ance with guidelines which the Secretary shall pre2 scribe,’’ after ‘‘reasonable and necessary,’’.

3 (b) REGULATIONS.—Not later than 30 days after the

4 date of the enactment of this Act, the Secretary of Veter5 ans Affairs shall prescribe the guidelines required by the

6 amendments made by subsection (a) and shall furnish a

7 copy of those guidelines to the Committees on Veterans’

8 Affairs of the Senate and House of Representatives.

9 SEC. 11034. MANAGEMENT OF HEALTH CARE.

10 (a) IN GENERAL.—(1) Chapter 17 of title 38, United

11 States Code, is amended by inserting after section 1704

12 the following new sections:

13 ‘‘§ 1705. Management of health care: patient enroll14 ment system

15 ‘‘(a) In managing the provision of hospital care and

16 medical services under section 1710(a)(1) of this title, the

17 Secretary, in accordance with regulations the Secretary

18 shall prescribe, shall establish and operate a system of an19 nual patient enrollment. The Secretary shall manage the

20 enrollment of veterans in accordance with the following

21 priorities, in the order listed:

22 ‘‘(1) Veterans with service-connected disabilities

23 rated 30 percent or greater.
623

•HR 2491 RH

1 ‘‘(2) Veterans who are former prisoners of war

2 and veterans with service connected disabilities rated

3 10 percent or 20 percent.

4 ‘‘(3) Veterans who are in receipt of increased

5 pension based on a need of regular aid and attend6 ance or by reason of being permanently housebound

7 and other veterans who are catastrophically disabled.

8 ‘‘(4) Veterans not covered by paragraphs (1)

9 through (3) who are unable to defray the expenses

10 of necessary care as determined under section

11 1722(a) of this title.

12 ‘‘(5) All other veterans eligible for hospital care,

13 medical services, and nursing home care under sec14 tion 1710(a)(1) of this title.

15 ‘‘(b) In the design of an enrollment system under

16 subsection (a), the Secretary—

17 ‘‘(1) shall ensure that the system will be man18 aged in a manner to ensure that the provision of

19 care to enrollees is timely and acceptable in quality;

20 ‘‘(2) may establish additional priorities within

21 each priority group specified in subsection (a), as

22 the Secretary determines necessary; and

23 ‘‘(3) may provide for exceptions to the specified

24 priorities where dictated by compelling medical rea25 sons.
624

•HR 2491 RH

1 ‘‘§ 1706. Management of health care: other require2 ments

3 ‘‘(a) In managing the provision of hospital care and

4 medical services under section 1710(a) of this title, the

5 Secretary shall, to the extent feasible, design, establish

6 and manage health care programs in such a manner as

7 to promote cost-effective delivery of health care services

8 in the most clinically appropriate setting.

9 ‘‘(b) In managing the provision of hospital care and

10 medical services under section 1710(a) of this title, the

11 Secretary—

12 ‘‘(1) may contract for hospital care and medical

13 services when Department facilities are not capable

14 of furnishing such care and services economically,

15 and

16 ‘‘(2) shall make such rules and regulations re17 garding acquisition procedures or policies as the Sec18 retary considers appropriate to provide such needed

19 care and services.

20 ‘‘(c) In managing the provision of hospital care and

21 medical services under section 1710(a) of this title, the

22 Secretary shall ensure that the Department maintains its

23 capacity to provide for the specialized treatment and reha24 bilitative needs of disabled veterans described in section

25 1710(a) of this title (including veterans with spinal cord

26 dysfunction, blindness, amputations, and mental illness)
625

•HR 2491 RH

1 within distinct programs or facilities of the Department

2 that are dedicated to the specialized needs of those veter3 ans in a manner that (1) affords those veterans reasonable

4 access to care and services for those specialized needs, and

5 (2) ensures that overall capacity of the Department to pro6 vide such services is not reduced below the capacity of the

7 Department, nationwide, to provide those services, as of

8 the date of the enactment of this section.

9 ‘‘(d) In managing the provision of hospital care and

10 medical services under section 1710(a) of this title, the

11 Secretary shall ensure that any veteran with a service-con12 nected disability is provided all benefits under this chapter

13 for which that veteran was eligible before the date of the

14 enactment of this section.’’.

15 (2) The table of sections at the beginning of chapter

16 17 of such title is amended by inserting after the item

17 relating to section 1704 the following new items:

‘‘1705. Management of health care: patient enrollment system.

‘‘1706. Management of health care: other requirements.’’.

18 (b) CONFORMING AMENDMENTS TO SECTION

19 1703.—(1) Section 1703 of such title is amended—

20 (A) by striking out subsections (a) and (b); and

21 (B) in subsection (c) by—

22 (i) striking out ‘‘(c)’’, and

23 (ii) striking out ‘‘this section, sections’’

24 and inserting in lieu thereof ‘‘sections 1710,’’.
626

•HR 2491 RH

1 (2)(A) The heading of such section is amended to

2 read as follows:

3 ‘‘§ 1703. Annual report on furnishing of care and

4 services by contract’’.

5 (B) The item relating to such section in the table of

6 sections at the beginning of chapter 17 of such title is

7 amended to read as follows:

‘‘1703. Annual report on furnishing of care and services by contract.’’.

8 SEC. 11035. IMPROVED EFFICIENCY IN HEALTH CARE RE9 SOURCE MANAGEMENT.

10 (a) REPEAL OF SUNSET PROVISION.—Section 204 of

11 the Veterans Health Care Act of 1992 (Public Law 102–

12 585; 106 Stat. 4950) is repealed.

13 (b) COST RECOVERY.—Title II of such Act is further

14 amended by adding at the end the following new section:

15 ‘‘SEC. 207. AUTHORITY TO BILL HEALTH-PLAN CONTRACTS.

16 ‘‘(a) RIGHT TO RECOVER.—In the case of a primary

17 beneficiary (as described in section 201(2)(B)) who has

18 coverage under a health-plan contract, as defined in sec19 tion 1729(i)(1)(A) of title 38, United States Code, and

20 who is furnished care or services by a Department medical

21 facility pursuant to this title, the United States shall have

22 the right to recover or collect charges for such care or

23 services from such health-plan contract to the extent that

24 the beneficiary (or the provider of the care or services)

25 would be eligible to receive payment for such care or serv-
627

•HR 2491 RH

1 ices from such health-plan contract if the care or services

2 had not been furnished by a department or agency of the

3 United States. Any funds received from such health-plan

4 contract shall be credited to funds that have been allotted

5 to the facility that furnished the care or services.

6 ‘‘(b) ENFORCEMENT.—The right of the United

7 States to recover under such a beneficiary’s health-plan

8 contract shall be enforceable in the same manner as that

9 provided by subsections (a)(3), (b), (c)(1), (d), (f), (h),

10 and (i) of section 1729 of title 38, United States Code.’’.

11 SEC. 11036. SHARING AGREEMENTS FOR SPECIALIZED MED12 ICAL RESOURCES.

13 (a) REPEAL OF SECTION 8151.—(1) Subchapter IV

14 of chapter 81 of title 38, United States Code, is amend15 ed—

16 (A) by striking out section 8151; and

17 (B) by redesignating sections 8152, 8153,

18 8154, 8155, 8156, 8157, and 8158 as sections 8151,

19 8152, 8153, 8154, 8155, 8156, and 8157, respec20 tively.

21 (2) The table of sections at the beginning of chapter

22 81 is amended—

23 (A) by striking out the item relating to section

24 8151; and
628

•HR 2491 RH

1 (B) by revising the items relating to sections

2 8152, 8153, 8154, 8155, 8156, 8157, and 8158 to

3 reflect the redesignations by paragraph (1)(B).

4 (b) REVISED AUTHORITY FOR SHARING AGREE5 MENTS.—Section 8152 of such title, as redesignated by

6 subsection (a)(1)(B), is amended—

7 (1) in subsection (a)(1)(A)—

8 (A) by striking out ‘‘specialized medical re9 sources’’ and inserting in lieu thereof ‘‘health10 care resources’’; and

11 (B) by striking out ‘‘other’’ and all that

12 follows through ‘‘medical schools’’ and inserting

13 in lieu thereof ‘‘any medical school, health-care

14 provider, health-care plan, insurer, or other en15 tity or individual’’;

16 (2) in subsection (a)(2) by striking out ‘‘only’’

17 and all that follows through ‘‘are not’’ and inserting

18 in lieu thereof ‘‘if such resources are not, or would

19 not be,’’;

20 (3) in subsection (b), by striking out ‘‘reciprocal

21 reimbursement’’ in the first sentence and all that

22 follows through the period at the end of that sen23 tence and inserting in lieu thereof ‘‘payment to the

24 Department in accordance with procedures that pro-
629

•HR 2491 RH

1 vide appropriate flexibility to negotiate payment

2 which is in the best interest of the Government.’’;

3 (4) in subsection (d), by striking out ‘‘preclude

4 such payment, in accordance with—’’ and all that

5 follows through ‘‘to such facility therefor’’ and in6 serting in lieu thereof ‘‘preclude such payment to

7 such facility for such care or services’’;

8 (5) by redesignating subsection (e) as sub9 section (f); and

10 (6) by inserting after subsection (d) the follow11 ing new subsection (e):

12 ‘‘(e) The Secretary may make an arrangement that

13 authorizes the furnishing of services by the Secretary

14 under this section to individuals who are not veterans only

15 if the Secretary determines—

16 ‘‘(1) that such an arrangement will not result

17 in the denial of, or a delay in providing access to,

18 care to any veteran at that facility; and

19 ‘‘(2) that such an arrangement—

20 ‘‘(A) is necessary to maintain an accept21 able level and quality of service to veterans at

22 that facility; or

23 ‘‘(B) will result in the improvement of

24 services to eligible veterans at that facility.’’.
630

•HR 2491 RH

1 (c) CROSS-REFERENCE AMENDMENTS.—(1) Section

2 8110(c)(3)(A) of such title is amended by striking out

3 ‘‘8153’’ and inserting in lieu thereof ‘‘8152’’.

4 (2) Subsection (b) of section 8154 of such title (as

5 redesignated by subsection (a)(1)(B)) is amended by strik6 ing out ‘‘section 8154’’ and inserting in lieu thereof ‘‘sec7 tion 8153’’.

8 (3) Section 8156 of such title (as redesignated by

9 subsection (a)(1)(B)) is amended—

10 (A) in subsection (a), by striking out ‘‘section

11 8153(a)’’ and inserting in lieu thereof ‘‘section

12 8152(a)’’; and

13 (B) in subsection (b)(3), by striking out ‘‘sec14 tion 8153’’ and inserting in lieu thereof ‘‘section

15 8152’’.

16 (4) Subsection (a) of section 8157 of such title (as

17 redesignated by subsection (a)(1)(B)) is amended—

18 (A) in the matter preceding paragraph (1), by

19 striking out ‘‘section 8157’’ and ‘‘section 8153(a)’’

20 and inserting in lieu thereof ‘‘section 8156’’ and

21 ‘‘section 8152(a)’’, respectively; and

22 (B) in paragraph (1), by striking out ‘‘section

23 8157(b)(4)’’ and inserting in lieu thereof ‘‘section

24 8156(b)(4)’’.
631

•HR 2491 RH

1 SEC. 11037. PERSONNEL FURNISHING SHARED RESOURCES.

2 Section 712(b)(2) of title 38, United States Code, is

3 amended—

4 (1) by striking out ‘‘the sum of—’’ and insert5 ing in lieu thereof ‘‘the sum of the following:’’;

6 (2) by capitalizing the first letter of the first

7 word of each of subparagraphs (A) and (B);

8 (3) by striking out ‘‘; and’’ at the end of sub9 paragraph (A) and inserting in lieu thereof a period;

10 and

11 (4) by adding at the end the following:

12 ‘‘(C) The number of such positions in the

13 Department during that fiscal year held by per14 sons involved in providing health-care resources

15 under section 8111 or 8152 of this title.’’.

16 TITLE XII—COMMITTEE ON

17 WAYS AND MEANS—TRADE

18 Subtitle A—Technical Corrections

19 and Miscellaneous Trade Provi20 sions

21 SEC. 12001. PAYMENT OF DUTIES AND FEES.

22 (a) INTEREST ACCRUAL.—Section 505(c) of the Tar23 iff Act of 1930 (19 U.S.C. 1505(c)) is amended in the

24 second sentence by inserting after ‘‘duties, fees, and inter25 est’’ the following: ‘‘or, in a case in which a claim is made
632

•HR 2491 RH

1 under section 520(d), from the date on which such claim

2 is made,’’.

3 (b) EFFECTIVE DATE.—The amendment made by

4 subsection (a) shall apply to claims made pursuant to sec5 tion 520(d) of the Tariff Act of 1930 on or after April

6 25, 1995.

7 SEC. 12002. OTHER TECHNICAL AND CONFORMING AMEND8 MENTS.

9 (a) EXAMINATION OF BOOKS AND WITNESSES.—Sec10 tion 509(a)(2) of the Tariff Act of 1930 (19 U.S.C.

11 1509(a)(2)) is amended by striking ‘‘(c)(1)(A)’’ and in12 serting ‘‘(d)(1)(A)’’.

13 (b) REQUIREMENT FOR CERTIFICATE FOR IMPORTA14 TION OF ALCOHOLIC LIQUORS IN SMALL VESSELS.—Sec15 tion 7 of the Act of August 5, 1935 (19 U.S.C. 1707;

16 49 Stat. 520), is repealed.

17 (c) MANIFESTS.—Section 431(c)(1) of the Tariff Act

18 of 1930 (19 U.S.C. 1431(c)(1)) is amended in the matter

19 preceding subparagraph (A) by striking ‘‘such manifest’’

20 and inserting ‘‘a vessel manifest’’.

21 (d) DOCUMENTATION FOR ENTRY OF MERCHAN22 DISE.—Section 484(a)(1) of the Tariff Act of 1930 (19

23 U.S.C. 1484(a)(1)) is amended in the matter preceding

24 subparagraph (A) by striking ‘‘553, and 336(j)’’ and in25 serting ‘‘and 553’’.
633

•HR 2491 RH

1 (e) PENALTIES FOR CERTAIN VIOLATIONS.—Section

2 592 of the Tariff Act of 1930 (19 U.S.C. 1592) is amend3 ed—

4 (1) in subsection (a)(1), by striking ‘‘lawful

5 duty’’ and inserting ‘‘lawful duty, tax, or fee’’; and

6 (2) in subsections (b)(1)(A)(vi), (c)(2)(A)(ii),

7 (c)(3)(A)(ii), (c)(4)(A)(i), and (c)(4)(B) by striking

8 ‘‘lawful duties’’ each place it appears and inserting

9 ‘‘lawful duties, taxes, and fees’’.

10 (f) DEPRIVATION OF LAWFUL DUTIES, TAXES, OR

11 FEES.—Section 592(d) of the Tariff Act of 1930 (19

12 U.S.C. 1592(d)) is amended by striking ‘‘or fees be re13 stored’’ and inserting ‘‘and fees be restored’’.

14 (g) RECONCILIATION TREATED AS ENTRY FOR REC15 ORDKEEPING.—

16 (1) Section 401(s) of the Tariff Act of 1930

17 (19 U.S.C. 1401(s)) is amended by inserting ‘‘rec18 ordkeeping,’’ after ‘‘reliquidation,’’.

19 (2) Section 508(c)(1) of such Act (19 U.S.C.

20 1508(c)(1)) is amended by inserting ‘‘, filing of a

21 reconciliation,’’ after ‘‘entry’’.

22 (h) EXTENSION OF LIQUIDATION.—Section 504(d) of

23 the Tariff Act of 1930 (19 U.S.C. 1504(d)) is amended

24 by inserting ‘‘, unless liquidation is extended under sub25 section (b),’’ after ‘‘shall liquidate the entry’’.
634

•HR 2491 RH

1 (i) EXEMPTION FROM DUTY FOR PERSONAL AND

2 HOUSEHOLD GOODS ACCOMPANYING RETURNING RESI3 DENTS.—Section 321(a)(2)(B) of the Tariff Act of 1930

4 (19 U.S.C. 1321(a)(2)(B)) is amended by inserting ‘‘,

5 9804.00.65,’’ after ‘‘9804.00.30’’.

6 (j) DEBT COLLECTION.—Section 631(a) of the Tariff

7 Act of 1930 (19 U.S.C. 1631(a)) is amended—

8 (1) by inserting after ‘‘law,’’ the following: ‘‘in9 cluding section 3302 of title 31, United States Code,

10 and subchapters I and II of chapter 37 of such

11 title,’’; and

12 (2) by inserting ‘‘and the expenses associated

13 with recovering such indebtedness,’’ after ‘‘Govern14 ment,’’.

15 (k) EXAMINATION OF BOOKS AND WITNESSES.—Sec16 tion 509(b) of the Tariff Act of 1930 (19 U.S.C. 1509(b))

17 is amended in paragraphs (3) and (4) by striking ‘‘appro18 priate regional commissioner’’ and inserting ‘‘officer des19 ignated pursuant to regulations’’.

20 (l) REVIEW OF PROTESTS.—Section 515(d) of the

21 Tariff Act of 1930 (19 U.S.C. 1515(d)) is amended by

22 striking ‘‘district director’’ and inserting ‘‘port director’’.

23 (m) EFFECTIVE DATE.—The amendments made by

24 this section apply as of December 8, 1993.
635

•HR 2491 RH

1 SEC. 12003. CLARIFICATION REGARDING THE APPLICATION

2 OF CUSTOMS USER FEES.

3 (a) IN GENERAL.—Subparagraph (D) of section

4 13031(b)(8) of the Consolidated Omnibus Budget Rec5 onciliation Act of 1985 (19 U.S.C. 58c(b)(8)(D)) is

6 amended—

7 (1) in clause (iv)—

8 (A) by striking ‘‘subparagraph 9802.00.80

9 of such Schedules’’ and inserting ‘‘heading

10 9802.00.80 of such Schedule’’; and

11 (B) by striking ‘‘and’’ at the end of clause

12 (iv);

13 (2) by striking the period at the end of clause

14 (v) and inserting ‘‘; and’’; and

15 (3) by inserting after clause (v) the following

16 new clause:

17 ‘‘(vi) in the case of merchandise entered from

18 a foreign trade zone (other than merchandise to

19 which clause (v) applies), be applied only to the

20 value of the privileged or nonprivileged foreign sta21 tus merchandise under section 3 of the Act of June

22 18, 1934 (commonly known as the Foreign Trade

23 Zones Act, 19 U.S.C. 81c).’’.

24 (b) EFFECTIVE DATE.—The amendments made by

25 subsection (a) apply to—
636

•HR 2491 RH

1 (1) any entry made from a foreign trade zone

2 on or after the 15th day after the date of the enact3 ment of this Act; and

4 (2) any entry made from a foreign trade zone

5 after November 30, 1986, and before such 15th day

6 if liquidation of the entry was not final before such

7 15th day.

8 (c) APPLICATION OF FEES TO CERTAIN AGRICUL9 TURAL PRODUCTS.—The amendment made by section

10 111(b)(2)(D)(iv) of the Customs and Trade Act of 1990

11 shall apply to—

12 (1) any entry made from a foreign trade zone

13 on or after the 15th day after the date of the enact14 ment of this Act; and

15 (2) any entry made from a foreign trade zone

16 after November 30, 1986, and before such 15th day

17 if the liquidation of the entry was not final before

18 such 15th day.

19 SEC. 12004. TECHNICAL AMENDMENT TO THE CUSTOMS

20 AND TRADE ACT OF 1990.

21 Subsection (b) of section 484H of the Customs and

22 Trade Act of 1990 (19 U.S.C. 1553 note) is amended by

23 striking ‘‘, or withdrawn from warehouse for consump24 tion,’’ and inserting ‘‘for transportation in bond’’.
637

•HR 2491 RH

1 SEC. 12005. TECHNICAL AMENDMENTS REGARDING CER2 TAIN BENEFICIARY COUNTRIES.

3 (a) CARIBBEAN BASIN ECONOMIC RECOVERY ACT.—

4 Section 213(h)(1) of the Caribbean Basin Economic Re5 covery Act (19 U.S.C. 2703(h)(1)) is amended by adding

6 at the end thereof the following flush sentence:

7 ‘‘The duty reductions provided for under this paragraph

8 shall not apply to textile and apparel articles which are

9 subject to textile agreements.’’.

10 (b) ANDEAN TRADE PREFERENCE ACT.—Section

11 204(c)(1) of the Andean Trade Preference Act (19 U.S.C.

12 3203(c)(1)) is amended by adding at the end thereof the

13 following flush sentence:

14 ‘‘The duty reductions provided for under this paragraph

15 shall not apply to textile and apparel articles which are

16 subject to textile agreements.’’

17 (c) EFFECTIVE DATE.—The amendments made by

18 this section apply with respect to—

19 (1) articles entered, or withdrawn from ware20 house for consumption, on or after the 15th day

21 after the date of the enactment of this Act, and

22 (2) articles entered after December 31, 1991,

23 and before such 15th day, if the liquidation of the

24 entry of such articles was not final before such 15th

25 day.
638

•HR 2491 RH

1 SEC. 12006. CLARIFICATION OF FEES FOR CERTAIN CUS2 TOMS SERVICES.

3 (a) IN GENERAL.—Section 13031(b)(9)(A) of the

4 Consolidated Omnibus Budget Reconciliation Act of 1985

5 (19 U.S.C. 58c(b)(9)(A)) is amended—

6 (1) by striking ‘‘centralized hub facility or’’ in

7 clause (i); and

8 (2) in clause (ii)—

9 (A) by striking ‘‘facility—’’ and inserting

10 ‘‘facility or centralized hub facility—’’,

11 (B) by striking ‘‘customs inspectional’’ in

12 subclause (I), and

13 (C) by striking ‘‘at the facility’’ in

14 subclause (I) and inserting ‘‘for the facility’’.

15 (b) DEFINITIONS.—Section 13031(b)(9)(B)(i) of the

16 Consolidated Omnibus Budget Reconciliation Act of 1985

17 (19 U.S.C. 58c(b)(9)(B)(i)) is amended—

18 (1) by striking ‘‘, as in effect on July 30,

19 1990’’, and

20 (2) by adding at the end thereof the following

21 new sentence: ‘‘Nothing in this paragraph shall be

22 construed as prohibiting the Secretary of the Treas23 ury from processing merchandise that is informally

24 entered or released at any centralized hub facility or

25 express consignment carrier facility during the nor26 mal operating hours of the Customs Service, subject
639

•HR 2491 RH

1 to reimbursement and payment under subparagraph

2 (A).’’.

3 (c) CITATION.—Section 13031(b)(9)(B)(ii) of the

4 Consolidated Omnibus Budget Reconciliation Act of 1985

5 (19 U.S.C. 58c(b)(9)(B)(ii)) is amended by striking ‘‘sec6 tion 236 of the Tariff and Trade Act of 1984’’ and insert7 ing ‘‘section 236 of the Trade and Tariff Act of 1984’’.

8 SEC. 12007. SPECIAL RULE FOR EXTENDING TIME FOR FIL9 ING DRAWBACK CLAIMS.

10 Section 313(r) of the Tariff Act of 1930 (19 U.S.C.

11 1313(r)) is amended by adding at the end the following:

12 ‘‘(3)(A)(i) Subject to clause (ii), the Customs

13 Service may, notwithstanding the limitation set forth

14 in paragraph (1), extend the time for filing a draw15 back claim for a period not to exceed 18 months,

16 if—

17 ‘‘(I) the claimant establishes to the satis18 faction of the Customs Service that the claim19 ant was unable to file the drawback claim be20 cause of an event declared by the President to

21 be a major disaster on or after January 1,

22 1994; and

23 ‘‘(II) the claimant files a request for such

24 extension with the Customs Service within one
640

•HR 2491 RH

1 year from the last day of the 3-year period re2 ferred to in paragraph (1).

3 ‘‘(ii) In the case of a major disaster occurring

4 on or after January 1, 1994, and before the date of

5 the enactment of this paragraph—

6 ‘‘(I) the Customs Service may extend the

7 time for filing the drawback claim for a period

8 not to exceed 1 year; and

9 ‘‘(II) the request under clause (i)(II) must

10 be filed not later than 1 year from the date of

11 the enactment of this paragraph.

12 ‘‘(B) If an extension is granted with respect to

13 a request filed under this paragraph, the periods of

14 time for retaining records set forth in subsection (t)

15 of this section and section 508(c)(3) shall be ex16 tended for an additional 18 months or, in a case to

17 which subparagraph (A)(ii) applies, for a period not

18 to exceed 1 year from the date the claim is filed.

19 ‘‘(C) For purposes of this paragraph, the term

20 ‘major disaster’ has the meaning given that term in

21 section 102(2) of the Robert T. Stafford Disaster

22 Relief and Emergency Assistance Act (42 U.S.C.

23 5122(2)).’’.
641

•HR 2491 RH

1 SEC. 12008. TREATMENT OF CERTAIN ENTRIES.

2 (a) LIQUIDATION OR RELIQUIDATION OF ENTRIES.—

3 Notwithstanding sections 514 and 520 of the Tariff Act

4 of 1930 (19 U.S.C. 1514 and 1520), and any other provi5 sion of law, the United States Customs Service shall liq6 uidate or reliquidate those entry numbers made at New

7 York, New York, which are listed in subsection (c), in ac8 cordance with the final results of the administrative re9 view, covering the period from May 1, 1984, through

10 March 31, 1985, undertaken by the International Trade

11 Administration of the Department of Commerce for such

12 entries (case number A–580–008).

13 (b) PAYMENT OF AMOUNTS OWED.—Any amounts

14 owed by the United States pursuant to the liquidation or

15 reliquidation of an entry under subsection (a) shall be paid

16 by the Customs Service within 90 days after such liquida17 tion or reliquidation.

18 (c) ENTRY LIST.—The entries referred to in sub19 section (a) are the following:

Entry Number Date of Entry

84–4426808 ............................................................... August 29, 1984

84–4427823 ............................................................... September 4, 1984

84–4077985 ............................................................... July 25, 1984

84–4080859 ............................................................... August 3, 1984

84–4080817 ............................................................... August 3, 1984

84–4077723 ............................................................... August 1, 1984

84–4075194 ............................................................... July 10, 1984

84–4076481 ............................................................... July 17, 1984

84–4080930 ............................................................... August 9, 1984.
642

•HR 2491 RH

1 SEC. 12009. TEMPORARY DUTY SUSPENSION FOR PER2 SONAL EFFECTS OF PARTICIPANTS IN CER3 TAIN WORLD ATHLETIC EVENTS.

4 (a) IN GENERAL.—Subchapter II of chapter 99 of

5 the Harmonized Tariff Schedule of the United States is

6 amended by inserting in numerical sequence the following

7 new heading:

‘‘ 9902.98.05 Any of the following articles not intended for sale or

distribution to the

public: personal effects of aliens who

are participants in,

officials of, or accredited members

of delegations to,

the 1998 Goodwill

Games, and of persons who are immediate family

members of or

servants to any of

the foregoing persons; equipment

and materials imported in connection with the foregoing event by or

on behalf of the

foregoing persons

or the organizing

committee of such

event; articles to

be used in exhibitions depicting the

culture of a country participating in

such event; and, if

consistent with the

foregoing, such

other articles as

the Secretary of

the Treasury may

allow ..................... Free No change Free On or before

2/1/99 ’’.

8 (b) TAXES AND FEES NOT TO APPLY.—The articles

9 described in heading 9902.98.05 of the Harmonized Tariff

10 Schedule of the United States (as added by subsection (a))
643

•HR 2491 RH

1 shall be free of taxes and fees which may be otherwise

2 applicable.

3 (c) EFFECTIVE DATE.—The amendment made by

4 this section applies to articles entered, or withdrawn from

5 warehouse for consumption, on or after the 15th day after

6 the date of the enactment of this Act.

7 SEC. 12010. MISCELLANEOUS TECHNICAL CORRECTIONS.

8 (a) DRAWBACK AND REFUNDS.—Section

9 313(s)(2)(B) of the Tariff Act of 1930 (19 U.S.C.

10 1313(s)(2)(B)) is amended by striking ‘‘successor’’ the

11 first place it appears and inserting ‘‘predecessor’’.

12 (b) TRADE ACT OF 1974.—Section 301(c)(4) of the

13 Trade Act of 1974 (19 U.S.C. 2411(c)(4)) is amended by

14 striking ‘‘(1)(C)(iii)’’ and inserting ‘‘(1)(D)(iii)’’.

15 SEC. 12011. URUGUAY ROUND AGREEMENTS ACT.

16 Section 405(b) of the Uruguay Round Agreements

17 Act (19 U.S.C. 3602(b)) is amended—

18 (1) in paragraph (1) by striking ‘‘1(a)’’ and in19 serting ‘‘1(b)’’; and

20 (2) in paragraph (2) by striking ‘‘1(b)’’ and in21 serting ‘‘1(a)’’.

22 SEC. 12012. FILING OF CERTIFICATIONS FOR CIVIL AIR23 CRAFT PARTS.

24 General Note 6 of the Harmonized Tariff Schedule

25 of the United States is amended—
644

•HR 2491 RH

1 (1) by inserting ‘‘or electronic’’ after ‘‘shall file

2 a written’’; and

3 (2) by striking ‘‘with the appropriate customs

4 officer’’ and inserting ‘‘with the United States Cus5 toms Service’’.

6 SEC. 12013. EXEMPTION REGARDING CERTAIN VESSEL RE7 PAIRS.

8 (a) TEMPORARY EXEMPTION EXTENDED.—Section

9 484E(b)(2)(B) of the Customs and Trade Act of 1990 (19

10 U.S.C. 1466 note) is amended by striking ‘‘December 31,

11 1992’’ and inserting ‘‘December 31, 1994’’.

12 (b) EFFECTIVE DATE.—The amendment made by

13 this section applies to any entry made after December 31,

14 1992, and before January 1, 1995.

15 SEC. 12014. FEES FOR CERTAIN CUSTOMS SERVICES.

16 (a) IN GENERAL.—Section 13031(a)(5) of the Con17 solidated Omnibus Budget Reconciliation Act of 1985 (19

18 U.S.C. 58c(a)(5)) is amended—

19 (1) in subparagraph (A), by inserting ‘‘a place’’

20 after ‘‘aircraft from’’; and

21 (2) in subparagraph (B), by striking ‘‘sub22 section (b)(1)(A)’’ and inserting ‘‘subsection

23 (b)(1)(A)(i)’’.
645

•HR 2491 RH

1 (b) LIMITATION ON FEES.—Section 13031(b)(1) of

2 the Consolidated Omnibus Budget Reconciliation Act of

3 1985 (19 U.S.C. 58c(b)(1)) is amended to read as follows:

4 ‘‘(b) LIMITATIONS ON FEES.—(1)(A) No fee may be

5 charged under subsection (a) of this section for customs

6 services provided in connection with—

7 ‘‘(i) the arrival of any passenger whose jour8 ney—

9 ‘‘(I) originated in—

10 ‘‘(aa) Canada,

11 ‘‘(bb) Mexico,

12 ‘‘(cc) a territory or possession of the

13 United States, or

14 ‘‘(dd) any adjacent island (within the

15 meaning of section 101(b)(5) of the Immi16 gration and Nationality Act (8 U.S.C.

17 1101(b)(5))), or

18 ‘‘(II) originated in the United States and

19 was limited to—

20 ‘‘(aa) Canada,

21 ‘‘(bb) Mexico,

22 ‘‘(cc) territories and possessions of the

23 United States, and

24 ‘‘(dd) such adjacent islands;
646

•HR 2491 RH

1 ‘‘(ii) the arrival of any railroad car the journey

2 of which originates and terminates in the same

3 country, but only if no passengers board or dis4 embark from the train and no cargo is loaded or un5 loaded from such car while the car is within any

6 country other than the country in which such car

7 originates and terminates;

8 ‘‘(iii) the arrival of any ferry; or

9 ‘‘(iv) the arrival of any passenger on board a

10 commercial vessel traveling only between ports which

11 are within the customs territory of the United

12 States.

13 ‘‘(B) The exemption provided for in subparagraph

14 (A) shall not apply in the case of the arrival of any pas15 senger on board a commercial vessel whose journey origi16 nates and terminates at the same place in the United

17 States if there are no intervening stops.

18 ‘‘(C) The exemption provided for in subparagraph

19 (A)(i) shall not apply to fiscal years 1994, 1995, 1996,

20 and 1997.’’.

21 (c) FEE ASSESSED ONLY ONCE.—Section

22 13031(b)(4) of the Consolidated Omnibus Budget Rec23 onciliation Act of 1985 (19 U.S.C. 58c(b)(4)) is amend24 ed—
647

•HR 2491 RH

1 (1) by redesignating subparagraphs (A) and

2 (B) as clauses (i) and (ii), respectively;

3 (2) by striking ‘‘No fee’’ and inserting ‘‘(A) No

4 fee’’; and

5 (3) by adding at the end the following new sub6 paragraph:

7 ‘‘(B) In the case of a commercial vessel making a

8 single voyage involving 2 or more United States ports with

9 respect to which the passengers would otherwise be

10 charged a fee pursuant to subsection (a)(5), such fee shall

11 be charged only 1 time for each passenger.’’.

12 (d) EFFECTIVE DATE.—The amendments made by

13 this section shall take effect as if included in the amend14 ments made by section 521 of the North American Free

15 Trade Agreement Implementation Act.

16 SEC. 12015. TECHNICAL CORRECTION TO CERTAIN CHEMI17 CAL DESCRIPTION.

18 (a) AMENDMENT TO SUBHEADING 2933.90.02.—The

19 article description for subheading 2933.90.02 of the Har20 monized Tariff Schedule of the United States is amended

21 by striking ‘‘(Quizalofop ethyl)’’.

22 (b) EFFECTIVE DATE.—

23 (1) GENERAL RULE.—The amendment made by

24 this section applies to articles entered, or withdrawn
648

•HR 2491 RH

1 from warehouse for consumption, on or after the

2 15th day after the date of the enactment of this Act.

3 (2) RETROACTIVE PROVISION.—Notwithstand4 ing section 514 of the Tariff Act of 1930 or any

5 other provision of law, upon proper request (which

6 includes sufficient information to identify and locate

7 the entry) filed with the Customs Service on or be8 fore the date that is 180 days after the date of the

9 enactment of this Act, any entry, or withdrawal

10 from warehouse for consumption, of an article that

11 occurred—

12 (A) after December 31, 1994, and before

13 the date that is 15 days after the date of the

14 enactment of this Act, and

15 (B) with respect to which there would have

16 been no duty or a lesser duty if the amendment

17 made by subsection (a) applied to such entry or

18 withdrawal,

19 shall be liquidated or reliquidated as though such

20 amendment applied to such entry or withdrawal.

21 SEC. 12016. MARKING OF IMPORTED ARTICLES AND CON22 TAINERS.

23 (a) IN GENERAL.—Section 304 of the Tariff Act of

24 1930 (19 U.S.C.1304) is amended—
649

•HR 2491 RH

1 (1) by redesignating subsections (f), (g), (h),

2 and (i) as subsections (i), (j), (k), and (l), respec3 tively, and

4 (2) by inserting after subsection (e) the follow5 ing new subsections:

6 ‘‘(f) MARKING OF METAL FORGINGS.—The marking

7 requirements of subsections (a) and (b) shall not apply

8 to—

9 ‘‘(1) metal forgings that—

10 ‘‘(A) are imported for processing into fin11 ished hand tools in the United States, and

12 ‘‘(B) have not been improved in condition

13 beyond rough burring, trimming, grinding,

14 turning, hammering, chiseling, or filing; and

15 ‘‘(2) hand tools made from metal forgings de16 scribed in paragraph (1).

17 ‘‘(g) MARKING OF CERTAIN COFFEE AND TEA PROD18 UCTS.—The marking requirements of subsections (a) and

19 (b) shall not apply to articles described in subheading

20 0901.21, 0901.22, 0902.10, 0902.20, 0902.30, 0902.40,

21 2101.10, or 2101.20 of the Harmonized Tariff Schedule

22 of the United States, as in effect on January 1, 1995.

23 ‘‘(h) MARKING OF SPICES.—The marking require24 ments of subsections (a) and (b) shall not apply to articles

25 provided for under subheadings 0904.11, 0904.12,
650

•HR 2491 RH

1 0904.20, 0905.00, 0906.10, 0906.20, 0907.00, 0908.10,

2 0908.20, 0908.30, 0909.10, 0909.20, 0909.30, 0909.40,

3 0909.50, 0910.10, 0910.20, 0910.30, 0910.40, 0910.50,

4 0910.91, 0910.99, 1106.20, 1207.40, 1207.50, 1207.91,

5 1404.90, and 3302.10, and items classifiable in categories

6 0712.90.60, 0712.90.8080, 1209.91.2000, 1211.90.2000,

7 1211.90.8040, 1211.90.8050, 1211.90.8090,

8 2006.00.3000, 2918.13.2000, 3203.00.8000,

9 3301.90.1010, 3301.90.1020, and 3301.90.1050 of the

10 Harmonized Tariff Schedule of the United States, as in

11 effect on January 1, 1995.’’.

12 (b) EFFECTIVE DATE.—The amendments made by

13 this section apply to goods entered, or withdrawn from

14 warehouse for consumption, on or after the date of the

15 enactment of this Act.

16 SEC. 12017. RELIQUIDATING ENTRY OF WARP KNITTING

17 MACHINES.

18 Notwithstanding section 514 of the Tariff Act of

19 1930 (19 U.S.C. 1514) or any other provision of law, upon

20 proper request filed with the Customs Service before the

21 180th day after the date of the enactment of this Act,

22 the Secretary of the Treasury shall—

23 (1) liquidate or reliquidate as duty free Entry

24 No. 100–3022436–3, made on July 12, 1989, at the

25 port of Charleston, South Carolina; and
651

•HR 2491 RH

1 (2) refund any duties and interest paid with re2 spect to such entry.

3 SEC. 12018. IDENTIFICATION OF TRADE EXPANSION PRIOR4 ITIES.

5 Section 310(a)(1) of the Trade Act of 1974 (19

6 U.S.C. 2420(a)(1)) is amended by striking ‘‘calendar year

7 1995’’ and inserting ‘‘each of calendar years 1995 through

8 2000’’.

9 Subtitle B—Generalized System of

10 Preferences

11 SEC. 12101. SHORT TITLE.

12 This subtitle may be cited as the ‘‘GSP Renewal Act

13 of 1995’’.

14 SEC. 12102. GENERALIZED SYSTEM OF PREFERENCES.

15 (a) IN GENERAL.—Title V of the Trade Act of 1974

16 is amended to read as follows:

17 ‘‘TITLE V—GENERALIZED

18 SYSTEM OF PREFERENCES

19 ‘‘SEC. 501. AUTHORITY TO EXTEND PREFERENCES.

20 ‘‘The President may provide duty-free treatment for

21 any eligible article from any beneficiary developing coun22 try in accordance with the provisions of this title. In tak23 ing any such action, the President shall have due regard

24 for—
652

•HR 2491 RH

1 ‘‘(1) the effect such action will have on further2 ing the economic development of developing coun3 tries through the expansion of their exports;

4 ‘‘(2) the extent to which other major developed

5 countries are undertaking a comparable effort to as6 sist developing countries by granting generalized

7 preferences with respect to imports of products of

8 such countries;

9 ‘‘(3) the anticipated impact of such action on

10 United States producers of like or directly competi11 tive products; and

12 ‘‘(4) the extent of the beneficiary developing

13 country’s competitiveness with respect to eligible ar14 ticles.

15 ‘‘SEC. 502. DESIGNATION OF BENEFICIARY DEVELOPING

16 COUNTRIES.

17 ‘‘(a) AUTHORITY TO DESIGNATE COUNTRIES.—

18 ‘‘(1) BENEFICIARY DEVELOPING COUNTRIES.—

19 The President is authorized to designate countries

20 as beneficiary developing countries for purposes of

21 this title.

22 ‘‘(2) LEAST-DEVELOPED BENEFICIARY DEVEL23 OPING COUNTRIES.—The President is authorized to

24 designate any beneficiary developing country as a

25 least-developed beneficiary developing country for
653

•HR 2491 RH

1 purposes of this title, based on the considerations in

2 section 501 and subsection (c) of this section.

3 ‘‘(b) COUNTRIES INELIGIBLE FOR COUNTRY DES4 IGNATION.—

5 ‘‘(1) SPECIFIC COUNTRIES.—The following

6 countries may not be designated as beneficiary devel7 oping countries for purposes of this title:

8 ‘‘(A) Australia.

9 ‘‘(B) Canada.

10 ‘‘(C) European Union member states.

11 ‘‘(D) Iceland.

12 ‘‘(E) Japan.

13 ‘‘(F) Monaco.

14 ‘‘(G) New Zealand.

15 ‘‘(H) Norway.

16 ‘‘(I) Switzerland.

17 ‘‘(2) OTHER BASES FOR INELIGIBILITY.—The

18 President shall not designate any country a bene19 ficiary developing country under this title if any of

20 the following applies:

21 ‘‘(A) Such country is a Communist coun22 try, unless—

23 ‘‘(i) the products of such country re24 ceive nondiscriminatory treatment,
654

•HR 2491 RH

1 ‘‘(ii) such country is a WTO Member

2 (as such term is defined in section 2 of the

3 Uruguay Round Agreements Act,) and a

4 member of the International Monetary

5 Fund, and

6 ‘‘(iii) such country is not dominated

7 or controlled by international communism.

8 ‘‘(B) Such country is a party to an ar9 rangement of countries and participates in any

10 action pursuant to such arrangement, the effect

11 of which is—

12 ‘‘(i) to withhold supplies of vital com13 modity resources from international trade

14 or to raise the price of such commodities

15 to an unreasonable level, and

16 ‘‘(ii) to cause serious disruption of the

17 world economy.

18 ‘‘(C) Such country affords preferential

19 treatment to the products of a developed coun20 try, other than the United States, which has, or

21 is likely to have, a significant adverse effect on

22 United States commerce.

23 ‘‘(D)(i) Such country—

24 ‘‘(I) has nationalized, expropriated, or

25 otherwise seized ownership or control of
655

•HR 2491 RH

1 property, including patents, trademarks, or

2 copyrights, owned by a United States citi3 zen or by a corporation, partnership, or as4 sociation which is 50 percent or more ben5 eficially owned by United States citizens,

6 ‘‘(II) has taken steps to repudiate or

7 nullify an existing contract or agreement

8 with a United States citizen or a corpora9 tion, partnership, or association which is

10 50 percent or more beneficially owned by

11 United States citizens, the effect of which

12 is to nationalize, expropriate, or otherwise

13 seize ownership or control of property, in14 cluding patents, trademarks, or copyrights,

15 so owned, or

16 ‘‘(III) has imposed or enforced taxes

17 or other exactions, restrictive maintenance

18 or operational conditions, or other meas19 ures with respect to property, including

20 patents, trademarks, or copyrights, so

21 owned, the effect of which is to nationalize,

22 expropriate, or otherwise seize ownership

23 or control of such property,

24 unless clause (ii) applies.
656

•HR 2491 RH

1 ‘‘(ii) This clause applies if the President

2 determines that—

3 ‘‘(I) prompt, adequate, and effective

4 compensation has been or is being made to

5 the citizen, corporation, partnership, or as6 sociation referred to in clause (i),

7 ‘‘(II) good faith negotiations to pro8 vide prompt, adequate, and effective com9 pensation under the applicable provisions

10 of international law are in progress, or the

11 country described in clause (i) is otherwise

12 taking steps to discharge its obligations

13 under international law with respect to

14 such citizen, corporation, partnership, or

15 association, or

16 ‘‘(III) a dispute involving such citizen,

17 corporation, partnership, or association

18 over compensation for such a seizure has

19 been submitted to arbitration under the

20 provisions of the Convention for the Settle21 ment of Investment Disputes, or in an22 other mutually agreed upon forum,

23 and the President promptly furnishes a copy of

24 such determination to the Senate and House of

25 Representatives.
657

•HR 2491 RH

1 ‘‘(E) Such country fails to act in good

2 faith in recognizing as binding or in enforcing

3 arbitral awards in favor of United States citi4 zens or a corporation, partnership, or associa5 tion which is 50 percent or more beneficially

6 owned by United States citizens, which have

7 been made by arbitrators appointed for each

8 case or by permanent arbitral bodies to which

9 the parties involved have submitted their dis10 pute.

11 ‘‘(F) Such country aids or abets, by grant12 ing sanctuary from prosecution to, any individ13 ual or group which has committed an act of

14 international terrorism.

15 ‘‘(G) Such country has not taken or is not

16 taking steps to afford internationally recognized

17 worker rights to workers in the country (includ18 ing any designated zone in that country).

19 Subparagraphs (D), (E), (F), and (G) shall not pre20 vent the designation of any country as a beneficiary

21 developing country under this title if the President

22 determines that such designation will be in the na23 tional economic interest of the United States and re24 ports such determination to the Congress with the

25 reasons therefor.
658

•HR 2491 RH

1 ‘‘(c) FACTORS AFFECTING COUNTRY DESIGNA2 TION.—In determining whether to designate any country

3 as a beneficiary developing country under this title, the

4 President shall take into account—

5 ‘‘(1) an expression by such country of its desire

6 to be so designated;

7 ‘‘(2) the level of economic development of such

8 country, including its per capita gross national prod9 uct, the living standards of its inhabitants, and any

10 other economic factors which the President deems

11 appropriate;

12 ‘‘(3) the extent to which other major developed

13 countries are extending generalized preferential tar14 iff treatment to such country;

15 ‘‘(4) the extent to which such country has as16 sured the United States that it will provide equitable

17 and reasonable access to the markets and basic com18 modity resources of such country and the extent to

19 which such country has assured the United States

20 that it will refrain from engaging in unreasonable

21 export practices;

22 ‘‘(5) whether such country is providing ade23 quate and effective protection of intellectual property

24 rights;
659

•HR 2491 RH

1 ‘‘(6) the extent to which such country has taken

2 action to—

3 ‘‘(A) reduce trade distorting investment

4 practices and policies (including export per5 formance requirements); and

6 ‘‘(B) reduce or eliminate barriers to trade

7 in services;

8 ‘‘(7) whether or not such country has taken or

9 is taking steps to afford to workers in that country

10 (including any designated zone in that country)

11 internationally recognized worker rights; and

12 ‘‘(8) the extent to which such country fails to

13 cooperate with the United States in preventing the

14 proliferation of nuclear weapons, nuclear weapons

15 components, and nuclear weapons delivery systems,

16 or in preventing illegal drug trafficking.

17 A country may be found to not provide adequate and effec18 tive protection of intellectual property rights under para19 graph (5) and section 503(d)(2)(B), notwithstanding the

20 fact that it may be in compliance with the specific obliga21 tions of the Agreement on Trade-Related Aspects of Intel22 lectual Property Rights referred to in section 101(d)(15)

23 of the Uruguay Round Agreements Act.

24 ‘‘(d) WITHDRAWAL, SUSPENSION, OR LIMITATION OF

25 COUNTRY DESIGNATION.—
660

•HR 2491 RH

1 ‘‘(1) IN GENERAL.—The President may with2 draw, suspend, or limit the application of the duty3 free treatment accorded under this title with respect

4 to any country. Except in exceptional circumstances,

5 the President, before taking any action under this

6 subsection, shall provide a period for the submission

7 of public comments on the matter under consider8 ation, and in taking any action under this sub9 section, the President shall consider the factors set

10 forth in section 501 and subsection (c) of this sec11 tion, and comments received from the public.

12 ‘‘(2) CHANGED CIRCUMSTANCES.—The Presi13 dent shall, after complying with the requirements of

14 subsection (f)(2), withdraw or suspend the designa15 tion of any country as a beneficiary developing coun16 try if, after such designation, the President deter17 mines that as the result of changed circumstances

18 such country would be barred from designation as a

19 beneficiary developing country under subsection

20 (b)(2). Such country shall cease to be a beneficiary

21 developing country on the day on which the Presi22 dent issues an Executive order or Presidential proc23 lamation revoking the designation of such country

24 under this title.
661

•HR 2491 RH

1 ‘‘(e) MANDATORY GRADUATION OF BENEFICIARY

2 DEVELOPING COUNTRIES.—If the President determines

3 that a beneficiary developing country has become a ‘high

4 income’ country, as defined by the official statistics of the

5 International Bank for Reconstruction and Development,

6 then the President shall terminate the designation of such

7 country as a beneficiary developing country for purposes

8 of this title, effective on January 1 of the second year fol9 lowing the year in which such determination is made.

10 ‘‘(f) CONGRESSIONAL NOTIFICATION.—

11 ‘‘(1) NOTIFICATION OF DESIGNATION.—

12 ‘‘(A) IN GENERAL.—Before the President

13 designates any country as a beneficiary develop14 ing country under this title, the President shall

15 notify the Congress of the President’s intention

16 to make such designation, together with the

17 considerations entering into such decision.

18 ‘‘(B) DESIGNATION AS LEAST-DEVELOPED

19 BENEFICIARY DEVELOPING COUNTRY.—At least

20 60 days before the President designates any

21 country as a least-developed beneficiary develop22 ing country, the President shall notify the Con23 gress of the President’s intention to make such

24 designation.
662

•HR 2491 RH

1 ‘‘(2) NOTIFICATION OF TERMINATION.—If the

2 President has designated any country as a bene3 ficiary developing country under this title, the Presi4 dent shall not terminate such designation unless, at

5 least 60 days before such termination, the President

6 has notified the Congress and has notified such

7 country of the President’s intention to terminate

8 such designation, together with the considerations

9 entering into such decision.

10 ‘‘SEC. 503. DESIGNATION OF ELIGIBLE ARTICLES.

11 ‘‘(a) ELIGIBLE ARTICLES.—

12 ‘‘(1) DESIGNATION.—

13 ‘‘(A) IN GENERAL.—Except as provided in

14 subsection (b), the President is authorized to

15 designate articles as eligible articles for all ben16 eficiary developing countries for purposes of

17 this title by Executive order or Presidential

18 proclamation after receiving the advice of the

19 International Trade Commission in accordance

20 with subsection (e).

21 ‘‘(B) LEAST-DEVELOPED BENEFICIARY DE22 VELOPING COUNTRIES.—Except as provided in

23 subsection (b), the President is authorized to

24 designate additional articles as eligible articles

25 only for countries designated as least-developed
663

•HR 2491 RH

1 beneficiary developing countries under section

2 502(a)(2) if, after receiving the advice of the

3 International Trade Commission in accordance

4 with subsection (e) of this section, the Presi5 dent determines that such articles are not im6 port-sensitive in the context of imports from

7 least-developed beneficiary developing countries.

8 ‘‘(C) THREE-YEAR RULE.—If, after receiv9 ing the advice of the International Trade Com10 mission under subsection (e), an article has

11 been formally considered for designation as an

12 eligible article under this title and denied such

13 designation, such article may not be reconsid14 ered for such designation for a period of three

15 years after such denial.

16 ‘‘(2) RULE OF ORIGIN.—

17 ‘‘(A) GENERAL RULE.—The duty-free

18 treatment provided under this title shall apply

19 to any eligible article which is the growth, prod20 uct, or manufacture of a beneficiary developing

21 country if—

22 ‘‘(i) that article is imported directly

23 from a beneficiary developing country into

24 the customs territory of the United States;

25 and
664

•HR 2491 RH

1 ‘‘(ii) the sum of—

2 ‘‘(I) the cost or value of the ma3 terials produced in the beneficiary de4 veloping country or any two or more

5 countries which are members of the

6 same association of countries which is

7 treated as one country under section

8 506(2), plus

9 ‘‘(II) the direct costs of process10 ing operations performed in such ben11 eficiary developing country or such

12 member countries,

13 is not less than 35 percent of the ap14 praised value of such article at the time it

15 is entered.

16 ‘‘(B) EXCLUSIONS.—An article shall not

17 be treated as the growth, product, or manufac18 ture of a beneficiary developing country by vir19 tue of having merely undergone—

20 ‘‘(i) simple combining or packaging

21 operations, or

22 ‘‘(ii) mere dilution with water or mere

23 dilution with another substance that does

24 not materially alter the characteristics of

25 the article.
665

•HR 2491 RH

1 ‘‘(3) REGULATIONS.—The Secretary of the

2 Treasury, after consulting with the United States

3 Trade Representative, shall prescribe such regula4 tions as may be necessary to carry out paragraph

5 (2), including, but not limited to, regulations provid6 ing that, in order to be eligible for duty-free treat7 ment under this title, an article—

8 ‘‘(A) must be wholly the growth, product,

9 or manufacture of a beneficiary developing

10 country, or

11 ‘‘(B) must be a new or different article of

12 commerce which has been grown, produced, or

13 manufactured in the beneficiary developing

14 country.

15 ‘‘(b) ARTICLES THAT MAY NOT BE DESIGNATED AS

16 ELIGIBLE ARTICLES.—

17 ‘‘(1) IMPORT SENSITIVE ARTICLES.—The Presi18 dent may not designate any article as an eligible ar19 ticle under subsection (a) if such article is within

20 one of the following categories of import-sensitive ar21 ticles:

22 ‘‘(A) Textile and apparel articles which

23 were not eligible articles for purposes of this

24 title on January 1, 1994, as this title was in ef25 fect on such date.
666

•HR 2491 RH

1 ‘‘(B) Import-sensitive electronic articles.

2 ‘‘(C) Import-sensitive steel articles.

3 ‘‘(D) Footwear, handbags, luggage, flat

4 goods, work gloves, and leather wearing apparel

5 which were not eligible articles for purposes of

6 this title on January 1, 1995, as this title was

7 in effect on such date.

8 ‘‘(E) Import-sensitive semimanufactured

9 and manufactured glass products.

10 ‘‘(F) Any other articles which the Presi11 dent determines to be import-sensitive in the

12 context of the Generalized System of Pref13 erences.

14 ‘‘(2) ARTICLES AGAINST WHICH OTHER AC15 TIONS TAKEN.—An article shall not be an eligible

16 article for purposes of this title for any period dur17 ing which such article is the subject of any action

18 proclaimed pursuant to section 203 of this Act (19

19 U.S.C. 2253) or section 232 or 351 of the Trade

20 Expansion Act of 1962 (19 U.S.C. 1862, 1981).

21 ‘‘(3) AGRICULTURAL PRODUCTS.—No quantity

22 of an agricultural product subject to a tariff-rate

23 quota that exceeds the in-quota quantity shall be eli24 gible for duty-free treatment under this title.
667

•HR 2491 RH

1 ‘‘(c) WITHDRAWAL, SUSPENSION, OR LIMITATION OF

2 DUTY-FREE TREATMENT; COMPETITIVE NEED LIMITA3 TION.—

4 ‘‘(1) IN GENERAL.—The President may with5 draw, suspend, or limit the application of the duty6 free treatment accorded under this title with respect

7 to any article, except that no rate of duty may be

8 established with respect to any article pursuant to

9 this subsection other than the rate which would

10 apply but for this title. In taking any action under

11 this subsection, the President shall consider the fac12 tors set forth in sections 501 and 502(c).

13 ‘‘(2) COMPETITIVE NEED LIMITATION.—

14 ‘‘(A) BASIS FOR WITHDRAWAL OF DUTY15 FREE TREATMENT.—Except as provided in this

16 paragraph and subject to subsection (d), when17 ever the President determines that a beneficiary

18 developing country has exported (directly or in19 directly) to the United States during any cal20 endar year beginning after December 31,

21 1995—

22 ‘‘(i) a quantity of an eligible article

23 having an appraised value in excess of

24 $75,000,000, except that, in applying this

25 clause, the amount of $75,000,000 shall be
668

•HR 2491 RH

1 increased by $5,000,000 on January 1 of

2 each calendar year after calendar year

3 1995, or

4 ‘‘(ii) a quantity of an eligible article

5 equal to or exceeding 50 percent of the ap6 praised value of the total imports of that

7 article into the United States during the

8 calendar year,

9 then the President shall, not later than July 1

10 of the next calendar year, terminate the duty11 free treatment for that article from that bene12 ficiary developing country.

13 ‘‘(B) COUNTRY DEFINED.—For purposes

14 of this paragraph, the term ‘country’ does not

15 include an association of countries which is

16 treated as one country under section 506(2),

17 but does include a country which is a member

18 of any such association.

19 ‘‘(C) REDESIGNATIONS.—A country which

20 is no longer treated as a beneficiary developing

21 country with respect to an eligible article by

22 reason of subparagraph (A) may be redesig23 nated a beneficiary developing country with re24 spect to such article, subject to the consider25 ations set forth in sections 501 and 502, if im-
669

•HR 2491 RH

1 ports of such article from such country did not

2 exceed the limitations in subparagraph (A) dur3 ing the preceding calendar year.

4 ‘‘(D) LEAST-DEVELOPED BENEFICIARY

5 DEVELOPING COUNTRIES.—Subparagraph (A)

6 shall not apply to any least-developed bene7 ficiary developing country.

8 ‘‘(E) ARTICLES NOT PRODUCED IN THE

9 UNITED STATES EXCLUDED.—Subparagraph

10 (A)(ii) shall not apply with respect to any eligi11 ble article if a like or directly competitive article

12 was not produced in the United States on Jan13 uary 1, 1995.

14 ‘‘(F) DE MINIMIS WAIVERS.—The Presi15 dent may disregard subparagraph (A)(ii) with

16 respect to any eligible article from any bene17 ficiary developing country if the appraised value

18 of the total imports of such article into the

19 United States during calendar year 1995 or any

20 calendar year thereafter does not exceed

21 $13,000,000, except that, in applying this sub22 paragraph, the amount of $13,000,000 shall be

23 increased by $500,000 on January 1 of each

24 calendar year after calendar year 1995.

25 ‘‘(d) WAIVER OF COMPETITIVE NEED LIMITATION.—
670

•HR 2491 RH

1 ‘‘(1) IN GENERAL.—The President may waive

2 the application of subsection (c)(2) with respect to

3 any eligible article of any beneficiary developing

4 country if, before July 1 of the calendar year begin5 ning after the calendar year for which a determina6 tion described in subsection (c)(2)(A) was made with

7 respect to such eligible article, the President—

8 ‘‘(A) receives the advice of the Inter9 national Trade Commission under section 332

10 of the Tariff Act of 1930 on whether any indus11 try in the United States is likely to be adversely

12 affected by such waiver,

13 ‘‘(B) determines, based on the consider14 ations described in sections 501 and 502(c) and

15 the advice described in subparagraph (A), that

16 such waiver is in the national economic interest

17 of the United States, and

18 ‘‘(C) publishes the determination described

19 in subparagraph (B) in the Federal Register.

20 ‘‘(2) CONSIDERATIONS BY THE PRESIDENT.—In

21 making any determination under paragraph (1), the

22 President shall give great weight to—

23 ‘‘(A) the extent to which the beneficiary

24 developing country has assured the United

25 States that such country will provide equitable
671

•HR 2491 RH

1 and reasonable access to the markets and basic

2 commodity resources of such country, and

3 ‘‘(B) the extent to which such country pro4 vides adequate and effective protection of intel5 lectual property rights.

6 ‘‘(3) EFFECTIVE PERIOD OF WAIVER.—Any

7 waiver granted under this subsection shall remain in

8 effect until the President determines that such waiv9 er is no longer warranted due to changed cir10 cumstances.

11 ‘‘(e) INTERNATIONAL TRADE COMMISSION AD12 VICE.—Before designating articles as eligible articles

13 under section 503(a)(1), the President shall publish and

14 furnish the International Trade Commission with lists of

15 articles which may be considered for designation as eligible

16 articles for purposes of this title. The provisions of sec17 tions 131, 132, 133, and 134 shall be complied with as

18 though action under section 501 and this section were ac19 tion under section 123 to carry out a trade agreement en20 tered into under section 123.

21 ‘‘(f) SPECIAL RULE CONCERNING PUERTO RICO.—

22 No action under this title may affect any tariff duty im23 posed by the Legislature of Puerto Rico pursuant to sec24 tion 319 of the Tariff Act of 1930 on coffee imported into

25 Puerto Rico.
672

•HR 2491 RH

1 ‘‘SEC. 504. REVIEW AND REPORTS TO CONGRESS.

2 ‘‘(a) REPORT ON OPERATION OF TITLE.—On or be3 fore July 31, 1997, the President shall submit to the Con4 gress a full and complete report regarding the operation

5 of this title.

6 ‘‘(b) ANNUAL REPORTS ON WORKER RIGHTS.—The

7 President shall submit an annual report to the Congress

8 on the status of internationally recognized worker rights

9 within each beneficiary developing country.

10 ‘‘SEC. 505. DATE OF TERMINATION.

11 ‘‘No duty-free treatment provided under this title

12 shall remain in effect after December 31, 1997.

13 ‘‘SEC. 506. DEFINITIONS.

14 ‘‘For purposes of this title:

15 ‘‘(1) BENEFICIARY DEVELOPING COUNTRY.—

16 The term ‘beneficiary developing country’ means any

17 country with respect to which there is in effect an

18 Executive order or Presidential proclamation by the

19 President designating such country as a beneficiary

20 developing country for purposes of this title.

21 ‘‘(2) COUNTRY.—The term ‘country’ means any

22 foreign country or territory, including any overseas

23 dependent territory or possession of a foreign coun24 try, or the Trust Territory of the Pacific Islands. In

25 the case of an association of countries which is a

26 free trade area or customs union, or which is con-
673

•HR 2491 RH

1 tributing to comprehensive regional economic inte2 gration among its members through appropriate

3 means, including, but not limited to, the reduction

4 of duties, the President may by Executive order or

5 Presidential proclamation provide that all members

6 of such association other than members which are

7 barred from designation under section 502(b) shall

8 be treated as one country for purposes of this title.

9 ‘‘(3) ENTERED.—The term ‘entered’ means en10 tered, or withdrawn from warehouse for consump11 tion, in the customs territory of the United States.

12 ‘‘(4) INTERNATIONALLY RECOGNIZED WORKER

13 RIGHTS.—The term ‘internationally recognized work14 er rights’ includes—

15 ‘‘(A) the right of association;

16 ‘‘(B) the right to organize and bargain col17 lectively;

18 ‘‘(C) a prohibition on the use of any form

19 of forced or compulsory labor;

20 ‘‘(D) a minimum age for the employment

21 of children; and

22 ‘‘(E) acceptable conditions of work with re23 spect to minimum wages, hours of work, and

24 occupational safety and health.
674

•HR 2491 RH

1 ‘‘(5) LEAST-DEVELOPED BENEFICIARY DEVEL2 OPING COUNTRY.—The term ‘least-developed bene3 ficiary developing country’ means a beneficiary de4 veloping country that is designated as a least-devel5 oped beneficiary developing country under section

6 502(a)(2).’’.

7 (b) TABLE OF CONTENTS.—The items relating to

8 title V in the table of contents of the Trade Act of 1974

9 are amended to read as follows:

‘‘TITLE V—GENERALIZED SYSTEM OF PREFERENCES

‘‘Sec. 501. Authority to extend preferences.

‘‘Sec. 502. Designation of beneficiary developing countries.

‘‘Sec. 503. Designation of eligible articles.

‘‘Sec. 504. Review and reports to Congress.

‘‘Sec. 505. Date of termination.

‘‘Sec. 506. Definitions.’’.

10 SEC. 12103. RETROACTIVE APPLICATION FOR CERTAIN LIQ11 UIDATIONS AND RELIQUIDATIONS.

12 (a) IN GENERAL.—Notwithstanding section 514 of

13 the Tariff Act of 1930 or any other provision of law and

14 subject to subsection (b), the entry—

15 (1) of any article to which duty-free treatment

16 under title V of the Trade Act of 1974 would have

17 applied if the entry had been made on July 31,

18 1995, and

19 (2) that was made after July 31, 1995, and be20 fore the date of the enactment of this Act,

21 shall be liquidated or reliquidated as free of duty, and the

22 Secretary of the Treasury shall refund any duty paid with
675

•HR 2491 RH

1 respect to such entry. As used in this subsection, the term

2 ‘‘entry’’ includes a withdrawal from warehouse for con3 sumption.

4 (b) REQUESTS.—Liquidation or reliquidation may be

5 made under subsection (a) with respect to an entry only

6 if a request therefor is filed with the Customs Service,

7 within 180 days after the date of the enactment of this

8 Act, that contains sufficient information to enable the

9 Customs Service—

10 (1) to locate the entry; or

11 (2) to reconstruct the entry if it cannot be lo12 cated.

13 (c) TREATMENT OF CERTAIN ENTRIES OF

14 BUFFALO LEATHER.—Notwithstanding section 514

15 of the Tariff Act of 1930 or any other provision of

16 law, buffalo leather, provided for under subheading

17 4104.39.20 of the Harmonized Tariff Schedule of

18 the United States, that is a product of Thailand and

19 entered into the United States under entry numbers

20 M42–1113868–8 and M42–1113939–7, shall be liq21 uidated or reliquidated, as appropriate, as if entered

22 on June 30, 1995.

23 SEC. 12104. CONFORMING AMENDMENTS.

24 (a) TRADE LAWS.—
676

•HR 2491 RH

1 (1) Section 1211(b) of the Omnibus Trade and

2 Competitiveness Act of 1988 (19 U.S.C. 3011(b)) is

3 amended—

4 (A) in paragraph (1), by striking ‘‘(19

5 U.S.C. 2463(a), 2464(c)(3))’’ and inserting

6 ‘‘(as in effect on the day before the date of the

7 enactment of the GSP Renewal Act of 1995)’’;

8 and

9 (B) in paragraph (2), by striking ‘‘(19

10 U.S.C. 2464(c)(1))’’ and inserting the follow11 ing: ‘‘(as in effect on the day before the date

12 of the enactment of the GSP Renewal Act of

13 1995)’’.

14 (2) Section 203(c)(7) of the Andean Trade

15 Preference Act (19 U.S.C. 3202(c)(7)) is amended

16 by striking ‘‘502(a)(4)’’ and inserting ‘‘506(4)’’.

17 (3) Section 212(b)(7) of the Caribbean Basin

18 Economic Recovery Act (19 U.S.C. 2702(b)(7)) is

19 amended by striking ‘‘502(a)(4)’’ and inserting

20 ‘‘506(4)’’.

21 (4) General note 3(a)(iv)(C) of the Harmonized

22 Tariff Schedule of the United States is amended by

23 striking ‘‘sections 503(b) and 504(c)’’ and inserting

24 ‘‘subsections (a), (c), and (d) of section 503’’.

25 (b) OTHER LAWS.—
677

•HR 2491 RH

1 (1) Section 871(f)(2)(B) of the Internal Reve2 nue Code of 1986 is amended by striking ‘‘within

3 the meaning of section 502’’ and inserting ‘‘under

4 title V’’.

5 (2) Section 2202(8) of the Export Enhance6 ment Act of 1988 (15 U.S.C. 4711(8)) is amended

7 by striking ‘‘502(a)(4)’’ and inserting ‘‘506(4)’’.

8 (3) Section 231A(a) of the Foreign Assistance

9 Act of 1961 (22 U.S.C. 2191a(a)) is amended—

10 (A) in paragraph (1) by striking

11 ‘‘502(a)(4) of the Trade Act of 1974 (19

12 U.S.C. 2462(a)(4))’’ and inserting ‘‘506(4) of

13 the Trade Act of 1974’’;

14 (B) in paragraph (2) by striking ‘‘505(c)

15 of the Trade Act of 1974 (19 U.S.C. 2465(c))’’

16 and inserting ‘‘504(b) of the Trade Act of

17 1974’’; and

18 (C) in paragraph (4) by striking

19 ‘‘502(a)(4)’’ and inserting ‘‘506(4)’’.
678

•HR 2491 RH

1 Subtitle C—Trade Adjustment

2 Assistance

3 SEC. 12201. MODIFICATION OF TRADE ADJUSTMENT AS4 SISTANCE.

5 (a) REQUIREMENT OF TRAINING.—(1) Section

6 231(c) of the Trade Act of 1974 (19 U.S.C. 2291) is

7 amended—

8 (A) in paragraph (1)(A) and (B) by striking ‘‘it

9 is not feasible or appropriate to approve a training

10 program’’ and inserting ‘‘a training program is not

11 available’’; and

12 (B) in paragraph (2)(A) and (B) by striking ‘‘it

13 is feasible or appropriate to approve a training pro14 gram’’ and inserting ‘‘a training program is avail15 able’’.

16 (2) Section 233(b) of such Act (19 U.S.C. 2293(b))

17 is repealed.

18 (3) Paragraph (3) of section 250(d) of the Trade Act

19 of 1974 (19 U.S.C. 2331(d)) is amended—

20 (A) by striking ‘‘it is not feasible or appropriate

21 to approve a training program’’ in subparagraph (A)

22 and inserting ‘‘a training program is not available’’,

23 and

24 (B) by striking ‘‘notwithstanding the provisions

25 of section 233(b),’’ in subparagraph (B).
679

•HR 2491 RH

1 (b) TERMINATION OF RELOCATION ALLOWANCES.—

2 (1) Section 238 of the Trade Act of 1974 (19 U.S.C.

3 2298), and the item relating to that section in the table

4 of contents for that Act, are repealed.

5 (2) Section 250(d) of the Trade Act of 1974 (19

6 U.S.C. 2331(d)) is amended by striking paragraph (5).

7 (c) TERMINATION OF PROGRAM.—Section 285(c) of

8 the Trade Act of 1974 (19 U.S.C. 2271 preceding note)

9 is amended—

10 (1) in paragraph (1), by striking ‘‘1998’’ and

11 inserting ‘‘2000’’; and

12 (2) by amending paragraph (2) to read as fol13 lows:

14 ‘‘(2) No assistance, vouchers, allowances, or other

15 payments may be provided under subchapter D of chapter

16 2 after September 30, 1998.’’.

17 (d) EXTENSION OF AUTHORIZATION.—(1) Section

18 245(a) of the Trade Act of 1974 (19 U.S.C. 2317(a)) is

19 amended by striking ‘‘and 1998’’ and inserting ‘‘1998,

20 1999, and 2000’’.

21 (2) Section 256(b) of the Trade Act of 1974 (19

22 U.S.C. 2346(a)) is amended by striking ‘‘and 1998’’ and

23 inserting ‘‘1998, 1999, and 2000’’.

24 (e) EFFECTIVE DATE.—
680

•HR 2491 RH

1 (1) IN GENERAL.—Except as provided in para2 graph (2), the amendments made by this section

3 shall take effect on the date of the enactment of this

4 Act.

5 (2) SUBSECTIONS (a) AND (b).—The amend6 ments made by subsections (a) and (b) shall take ef7 fect on October 1, 1996.

8 TITLE XIII—COMMITTEE ON

9 WAYS AND MEANS—REVENUE

10 RECONCILIATION

11 SEC. 13001. SHORT TITLE; AMENDMENT OF 1986 CODE.

12 (a) SHORT TITLE.—This title may be cited as the

13 ‘‘Revenue Reconciliation Act of 1995’’.

14 (b) AMENDMENT OF 1986 CODE.—Except as other15 wise expressly provided, whenever in this title an amend16 ment or repeal is expressed in terms of an amendment

17 to, or repeal of, a section or other provision, the reference

18 shall be considered to be made to a section or other provi19 sion of the Internal Revenue Code of 1986.

20 (c) TABLE OF CONTENTS.—The table of contents for

21 this title is as follows:

TITLE XIII—COMMITTEE ON WAYS AND MEANS—REVENUE

RECONCILIATION

Sec. 13001. Short title; amendment of 1986 Code.

Subtitle A—Extension of Expiring Provisions, Etc.

PART I—EXTENSIONS THROUGH DECEMBER 31, 1997

Sec. 13101. Work opportunity tax credit.
681

•HR 2491 RH

Sec. 13102. Employer-provided educational assistance programs.

Sec. 13103. Research credit.

Sec. 13104. Contributions of stock to private foundations.

Sec. 13105. Credit for clinical testing expenses.

PART II—PERMANENT EXTENSION OF FUTA EXEMPTION FOR ALIEN

AGRICULTURAL WORKERS

Sec. 13106. FUTA exemption for alien agricultural workers.

PART III—COMMERCIAL AVIATION FUEL

Sec. 13111. Delay of scheduled increase in tax on fuel used in commercial aviation.

PART IV—EXTENSION OF AIRPORT AND AIRWAY TRUST FUND EXCISE

TAXES

Sec. 13116. Extension of Airport and Airway Trust Fund excise taxes.

Subtitle B—Medical Savings Accounts

Sec. 13201. Medical savings accounts.

Subtitle C—Pickle-Johnson Taxpayer Bill of Rights 2

PART I—TAXPAYER ADVOCATE

Sec. 13301. Establishment of position of taxpayer advocate within Internal

Revenue Service.

Sec. 13302. Expansion of authority to issue taxpayer assistance orders.

PART II—MODIFICATIONS TO INSTALLMENT AGREEMENT PROVISIONS

Sec. 13306. Notification of reasons for termination of installment agreements.

Sec. 13307. Administrative review of termination of installment agreement.

PART III—ABATEMENT OF INTEREST AND PENALTIES

Sec. 13311. Expansion of authority to abate interest.

Sec. 13312. Review of IRS failure to abate interest.

Sec. 13313. Extension of interest-free period for payment of tax after notice

and demand.

PART IV—JOINT RETURNS

Sec. 13316. Studies of joint return-related issues.

Sec. 13317. Joint return may be made after separate returns without full payment of tax.

Sec. 13318. Disclosure of collection activities.

PART V—COLLECTION ACTIVITIES

Sec. 13321. Modifications to lien and levy provisions.

Sec. 13322. Offers-in-compromise.

PART VI—INFORMATION RETURNS

Sec. 13326. Civil damages for fraudulent filing of information returns.
682

•HR 2491 RH

Sec. 13327. Requirement to conduct reasonable investigations of information

returns.

PART VII—AWARDING OF COSTS AND CERTAIN FEES

Sec. 13331. United States must establish that its position in proceeding was

substantially justified.

Sec. 13332. Increased limit on attorney fees.

Sec. 13333. Failure to agree to extension not taken into account.

Sec. 13334. Award of litigation costs permitted in declaratory judgment proceedings.

Sec. 13335. Effective date.

PART VIII—MODIFICATION TO RECOVERY OF CIVIL DAMAGES FOR

UNAUTHORIZED COLLECTION ACTIONS

Sec. 13336. Increase in limit on recovery of civil damages for unauthorized collection actions.

Sec. 13337. Court discretion to reduce award for litigation costs for failure to

exhaust administrative remedies.

PART IX—MODIFICATIONS TO PENALTY FOR FAILURE TO COLLECT AND

PAY OVER TAX

Sec. 13341. Preliminary notice requirement.

Sec. 13342. Disclosure of certain information where more than 1 person liable

for penalty for failure to collect and pay over tax.

Sec. 13343. Right of contribution where more than 1 person liable for penalty

for failure to collect and pay over tax.

Sec. 13344. Volunteer board members of tax-exempt organizations exempt from

penalty for failure to collect and pay over tax.

PART X—MODIFICATIONS OF RULES RELATING TO SUMMONSES

Sec. 13346. Enrolled agents included as third-party recordkeepers.

Sec. 13347. Safeguards relating to designated summonses.

Sec. 13348. Annual report to Congress concerning designated summonses.

PART XI—RELIEF FROM RETROACTIVE APPLICATION OF TREASURY

DEPARTMENT REGULATIONS

Sec. 13351. Relief from retroactive application of Treasury Department regulations.

PART XII—MISCELLANEOUS PROVISIONS

Sec. 13356. Report on pilot program for appeal of enforcement actions.

Sec. 13357. Phone number of person providing payee Statements required to

be shown on such Statement.

Sec. 13358. Required notice of certain payments.

Sec. 13359. Unauthorized enticement of information disclosure.

Sec. 13360. Annual reminders to taxpayers with outstanding delinquent accounts.

Sec. 13361. 5-year extension of authority for undercover operations.

Sec. 13362. Disclosure of form 8300 information on cash transactions.

Sec. 13363. Disclosure of returns and return information to designee of taxpayer.

Sec. 13364. Study of netting of interest on overpayments and liabilities.
683

•HR 2491 RH

Sec. 13365. Credit for expenses of certain TCMP audits.

Sec. 13366. Expenses of detection of underpayments and fraud, etc.

Subtitle D—Additional Technical Corrections

Sec. 13401. Reporting of real estate transactions.

Sec. 13402. Clarification of denial of deduction for stock redemption expenses.

Sec. 13403. Clarification of depreciation class for certain energy property.

Sec. 13404. Clerical amendment to section 404.

Sec. 13405. Treatment of certain veterans’ reemployment rights.

Subtitle E—Tax Information Sharing

Sec. 13501. Disclosure of return information for administration of certain veterans programs.

Subtitle F—Revenue Increases

PART I—PROVISIONS RELATING TO BUSINESSES

Sec. 13601. Tax treatment of certain extraordinary dividends.

Sec. 13602. Registration of confidential corporate tax shelters.

Sec. 13603. Denial of deduction for interest on loans with respect to companyowned insurance.

Sec. 13604. Termination of suspense accounts for family corporations required

to use accrual method of accounting.

Sec. 13605. Termination of Puerto Rico and possession tax credit.

Sec. 13606. Depreciation under income forecast method.

Sec. 13607. Transfers of excess pension assets.

PART II—LEGAL REFORMS

Sec. 13611. Repeal of exclusion for punitive damages and for damages not attributable to physical injuries or sickness.

Sec. 13612. Reporting of certain payments made to attorneys.

PART III—TREATMENT OF INDIVIDUALS WHO LOSE UNITED STATES

CITIZENSHIP

Sec. 13616. Revision of income, estate, and gift taxes on individuals who lose

United States citizenship.

Sec. 13617. Information on individuals losing United States citizenship.

Sec. 13618. Report on tax compliance by United States citizens and residents

living abroad.

PART IV—REFORMS RELATING TO ENERGY PROVISIONS

Sec. 13621. Termination of credit for electricity produced from certain renewable resources.

Sec. 13622. Reduction of incentives for alcohol fuels.

Sec. 13623. Exclusion for energy conservation subsidies limited to subsidies

with respect to dwelling units.

PART V—REFORMS RELATING TO NONRECOGNITION PROVISIONS

Sec. 13626. Basis adjustment to property held by corporation where stock in

corporation is replacement property under involuntary conversion rules.
684

•HR 2491 RH

Sec. 13627. Expansion of requirement that involuntarily converted property be

replaced with property acquired from an unrelated person.

Sec. 13628. No rollover or exclusion of gain on sale of principal residence which

is attributable to depreciation deductions.

Sec. 13629. Nonrecognition of gain on sale of principal residence by noncitizens

limited to new residences located in the United States.

PART VI—REFORMS RELATING TO GAMING ACTIVITIES

Sec. 13631. Treatment of Indian gaming activities under unrelated business income tax.

Sec. 13632. Repeal of targeted exemption from tax on unrelated trade or business income from gambling in certain States.

Sec. 13633. Extension of withholding to certain gambling winnings.

PART VII—OTHER REFORMS

Sec. 13636. Sunset of low-income housing credit.

Sec. 13637. Repeal of credit for contributions to community development

corporations.

Sec. 13638. Repeal of diesel fuel tax rebate to purchasers of diesel-powered

automobiles and light trucks.

Sec. 13639. Application of failure-to-pay penalty to substitute returns.

Sec. 13640. Repeal of special rule for rental use of vacation homes, etc., for

less than 15 days.

Sec. 13641. Election to cease status as qualified scholarship funding

corporation.

Sec. 13642. Certain amounts derived from foreign corporations treated as

unrelated business taxable income.

PART VIII—EXCISE TAX ON AMOUNTS OF PRIVATE EXCESS BENEFITS

Sec. 13646. Excise taxes for failure by certain charitable organizations to meet

certain qualification requirements.

Sec. 13647. Reporting of certain excise taxes and other information.

Sec. 13648. Exempt organizations required to provide copy of return.

Sec. 13649. Certain organizations required to disclose nonexempt status.

Sec. 13650. Increase in penalties on exempt organizations for failure to file

complete and timely annual returns.

Sec. 13651. Studies.

Subtitle G—Reform of the Earned Income Tax Credit

Sec. 13701. Repeal of earned income credit for individuals without qualifying

children; modifications to credit phaseout.

Sec. 13702. Modification of adjusted gross income used for phaseout.

Sec. 13703. Earned income tax credit denied to individuals not authorized to

be employed in the United States.

Subtitle H—Increase in Public Debt Limit

Sec. 13801. Increase in public debt limit.

Subtitle I—Coal Industry Retiree Health Equity

Sec. 13901. Repeal of reachback provisions of coal industry health benefit

system.
685

•HR 2491 RH

1 Subtitle A—Extension of Expiring

2 Provisions, Etc.

3 PART I—EXTENSIONS THROUGH DECEMBER 31,

4 1997

5 SEC. 13101. WORK OPPORTUNITY TAX CREDIT.

6 (a) AMOUNT OF CREDIT.—Subsection (a) of section

7 51 is amended by striking ‘‘40 percent’’ and inserting ‘‘35

8 percent’’.

9 (b) MEMBERS OF TARGETED GROUPS.—Subsection

10 (d) of section 51 is amended to read as follows:

11 ‘‘(d) MEMBERS OF TARGETED GROUPS.—For pur12 poses of this subpart—

13 ‘‘(1) IN GENERAL.—An individual is a member

14 of a targeted group if such individual is—

15 ‘‘(A) a qualified AFDC recipient,

16 ‘‘(B) a qualified ex-felon,

17 ‘‘(C) a high-risk youth,

18 ‘‘(D) a vocational rehabilitation referral, or

19 ‘‘(E) a qualified summer youth employee.

20 ‘‘(2) QUALIFIED AFDC RECIPIENT.—

21 ‘‘(A) IN GENERAL.—The term ‘qualified

22 AFDC recipient’ means any individual who is

23 certified by the designated local agency as being

24 a member of a family receiving assistance under

25 an AFDC program for at least a 9-month pe-
686

•HR 2491 RH

1 riod ending during the 9-month period ending

2 on the hiring date.

3 ‘‘(B) AFDC PROGRAM.—For purposes of

4 this paragraph, the term ‘AFDC program’

5 means any program providing aid under a State

6 plan approved under part A of title IV of the

7 Social Security Act (relating to aid to families

8 with dependent children) and any successor of

9 such program.

10 ‘‘(C) SPECIAL RULES FOR VETERANS.—In

11 the case of a veteran, subparagraph (A) shall be

12 applied by substituting ‘12-month’ for ‘9-

13 month’ the second place it appears.

14 ‘‘(D) VETERAN.—For purposes of sub15 paragraph (C), the term ‘veteran’ means any

16 individual who is certified by the designated

17 local agency as—

18 ‘‘(i)(I) having served on active duty

19 (other than active duty for training) in the

20 Armed Forces of the United States for a

21 period of more than 180 days, or

22 ‘‘(II) having been discharged or re23 leased from active duty in the Armed

24 Forces of the United States for a service25 connected disability, and
687

•HR 2491 RH

1 ‘‘(ii) not having any day during the

2 60-day period ending on the hiring date

3 which was a day of extended active duty in

4 the Armed Forces of the United States.

5 For purposes of clause (ii), the term ‘extended

6 active duty’ means a period of more than 90

7 days during which the individual was on active

8 duty (other than active duty for training).

9 ‘‘(3) QUALIFIED EX-FELON.—The term ‘quali10 fied ex-felon’ means any individual who is certified

11 by the designated local agency—

12 ‘‘(A) as having been convicted of a felony

13 under any statute of the United States or any

14 State,

15 ‘‘(B) as having a hiring date which is not

16 more than 1 year after the last date on which

17 such individual was so convicted or was released

18 from prison, and

19 ‘‘(C) as being a member of a family which

20 had an income during the 6 months imme21 diately preceding the earlier of the month in

22 which such income determination occurs or the

23 month in which the hiring date occurs, which,

24 on an annual basis, would be 70 percent or less
688

•HR 2491 RH

1 of the Bureau of Labor Statistics lower living

2 standard.

3 Any determination under subparagraph (C) shall be

4 valid for the 45-day period beginning on the date

5 such determination is made.

6 ‘‘(4) HIGH-RISK YOUTH.—

7 ‘‘(A) IN GENERAL.—The term ‘high-risk

8 youth’ means any individual who is certified by

9 the designated local agency—

10 ‘‘(i) as having attained age 18 but not

11 age 25 on the hiring date, and

12 ‘‘(ii) as having his principal place of

13 abode within an empowerment zone or en14 terprise community.

15 ‘‘(B) YOUTH MUST CONTINUE TO RESIDE

16 IN ZONE.—In the case of a high-risk youth, the

17 term ‘qualified wages’ shall not include wages

18 paid or incurred for services performed while

19 such youth’s principal place of abode is outside

20 an empowerment zone or enterprise community.

21 ‘‘(5) VOCATIONAL REHABILITATION REFER22 RAL.—The term ‘vocational rehabilitation referral’

23 means any individual who is certified by the des24 ignated local agency as—
689

•HR 2491 RH

1 ‘‘(A) having a physical or mental disability

2 which, for such individual, constitutes or results

3 in a substantial handicap to employment, and

4 ‘‘(B) having been referred to the employer

5 upon completion of (or while receiving) rehabili6 tative services pursuant to—

7 ‘‘(i) an individualized written rehabili8 tation plan under a State plan for voca9 tional rehabilitation services approved

10 under the Rehabilitation Act of 1973, or

11 ‘‘(ii) a program of vocational rehabili12 tation carried out under chapter 31 of title

13 38, United States Code.

14 ‘‘(6) QUALIFIED SUMMER YOUTH EMPLOYEE.—

15 ‘‘(A) IN GENERAL.—The term ‘qualified

16 summer youth employee’ means any individ17 ual—

18 ‘‘(i) who performs services for the em19 ployer between May 1 and September 15,

20 ‘‘(ii) who is certified by the designated

21 local agency as having attained age 16 but

22 not 18 on the hiring date (or if later, on

23 May 1 of the calendar year involved),

24 ‘‘(iii) who has not been an employee

25 of the employer during any period prior to
690

•HR 2491 RH

1 the 90-day period described in subpara2 graph (B)(i), and

3 ‘‘(iv) who is certified by the des4 ignated local agency as having his principal

5 place of abode within an empowerment

6 zone or enterprise community.

7 ‘‘(B) SPECIAL RULES FOR DETERMINING

8 AMOUNT OF CREDIT.—For purposes of applying

9 this subpart to wages paid or incurred to any

10 qualified summer youth employee—

11 ‘‘(i) subsection (b)(2) shall be applied

12 by substituting ‘any 90-day period between

13 May 1 and September 15’ for ‘the 1-year

14 period beginning with the day the individ15 ual begins work for the employer’, and

16 ‘‘(ii) subsection (b)(3) shall be applied

17 by substituting ‘$3,000’ for ‘$6,000’.

18 The preceding sentence shall not apply to an in19 dividual who, with respect to the same em20 ployer, is certified as a member of another tar21 geted group after such individual has been a

22 qualified summer youth employee.

23 ‘‘(C) YOUTH MUST CONTINUE TO RESIDE

24 IN ZONE.—Paragraph (4)(B) shall apply for

25 purposes of this paragraph.
691

•HR 2491 RH

1 ‘‘(7) HIRING DATE.—The term ‘hiring date’

2 means the day the individual is hired by the em3 ployer.

4 ‘‘(8) DESIGNATED LOCAL AGENCY.—The term

5 ‘designated local agency’ means a State employment

6 security agency established in accordance with the

7 Act of June 6, 1933, as amended (29 U.S.C. 49–

8 49n).

9 ‘‘(9) SPECIAL RULES FOR CERTIFICATIONS.—

10 ‘‘(A) IN GENERAL.—An individual shall

11 not be treated as a member of a targeted group

12 unless—

13 ‘‘(i) on or before the day on which

14 such individual begins work for the em15 ployer, the employer has received a certifi16 cation from a designated local agency that

17 such individual is a member of a targeted

18 group, or

19 ‘‘(ii)(I) on or before the day the indi20 vidual is offered employment with the em21 ployer, a pre-screening notice is completed

22 with respect to such individual, and

23 ‘‘(II) not later than the 14th day after

24 the individual begins work for the em25 ployer, the employer submits such notice to
692

•HR 2491 RH

1 the designated local agency as part of a

2 written request for such a certification

3 from such agency.

4 For purposes of this paragraph, the term ‘pre5 screening notice’ means a document (in such

6 form as the Secretary shall prescribe) which is

7 signed by the employer and the individual under

8 penalties of perjury and which contains infor9 mation provided by the individual on the basis

10 of which the employer believes that the individ11 ual is a member of a targeted group.

12 ‘‘(B) INCORRECT CERTIFICATIONS.—If—

13 ‘‘(i) an individual has been certified

14 by a designated local agency as a member

15 of a targeted group, and

16 ‘‘(ii) such certification is incorrect be17 cause it was based on false information

18 provided by such individual,

19 the certification shall be revoked and wages

20 paid by the employer after the date on which

21 notice of revocation is received by the employer

22 shall not be treated as qualified wages.

23 ‘‘(C) EXPLANATION OF DENIAL OF RE24 QUEST.—If a designated local agency denies a

25 request for certification of membership in a tar-
693

•HR 2491 RH

1 geted group, such agency shall provide to the

2 person making such request a written expla3 nation of the reasons for such denial.’’

4 (c) MINIMUM EMPLOYMENT PERIOD.—Paragraph

5 (3) of section 51(i) is amended to read as follows:

6 ‘‘(3) INDIVIDUALS NOT MEETING MINIMUM EM7 PLOYMENT PERIOD.—No wages shall be taken into

8 account under subsection (a) with respect to any in9 dividual unless such individual either—

10 ‘‘(A) is employed by the employer at least

11 180 days (20 days in the case of a qualified

12 summer youth employee), or

13 ‘‘(B) has completed at least 500 hours

14 (120 hours in the case of a qualified summer

15 youth employee) of services performed for the

16 employer.’’

17 (d) DEFINITION OF WAGES.—Subsection (c) of sec18 tion 51 is amended by striking paragraph (3).

19 (e) TERMINATION.—Paragraph (4) of section 51(c)

20 is amended to read as follows:

21 ‘‘(3) TERMINATION.—The term ‘wages’ shall

22 not include any amount paid or incurred to an indi23 vidual who begins work for the employer—

24 ‘‘(A) after December 31, 1994, and before

25 January 1, 1996, or
694

•HR 2491 RH

1 ‘‘(B) after December 31, 1997.’’

2 (f) REDESIGNATION OF CREDIT.—

3 (1) Sections 38(b)(2) and 51(a) are each

4 amended by striking ‘‘targeted jobs credit’’ and in5 serting ‘‘work opportunity credit’’.

6 (2) The subpart heading for subpart F of part

7 IV of subchapter A of chapter 1 is amended by

8 striking ‘‘Targeted Jobs Credit’’ and inserting

9 ‘‘Work Opportunity Credit’’.

10 (3) The table of subparts for such part IV is

11 amended by striking ‘‘targeted jobs credit’’ and in12 serting ‘‘work opportunity credit’’.

13 (g) BUSINESS AWARENESS PROGRAM.—The Sec14 retary of Labor shall implement a program to encourage

15 small businesses to use the services of local agencies to

16 identify individuals who qualify to be certified as members

17 of targeted groups (as defined in section 51 of the Internal

18 Revenue Code of 1986, as amended by this section). Such

19 Secretary, and the heads of other Federal agencies, shall

20 make every effort to encourage small businesses to benefit

21 from the credit allowable under such section by simplifying

22 procedures to the extent possible.

23 (h) TECHNICAL AMENDMENTS.—

24 (1) Paragraph (1) of section 51(c) is amended

25 by striking ‘‘, subsection (d)(8)(D),’’.
695

•HR 2491 RH

1 (2) Paragraph (3) of section 51(i) is amended

2 by striking ‘‘(d)(12)’’ each place it appears and in3 serting ‘‘(d)(6)’’.

4 (i) EFFECTIVE DATE.—The amendments made by

5 this section shall apply to individuals who begin work for

6 the employer after December 31, 1995.

7 SEC. 13102. EMPLOYER-PROVIDED EDUCATIONAL ASSIST8 ANCE PROGRAMS.

9 (a) EXTENSION.—Subsection (d) of section 127 (re10 lating to educational assistance programs) is amended by

11 striking ‘‘December 31, 1994’’ and inserting ‘‘December

12 31, 1997’’.

13 (b) LIMITATION TO EDUCATION BELOW GRADUATE

14 LEVEL.—The last sentence of section 127(c)(1) is amend15 ed by inserting before the period ‘‘or at the graduate

16 level’’.

17 (c) EFFECTIVE DATES.—

18 (1) EXTENSION.—The amendment made by

19 subsection (a) shall apply to taxable years beginning

20 after December 31, 1994.

21 (2) LIMITATION.—The amendment made by

22 subsection (b) shall apply to taxable years beginning

23 after December 31, 1995.
696

•HR 2491 RH

1 SEC. 13103. RESEARCH CREDIT.

2 (a) IN GENERAL.—Subsection (h) of section 41 (re3 lating to credit for research activities) is amended—

4 (1) by striking ‘‘June 30, 1995’’ each place it

5 appears and inserting ‘‘December 31, 1997’’, and

6 (2) by striking ‘‘July 1, 1995’’ each place it ap7 pears and inserting ‘‘January 1, 1998’’.

8 (b) BASE AMOUNT FOR START-UP COMPANIES.—

9 Clause (i) of section 41(c)(3)(B) (relating to start-up com10 panies) is amended to read as follows:

11 ‘‘(i) TAXPAYERS TO WHICH SUBPARA12 GRAPH APPLIES.—The fixed-base percent13 age shall be determined under this sub14 paragraph if—

15 ‘‘(I) the first taxable year in

16 which a taxpayer had both gross re17 ceipts and qualified research expenses

18 begins after December 31, 1983, or

19 ‘‘(II) there are fewer than 3 tax20 able years beginning after December

21 31, 1983, and before January 1,

22 1989, in which the taxpayer had both

23 gross receipts and qualified research

24 expenses.’’

25 (c) ELECTION OF ALTERNATIVE INCREMENTAL

26 CREDIT.—Subsection (c) of section 41 is amended by re-
697

•HR 2491 RH

1 designating paragraphs (4) and (5) as paragraphs (5) and

2 (6), respectively, and by inserting after paragraph (3) the

3 following new paragraph:

4 ‘‘(4) ELECTION OF ALTERNATIVE INCREMEN5 TAL CREDIT.—

6 ‘‘(A) IN GENERAL.—At the election of the

7 taxpayer, the credit determined under sub8 section (a)(1) shall be equal to the sum of—

9 ‘‘(i) 1.65 percent of so much of the

10 qualified research expenses for the taxable

11 year as exceeds 1 percent of the average

12 described in subsection (c)(1)(B) but does

13 not exceed 1.5 percent of such average,

14 ‘‘(ii) 2.2 percent of so much of such

15 expenses as exceeds 1.5 percent of such av16 erage but does not exceed 2 percent of

17 such average, and

18 ‘‘(iii) 2.75 percent of so much of such

19 expenses as exceeds 2 percent of such aver20 age.

21 ‘‘(B) ELECTION.—An election under this

22 paragraph may be made only for the first tax23 able year of the taxpayer beginning after June

24 30, 1995. Such an election shall apply to the

25 taxable year for which made and all succeeding
698

•HR 2491 RH

1 taxable years unless revoked with the consent of

2 the Secretary.’’

3 (d) INCREASED CREDIT FOR CONTRACT RESEARCH

4 EXPENSES WITH RESPECT TO CERTAIN RESEARCH CON5 SORTIA.—Paragraph (3) of section 41(b) is amended by

6 adding at the end the following new subparagraph:

7 ‘‘(C) AMOUNTS PAID TO CERTAIN RE8 SEARCH CONSORTIA.—

9 ‘‘(i) IN GENERAL.—Subparagraph (A)

10 shall be applied by substituting ‘75 per11 cent’ for ‘65 percent’ with respect to

12 amounts paid or incurred by the taxpayer

13 to a qualified research consortium for

14 qualified research.

15 ‘‘(ii) QUALIFIED RESEARCH CONSOR16 TIUM.—The term ‘qualified research con17 sortium’ means any organization described

18 in subsection (e)(6)(B) if—

19 ‘‘(I) at least 15 unrelated tax20 payers paid (during the calendar year

21 in which the taxable year of the tax22 payer begins) amounts to such organi23 zation for qualified research,

24 ‘‘(II) no 3 persons paid during

25 such calendar year more than 50 per-
699

•HR 2491 RH

1 cent of the total amounts paid during

2 such calendar year for qualified re3 search, and

4 ‘‘(III) no person contributed

5 more than 20 percent of such total

6 amounts.

7 For purposes of subclause (I), all persons

8 treated as a single employer under sub9 section (a) or (b) of section 52 shall be

10 treated as related taxpayers.’’

11 (e) CONFORMING AMENDMENT.—Subparagraph (D)

12 of section 28(b)(1) is amended by striking ‘‘June 30,

13 1995’’ and inserting ‘‘December 31, 1997’’.

14 (f) EFFECTIVE DATE.—

15 (1) IN GENERAL.—Except as provided in para16 graph (2), the amendments made by this section

17 shall apply to taxable years ending after June 30,

18 1995.

19 (2) SUBSECTIONS (c) AND (d).—The amend20 ments made by subsections (c) and (d) shall apply

21 to taxable years beginning after June 30, 1995.
700

•HR 2491 RH

1 SEC. 13104. CONTRIBUTIONS OF STOCK TO PRIVATE FOUN2 DATIONS.

3 (a) IN GENERAL.—Subparagraph (D) of section

4 170(e)(5) is amended by striking ‘‘December 31, 1994’’

5 and inserting ‘‘December 31, 1997’’.

6 (b) EFFECTIVE DATE.—The amendment made by

7 this section shall apply to contributions made after De8 cember 31, 1994.

9 SEC. 13105. CREDIT FOR CLINICAL TESTING EXPENSES.

10 (a) IN GENERAL.—Subsection (e) of section 28 is

11 amended by striking ‘‘December 31, 1994’’ and inserting

12 ‘‘December 31, 1997’’.

13 (b) EFFECTIVE DATE.—The amendment made by

14 this section shall apply to taxable years ending after De15 cember 31, 1994.

16 PART II—PERMANENT EXTENSION OF FUTA EX17 EMPTION FOR ALIEN AGRICULTURAL WORK18 ERS

19 SEC. 13106. FUTA EXEMPTION FOR ALIEN AGRICULTURAL

20 WORKERS.

21 (a) IN GENERAL.—Subparagraph (B) of section

22 3306(c)(1) (defining employment) is amended by striking

23 ‘‘before January 1, 1995,’’.

24 (b) EFFECTIVE DATE.—The amendment made by

25 subsection (a) shall apply to services performed after De26 cember 31, 1994.
701

•HR 2491 RH

1 PART III—COMMERCIAL AVIATION FUEL

2 SEC. 13111. DELAY OF SCHEDULED INCREASE IN TAX ON

3 FUEL USED IN COMMERCIAL AVIATION.

4 (a) 2-YEAR DELAY.—Sections 4092(b)(2),

5 6421(f)(2)(B), and 6427(l)(4)(B) are each amended by

6 striking ‘‘September 30, 1995’’ and inserting ‘‘September

7 30, 1997’’.

8 (b) CONFORMING AMENDMENT.—Section 13245 of

9 the Omnibus Budget Reconciliation Act of 1993 is hereby

10 repealed.

11 (c) EFFECTIVE DATE.—

12 (1) IN GENERAL.—The amendments made by

13 this section shall take effect on September 30, 1995.

14 (2) CROSS REFERENCE.—

For refund of tax paid on commercial aviation

fuel before the date of the enactment of this Act, see

section 6427(l) of the Internal Revenue Code of 1986.

15 (d) FLOOR STOCKS TAX.—

16 (1) IMPOSITION OF TAX.—In the case of com17 mercial aviation fuel which is held by any person on

18 October 1, 1997, there is hereby imposed a floor

19 stocks tax equal to 4.3 cents per gallon.

20 (2) LIABILITY FOR TAX AND METHOD OF PAY21 MENT.—

22 (A) LIABILITY FOR TAX.—A person hold23 ing aviation fuel on October 1, 1997, to which
702

•HR 2491 RH

1 the tax imposed by paragraph (1) applies shall

2 be liable for such tax.

3 (B) METHOD OF PAYMENT.—The tax im4 posed by paragraph (1) shall be paid in such

5 manner as the Secretary shall prescribe.

6 (C) TIME FOR PAYMENT.—The tax im7 posed by paragraph (1) shall be paid on or be8 fore April 30, 1998.

9 (3) DEFINITIONS.—For purposes of this sub10 section—

11 (A) HELD BY A PERSON.—Aviation fuel

12 shall be considered as ‘‘held by a person’’ if

13 title thereto has passed to such person (whether

14 or not delivery to the person has been made).

15 (B) COMMERCIAL AVIATION FUEL.—The

16 term ‘‘commercial aviation fuel’’ means aviation

17 fuel (as defined in section 4093 of such Code)

18 which is held on October 1, 1997, for sale or

19 use in commercial aviation (as defined in sec20 tion 4092(b) of such Code).

21 (C) SECRETARY.—The term ‘‘Secretary’’

22 means the Secretary of the Treasury or his del23 egate.

24 (4) EXCEPTION FOR EXEMPT USES.—The tax

25 imposed by paragraph (1) shall not apply to aviation
703

•HR 2491 RH

1 fuel held by any person exclusively for any use for

2 which a credit or refund of the entire tax imposed

3 by section 4091 of such Code (other than the rate

4 imposed by section 4091(b)(2) of such Code) is al5 lowable for aviation fuel so used.

6 (5) EXCEPTION FOR CERTAIN AMOUNTS OF

7 FUEL.—

8 (A) IN GENERAL.—No tax shall be im9 posed by paragraph (1) on aviation fuel held on

10 October 1, 1997, by any person if the aggregate

11 amount of commercial aviation fuel held by

12 such person on such date does not exceed 2,000

13 gallons. The preceding sentence shall apply only

14 if such person submits to the Secretary (at the

15 time and in the manner required by the Sec16 retary) such information as the Secretary shall

17 require for purposes of this paragraph.

18 (B) EXEMPT FUEL.—For purposes of sub19 paragraph (A), there shall not be taken into ac20 count fuel held by any person which is exempt

21 from the tax imposed by paragraph (1) by rea22 son of paragraph (4).

23 (C) CONTROLLED GROUPS.—For purposes

24 of this paragraph—

25 (i) CORPORATIONS.—
704

•HR 2491 RH

1 (I) IN GENERAL.—All persons

2 treated as a controlled group shall be

3 treated as 1 person.

4 (II) CONTROLLED GROUP.—The

5 term ‘‘controlled group’’ has the

6 meaning given to such term by sub7 section (a) of section 1563 of such

8 Code; except that for such purposes

9 the phrase ‘‘more than 50 percent’’

10 shall be substituted for the phrase ‘‘at

11 least 80 percent’’ each place it ap12 pears in such subsection.

13 (ii) NONINCORPORATED PERSONS

14 UNDER COMMON CONTROL.—Under regula15 tions prescribed by the Secretary, prin16 ciples similar to the principles of clause (i)

17 shall apply to a group of persons under

18 common control where 1 or more of such

19 persons is not a corporation.

20 (6) OTHER LAWS APPLICABLE.—All provisions

21 of law, including penalties, applicable with respect to

22 the taxes imposed by section 4091 of such Code

23 shall, insofar as applicable and not inconsistent with

24 the provisions of this subsection, apply with respect

25 to the floor stock taxes imposed by paragraph (1) to
705

•HR 2491 RH

1 the same extent as if such taxes were imposed by

2 such section 4091.

3 (f) STUDY.—The Secretary of the Treasury or his

4 delegate shall, in consultation with the Secretary of Trans5 portation, conduct a study of the Federal excise tax bur6 dens on each of the various modes of transportation and

7 the benefits provided to each such mode from revenues

8 derived from such excise taxes. The results of such study

9 shall be submitted not later than June 30, 1996, to the

10 Committee on Ways and Means of the House of Rep11 resentatives and the Committee on Finance of the Senate.

12 PART IV—EXTENSION OF AIRPORT AND AIRWAY

13 TRUST FUND EXCISE TAXES

14 SEC. 13116. EXTENSION OF AIRPORT AND AIRWAY TRUST

15 FUND EXCISE TAXES.

16 (a) FUEL TAX.—

17 (1) Subparagraph (A) of section 4091(b)(3) is

18 amended by striking ‘‘January 1, 1996’’ and insert19 ing ‘‘October 1, 1996’’.

20 (2) Paragraph (2) of section 4081(d), as

21 amended by section 14721 of this Act, is amended

22 by striking ‘‘January 1, 1996’’ and inserting ‘‘Octo23 ber 1, 1996’’.
706

•HR 2491 RH

1 (b) TICKET TAXES.—Sections 4261(g) and 4271(d)

2 are each amended by striking ‘‘January 1, 1996’’ and in3 serting ‘‘October 1, 1996’’.

4 (c) TRANSFER TO AIRPORT AND AIRWAY TRUST

5 FUND.—

6 (1) Subsection (b) of section 9502 is amended

7 by striking ‘‘January 1, 1996’’ each place it appears

8 and inserting ‘‘October 1, 1996’’.

9 (2) Paragraph (3) of section 9502(f) is amend10 ed by striking ‘‘December 31, 1995’’ and inserting

11 ‘‘September 30, 1996’’.

12 Subtitle B—Medical Savings

13 Accounts

14 SEC. 13201. MEDICAL SAVINGS ACCOUNTS.

15 (a) IN GENERAL.—Part VII of subchapter B of chap16 ter 1 (relating to additional itemized deductions for indi17 viduals) is amended by redesignating section 220 as sec18 tion 221 and by inserting after section 219 the following

19 new section:

20 ‘‘SEC. 220. MEDICAL SAVINGS ACCOUNTS.

21 ‘‘(a) DEDUCTION ALLOWED.—In the case of an indi22 vidual who is an eligible individual for any month during

23 the taxable year, there shall be allowed as a deduction for

24 the taxable year an amount equal to the aggregate amount
707

•HR 2491 RH

1 paid in cash during such taxable year by such individual

2 to a medical savings account of such individual.

3 ‘‘(b) LIMITATIONS.—

4 ‘‘(1) IN GENERAL.—Except as otherwise pro5 vided in this subsection, the amount allowable as a

6 deduction under subsection (a) to an individual for

7 the taxable year shall not exceed the lesser of—

8 ‘‘(A) $2,500, or

9 ‘‘(B) the deductible under the catastrophic

10 health plan covering such individual.

11 If the catastrophic health plan covering such individ12 ual provides coverage for any other eligible individ13 ual who is the spouse or any dependent (as defined

14 in section 152) of the taxpayer, subparagraph (A)

15 shall be applied by substituting ‘$5,000’ for

16 ‘$2,500’. The preceding sentence shall not apply if

17 the spouse or any dependent (as so defined) of such

18 individual is covered under any other catastrophic

19 health plan.

20 ‘‘(2) SPECIAL RULE FOR MARRIED INDIVID21 UALS.—

22 ‘‘(A) IN GENERAL.—This subsection shall

23 be applied separately for each married individ24 ual.
708

•HR 2491 RH

1 ‘‘(B) SPECIAL RULE.—If individuals who

2 are married to each other are covered under the

3 same catastrophic health plan, then the

4 amounts applicable under subparagraphs (A)

5 and (B) of paragraph (1) shall be divided equal6 ly between them unless they agree on a dif7 ferent division.

8 ‘‘(3) COORDINATION WITH EXCLUSION FOR EM9 PLOYER CONTRIBUTIONS.—No deduction shall be al10 lowed under this section for any amount paid for

11 any taxable year to a medical savings account of an

12 individual if—

13 ‘‘(A) any amount is paid to any medical

14 savings account of such individual which is ex15 cludable from gross income under section

16 106(b) for such year, or

17 ‘‘(B) in a case described in paragraph (2),

18 any amount is paid to any medical savings ac19 count of either spouse which is so excludable for

20 such year.

21 ‘‘(4) PRORATION OF LIMITATION.—

22 ‘‘(A) IN GENERAL.—The limitation under

23 paragraph (1) shall be the sum of the monthly

24 limitations for months during the taxable year

25 that the individual is an eligible individual if—
709

•HR 2491 RH

1 ‘‘(i) such individual is not an eligible

2 individual for all months of the taxable

3 year,

4 ‘‘(ii) the deductible under the cata5 strophic health plan covering such individ6 ual is not the same throughout such tax7 able year, or

8 ‘‘(iii) such limitation is determined

9 using the next to the last sentence of para10 graph (1) for some but not all months dur11 ing such taxable year.

12 ‘‘(B) MONTHLY LIMITATION.—The month13 ly limitation for any month shall be an amount

equal to 1 14 ⁄12 of the limitation which would (but

15 for this paragraph and paragraph (3)) be deter16 mined under paragraph (1) if the facts and cir17 cumstances as of the first day of such month

18 that such individual is covered under a cata19 strophic health plan were true for the entire

20 taxable year.

21 ‘‘(5) DENIAL OF DEDUCTION TO DEPEND22 ENTS.—No deduction shall be allowed under this

23 section to any individual with respect to whom a de24 duction under section 151 is allowable to another

25 taxpayer for a taxable year beginning in the cal-
710

•HR 2491 RH

1 endar year in which such individual’s taxable year

2 begins.

3 ‘‘(c) DEFINITIONS.—For purposes of this section—

4 ‘‘(1) ELIGIBLE INDIVIDUAL.—

5 ‘‘(A) IN GENERAL.—The term ‘eligible in6 dividual’ means, with respect to any month, any

7 individual—

8 ‘‘(i) who is covered under a cata9 strophic health plan at any time during

10 such month, and

11 ‘‘(ii) who is not, while covered under

12 a catastrophic health plan, covered under

13 any health plan—

14 ‘‘(I) which is not a catastrophic

15 health plan, and

16 ‘‘(II) which provides coverage for

17 any benefit which is covered under the

18 catastrophic health plan.

19 ‘‘(B) CERTAIN COVERAGE DIS20 REGARDED.—Subparagraph (A)(ii) shall be ap21 plied without regard to—

22 ‘‘(i) coverage for any benefit provided

23 by permitted insurance, and
711

•HR 2491 RH

1 ‘‘(ii) coverage (whether through insur2 ance or otherwise) for accidents, dental

3 care, vision care, or long-term care.

4 ‘‘(2) CATASTROPHIC HEALTH PLAN.—The term

5 ‘catastrophic health plan’ means any health plan

6 which provides no compensation for an individual’s

7 expenses covered by the plan for any calendar year

8 to the extent such expenses for such calendar year

9 do not exceed $1,500 ($3,000 if the catastrophic

10 health plan covering the taxpayer provides coverage

11 for more than 1 individual) or such higher amounts

12 as may be specified by the plan.

13 ‘‘(3) PERMITTED INSURANCE.—The term ‘per14 mitted insurance’ means—

15 ‘‘(A) Medicare supplemental insurance,

16 ‘‘(B) insurance if substantially all of the

17 coverage provided under such insurance relates

18 to—

19 ‘‘(i) liabilities incurred under workers’

20 compensation laws,

21 ‘‘(ii) tort liabilities,

22 ‘‘(iii) liabilities relating to ownership

23 or use of property,

24 ‘‘(iv) credit insurance, or
712

•HR 2491 RH

1 ‘‘(v) such other similar liabilities as

2 the Secretary may specify by regulations,

3 ‘‘(C) insurance for a specified disease or

4 illness, and

5 ‘‘(D) insurance paying a fixed amount per

6 day (or other period) of hospitalization.

7 ‘‘(d) MEDICAL SAVINGS ACCOUNT.—For purposes of

8 this section—

9 ‘‘(1) MEDICAL SAVINGS ACCOUNT.—The term

10 ‘medical savings account’ means a trust created or

11 organized in the United States exclusively for the

12 purpose of paying the qualified medical expenses of

13 the account holder, but only if the written governing

14 instrument creating the trust meets the following re15 quirements:

16 ‘‘(A) Except in the case of a rollover con17 tribution described in subsection (f)(4), no con18 tribution will be accepted unless it is in cash.

19 ‘‘(B) The trustee is a bank (as defined in

20 section 408(n)), an insurance company (as de21 fined in section 816), or another person who

22 demonstrates to the satisfaction of the Sec23 retary that the manner in which such person

24 will administer the trust will be consistent with

25 the requirements of this section.
713

•HR 2491 RH

1 ‘‘(C) No part of the trust assets will be in2 vested in life insurance contracts.

3 ‘‘(D) The assets of the trust will not be

4 commingled with other property except in a

5 common trust fund or common investment

6 fund.

7 ‘‘(E) The interest of an individual in the

8 balance in his account is nonforfeitable.

9 ‘‘(2) QUALIFIED MEDICAL EXPENSES.—

10 ‘‘(A) IN GENERAL.—The term ‘qualified

11 medical expenses’ means, with respect to an ac12 count holder, amounts paid by such holder—

13 ‘‘(i) for medical care (as defined in

14 section 213(d)) for such individual, the

15 spouse of such individual, and any depend16 ent (as defined in section 152) of such in17 dividual, but only to the extent such

18 amounts are not compensated for by insur19 ance or otherwise, or

20 ‘‘(ii) for long-term care insurance for

21 such individual, spouse, or dependent.

22 ‘‘(B) HEALTH INSURANCE MAY NOT BE

23 PURCHASED FROM ACCOUNT.—Subparagraph

24 (A)(i) shall not apply to any payment for insur25 ance.
714

•HR 2491 RH

1 ‘‘(3) ACCOUNT HOLDER.—The term ‘account

2 holder’ means the individual on whose behalf the

3 medical savings account was established.

4 ‘‘(4) CERTAIN RULES TO APPLY.—Rules similar

5 to the following rules shall apply for purposes of this

6 section:

7 ‘‘(A) Section 219(d)(2) (relating to no de8 duction for rollovers).

9 ‘‘(B) Section 219(f)(3) (relating to time

10 when contributions deemed made).

11 ‘‘(C) Except as provided in section 106(b),

12 section 219(f)(5) (relating to employer pay13 ments).

14 ‘‘(D) Section 408(g) (relating to commu15 nity property laws).

16 ‘‘(E) Section 408(h) (relating to custodial

17 accounts).

18 ‘‘(e) TAX TREATMENT OF ACCOUNTS.—

19 ‘‘(1) ACCOUNT TAXED AS GRANTOR TRUST.—

20 ‘‘(A) IN GENERAL.—Except as provided in

21 subparagraph (B), the account holder of a med22 ical savings account shall be treated for pur23 poses of this title as the owner of such account

24 and shall be subject to tax thereon in accord25 ance with subpart E of part I of subchapter J
715

•HR 2491 RH

1 of this chapter (relating to grantors and others

2 treated as substantial owners).

3 ‘‘(B) TREATMENT OF CAPITAL LOSSES.—

4 With respect to assets held in a medical savings

5 account, any capital loss for a taxable year

6 from the sale or exchange of such an asset shall

7 be allowed only to the extent of capital gains

8 from such assets for such taxable year. Any

9 capital loss which is disallowed under the pre10 ceding sentence shall be treated as a capital

11 loss from the sale or exchange of such an asset

12 in the next taxable year. For purposes of this

13 subparagraph, all medical savings accounts of

14 the account holder shall be treated as 1 ac15 count.

16 ‘‘(2) ACCOUNT ASSETS TREATED AS DISTRIB17 UTED IN THE CASE OF PROHIBITED TRANSACTIONS

18 OR ACCOUNT PLEDGED AS SECURITY FOR LOAN.—

19 Rules similar to the rules of paragraphs (2) and (4)

20 of section 408(e) shall apply to medical savings ac21 counts, and any amount treated as distributed under

22 such rules shall be treated as not used to pay quali23 fied medical expenses.

24 ‘‘(3) TREATMENT OF ACCOUNT AFTER DEATH

25 OF ACCOUNT HOLDER.—
716

•HR 2491 RH

1 ‘‘(A) IN GENERAL.—A trust shall not con2 stitute a medical savings account unless the

3 written governing instrument provides that, if

4 the account holder dies while there is a balance

5 in the account, the entire balance of the ac6 count holder will be distributed within 5 years

7 after the death of the account holder.

8 ‘‘(B) EXCEPTION WHERE SPOUSE BE9 COMES ACCOUNT HOLDER.—Subparagraph (A)

10 shall not apply if the account is payable to (or

11 for the benefit of) the surviving spouse of the

12 decedent.

13 ‘‘(f) TAX TREATMENT OF DISTRIBUTIONS.—

14 ‘‘(1) INCLUSION OF AMOUNTS NOT USED FOR

15 QUALIFIED MEDICAL EXPENSES.—

16 ‘‘(A) IN GENERAL.—No amount shall be

17 included in the gross income of the account

18 holder by reason of a payment or distribution

19 from a medical savings account which is used

20 exclusively to pay the qualified medical expenses

21 of the account holder. Any amount paid or dis22 tributed from a medical savings account which

23 is not so used shall be included in the gross in24 come of such holder to the extent such amount

25 does not exceed the excess of—
717

•HR 2491 RH

1 ‘‘(i) the aggregate contributions to

2 such account which were allowed as a de3 duction under this section or which were

4 excluded under section 106(b), over

5 ‘‘(ii) the aggregate prior payments or

6 distributions from such account which were

7 includible in gross income under this para8 graph.

9 ‘‘(B) SPECIAL RULES.—For purposes of

10 subparagraph (A)—

11 ‘‘(i) all medical savings accounts of

12 the account holder shall be treated as 1 ac13 count,

14 ‘‘(ii) all payments and distributions

15 during any taxable year shall be treated as

16 1 distribution, and

17 ‘‘(iii) any distribution of property

18 shall be taken into account at its fair mar19 ket value on the date of the distribution.

20 ‘‘(2) PENALTY FOR DISTRIBUTIONS NOT USED

21 FOR QUALIFIED MEDICAL EXPENSES.—

22 ‘‘(A) IN GENERAL.—The tax imposed by

23 this chapter for any taxable year in which there

24 is a payment or distribution from a medical

25 savings account which is not used exclusively to
718

•HR 2491 RH

1 pay the qualified medical expenses of the ac2 count holder shall be increased by 10 percent of

3 the amount of such payment or distribution

4 which is includible in gross income under para5 graph (1).

6 ‘‘(B) EXCEPTIONS.—Subparagraph (A)

7 shall not apply if the payment or distribution is

8 made on or after the date the account holder—

‘‘(i) attains age 59 1 9 ⁄2,

10 ‘‘(ii) becomes disabled within the

11 meaning of section 72(m)(7), or

12 ‘‘(iii) dies.

13 ‘‘(3) WITHDRAWAL OF EXCESS CONTRIBU14 TIONS.—Paragraph (1) shall not apply to the dis15 tribution of any contribution paid during a taxable

16 year to a medical savings account if—

17 ‘‘(A) such distribution is received on or be18 fore the day prescribed by law (including exten19 sions of time) for filing such individual’s return

20 for such taxable year,

21 ‘‘(B) no deduction is allowed under this

22 section with respect to such contribution, and

23 ‘‘(C) such distribution is accompanied by

24 the amount of net income attributable to such

25 contribution.
719

•HR 2491 RH

1 In the case of such a distribution, for purposes of section

2 61, any net income described in subparagraph (C) shall

3 be deemed to have been earned and receivable in the tax4 able year in which such contribution is made.

5 ‘‘(4) ROLLOVERS.—Paragraph (1) shall not

6 apply to any amount paid or distributed out of a

7 medical savings account to the account holder if the

8 entire amount received (including money and any

9 other property) is paid into another medical savings

10 account for the benefit of such holder not later than

11 the 60th day after the day on which he received the

12 payment or distribution.

13 ‘‘(5) COORDINATION WITH MEDICAL EXPENSE

14 DEDUCTION.—For purposes of section 213, any pay15 ment or distribution out of a medical savings ac16 count for qualified medical expenses shall not be

17 treated as an expense paid for medical care to the

18 extent of the amount of such payment or distribu19 tion which is excludable from gross income solely by

20 reason of paragraph (1)(A).

21 ‘‘(g) COST-OF-LIVING ADJUSTMENT.—

22 ‘‘(1) IN GENERAL.—In the case of any taxable

23 year beginning in a calendar year after 1996, each

24 dollar amount in subsection (b)(1) or in subsection

25 (c)(2) shall be increased by an amount equal to—
720

•HR 2491 RH

1 ‘‘(A) such dollar amount, multiplied by

2 ‘‘(B) the medical care cost adjustment for

3 such calendar year.

4 If any increase under the preceding sentence is not

5 a multiple of $50, such increase shall be rounded to

6 the nearest multiple of $50.

7 ‘‘(2) MEDICAL CARE COST ADJUSTMENT.—For

8 purposes of paragraph (1), the medical care cost ad9 justment for any calendar year is the percentage (if

10 any) by which—

11 ‘‘(A) the medical care component of the

12 Consumer Price Index (as defined in section

13 1(f)(5)) for August of the preceding calendar

14 year, exceeds

15 ‘‘(B) such component for August of 1995.

16 ‘‘(h) REPORTS.—The trustee of a medical savings ac17 count shall make such reports regarding such account to

18 the Secretary and to the account holder with respect to

19 contributions, distributions, and such other matters as the

20 Secretary may require under regulations. The reports re21 quired by this subsection shall be filed at such time and

22 in such manner and furnished to such individuals at such

23 time and in such manner as may be required by those reg24 ulations.’’
721

•HR 2491 RH

1 (b) DEDUCTION ALLOWED WHETHER OR NOT INDI2 VIDUAL ITEMIZES OTHER DEDUCTIONS.—Subsection (a)

3 of section 62 is amended by inserting after paragraph (15)

4 the following new paragraph:

5 ‘‘(16) MEDICAL SAVINGS ACCOUNTS.—The de6 duction allowed by section 220.’’

7 (c) EXCLUSIONS FOR EMPLOYER CONTRIBUTIONS TO

8 MEDICAL SAVINGS ACCOUNTS.—

9 (1) EXCLUSION FROM INCOME TAX.—The text

10 of section 106 (relating to contributions by employer

11 to accident and health plans) is amended to read as

12 follows:

13 ‘‘(a) GENERAL RULE.—Gross income of an employee

14 does not include employer-provided coverage under an ac15 cident or health plan.

16 ‘‘(b) CONTRIBUTIONS TO MEDICAL SAVINGS AC17 COUNTS.—

18 ‘‘(1) IN GENERAL.—In the case of an employee

19 who is an eligible individual, gross income does not

20 include amounts contributed by such employee’s em21 ployer to any medical savings account of such em22 ployee.

23 ‘‘(2) COORDINATION WITH DEDUCTION LIMITA24 TION.—The amount excluded from the gross income

25 of an employee under this subsection for any taxable
722

•HR 2491 RH

1 year shall not exceed the limitation under section

2 220(b)(1) (determined without regard to this sub3 section) which is applicable to such employee for

4 such taxable year.’’

5 ‘‘(3) NO CONSTRUCTIVE RECEIPT.—No amount

6 shall be included in the gross income of any em7 ployee solely because the employee may choose be8 tween the contributions referred to in paragraph (1)

9 and employer contributions to another health plan of

10 the employer.

11 ‘‘(4) SPECIAL RULE FOR DEDUCTION OF EM12 PLOYER CONTRIBUTIONS.—Any employer contribu13 tion to a medical savings account, if otherwise allow14 able as a deduction under this chapter, shall be al15 lowed only for the taxable year in which paid.

16 ‘‘(5) DEFINITIONS.—For purposes of this sub17 section, the terms ‘eligible individual’ and ‘medical

18 savings account’ have the respective meanings given

19 to such terms by section 220.’’

20 (2) EXCLUSION FROM EMPLOYMENT TAXES.—

21 (A) SOCIAL SECURITY TAXES.—

22 (i) Subsection (a) of section 3121 is

23 amended by striking ‘‘or’’ at the end of

24 paragraph (20), by striking the period at

25 the end of paragraph (21) and inserting ‘‘;
723

•HR 2491 RH

1 or’’, and by inserting after paragraph (21)

2 the following new paragraph:

3 ‘‘(22) any payment made to or for the benefit

4 of an employee if at the time of such payment it is

5 reasonable to believe that the employee will be able

6 to exclude such payment from income under section

7 106(b).’’

8 (ii) Subsection (a) of section 209 of

9 the Social Security Act is amended by

10 striking ‘‘or’’ at the end of paragraph (17),

11 by striking the period at the end of para12 graph (18) and inserting ‘‘; or’’, and by in13 serting after paragraph (18) the following

14 new paragraph:

15 ‘‘(19) any payment made to or for the benefit

16 of an employee if at the time of such payment it is

17 reasonable to believe that the employee will be able

18 to exclude such payment from income under section

19 106(b) of the Internal Revenue Code of 1986.’’

20 (B) RAILROAD RETIREMENT TAX.—Sub21 section (e) of section 3231 is amended by add22 ing at the end the following new paragraph:

23 ‘‘(10) MEDICAL SAVINGS ACCOUNT CONTRIBU24 TIONS.—The term ‘compensation’ shall not include

25 any payment made to or for the benefit of an em-
724

•HR 2491 RH

1 ployee if at the time of such payment it is reason2 able to believe that the employee will be able to ex3 clude such payment from income under section

4 106(b).’’

5 (C) UNEMPLOYMENT TAX.—Subsection (b)

6 of section 3306 is amended by striking ‘‘or’’ at

7 the end of paragraph (15), by striking the pe8 riod at the end of paragraph (16) and inserting

9 ‘‘; or’’, and by inserting after paragraph (16)

10 the following new paragraph:

11 ‘‘(17) any payment made to or for the benefit

12 of an employee if at the time of such payment it is

13 reasonable to believe that the employee will be able

14 to exclude such payment from income under section

15 106(b).’’

16 (D) WITHHOLDING TAX.—Subsection (a)

17 of section 3401 is amended by striking ‘‘or’’ at

18 the end of paragraph (19), by striking the pe19 riod at the end of paragraph (20) and inserting

20 ‘‘; or’’, and by inserting after paragraph (20)

21 the following new paragraph:

22 ‘‘(21) any payment made to or for the benefit

23 of an employee if at the time of such payment it is

24 reasonable to believe that the employee will be able
725

•HR 2491 RH

1 to exclude such payment from income under section

2 106(b).’’

3 (d) MEDICAL SAVINGS ACCOUNT CONTRIBUTIONS

4 NOT AVAILABLE UNDER CAFETERIA PLANS.—Subsection

5 (f) of section 125 is amended by inserting ‘‘106(b),’’ be6 fore ‘‘117’’.

7 (e) TAX ON PROHIBITED TRANSACTIONS.—Section

8 4975 (relating to tax on prohibited transactions) is

9 amended—

10 (1) by adding at the end of subsection (c) the

11 following new paragraph:

12 ‘‘(4) SPECIAL RULE FOR MEDICAL SAVINGS AC13 COUNTS.—An individual for whose benefit a medical

14 savings account (within the meaning of section

15 220(d)) is established shall be exempt from the tax

16 imposed by this section with respect to any trans17 action concerning such account (which would other18 wise be taxable under this section) if, with respect

19 to such transaction, the account ceases to be a medi20 cal savings account by reason of the application of

21 section 220(e)(2) to such account.’’, and

22 (2) by inserting ‘‘or a medical savings account

23 described in section 220(d)’’ in subsection (e)(1)

24 after ‘‘described in section 408(a)’’.
726

•HR 2491 RH

1 (f) FAILURE TO PROVIDE REPORTS ON MEDICAL

2 SAVINGS ACCOUNTS.—Section 6693 (relating to failure to

3 provide reports on individual retirement accounts or annu4 ities) is amended—

5 (1) by inserting ‘‘OR ON MEDICAL SAVINGS

6 ACCOUNTS’’ after ‘‘ANNUITIES’’ in the heading of

7 such section, and

8 (2) by adding at the end of subsection (a) the

9 following: ‘‘The person required by section 220(h) to

10 file a report regarding a medical savings account at

11 the time and in the manner required by such section

12 shall pay a penalty of $50 for each failure to so file

13 unless it is shown that such failure is due to reason14 able cause.’’

15 (g) CLERICAL AMENDMENTS.—

16 (1) The table of sections for part VII of sub17 chapter B of chapter 1 is amended by striking the

18 last item and inserting the following:

‘‘Sec. 220. Medical savings accounts.

‘‘Sec. 221. Cross reference.’’

19 (2) The table of sections for subchapter B of

20 chapter 68 is amended by inserting ‘‘or on medical

21 savings accounts’’ after ‘‘annuities’’ in the item re22 lating to section 6693.
727

•HR 2491 RH

1 (h) EFFECTIVE DATE.—The amendments made by

2 this section shall apply to taxable years beginning after

3 December 31, 1995.

4 Subtitle C—Pickle-Johnson

5 Taxpayer Bill of Rights 2

6 PART I—TAXPAYER ADVOCATE

7 SEC. 13301. ESTABLISHMENT OF POSITION OF TAXPAYER

8 ADVOCATE WITHIN INTERNAL REVENUE

9 SERVICE.

10 (a) GENERAL RULE.—Section 7802 (relating to

11 Commissioner of Internal Revenue; Assistant Commis12 sioner (Employee Plans and Exempt Organizations)) is

13 amended by adding at the end the following new sub14 section:

15 ‘‘(d) OFFICE OF TAXPAYER ADVOCATE.—

16 ‘‘(1) IN GENERAL.—There is established in the

17 Internal Revenue Service an office to be known as

18 the ‘Office of the Taxpayer Advocate’. Such office

19 shall be under the supervision and direction of an of20 ficial to be known as the ‘Taxpayer Advocate’ who

21 shall be appointed by and report directly to the

22 Commissioner of Internal Revenue. The Taxpayer

23 Advocate shall be entitled to compensation at the

24 same rate as the highest level official reporting di-
728

•HR 2491 RH

1 rectly to the Deputy Commissioner of the Internal

2 Revenue Service.

3 ‘‘(2) FUNCTIONS OF OFFICE.—

4 ‘‘(A) IN GENERAL.—It shall be the func5 tion of the Office of Taxpayer Advocate to—

6 ‘‘(i) assist taxpayers in resolving prob7 lems with the Internal Revenue Service,

8 ‘‘(ii) identify areas in which taxpayers

9 have problems in dealings with the Internal

10 Revenue Service,

11 ‘‘(iii) to the extent possible, propose

12 changes in the administrative practices of

13 the Internal Revenue Service to mitigate

14 problems identified under clause (ii), and

15 ‘‘(iv) identify potential legislative

16 changes which may be appropriate to miti17 gate such problems.

18 ‘‘(B) ANNUAL REPORTS.—

19 ‘‘(i) OBJECTIVES.—Not later than

20 June 30 of each calendar year after 1995,

21 the Taxpayer Advocate shall report to the

22 Committee on Ways and Means of the

23 House of Representatives and the Commit24 tee on Finance of the Senate on the objec25 tives of the Taxpayer Advocate for the fis-
729

•HR 2491 RH

1 cal year beginning in such calendar year.

2 Any such report shall contain full and sub3 stantive analysis, in addition to statistical

4 information.

5 ‘‘(ii) ACTIVITIES.—Not later than De6 cember 31 of each calendar year after

7 1995, the Taxpayer Advocate shall report

8 to the Committee on Ways and Means of

9 the House of Representatives and the

10 Committee on Finance of the Senate on

11 the activities of the Taxpayer Advocate

12 during the fiscal year ending during such

13 calendar year. Any such report shall con14 tain full and substantive analysis, in addi15 tion to statistical information, and shall—

16 ‘‘(I) identify the initiatives the

17 Taxpayer Advocate has taken on im18 proving taxpayer services and Internal

19 Revenue Service responsiveness,

20 ‘‘(II) contain recommendations

21 received from individuals with the au22 thority to issue Taxpayer Assistance

23 Orders under section 7811,

24 ‘‘(III) contain a summary of at

25 least 20 of the most serious problems
730

•HR 2491 RH

1 encountered by taxpayers, including a

2 description of the nature of such prob3 lems,

4 ‘‘(IV) contain an inventory of the

5 items described in subclauses (I), (II),

6 and (III) for which action has been

7 taken and the result of such action,

8 ‘‘(V) contain an inventory of the

9 items described in subclauses (I), (II),

10 and (III) for which action remains to

11 be completed and the period during

12 which each item has remained on such

13 inventory,

14 ‘‘(VI) contain an inventory of the

15 items described in subclauses (II) and

16 (III) for which no action has been

17 taken, the period during which each

18 item has remained on such inventory,

19 the reasons for the inaction, and iden20 tify any Internal Revenue Service offi21 cial who is responsible for such inac22 tion,

23 ‘‘(VII) identify any Taxpayer As24 sistance Order which was not honored

25 by the Internal Revenue Service in a
731

•HR 2491 RH

1 timely manner, as specified under sec2 tion 7811(b),

3 ‘‘(VIII) contain recommendations

4 for such administrative and legislative

5 action as may be appropriate to re6 solve problems encountered by tax7 payers,

8 ‘‘(IX) describe the extent to

9 which regional problem resolution offi10 cers participate in the selection and

11 evaluation of local problem resolution

12 officers, and

13 ‘‘(X) include such other informa14 tion as the Taxpayer Advocate may

15 deem advisable.

16 ‘‘(iii) REPORT TO BE SUBMITTED DI17 RECTLY.—Each report required under this

18 subparagraph shall be provided directly to

19 the Committees referred to in clauses (i)

20 and (ii) without any prior review or com21 ment from the Commissioner, the Sec22 retary of the Treasury, any other officer or

23 employee of the Department of the Treas24 ury, or the Office of Management and

25 Budget.
732

•HR 2491 RH

1 ‘‘(3) RESPONSIBILITIES OF COMMISSIONER.—

2 The Commissioner of Internal Revenue shall estab3 lish procedures requiring a formal response to all

4 recommendations submitted to the Commissioner

5 by the Taxpayer Advocate within 3 months after

6 submission to the Commissioner.’’

7 (b) CONFORMING AMENDMENTS.—

8 (1) Section 7811 (relating to Taxpayer Assist9 ance Orders) is amended—

10 (A) by striking ‘‘the Office of Ombuds11 man’’ in subsection (a) and inserting ‘‘the Of12 fice of the Taxpayer Advocate’’, and

13 (B) by striking ‘‘Ombudsman’’ each place

14 it appears (including in the headings of sub15 sections (e) and (f)) and inserting ‘‘Taxpayer

16 Advocate’’.

17 (2) The heading for section 7802 is amended to

18 read as follows:

19 ‘‘SEC. 7802. COMMISSIONER OF INTERNAL REVENUE; AS20 SISTANT COMMISSIONERS; TAXPAYER ADVO21 CATE.’’

22 (3) The table of sections for subchapter A of

23 chapter 80 is amended by striking the item relating
733

•HR 2491 RH

1 to section 7802 and inserting the following new

2 item:

‘‘Sec. 7802. Commissioner of Internal Revenue; Assistant Commissioners; Taxpayer Advocate.’’

3 (c) EFFECTIVE DATE.—The amendments made by

4 this section shall take effect on the date of the enactment

5 of this Act.

6 SEC. 13302. EXPANSION OF AUTHORITY TO ISSUE TAX7 PAYER ASSISTANCE ORDERS.

8 (a) TERMS OF ORDERS.—Subsection (b) of section

9 7811 (relating to terms of Taxpayer Assistance Orders)

10 is amended—

11 (1) by inserting ‘‘within a specified time pe12 riod’’ after ‘‘the Secretary’’, and

13 (2) by inserting ‘‘take any action as permitted

14 by law,’’ after ‘‘cease any action,’’.

15 (b) LIMITATION ON AUTHORITY TO MODIFY OR RE16 SCIND.—Section 7811(c) (relating to authority to modify

17 or rescind) is amended to read as follows:

18 ‘‘(c) AUTHORITY TO MODIFY OR RESCIND.—Any

19 Taxpayer Assistance Order issued by the Taxpayer Advo20 cate under this section may be modified or rescinded—

21 ‘‘(1) only by the Taxpayer Advocate, the Com22 missioner of Internal Revenue, the Deputy Commis23 sioner of Internal Revenue, or a regional problem

24 resolution officer, and
734

•HR 2491 RH

1 ‘‘(2) only if a written explanation of the reasons

2 for the modification or rescission is provided to the

3 Taxpayer Advocate.’’

4 (c) EFFECTIVE DATE.—The amendments made by

5 this section shall take effect on the date of the enactment

6 of this Act.

7 PART II—MODIFICATIONS TO INSTALLMENT

8 AGREEMENT PROVISIONS

9 SEC. 13306. NOTIFICATION OF REASONS FOR TERMINATION

10 OF INSTALLMENT AGREEMENTS.

11 (a) TERMINATIONS.—Subsection (b) of section 6159

12 (relating to extent to which agreements remain in effect)

13 is amended by adding at the end the following new para14 graph:

15 ‘‘(5) NOTICE REQUIREMENTS.—The Secretary

16 may not take any action under paragraph (2), (3),

17 or (4) unless—

18 ‘‘(A) a notice of such action is provided to

19 the taxpayer not later than the day 30 days be20 fore the date of such action, and

21 ‘‘(B) such notice includes an explanation

22 why the Secretary intends to take such action.

23 The preceding sentence shall not apply in any case

24 in which the Secretary believes that collection of any
735

•HR 2491 RH

1 tax to which an agreement under this section relates

2 is in jeopardy.’’

3 (b) CONFORMING AMENDMENT.—Paragraph (3) of

4 section 6159(b) is amended to read as follows:

5 ‘‘(3) SUBSEQUENT CHANGE IN FINANCIAL CON6 DITIONS.—If the Secretary makes a determination

7 that the financial condition of a taxpayer with whom

8 the Secretary has entered into an agreement under

9 subsection (a) has significantly changed, the Sec10 retary may alter, modify, or terminate such agree11 ment.’’

12 (c) EFFECTIVE DATE.—The amendments made by

13 this section shall take effect on the date 6 months after

14 the date of the enactment of this Act.

15 SEC. 13307. ADMINISTRATIVE REVIEW OF TERMINATION OF

16 INSTALLMENT AGREEMENT.

17 (a) GENERAL RULE.—Section 6159 (relating to

18 agreements for payment of tax liability in installments)

19 is amended by adding at the end the following new sub20 section:

21 ‘‘(c) ADMINISTRATIVE REVIEW.—The Secretary shall

22 establish procedures for an independent administrative re23 view of terminations of installment agreements under this

24 section for taxpayers who request such a review.’’
736

•HR 2491 RH

1 (b) EFFECTIVE DATE.—The amendment made by

2 subsection (a) shall take effect on January 1, 1996.

3 PART III—ABATEMENT OF INTEREST AND

4 PENALTIES

5 SEC. 13311. EXPANSION OF AUTHORITY TO ABATE INTER6 EST.

7 (a) GENERAL RULE.—Paragraph (1) of section

8 6404(e) (relating to abatement of interest in certain cases)

9 is amended—

10 (1) by inserting ‘‘unreasonable’’ before ‘‘error’’

11 each place it appears in subparagraphs (A) and (B),

12 and

13 (2) by striking ‘‘in performing a ministerial

14 act’’ each place it appears and inserting ‘‘in per15 forming a ministerial or managerial act’’.

16 (b) CLERICAL AMENDMENT.—The subsection head17 ing for subsection (e) of section 6404 is amended—

18 (1) by striking ‘‘ASSESSMENTS’’ and inserting

19 ‘‘ABATEMENT’’, and

20 (2) by inserting ‘‘UNREASONABLE’’ before ‘‘ER21 RORS’’.

22 (c) EFFECTIVE DATE.—The amendments made by

23 this section shall apply to interest accruing with respect

24 to deficiencies or payments for taxable years beginning

25 after the date of the enactment of this Act.
737

•HR 2491 RH

1 SEC. 13312. REVIEW OF IRS FAILURE TO ABATE INTEREST.

2 (a) IN GENERAL.—Section 6404 is amended by add3 ing at the end the following new subsection:

4 ‘‘(g) REVIEW OF DENIAL OF REQUEST FOR ABATE5 MENT OF INTEREST.—The Tax Court shall have jurisdic6 tion over any action brought by a taxpayer who meets the

7 requirements referred to in section 7430(c)(4)(A)(iii) to

8 determine whether the Secretary’s failure to abate interest

9 under this section was an abuse of discretion if such action

10 is brought within 6 months after the date of the Sec11 retary’s final determination not to abate such interest.’’

12 (b) EFFECTIVE DATE.—The amendment made by

13 this section shall apply to requests for abatement after the

14 date of the enactment of this Act.

15 SEC. 13313. EXTENSION OF INTEREST-FREE PERIOD FOR

16 PAYMENT OF TAX AFTER NOTICE AND DE17 MAND.

18 (a) GENERAL RULE.—Paragraph (3) of section

19 6601(e) (relating to payments made within 10 days after

20 notice and demand) is amended to read as follows:

21 ‘‘(3) PAYMENTS MADE WITHIN SPECIFIED PE22 RIOD AFTER NOTICE AND DEMAND.—If notice and

23 demand is made for payment of any amount and if

24 such amount is paid within 21 calendar days (10

25 business days if the amount for which such notice

26 and demand is made equals or exceeds $100,000)
738

•HR 2491 RH

1 after the date of such notice and demand, interest

2 under this section on the amount so paid shall not

3 be imposed for the period after the date of such no4 tice and demand.’’

5 (b) CONFORMING AMENDMENTS.—

6 (1) Subparagraph (A) of section 6601(e)(2) is

7 amended by striking ‘‘10 days from the date of no8 tice and demand therefor’’ and inserting ‘‘21 cal9 endar days from the date of notice and demand

10 therefor (10 business days if the amount for which

11 such notice and demand is made equals or exceeds

12 $100,000)’’.

13 (2) Paragraph (3) of section 6651(a) is amend14 ed by striking ‘‘10 days of the date of the notice and

15 demand therefor’’ and inserting ‘‘21 calendar days

16 from the date of notice and demand therefor (10

17 business days if the amount for which such notice

18 and demand is made equals or exceeds $100,000)’’.

19 (c) EFFECTIVE DATE.—The amendments made by

20 this section shall apply in the case of any notice and de21 mand given after June 30, 1996.
739

•HR 2491 RH

1 PART IV—JOINT RETURNS

2 SEC. 13316. STUDIES OF JOINT RETURN-RELATED ISSUES.

3 The Secretary of the Treasury or his delegate and

4 the Comptroller General of the United States shall each

5 conduct separate studies of—

6 (1) the effects of changing the liability for tax

7 on a joint return from being joint and several to

8 being proportionate to the tax attributable to each

9 spouse,

10 (2) the effects of providing that, if a divorce de11 cree allocates liability for tax on a joint return filed

12 before the divorce, the Secretary may collect such li13 ability only in accordance with the decree,

14 (3) whether those provisions of the Internal

15 Revenue Code of 1986 intended to provide relief to

16 innocent spouses provide meaningful relief in all

17 cases where such relief is appropriate, and

18 (4) the effect of providing that community in19 come (as defined in section 66(d) of such Code)

20 which, in accordance with the rules contained in sec21 tion 879(a) of such Code, would be treated as the

22 income of one spouse is exempt from a levy for fail23 ure to pay any tax imposed by subtitle A by the

24 other spouse for a taxable year ending before their

25 marriage.
740

•HR 2491 RH

1 The reports of such studies shall be submitted to the Com2 mittee on Ways and Means of the House of Representa3 tives and the Committee on Finance of the Senate within

4 6 months after the date of the enactment of this Act.

5 SEC. 13317. JOINT RETURN MAY BE MADE AFTER SEPA6 RATE RETURNS WITHOUT FULL PAYMENT OF

7 TAX.

8 (a) GENERAL RULE.—Paragraph (2) of section

9 6013(b) (relating to limitations on filing of joint return

10 after filing separate returns) is amended by striking sub11 paragraph (A) and redesignating the following subpara12 graphs accordingly.

13 (b) EFFECTIVE DATE.—The amendment made by

14 subsection (a) shall apply to taxable years beginning after

15 the date of the enactment of this Act.

16 SEC. 13318. DISCLOSURE OF COLLECTION ACTIVITIES.

17 Subsection (e) of section 6103 (relating to disclosure

18 to persons having material interest) is amended by adding

19 at the end the following new paragraph:

20 ‘‘(8) DISCLOSURE OF COLLECTION ACTIVITIES

21 WITH RESPECT TO JOINT RETURN.—If any defi22 ciency of tax with respect to a joint return is as23 sessed and the individuals filing such return are no

24 longer married or no longer reside in the same

25 household, upon request in writing by either of such
741

•HR 2491 RH

1 individuals, the Secretary shall disclose in writing to

2 the individual making the request whether the Sec3 retary has attempted to collect such deficiency from

4 such other individual, the general nature of such col5 lection activities, and the amount collected.’’

6 PART V—COLLECTION ACTIVITIES

7 SEC. 13321. MODIFICATIONS TO LIEN AND LEVY PROVI8 SIONS.

9 (a) WITHDRAWAL OF CERTAIN NOTICES.—Section

10 6323 (relating to validity and priority against certain per11 sons) is amended by adding at the end the following new

12 subsection:

13 ‘‘(j) WITHDRAWAL OF NOTICE IN CERTAIN CIR14 CUMSTANCES.—

15 ‘‘(1) IN GENERAL.—The Secretary may with16 draw a notice of a lien filed under this section and

17 this chapter shall be applied as if the withdrawn no18 tice had not been filed, if the Secretary determines

19 that—

20 ‘‘(A) the filing of such notice was pre21 mature or otherwise not in accordance with ad22 ministrative procedures of the Secretary,

23 ‘‘(B) the taxpayer has entered into an

24 agreement under section 6159 to satisfy the tax

25 liability for which the lien was imposed by
742

•HR 2491 RH

1 means of installment payments, unless such

2 agreement provides otherwise,

3 ‘‘(C) the withdrawal of such notice will fa4 cilitate the collection of the tax liability, or

5 ‘‘(D) with the consent of the taxpayer or

6 the Taxpayer Advocate, the withdrawal of such

7 notice would be in the best interests of the tax8 payer (as determined by the Taxpayer Advo9 cate) and the United States.

10 Any such withdrawal shall be made by filing notice

11 at the same office as the withdrawn notice. A copy

12 of such notice of withdrawal shall be provided to the

13 taxpayer.

14 ‘‘(2) NOTICE TO CREDIT AGENCIES, ETC.—

15 Upon written request by the taxpayer with respect

16 to whom a notice of a lien was withdrawn under

17 paragraph (1), the Secretary shall promptly make

18 reasonable efforts to notify credit reporting agencies,

19 and any financial institution or creditor whose name

20 and address is specified in such request, of the with21 drawal of such notice. Any such request shall be in

22 such form as the Secretary may prescribe.’’

23 (b) RETURN OF LEVIED PROPERTY IN CERTAIN

24 CASES.—Section 6343 (relating to authority to release
743

•HR 2491 RH

1 levy and return property) is amended by adding at the

2 end the following new subsection:

3 ‘‘(d) RETURN OF PROPERTY IN CERTAIN CASES.—

4 If—

5 ‘‘(1) any property has been levied upon, and

6 ‘‘(2) the Secretary determines that—

7 ‘‘(A) the levy on such property was pre8 mature or otherwise not in accordance with ad9 ministrative procedures of the Secretary,

10 ‘‘(B) the taxpayer has entered into an

11 agreement under section 6159 to satisfy the tax

12 liability for which the levy was imposed by

13 means of installment payments, unless such

14 agreement provides otherwise,

15 ‘‘(C) the return of such property will facili16 tate the collection of the tax liability, or

17 ‘‘(D) with the consent of the taxpayer or

18 the Taxpayer Advocate, the return of such

19 property would be in the best interests of the

20 taxpayer (as determined by the Taxpayer Advo21 cate) and the United States,

22 the provisions of subsection (b) shall apply in the same

23 manner as if such property had been wrongly levied upon,

24 except that no interest shall be allowed under subsection

25 (c).’’
744

•HR 2491 RH

1 (c) MODIFICATIONS IN CERTAIN LEVY EXEMPTION

2 AMOUNTS.—

3 (1) FUEL, ETC.—Paragraph (2) of section

4 6334(a) (relating to fuel, provisions, furniture, and

5 personal effects exempt from levy) is amended—

6 (A) by striking ‘‘If the taxpayer is the

7 head of a family, so’’ and inserting ‘‘So’’,

8 (B) by striking ‘‘his household’’ and insert9 ing ‘‘the taxpayer’s household’’, and

10 (C) by striking ‘‘$1,650 ($1,550 in the

11 case of levies issued during 1989)’’ and insert12 ing ‘‘$2,500’’.

13 (2) INFLATION ADJUSTMENT.—Section 6334

14 (relating to property exempt from levy) is amended

15 by adding at the end the following new subsection:

16 ‘‘(f) INFLATION ADJUSTMENT.—

17 ‘‘(1) IN GENERAL.—In the case of any calendar

18 year beginning after 1996, each dollar amount re19 ferred to in paragraphs (2) and (3) of subsection (a)

20 shall be increased by an amount equal to—

21 ‘‘(A) such dollar amount, multiplied by

22 ‘‘(B) the cost-of-living adjustment deter23 mined under section 1(f)(3) for such calendar

24 year, by substituting ‘calendar year 1995’ for
745

•HR 2491 RH

1 ‘calendar year 1992’ in subparagraph (B)

2 thereof.

3 ‘‘(2) ROUNDING.—If any dollar amount after

4 being increased under paragraph (1) is not a mul5 tiple of $10, such dollar amount shall be rounded to

6 the nearest multiple of $10.’’

7 (3) TECHNICAL AMENDMENT.—Paragraph (3)

8 of section 6334(a) is amended by striking ‘‘($1,050

9 in the case of levies issued during 1989)’’.

10 (d) EFFECTIVE DATES.—

11 (1) IN GENERAL.—Except as provided in para12 graph (2), the amendments made by this section

13 shall take effect on the date of the enactment of this

14 Act.

15 (2) EXEMPT AMOUNTS.—The amendments

16 made by subsection (c) shall take effect with respect

17 to levies issued after December 31, 1995.

18 SEC. 13322. OFFERS-IN-COMPROMISE.

19 (a) REVIEW REQUIREMENTS.—Subsection (b) of sec20 tion 7122 (relating to records) is amended by striking

21 ‘‘$500.’’ and inserting ‘‘$100,000. However, such com22 promise shall be subject to continuing quality review by

23 the Secretary.’’
746

•HR 2491 RH

1 (b) EFFECTIVE DATE.—The amendment made by

2 this section shall take effect on the date of the enactment

3 of this Act.

4 PART VI—INFORMATION RETURNS

5 SEC. 13326. CIVIL DAMAGES FOR FRAUDULENT FILING OF

6 INFORMATION RETURNS.

7 (a) GENERAL RULE.—Subchapter B of chapter 76

8 (relating to proceedings by taxpayers and third parties)

9 is amended by redesignating section 7434 as section 7435

10 and by inserting after section 7433 the following new

11 section:

12 ‘‘SEC. 7434. CIVIL DAMAGES FOR FRAUDULENT FILING OF

13 INFORMATION RETURNS.

14 ‘‘(a) IN GENERAL.—If any person willfully files a

15 fraudulent information return with respect to payments

16 purported to be made to any other person, such other per17 son may bring a civil action for damages against the per18 son so filing such return.

19 ‘‘(b) DAMAGES.—In any action brought under sub20 section (a), upon a finding of liability on the part of the

21 defendant, the defendant shall be liable to the plaintiff in

22 an amount equal to the greater of $5,000 or the sum of—

23 ‘‘(1) any actual damages sustained by the plain24 tiff as a proximate result of the filing of the fraudu25 lent information return (including any costs attrib-
747

•HR 2491 RH

1 utable to resolving deficiencies asserted as a result

2 of such filing),

3 ‘‘(2) the costs of the action, and

4 ‘‘(3) in the court’s discretion, reasonable attor5 neys fees.

6 ‘‘(c) PERIOD FOR BRINGING ACTION.—Notwith7 standing any other provision of law, an action to enforce

8 the liability created under this section may be brought

9 without regard to the amount in controversy and may be

10 brought only within the later of—

11 ‘‘(1) 6 years after the date of the filing of the

12 fraudulent information return, or

13 ‘‘(2) 1 year after the date such fraudulent in14 formation return would have been discovered by ex15 ercise of reasonable care.

16 ‘‘(d) COPY OF COMPLAINT FILED WITH IRS.—Any

17 person bringing an action under subsection (a) shall pro18 vide a copy of the complaint to the Internal Revenue Serv19 ice upon the filing of such complaint with the court.

20 ‘‘(e) FINDING OF COURT TO INCLUDE CORRECT

21 AMOUNT OF PAYMENT.—The decision of the court award22 ing damages in an action brought under subsection (a)

23 shall include a finding of the correct amount which should

24 have been reported in the information return.
748

•HR 2491 RH

1 ‘‘(f) INFORMATION RETURN.—For purposes of this

2 section, the term ‘information return’ means any state3 ment described in section 6724(d)(1)(A).’’

4 (b) CLERICAL AMENDMENT.—The table of sections

5 for subchapter B of chapter 76 is amended by striking

6 the item relating to section 7434 and inserting the

7 following:

‘‘Sec. 7434. Civil damages for fraudulent filing of information returns.

‘‘Sec. 7435. Cross references.’’

8 (c) EFFECTIVE DATE.—The amendments made by

9 this section shall apply to fraudulent information returns

10 filed after the date of the enactment of this Act.

11 SEC. 13327. REQUIREMENT TO CONDUCT REASONABLE IN12 VESTIGATIONS OF INFORMATION RETURNS.

13 (a) GENERAL RULE.—Section 6201 (relating to as14 sessment authority) is amended by redesignating sub15 section (d) as subsection (e) and by inserting after sub16 section (c) the following new subsection:

17 ‘‘(d) REQUIRED REASONABLE VERIFICATION OF IN18 FORMATION RETURNS.—In any court proceeding, if a tax19 payer asserts a reasonable dispute with respect to any

20 item of income reported on an information return filed

21 with the Secretary under subpart B or C of part III of

22 subchapter A of chapter 61 by a third party and the tax23 payer has fully cooperated with the Secretary (including

24 providing, within a reasonable period of time, access to
749

•HR 2491 RH

1 and inspection of all witnesses, information, and docu2 ments within the control of the taxpayer as reasonably re3 quested by the Secretary), the Secretary shall have the

4 burden of producing reasonable and probative information

5 concerning such deficiency in addition to such information

6 return.’’

7 (b) EFFECTIVE DATE.—The amendment made by

8 subsection (a) shall take effect on the date of the enact9 ment of this Act.

10 PART VII—AWARDING OF COSTS AND CERTAIN

11 FEES

12 SEC. 13331. UNITED STATES MUST ESTABLISH THAT ITS PO13 SITION IN PROCEEDING WAS SUBSTANTIALLY

14 JUSTIFIED.

15 (a) GENERAL RULE.—Subparagraph (A) of section

16 7430(c)(4) (defining prevailing party) is amended by

17 striking clause (i) and by redesignating clauses (ii) and

18 (iii) as clauses (i) and (ii), respectively.

19 (b) BURDEN OF PROOF ON UNITED STATES.—Para20 graph (4) of section 7430(c) is amended by redesignating

21 subparagraph (B) as subparagraph (C) and by inserting

22 after subparagraph (A) the following new subparagraph:

23 ‘‘(B) EXCEPTION IF UNITED STATES ES24 TABLISHES THAT ITS POSITION WAS SUBSTAN25 TIALLY JUSTIFIED.—
750

•HR 2491 RH

1 ‘‘(i) GENERAL RULE.—A party shall

2 not be treated as the prevailing party in a

3 proceeding to which subsection (a) applies

4 if the United States establishes that the

5 position of the United States in the pro6 ceeding was substantially justified.

7 ‘‘(ii) PRESUMPTION OF NO JUSTIFICA8 TION IF INTERNAL REVENUE SERVICE

9 DIDN’T FOLLOW CERTAIN PUBLISHED

10 GUIDANCE.—For purposes of clause (i),

11 the position of the United States shall be

12 presumed not to be substantially justified

13 if the Internal Revenue Service did not fol14 low its applicable published guidance in the

15 administrative proceeding. Such presump16 tion may be rebutted.

17 ‘‘(iii) APPLICABLE PUBLISHED GUID18 ANCE.—For purposes of clause (ii), the

19 term ‘applicable published guidance’

20 means—

21 ‘‘(I) regulations, revenue rulings,

22 revenue procedures, information re23 leases, notices, and announcements,

24 and
751

•HR 2491 RH

1 ‘‘(II) any of the following which

2 are issued to the taxpayer: private let3 ter rulings, technical advice memo4 randa, and determination letters.’’

5 (c) CONFORMING AMENDMENTS.—

6 (1) Subparagraph (B) of section 7430(c)(2) is

7 amended by striking ‘‘paragraph (4)(B)’’ and insert8 ing ‘‘paragraph (4)(C)’’.

9 (2) Subparagraph (C) of section 7430(c)(4), as

10 redesignated by subsection (b), is amended by strik11 ing ‘‘subparagraph (A)’’ and inserting ‘‘this para12 graph’’.

13 (3) Sections 6404(g) and 6656(c)(1), as amend14 ed by this title, are each amended by striking ‘‘sec15 tion 7430(c)(4)(A)(iii)’’ and inserting ‘‘section

16 7430(c)(4)(A)(ii)’’.

17 SEC. 13332. INCREASED LIMIT ON ATTORNEY FEES.

18 Paragraph (1) of section 7430(c) (defining reason19 able litigation costs) is amended—

20 (1) by striking ‘‘$75’’ in clause (iii) of subpara21 graph (B) and inserting ‘‘$110’’,

22 (2) by striking ‘‘an increase in the cost of living

23 or’’ in clause (iii) of subparagraph (B), and

24 (3) by adding after clause (iii) the following:
752

•HR 2491 RH

1 ‘‘In the case of any calendar year beginning after

2 1996, the dollar amount referred to in clause (iii)

3 shall be increased by an amount equal to such dollar

4 amount multiplied by the cost-of-living adjustment

5 determined under section 1(f)(3) for such calendar

6 year, by substituting ‘calendar year 1995’ for ‘cal7 endar year 1992’ in subparagraph (B) thereof. If

8 any dollar amount after being increased under the

9 preceding sentence is not a multiple of $10, such

10 dollar amount shall be rounded to the nearest mul11 tiple of $10.’’

12 SEC. 13333. FAILURE TO AGREE TO EXTENSION NOT TAKEN

13 INTO ACCOUNT.

14 Paragraph (1) of section 7430(b) (relating to require15 ment that administrative remedies be exhausted) is

16 amended by adding at the end the following new sentence:

17 ‘‘Any failure to agree to an extension of the time for the

18 assessment of any tax shall not be taken into account for

19 purposes of determining whether the prevailing party

20 meets the requirements of the preceding sentence.’’

21 SEC. 13334. AWARD OF LITIGATION COSTS PERMITTED IN

22 DECLARATORY JUDGMENT PROCEEDINGS.

23 Subsection (b) of section 7430 is amended by striking

24 paragraph (3) and by redesignating paragraph (4) as

25 paragraph (3).
753

•HR 2491 RH

1 SEC. 13335. EFFECTIVE DATE.

2 The amendments made by this part shall apply in the

3 case of proceedings commenced after the date of the enact4 ment of this Act.

5 PART VIII—MODIFICATION TO RECOVERY OF

6 CIVIL DAMAGES FOR UNAUTHORIZED COL7 LECTION ACTIONS

8 SEC. 13336. INCREASE IN LIMIT ON RECOVERY OF CIVIL

9 DAMAGES FOR UNAUTHORIZED COLLECTION

10 ACTIONS.

11 (a) GENERAL RULE.—Subsection (b) of section 7433

12 (relating to damages) is amended by striking ‘‘$100,000’’

13 and inserting ‘‘$1,000,000’’.

14 (b) EFFECTIVE DATE.—The amendment made by

15 subsection (a) shall apply to actions by officers or employ16 ees of the Internal Revenue Service after the date of the

17 enactment of this Act.

18 SEC. 13337. COURT DISCRETION TO REDUCE AWARD FOR

19 LITIGATION COSTS FOR FAILURE TO EX20 HAUST ADMINISTRATIVE REMEDIES.

21 (a) GENERAL RULE.—Paragraph (1) of section

22 7433(d) (relating to civil damages for certain unauthor23 ized collection actions) is amended to read as follows:

24 ‘‘(1) AWARD FOR DAMAGES MAY BE REDUCED

25 IF ADMINISTRATIVE REMEDIES NOT EXHAUSTED.—

26 The amount of damages awarded under subsection
754

•HR 2491 RH

1 (b) may be reduced if the court determines that the

2 plaintiff has not exhausted the administrative rem3 edies available to such plaintiff within the Internal

4 Revenue Service.’’

5 (b) EFFECTIVE DATE.—The amendment made by

6 this section shall apply in the case of proceedings com7 menced after the date of the enactment of this Act.

8 PART IX—MODIFICATIONS TO PENALTY FOR

9 FAILURE TO COLLECT AND PAY OVER TAX

10 SEC. 13341. PRELIMINARY NOTICE REQUIREMENT.

11 (a) IN GENERAL.—Section 6672 (relating to failure

12 to collect and pay over tax, or attempt to evade or defeat

13 tax) is amended by redesignating subsection (b) as sub14 section (c) and by inserting after subsection (a) the follow15 ing new subsection:

16 ‘‘(b) PRELIMINARY NOTICE REQUIREMENT.—

17 ‘‘(1) IN GENERAL.—No penalty shall be im18 posed under subsection (a) unless the Secretary noti19 fies the taxpayer in writing by mail to an address as

20 determined under section 6212(b) that the taxpayer

21 shall be subject to an assessment of such penalty.

22 ‘‘(2) TIMING OF NOTICE.—The mailing of the

23 notice described in paragraph (1) shall precede any

24 notice and demand of any penalty under subsection

25 (a) by at least 60 days.
755

•HR 2491 RH

1 ‘‘(3) STATUTE OF LIMITATIONS.—If a notice

2 described in paragraph (1) with respect to any pen3 alty is mailed before the expiration of the period

4 provided by section 6501 for the assessment of such

5 penalty (determined without regard to this para6 graph), the period provided by such section for the

7 assessment of such penalty shall not expire before

8 the later of—

9 ‘‘(A) the date 90 days after the date on

10 which such notice was mailed, or

11 ‘‘(B) if there is a timely protest of the pro12 posed assessment, the date 30 days after the

13 Secretary makes a final administrative deter14 mination with respect to such protest.

15 ‘‘(4) EXCEPTION FOR JEOPARDY.—This sub16 section shall not apply if the Secretary finds that the

17 collection of the penalty is in jeopardy.’’

18 (b) EFFECTIVE DATE.—The amendment made by

19 subsection (a) shall apply to proposed assessments made

20 after June 30, 1996.
756

•HR 2491 RH

1 SEC. 13342. DISCLOSURE OF CERTAIN INFORMATION

2 WHERE MORE THAN 1 PERSON LIABLE FOR

3 PENALTY FOR FAILURE TO COLLECT AND

4 PAY OVER TAX.

5 (a) IN GENERAL.—Subsection (e) of section 6103

6 (relating to disclosure to persons having material interest),

7 as amended by section 13318, is amended by adding at

8 the end the following new paragraph:

9 ‘‘(9) DISCLOSURE OF CERTAIN INFORMATION

10 WHERE MORE THAN 1 PERSON SUBJECT TO PEN11 ALTY UNDER SECTION 6672.—If the Secretary deter12 mines that a person is liable for a penalty under sec13 tion 6672(a) with respect to any failure, upon re14 quest in writing of such person, the Secretary shall

15 disclose in writing to such person—

16 ‘‘(A) the name of any other person whom

17 the Secretary has determined to be liable for

18 such penalty with respect to such failure, and

19 ‘‘(B) whether the Secretary has attempted

20 to collect such penalty from such other person,

21 the general nature of such collection activities,

22 and the amount collected.’’

23 (b) EFFECTIVE DATE.—The amendment made by

24 subsection (a) shall take effect on the date of the enact25 ment of this Act.
757

•HR 2491 RH

1 SEC. 13343. RIGHT OF CONTRIBUTION WHERE MORE THAN

2 1 PERSON LIABLE FOR PENALTY FOR FAIL3 URE TO COLLECT AND PAY OVER TAX.

4 (a) IN GENERAL.—Section 6672 (relating to failure

5 to collect and pay over tax, or attempt to evade or defeat

6 tax) is amended by adding at the end the following new

7 subsection:

8 ‘‘(d) RIGHT OF CONTRIBUTION WHERE MORE THAN

9 1 PERSON LIABLE FOR PENALTY.—If more than 1 person

10 is liable for the penalty under subsection (a) with respect

11 to any tax, each person who paid such penalty shall be

12 entitled to recover from other persons who are liable for

13 such penalty an amount equal to the excess of the amount

14 paid by such person over such person’s proportionate

15 share of the penalty. Any claim for such a recovery may

16 be made only in a proceeding which is separate from, and

17 is not joined with—

18 ‘‘(1) an action for collection of such penalty

19 brought by the United States, or

20 ‘‘(2) a proceeding in which the United States

21 files a counterclaim or third-party complaint for the

22 collection of such penalty.’’

23 (b) EFFECTIVE DATE.—The amendment made by

24 subsection (a) shall apply to penalties assessed after the

25 date of the enactment of this Act.
758

•HR 2491 RH

1 SEC. 13344. VOLUNTEER BOARD MEMBERS OF TAX-EXEMPT

2 ORGANIZATIONS EXEMPT FROM PENALTY

3 FOR FAILURE TO COLLECT AND PAY OVER

4 TAX.

5 (a) IN GENERAL.—Section 6672 is amended by add6 ing at the end the following new subsection:

7 ‘‘(e) EXCEPTION FOR VOLUNTARY BOARD MEMBERS

8 OF TAX-EXEMPT ORGANIZATIONS.—No penalty shall be

9 imposed by subsection (a) on any unpaid, volunteer mem10 ber of any board of trustees or directors of an organization

11 exempt from tax under subtitle A if such member—

12 ‘‘(1) is solely serving in an honorary capacity,

13 ‘‘(2) does not participate in the day-to-day or

14 financial operations of the organization, and

15 ‘‘(3) does not have actual knowledge of the fail16 ure on which such penalty is imposed.

17 The preceding sentence shall not apply if it results in no

18 person being liable for the penalty imposed by subsection

19 (a).’’

20 (b) PUBLIC INFORMATION REQUIREMENTS.—

21 (1) IN GENERAL.—The Secretary of the Treas22 ury or the Secretary’s delegate (hereafter in this

23 subsection referred to as the ‘‘Secretary’’) shall take

24 such actions as may be appropriate to ensure that

25 employees are aware of their responsibilities under

26 the Federal tax depository system, the circumstances
759

•HR 2491 RH

1 under which employees may be liable for the penalty

2 imposed by section 6672 of the Internal Revenue

3 Code of 1986, and the responsibility to promptly re4 port to the Internal Revenue Service any failure re5 ferred to in subsection (a) of such section 6672.

6 Such actions shall include—

7 (A) printing of a warning on deposit cou8 pon booklets and the appropriate tax returns

9 that certain employees may be liable for the

10 penalty imposed by such section 6672, and

11 (B) the development of a special informa12 tion packet.

13 (2) DEVELOPMENT OF EXPLANATORY MATE14 RIALS.—The Secretary shall develop materials ex15 plaining the circumstances under which board mem16 bers of tax-exempt organizations (including vol17 untary and honorary members) may be subject to

18 penalty under section 6672 of such Code. Such ma19 terials shall be made available to tax-exempt organi20 zations.

21 (3) IRS INSTRUCTIONS.—The Secretary shall

22 clarify the instructions to Internal Revenue Service

23 employees on the application of the penalty under

24 section 6672 of such Code with regard to voluntary
760

•HR 2491 RH

1 members of boards of trustees or directors of tax2 exempt organizations.

3 PART X—MODIFICATIONS OF RULES RELATING

4 TO SUMMONSES

5 SEC. 13346. ENROLLED AGENTS INCLUDED AS THIRD6 PARTY RECORDKEEPERS.

7 (a) IN GENERAL.—Paragraph (3) of section 7609(a)

8 (relating to third-party recordkeeper defined) is amended

9 by striking ‘‘and’’ at the end of subparagraph (G), by

10 striking the period at the end of subparagraph (H) and

11 inserting ‘‘; and’’, and by adding at the end the following

12 the subparagraph:

13 ‘‘(I) any enrolled agent.’’

14 (b) EFFECTIVE DATE.—The amendment made by

15 subsection (a) shall apply to summonses issued after the

16 date of the enactment of this Act.

17 SEC. 13347. SAFEGUARDS RELATING TO DESIGNATED SUM18 MONSES.

19 (a) STANDARD OF REVIEW.—Subparagraph (A) of

20 section 6503(j)(2) (defining designated summons) is

21 amended by redesignating clauses (i) and (ii) as clauses

22 (ii) and (iii), respectively, and by inserting before clause

23 (ii) (as so redesignated) the following new clause:

24 ‘‘(i) the issuance of such summons is

25 preceded by a review of such issuance by
761

•HR 2491 RH

1 the regional counsel of the Office of Chief

2 Counsel for the region in which the exam3 ination of the corporation is being con4 ducted,’’.

5 (b) LIMITATION ON PERSONS TO WHOM DES6 IGNATED SUMMONS MAY BE ISSUED.—Paragraph (1) of

7 section 6503(j) is amended by striking ‘‘with respect to

8 any return of tax by a corporation’’ and inserting ‘‘to a

9 corporation (or to any other person to whom the corpora10 tion has transferred records) with respect to any return

11 of tax by such corporation for a taxable year (or other

12 period) for which such corporation is being examined

13 under the coordinated examination program (or any suc14 cessor program) of the Internal Revenue Service’’.

15 (c) EFFECTIVE DATE.—The amendments made by

16 this section shall apply to summonses issued after the date

17 of the enactment of this Act.

18 SEC. 13348. ANNUAL REPORT TO CONGRESS CONCERNING

19 DESIGNATED SUMMONSES.

20 Not later than December 31 of each calendar year

21 after 1995, the Secretary of the Treasury or his delegate

22 shall report to the Committee on Ways and Means of the

23 House of Representatives and the Committee on Finance

24 of the Senate on the number of designated summonses (as

25 defined in section 6503(j) of the Internal Revenue Code
762

•HR 2491 RH

1 of 1986) which were issued during the preceding 12

2 months.

3 PART XI—RELIEF FROM RETROACTIVE APPLICA4 TION OF TREASURY DEPARTMENT REGULA5 TIONS

6 SEC. 13351. RELIEF FROM RETROACTIVE APPLICATION OF

7 TREASURY DEPARTMENT REGULATIONS.

8 (a) IN GENERAL.—Subsection (b) of section 7805

9 (relating to rules and regulations) is amended to read as

10 follows:

11 ‘‘(b) RETROACTIVITY OF REGULATIONS.—

12 ‘‘(1) IN GENERAL.—Except as otherwise pro13 vided in this subsection, no temporary, proposed, or

14 final regulation relating to the internal revenue laws

15 shall apply to any taxable period ending before the

16 earliest of the following dates:

17 ‘‘(A) The date on which such regulation is

18 filed with the Federal Register.

19 ‘‘(B) In the case of any final regulation,

20 the date on which any proposed or temporary

21 regulation to which such final regulation relates

22 was filed with the Federal Register.

23 ‘‘(C) The date on which any notice sub24 stantially describing the expected contents of
763

•HR 2491 RH

1 any temporary, proposed, or final regulation is

2 issued to the public.

3 ‘‘(2) EXCEPTION FOR PROMPTLY ISSUED REGU4 LATIONS.—Paragraph (1) shall not apply to regula5 tions filed or issued within 12 months of the date of

6 the enactment of the statutory provision to which

7 the regulation relates.

8 ‘‘(3) PREVENTION OF ABUSE.—The Secretary

9 may provide that any regulation may take effect or

10 apply retroactively to prevent abuse.

11 ‘‘(4) CORRECTION OF PROCEDURAL DE12 FECTS.—The Secretary may provide that any regu13 lation may apply retroactively to correct a proce14 dural defect in the issuance of any prior regulation.

15 ‘‘(5) INTERNAL REGULATIONS.—The limitation

16 of paragraph (1) shall not apply to any regulation

17 relating to internal Treasury Department policies,

18 practices, or procedures.

19 ‘‘(6) CONGRESSIONAL AUTHORIZATION.—The

20 limitation of paragraph (1) may be superseded by a

21 legislative grant from Congress authorizing the Sec22 retary to prescribe the effective date with respect to

23 any regulation.

24 ‘‘(7) ELECTION TO APPLY RETROACTIVELY.—

25 Paragraph (1) shall not apply to any regulation
764

•HR 2491 RH

1 which the taxpayer elects to apply before the dates

2 specified in paragraph (1) but only if such election

3 applies to all regulations which were issued with

4 such regulation under the statutory provision to

5 which such regulation relates.

6 ‘‘(8) APPLICATION TO RULINGS.—The Sec7 retary may prescribe the extent, if any, to which any

8 ruling (including any judicial decision or any admin9 istrative determination other than by regulation) re10 lating to the internal revenue laws shall be applied

11 without retroactive effect.’’

12 (b) EFFECTIVE DATE.—The amendment made by

13 subsection (a) shall apply with respect to regulations

14 which relate to statutory provisions enacted on or after

15 the date of the enactment of this Act.

16 PART XII—MISCELLANEOUS PROVISIONS

17 SEC. 13356. REPORT ON PILOT PROGRAM FOR APPEAL OF

18 ENFORCEMENT ACTIONS.

19 Not later than March 1, 1996, the Secretary of the

20 Treasury or his delegate shall submit to the Committee

21 on Ways and Means of the House of Representatives and

22 the Committee on Finance of the Senate a report on the

23 pilot program for appeals of enforcement actions (includ24 ing lien, levy, and seizure actions) to the Appeals Division
765

•HR 2491 RH

1 of the Internal Revenue Service, together with such rec2 ommendations as he may deem advisable.

3 SEC. 13357. PHONE NUMBER OF PERSON PROVIDING PAYEE

4 STATEMENTS REQUIRED TO BE SHOWN ON

5 SUCH STATEMENT.

6 (a) GENERAL RULE.—The following provisions are

7 each amended by striking ‘‘name and address’’ and insert8 ing ‘‘name, address, and phone number of the information

9 contact’’:

10 (1) Section 6041(d)(1).

11 (2) Section 6041A(e)(1).

12 (3) Section 6042(c)(1).

13 (4) Section 6044(e)(1).

14 (5) Section 6045(b)(1).

15 (6) Section 6049(c)(1)(A).

16 (7) Section 6050B(b)(1).

17 (8) Section 6050H(d)(1).

18 (9) Section 6050I(e)(1).

19 (10) Section 6050J(e).

20 (11) Section 6050K(b)(1).

21 (12) Section 6050N(b)(1).

22 (b) EFFECTIVE DATE.—The amendments made by

23 subsection (a) shall apply to statements required to be fur24 nished after December 31, 1996 (determined without

25 regard to any extension).
766

•HR 2491 RH

1 SEC. 13358. REQUIRED NOTICE OF CERTAIN PAYMENTS.

2 If any payment is received by the Secretary of the

3 Treasury or his delegate from any taxpayer and the Sec4 retary cannot associate such payment with such taxpayer,

5 the Secretary shall make reasonable efforts to notify the

6 taxpayer of such inability within 60 days after the re7 ceipt of such payment.

8 SEC. 13359. UNAUTHORIZED ENTICEMENT OF INFORMA9 TION DISCLOSURE.

10 (a) IN GENERAL.—Subchapter B of chapter 76 (re11 lating to proceedings by taxpayers and third parties), as

12 amended by section 13316(a), is amended by redesignat13 ing section 7435 as section 7436 and by inserting after

14 section 7434 the following new section:

15 ‘‘SEC. 7435. CIVIL DAMAGES FOR UNAUTHORIZED ENTICE16 MENT OF INFORMATION DISCLOSURE.

17 ‘‘(a) IN GENERAL.—If any officer or employee of the

18 United States intentionally compromises the determina19 tion or collection of any tax due from an attorney, certified

20 public accountant, or enrolled agent representing a tax21 payer in exchange for information conveyed by the tax22 payer to the attorney, certified public accountant, or en23 rolled agent for purposes of obtaining advice concerning

24 the taxpayer’s tax liability, such taxpayer may bring a civil

25 action for damages against the United States in a district

26 court of the United States. Such civil action shall be the
767

•HR 2491 RH

1 exclusive remedy for recovering damages resulting from

2 such actions.

3 ‘‘(b) DAMAGES.—In any action brought under sub4 section (a), upon a finding of liability on the part of the

5 defendant, the defendant shall be liable to the plaintiff in

6 an amount equal to the lesser of $500,000 or the sum

7 of—

8 ‘‘(1) actual, direct economic damages sustained

9 by the plaintiff as a proximate result of the informa10 tion disclosure, and

11 ‘‘(2) the costs of the action.

12 Damages shall not include the taxpayer’s liability for any

13 civil or criminal penalties, or other losses attributable to

14 incarceration or the imposition of other criminal sanctions.

15 ‘‘(c) PAYMENT AUTHORITY.—Claims pursuant to

16 this section shall be payable out of funds appropriated

17 under section 1304 of title 31, United States Code.

18 ‘‘(d) PERIOD FOR BRINGING ACTION.—Notwith19 standing any other provision of law, an action to enforce

20 liability created under this section may be brought without

21 regard to the amount in controversy and may be brought

22 only within 2 years after the date the actions creating such

23 liability would have been discovered by exercise of reason24 able care.
768

•HR 2491 RH

1 ‘‘(e) MANDATORY STAY.—Upon a certification by the

2 Commissioner or the Commissioner’s delegate that there

3 is an ongoing investigation or prosecution of the taxpayer,

4 the district court before which an action under this section

5 is pending, shall stay all proceedings with respect to such

6 action pending the conclusion of the investigation or

7 prosecution.

8 ‘‘(f) CRIME-FRAUD EXCEPTION.—Subsection (a)

9 shall not apply to information conveyed to an attorney,

10 certified public accountant, or enrolled agent for the pur11 pose of perpetrating a fraud or crime.’’

12 (b) CLERICAL AMENDMENT.—The table of sections

13 for subchapter B of chapter 76, as amended by section

14 13316(b), is amended by striking the item relating to sec15 tion 7435 and by adding at the end the following new

16 items:

‘‘Sec. 7435. Civil damages for unauthorized enticement of information disclosure.

‘‘Sec. 7436. Cross references.’’

17 (c) EFFECTIVE DATE.—The amendments made by

18 this section shall apply to actions after the date of the

19 enactment of this Act.

20 SEC. 13360. ANNUAL REMINDERS TO TAXPAYERS WITH OUT21 STANDING DELINQUENT ACCOUNTS.

22 (a) IN GENERAL.—Chapter 77 (relating to mis23 cellaneous provisions) is amended by adding at the end

24 the following new section:
769

•HR 2491 RH

1 ‘‘SEC. 7524. ANNUAL NOTICE OF TAX DELINQUENCY.

2 ‘‘Not less often than annually, the Secretary shall

3 send a written notice to each taxpayer who has a tax delin4 quent account of the amount of the tax delinquency as

5 of the date of the notice.’’

6 (b) CLERICAL AMENDMENT.—The table of sections

7 for chapter 77 is amended by adding at the end the follow8 ing new item:

‘‘Sec. 7524. Annual notice of tax delinquency.’’

9 (c) EFFECTIVE DATE.—The amendments made by

10 this section shall apply to calendar years after 1995.

11 SEC. 13361. 5-YEAR EXTENSION OF AUTHORITY FOR UNDER12 COVER OPERATIONS.

13 (a) IN GENERAL.—Paragraph (3) of section 7601(c)

14 of the Anti-Drug Abuse Act of 1988 is amended by strik15 ing all that follows ‘‘this Act’’ and inserting a period.

16 (b) RESTORATION OF AUTHORITY FOR 5 YEARS.—

17 Subsection (c) of section 7608 is amended by adding at

18 the end the following new paragraph:

19 ‘‘(6) APPLICATION OF SECTION.—The provi20 sions of this subsection—

21 ‘‘(A) shall apply after November 17, 1988,

22 and before January 1, 1990, and

23 ‘‘(B) shall apply after the date of the en24 actment of this paragraph and before January

25 1, 2001.
770

•HR 2491 RH

1 All amounts expended pursuant to this subsection

2 during the period described in subparagraph (B)

3 shall be recovered to the extent possible, and depos4 ited in the Treasury of the United States as mis5 cellaneous receipts, before January 1, 2001.’’

6 (c) ENHANCED OVERSIGHT.—

7 (1) ADDITIONAL INFORMATION REQUIRED IN

8 REPORTS TO CONGRESS.—Subparagraph (B) of sec9 tion 7608(c)(4) is amended—

10 (A) by striking ‘‘preceding the period’’ in

11 clause (ii),

12 (B) by striking ‘‘and’’ at the end of clause

13 (ii), and

14 (C) by striking clause (iii) and inserting

15 the following:

16 ‘‘(iii) the number, by programs, of un17 dercover investigative operations closed in

18 the 1-year period for which such report is

19 submitted, and

20 ‘‘(iv) the following information with

21 respect to each undercover investigative op22 eration pending as of the end of the 1-year

23 period for which such report is submitted

24 or closed during such 1-year period—
771

•HR 2491 RH

1 ‘‘(I) the date the operation began

2 and the date of the certification re3 ferred to in the last sentence of para4 graph (1),

5 ‘‘(II) the total expenditures

6 under the operation and the amount

7 and use of the proceeds from the op8 eration,

9 ‘‘(III) a detailed description of

10 the operation including the potential

11 violation being investigated and

12 whether the operation is being con13 ducted under grand jury auspices, and

14 ‘‘(IV) the results of the operation

15 including the results of criminal pro16 ceedings.’’

17 (2) AUDITS REQUIRED WITHOUT REGARD TO

18 AMOUNTS INVOLVED.—Subparagraph (C) of section

19 7608(c)(5) is amended to read as follows:

20 ‘‘(C) UNDERCOVER INVESTIGATIVE OPER21 ATION.—The term ‘undercover investigative op22 eration’ means any undercover investigative op23 eration of the Service; except that, for purposes

24 of subparagraphs (A) and (C) of paragraph (4),

25 such term only includes an operation which is
772

•HR 2491 RH

1 exempt from section 3302 or 9102 of title 31,

2 United States Code.’’

3 (3) EFFECTIVE DATE.—The amendments made

4 by this subsection shall take effect on the date of the

5 enactment of this Act.

6 SEC. 13362. DISCLOSURE OF FORM 8300 INFORMATION ON

7 CASH TRANSACTIONS.

8 (a) IN GENERAL.—Subsection (l) of section 6103 (re9 lating to disclosure of returns and return information for

10 purposes other than tax administration) is amended by

11 adding at the end the following new paragraph:

12 ‘‘(15) DISCLOSURE OF RETURNS FILED UNDER

13 SECTION 6050I.—The Secretary may, upon written

14 request, disclose to officers and employees of—

15 ‘‘(A) any Federal agency,

16 ‘‘(B) any agency of a State or local govern17 ment, or

18 ‘‘(C) any agency of the government of a

19 foreign country,

20 information contained on returns filed under section

21 6050I. Any such disclosure shall be made on the

22 same basis, and subject to the same conditions, as

23 apply to disclosures of information on reports filed

24 under section 5313 of title 31, United States Code;

25 except that no disclosure under this paragraph shall
773

•HR 2491 RH

1 be made for purposes of the administration of any

2 tax law.’’

3 (b) CONFORMING AMENDMENTS.—

4 (1) Subsection (i) of section 6103 is amended

5 by striking paragraph (8).

6 (2) Subparagraph (A) of section 6103(p)(3) is

7 amended—

8 (A) by striking ‘‘(7)(A)(ii), or (8)’’ and in9 serting ‘‘or (7)(A)(ii)’’, and

10 (B) by striking ‘‘or (14)’’ and inserting

11 ‘‘(14), or (15)’’.

12 (3) The material preceding subparagraph (A) of

13 section 6103(p)(4) is amended—

14 (A) by striking ‘‘(5), or (8)’’ and inserting

15 ‘‘or (5)’’,

16 (B) by striking ‘‘(i)(3)(B)(i), or (8)’’ and

17 inserting ‘‘(i)(3)(B)(i),’’, and

18 (C) by striking ‘‘or (12)’’ and inserting

19 ‘‘(12), or (15)’’.

20 (4) Clause (ii) of section 6103(p)(4)(F) is

21 amended—

22 (A) by striking ‘‘(5), or (8)’’ and inserting

23 ‘‘or (5)’’, and

24 (B) by striking ‘‘or (14)’’ and inserting

25 ‘‘(14), or (15)’’.
774

•HR 2491 RH

1 (5) Paragraph (2) of section 7213(a) is amend2 ed by striking ‘‘or (12)’’ and inserting ‘‘(12), or

3 (15)’’.

4 (c) EFFECTIVE DATE.—The amendments made by

5 this section shall take effect on the date of the enactment

6 of this Act.

7 SEC. 13363. DISCLOSURE OF RETURNS AND RETURN INFOR8 MATION TO DESIGNEE OF TAXPAYER.

9 Subsection (c) of section 6103 (relating to disclosure

10 of returns and return information to designee of taxpayer)

11 is amended by striking ‘‘written request for or consent to

12 such disclosure’’ and inserting ‘‘request for or consent to

13 such disclosure’’.

14 SEC. 13364. STUDY OF NETTING OF INTEREST ON OVERPAY15 MENTS AND LIABILITIES.

16 (a) IN GENERAL.—The Secretary of the Treasury or

17 his delegate shall—

18 (1) conduct a study of the manner in which the

19 Internal Revenue Service has implemented the net20 ting of interest on overpayments and underpayments

21 and of the policy and administrative implications of

22 global netting, and

23 (2) before submitting the report of such study,

24 hold a public hearing to receive comments on the

25 matters included in such study.
775

•HR 2491 RH

1 (b) REPORT.—The report of such study shall be sub2 mitted not later than 6 months after the date of the enact3 ment of this Act to the Committee on Ways and Means

4 of the House of Representatives and the Committee on

5 Finance of the Senate.

6 SEC. 13365. CREDIT FOR EXPENSES OF CERTAIN TCMP AU7 DITS.

8 (a) IN GENERAL.—Subchapter B of chapter 65 is

9 amended by adding at the end the following new section:

10 ‘‘SEC. 6428. CREDIT FOR EXPENSES OF 1994 TCMP AUDITS.

11 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in12 dividual, there shall be allowed as a credit against the tax

13 imposed by subtitle A an amount equal to the qualified

14 TCMP expenses paid or incurred by the taxpayer during

15 the taxable year.

16 ‘‘(b) LIMITATION.—The amount of the credit allowed

17 by subsection (a) shall not exceed $3,000 with respect to

18 an audit.

19 ‘‘(c) QUALIFIED TCMP EXPENSES.—For purposes

20 of this section, the term ‘qualified TCMP expenses’ means

21 amounts which would (but for subsection (d)) be allowed

22 as a deduction under section 162 or 212(3) in connection

23 with an audit under the Taxpayer Compliance Measure24 ment Program of the taxpayer’s return of tax imposed by

25 chapter 1 for any taxable year beginning during 1994.
776

•HR 2491 RH

1 Such term shall not include any expense in connection

2 with an audit of an estate, trust, partnership, or S cor3 poration.

4 ‘‘(d) DENIAL OF DOUBLE BENEFIT.—No deduction

5 shall be allowed under chapter 1 for any amount for which

6 a credit is allowed under this section.

7 ‘‘(e) CREDIT TREATED AS SUBPART C CREDIT.—For

8 purposes of this title, the credit allowed under subsection

9 (a) shall be treated as a credit allowed under subpart C

10 of part IV of subchapter A of chapter 1.’’

11 (b) TECHNICAL AMENDMENTS.—

12 (1) Paragraph (2) of section 1324(b) of title

13 31, United States Code, is amended by inserting be14 fore the period ‘‘, or from section 6428 of such

15 Code’’.

16 (2) The table of sections for such subchapter B

17 is amended by adding at the end the following new

18 item:

‘‘Sec. 6428. Credit for expenses of 1994 TCMP audits.’’

19 (d) EFFECTIVE DATE.—The amendments made by

20 this section shall apply to amounts paid or incurred after

21 December 31, 1994, in taxable years ending after such

22 date.
777

•HR 2491 RH

1 SEC. 13366. EXPENSES OF DETECTION OF UNDERPAYMENTS

2 AND FRAUD, ETC.

3 (a) IN GENERAL.—Section 7623 (relating to ex4 penses of deduction and punishment of frauds) is amended

5 to read as follows:

6 ‘‘SEC. 7623. EXPENSES OF DETECTION OF UNDERPAYMENTS

7 AND FRAUD, ETC.

8 ‘‘The Secretary, under regulations prescribed by the

9 Secretary, is authorized to pay such sums as he deem nec10 essary for—

11 ‘‘(1) detecting underpayments of tax, and

12 ‘‘(2) detecting and bringing to trial and punish13 ment persons guilty of violating the internal revenue

14 laws or conniving at the same,

15 in cases where such expenses are not otherwise provided

16 for by law. Any amount payable under the preceding sen17 tence shall be paid from the proceeds of amounts (other

18 than interest) collected by reason of the information pro19 vided, and any amount so collected shall be available for

20 such payments.’’.

21 (b) CLERICAL AMENDMENT.—The table of sections

22 for subchapter B of chapter 78 is amended by striking

23 the item relating to section 7623 and inserting the follow24 ing new item:

‘‘Sec. 7623. Expenses of detection of underpayments and fraud,

etc.’’.
778

•HR 2491 RH

1 (c) EFFECTIVE DATE.—The amendments made by

2 this section shall take effect on the date which is 6 months

3 after the enactment of this Act.

4 (d) REPORT.—The Secretary of the Treasury or his

5 delegate shall submit an annual report to the Committee

6 on Ways and Means of the House of Representatives and

7 the Committee on Finance of the Senate on the payments

8 under section 7623 of the Internal Revenue Code of 1986

9 during the year and on the amounts collected for which

10 such payments were made.

11 Subtitle D—Additional Technical

12 Corrections

13 SEC. 13401. REPORTING OF REAL ESTATE TRANSACTIONS.

14 (a) IN GENERAL.—Paragraph (3) of section 6045(e)

15 (relating to prohibition of separate charge for filing re16 turn) is amended by adding at the end the following new

17 sentence: ‘‘Nothing in this paragraph shall be construed

18 to prohibit the real estate reporting person from taking

19 into account its cost of complying with such requirement

20 in establishing its charge (other than a separate charge

21 for complying with such requirement) to any customer for

22 performing services in the case of a real estate trans23 action.’’

24 (b) EFFECTIVE DATE.—The amendment made by

25 subsection (a) shall take effect as if included in section
779

•HR 2491 RH

1 1015(e)(2)(A) of the Technical and Miscellaneous Reve2 nue Act of 1988.

3 SEC. 13402. CLARIFICATION OF DENIAL OF DEDUCTION

4 FOR STOCK REDEMPTION EXPENSES.

5 (a) IN GENERAL.—Paragraph (1) of section 162(k)

6 is amended by striking ‘‘the redemption of its stock’’ and

7 inserting ‘‘the reacquisition of its stock or of the stock

8 of any related person (as defined in section

9 465(b)(3)(C))’’.

10 (b) CERTAIN DEDUCTIONS PERMITTED.—Subpara11 graph (A) of section 162(k)(2) is amended by striking

12 ‘‘or’’ at the end of clause (i), by redesignating clause (ii)

13 as clause (iii), and by inserting after clause (i) the follow14 ing new clause:

15 ‘‘(ii) deduction for amounts which are

16 properly allocable to indebtedness and am17 ortized over the term of such indebtedness,

18 or’’.

19 (c) CLERICAL AMENDMENT.—The subsection head20 ing for subsection (k) of section 162 is amended by strik21 ing ‘‘REDEMPTION’’ and inserting ‘‘REACQUISITION’’.

22 (d) EFFECTIVE DATE.—

23 (1) IN GENERAL.—Except as provided in para24 graph (2), the amendments made by this section

25 shall apply to amounts paid or incurred after Sep-
780

•HR 2491 RH

1 tember 13, 1995, in taxable years ending after such

2 date.

3 (2) SUBSECTION (b).—The amendment made

4 by subsection (b) shall take effect as if included in

5 the amendment made by section 613 of the Tax Re6 form Act of 1986.

7 SEC. 13403. CLARIFICATION OF DEPRECIATION CLASS FOR

8 CERTAIN ENERGY PROPERTY.

9 (a) IN GENERAL.—Subparagraph (B) of section

10 168(e)(3) (relating to 5-year property) is amended by add11 ing at the end the following flush sentence:

12 ‘‘Nothing in any provision of law shall be con13 strued to treat property as not being described

14 in clause (vi)(I) (or the corresponding provi15 sions of prior law) by reason of being public

16 utility property (within the meaning of section

17 48(a)(3)).’’

18 (b) EFFECTIVE DATE.—The amendment made by

19 subsection (a) shall take effect as if included in the

20 amendments made by section 11813 of the Revenue Rec21 onciliation Act of 1990.

22 SEC. 13404. CLERICAL AMENDMENT TO SECTION 404.

23 (a) IN GENERAL.—Paragraph (1) of section 404(j)

24 is amended by striking ‘‘(10)’’ and inserting ‘‘(9)’’.
781

•HR 2491 RH

1 (b) EFFECTIVE DATE.—The amendment made by

2 subsection (a) shall take effect as if included in the

3 amendments made by section 713(d)(4)(A) of the Deficit

4 Reduction Act of 1984.

5 SEC. 13405. TREATMENT OF CERTAIN VETERANS’ REEM6 PLOYMENT RIGHTS.

7 (a) IN GENERAL.—Section 414 is amended by adding

8 at the end the following new subsection:

9 ‘‘(u) SPECIAL RULES RELATING TO VETERANS’ RE10 EMPLOYMENT RIGHTS.—

11 ‘‘(1) TREATMENT OF CERTAIN CONTRIBUTIONS

12 MADE PURSUANT TO VETERANS’ REEMPLOYMENT

13 RIGHTS.—If any contribution is made by an em14 ployer or an employee under an individual account

15 plan with respect to an employee, or by an employee

16 to a defined benefit pension plan that provides for

17 employee contributions, and such contribution is re18 quired by reason of such employee’s rights under

19 chapter 43 of title 38, United States Code, resulting

20 from qualified military service, then—

21 ‘‘(A) such contribution shall not be subject

22 to any otherwise applicable limitation contained

23 in section 402(g), 402(h), 403(b), 404(a),

24 404(h), 408, 415, or 457, and shall not be

25 taken into account in applying such limitations
782

•HR 2491 RH

1 to other contributions or benefits under such

2 plan or any other plan, with respect to the year

3 in which the contribution is made,

4 ‘‘(B) such contribution shall be subject to

5 the limitations referred to in subparagraph (A)

6 with respect to the year to which the contribu7 tion relates (in accordance with rules prescribed

8 by the Secretary), and

9 ‘‘(C) such plan shall not be treated as fail10 ing to meet the requirements of section

11 401(a)(4), 401(a)(26), 401(k)(3), 401(m),

12 403(b)(12), 408(k)(3), 408(k)(6), 410(b), or

13 416 by reason of the making of such contribu14 tion.

15 For purposes of the preceding sentence, any elective

16 deferral or employee contribution made under para17 graph (2) shall be treated as required by reason of

18 the employee’s rights under such chapter.

19 ‘‘(2) REEMPLOYMENT RIGHTS WITH RESPECT

20 TO ELECTIVE DEFERRALS.—

21 ‘‘(A) IN GENERAL.—For purposes of this

22 subchapter and subchapter E, if an employee is

23 entitled to the benefits of chapter 43 of title 38,

24 United States Code, with respect to any plan

25 which provides for elective deferrals, the em-
783

•HR 2491 RH

1 ployer sponsoring the plan shall be treated as

2 meeting the requirements of such chapter 43

3 with respect to such elective deferrals only if

4 such employer—

5 ‘‘(i) permits such employee to make

6 additional elective deferrals under such

7 plan (in the amount determined under sub8 paragraph (B) or such lesser amount as is

9 elected by the employee) during the period

10 which begins on the date of the reemploy11 ment of such employee with such employer

12 and has the same length as the lesser of—

13 ‘‘(I) the product of 3 and the pe14 riod of qualified military service which

15 resulted in such rights, and

16 ‘‘(II) 5 years, and

17 ‘‘(ii) makes a matching contribution

18 with respect to any additional elective de19 ferral made pursuant to clause (i) which

20 would have been required had such defer21 ral actually been made during the period of

22 such qualified military service.

23 ‘‘(B) AMOUNT OF MAKEUP REQUIRED.—

24 The amount determined under this subpara25 graph with respect to any plan is the maximum
784

•HR 2491 RH

1 amount of the elective deferrals that the indi2 vidual would have been permitted to make

3 under the plan in accordance with the limita4 tions referred to in paragraph (1)(A) during his

5 period of qualified military service if he had

6 continued to be employed by the employer dur7 ing such period and received compensation as

8 determined under paragraph (7). Proper adjust9 ment shall be made to the amount determined

10 under the preceding sentence for any elective

11 deferrals actually made during the period of

12 such qualified military service.

13 ‘‘(C) ELECTIVE DEFERRAL.—For purposes

14 of this paragraph, the term ‘elective deferral’

15 has the meaning given such term by section

16 402(g)(3); except that such term shall include

17 any deferral of compensation under an eligible

18 deferred compensation plan (as defined in sec19 tion 457(b)).

20 ‘‘(D) AFTER-TAX EMPLOYEE CONTRIBU21 TIONS.—References in subparagraphs (A) and

22 (B) to elective deferrals shall be treated as in23 cluding references to other employee contribu24 tions.
785

•HR 2491 RH

1 ‘‘(3) CERTAIN RETROACTIVE ADJUSTMENTS

2 NOT REQUIRED.—For purposes of this subchapter

3 and subchapter E, no provision of chapter 43 of title

4 38, United States Code, shall be construed as re5 quiring—

6 ‘‘(A) any crediting of earnings to an em7 ployee with respect to any contribution before

8 such contribution is actually made, or

9 ‘‘(B) any allocation of any forfeiture with

10 respect to the period of qualified military serv11 ice.

12 ‘‘(4) LOAN REPAYMENT SUSPENSIONS PER13 MITTED.—If any plan suspends the obligation to

14 repay any loan made to an employee from such plan

15 for any part of any period during which such em16 ployee is performing qualified military service, such

17 suspension shall not be taken into account for pur18 poses of section 72(p), 401(a), or 4975(d)(1).

19 ‘‘(5) QUALIFIED MILITARY SERVICE.—For pur20 poses of this subsection, the term ‘qualified military

21 service’ means any service in the uniformed services

22 (as defined in chapter 43 of title 38, United States

23 Code) by any individual if such individual is entitled

24 to reemployment rights under such chapter with re25 spect to such service.
786

•HR 2491 RH

1 ‘‘(6) INDIVIDUAL ACCOUNT PLAN.—For pur2 poses of this subsection, the term ‘individual account

3 plan’ means any defined contribution plan, any tax4 sheltered annuity plan under section 403(b), and

5 any eligible deferred compensation plan (as defined

6 in section 457(b)).

7 ‘‘(7) COMPENSATION.—For purposes of section

8 415(c)(3), an employee who is in qualified military

9 service shall be treated as receiving compensation

10 from the employer during such period of qualified

11 military service equal to—

12 ‘‘(A) the compensation the employee would

13 have received during such period if the em14 ployee were not in qualified military service, de15 termined based on the rate of pay the employee

16 would have received from the employer but for

17 absence during the period of qualified military

18 service, or

19 ‘‘(B) if the compensation of the employee

20 was not based on a fixed rate, the employee’s

21 average compensation from the employer during

22 the 12-month period immediately preceding the

23 qualified military service (or, if shorter, the pe24 riod of employment immediately preceding the

25 qualified military service).
787

•HR 2491 RH

1 ‘‘(8) REQUIREMENTS FOR QUALIFIED RETIRE2 MENT PLAN.—For purposes of this subchapter and

3 subchapter E, an employer sponsoring a plan shall

4 be treated as meeting the requirements of chapter

5 43 of title 38, United States Code, only if each of

6 the following requirements is met:

7 ‘‘(A) An individual reemployed under such

8 chapter is treated with respect to such plan as

9 not having incurred a break in service with the

10 employer maintaining the plan by reason of

11 such individual’s period of qualified military

12 service.

13 ‘‘(B) Each period of qualified military

14 service served by an individual is, upon reem15 ployment under such chapter, deemed with re16 spect to such plan to constitute service with the

17 employer maintaining the plan for the purpose

18 of determining the nonforfeitability of the indi19 vidual’s accrued benefits under such plan and

20 for the purpose of determining the accrual of

21 benefits under such plan.

22 ‘‘(C) An individual reemployed under such

23 chapter is entitled to accrued benefits that are

24 contingent on the making of, or derived from,

25 employee contributions or elective deferrals only
788

•HR 2491 RH

1 to the extent the individual makes payment to

2 the plan with respect to such contributions or

3 deferrals. No such payment may exceed the

4 amount the individual would have been per5 mitted or required to contribute had the indi6 vidual remained continuously employed by the

7 employer throughout the period of qualified

8 military service. Any payment to such plan shall

9 be made during the period beginning with the

10 date of reemployment and whose duration is 3

11 times the period of the qualified military service

12 (but not greater than 5 years).

13 ‘‘(9) REFERENCES.—For purposes of this sec14 tion, any reference to chapter 43 of title 38, United

15 States Code, shall be treated as a reference to such

16 chapter as in effect on December 12, 1994 (without

17 regard to any subsequent amendment).’’

18 (b) EFFECTIVE DATE.—The amendments made by

19 this section shall be effective as of December 12, 1994.
789

•HR 2491 RH

1 Subtitle E—Tax Information

2 Sharing

3 SEC. 13501. DISCLOSURE OF RETURN INFORMATION FOR

4 ADMINISTRATION OF CERTAIN VETERANS

5 PROGRAMS.

6 (a) GENERAL RULE.—Subparagraph (D) of section

7 6103(l)(7) (relating to disclosure of return information to

8 Federal, State, and local agencies administering certain

9 programs) is amended by striking ‘‘Clause (viii) shall not

10 apply after September 30, 1998.’’

11 (b) EFFECTIVE DATE.—The amendment made by

12 subsection (a) shall take effect on the date of the enact13 ment of this Act.

14 Subtitle F—Revenue Increases

15 PART I—PROVISIONS RELATING TO BUSINESSES

16 SEC. 13601. TAX TREATMENT OF CERTAIN EXTRAORDINARY

17 DIVIDENDS.

18 (a) TREATMENT OF EXTRAORDINARY DIVIDENDS IN

19 EXCESS OF BASIS.—Paragraph (2) of section 1059(a) (re20 lating to corporate shareholder’s basis in stock reduced by

21 nontaxed portion of extraordinary dividends) is amended

22 to read as follows:

23 ‘‘(2) AMOUNTS IN EXCESS OF BASIS.—If the

24 nontaxed portion of such dividends exceeds such

25 basis, such excess shall be treated as gain from the
790

•HR 2491 RH

1 sale or exchange of such stock for the taxable year

2 in which the extraordinary dividend is received.’’

3 (b) TREATMENT OF REDEMPTIONS WHERE OPTIONS

4 INVOLVED.—Paragraph (1) of section 1059(e) (relating to

5 treatment of partial liquidations and non-pro rata redemp6 tions) is amended to read as follows:

7 ‘‘(1) TREATMENT OF PARTIAL LIQUIDATIONS

8 AND CERTAIN REDEMPTIONS.—Except as otherwise

9 provided in regulations—

10 ‘‘(A) REDEMPTIONS.—In the case of any

11 redemption of stock—

12 ‘‘(i) which is part of a partial liquida13 tion (within the meaning of section 302(e))

14 of the redeeming corporation,

15 ‘‘(ii) which is not pro rata as to all

16 shareholders, or

17 ‘‘(iii) which would not have been

18 treated (in whole or in part) as a dividend

19 if any options had not been taken into ac20 count under section 318(a)(4),

21 any amount treated as a dividend with respect

22 to such redemption shall be treated as an ex23 traordinary dividend to which paragraphs (1)

24 and (2) of subsection (a) apply without regard

25 to the period the taxpayer held such stock. In
791

•HR 2491 RH

1 the case of a redemption described in clause

2 (iii), only the basis in the stock redeemed shall

3 be taken into account under subsection (a).

4 ‘‘(B) REORGANIZATIONS, ETC.—An ex5 change described in section 356(a)(1) which is

6 treated as a dividend under section 356(a)(2)

7 shall be treated as a redemption of stock for

8 purposes of applying subparagraph (A).’’

9 (c) EFFECTIVE DATES.—

10 (1) IN GENERAL.—The amendments made by

11 this section shall apply to distributions after May 3,

12 1995.

13 (2) TRANSITION RULE.—The amendments

14 made by this section shall not apply to any distribu15 tion made pursuant to the terms of—

16 (A) a written binding contract in effect on

17 May 3, 1995, and at all times thereafter before

18 such distribution, or

19 (B) a tender offer outstanding on May 3,

20 1995.

21 (3) CERTAIN DIVIDENDS NOT PURSUANT TO

22 CERTAIN REDEMPTIONS.—In determining whether

23 the amendment made by subsection (a) applies to

24 any extraordinary dividend other than a dividend

25 treated as an extraordinary dividend under section
792

•HR 2491 RH

1 1059(e)(1) of the Internal Revenue Code of 1986

2 (as amended by this Act), paragraphs (1) and (2)

3 shall be applied by substituting ‘‘September 13,

4 1995’’ for ‘‘May 3, 1995’’.

5 SEC. 13602. REGISTRATION OF CONFIDENTIAL CORPORATE

6 TAX SHELTERS.

7 (a) IN GENERAL.—Section 6111 (relating to registra8 tion of tax shelters) is amended by redesignating sub9 sections (d) and (e) as subsections (e) and (f), respectively,

10 and by inserting after subsection (c) the following new

11 subsection:

12 ‘‘(d) CERTAIN CONFIDENTIAL ARRANGEMENTS

13 TREATED AS TAX SHELTERS.—

14 ‘‘(1) IN GENERAL.—For purposes of this sec15 tion, the term ‘tax shelter’ includes any entity, plan,

16 arrangement, or transaction—

17 ‘‘(A) a significant purpose of which is the

18 avoidance or evasion of Federal income tax for

19 a participant which is a corporation,

20 ‘‘(B) which is offered to any potential par21 ticipant under conditions of confidentiality, and

22 ‘‘(C) for which the tax shelter organizers

23 may receive fees in excess of $100,000 in the

24 aggregate.
793

•HR 2491 RH

1 ‘‘(2) CONDITIONS OF CONFIDENTIALITY.—For

2 purposes of paragraph (1)(C), an offer is under con3 ditions of confidentiality if—

4 ‘‘(A) the potential participant to whom the

5 offer is made (or any other person acting on be6 half of such participant) has an understanding

7 or agreement with or for the benefit of any pro8 moter of the tax shelter that such participant

9 (or other person) will limit disclosure of the tax

10 shelter or any significant tax features of the tax

11 shelter, or

12 ‘‘(B) any promoter of the tax shelter—

13 ‘‘(i) claims, knows, or has reason to

14 know,

15 ‘‘(ii) knows or has reason to know

16 that any other person (other than the po17 tential participant) claims, or

18 ‘‘(iii) causes another person to claim,

19 that the tax shelter (or any aspect thereof) is

20 proprietary to any person other than the poten21 tial participant or is otherwise protected from

22 disclosure to or use by others.

23 For purposes of this subsection, the term ‘promoter’

24 means any person who participates in the organiza25 tion, management, or sale of the tax shelter.
794

•HR 2491 RH

1 ‘‘(3) PERSONS OTHER THAN ORGANIZER RE2 QUIRED TO REGISTER IN CERTAIN CASES.—

3 ‘‘(A) IN GENERAL.—If—

4 ‘‘(i) the requirements of subsection (a)

5 are not met with respect to any tax shelter

6 (as defined in paragraph (1)) by any tax

7 shelter organizer, and

8 ‘‘(ii) no tax shelter organizer is a

9 United States person,

10 then each United States person who discussed

11 participation in such shelter shall register such

12 shelter under subsection (a).

13 ‘‘(B) EXCEPTION.—Subparagraph (A)

14 shall not apply to a United States person who

15 discussed participation in a tax shelter if—

16 ‘‘(i) such person notified the promoter

17 in writing (not later than the close of the

18 day on which such discussions began) that

19 such person would not participate in such

20 shelter, and

21 ‘‘(ii) such person does not participate

22 in such shelter.

23 ‘‘(4) OFFER TO PARTICIPATE TREATED AS

24 OFFER FOR SALE.—For purposes of subsections (a)

25 and (b), an offer to participate in a tax shelter (as
795

•HR 2491 RH

1 defined in paragraph (1)) shall be treated as an

2 offer for sale.’’

3 (b) PENALTY.—Subsection (a) of section 6707 (relat4 ing to failure to furnish information regarding tax shel5 ters) is amended by adding at the end the following new

6 paragraph:

7 ‘‘(3) CONFIDENTIAL ARRANGEMENTS.—

8 ‘‘(A) IN GENERAL.—In the case of a tax

9 shelter (as defined in section 6111(d)), the pen10 alty imposed under paragraph (1) shall be an

11 amount equal to the greater of—

12 ‘‘(i) 50 percent of the fees paid to any

13 promoter of the tax shelter with respect to

14 offerings made before the date such shelter

15 is registered under section 6111, or

16 ‘‘(ii) $10,000.

17 Clause (i) shall be applied by substituting ‘75

18 percent’ for ‘50 percent’ in the case of an inten19 tional failure or act described in paragraph (1).

20 ‘‘(B) SPECIAL RULE FOR PARTICIPANTS

21 REQUIRED TO REGISTER SHELTER.—In the

22 case of a person required to register such a tax

23 shelter by reason of section 6111(d)(3)—

24 ‘‘(i) such person shall be required to

25 pay the penalty under paragraph (1) only
796

•HR 2491 RH

1 if such person actually participated in such

2 shelter,

3 ‘‘(ii) the amount of such penalty shall

4 be determined by taking into account

5 under subparagraph (A)(i) only the fees

6 paid by such person, and

7 ‘‘(iii) such penalty shall be in addition

8 to the penalty imposed on any other person

9 for failing to register such shelter.’’

10 (c) CONFORMING AMENDMENTS.—

11 (1) Paragraph (2) of section 6707(a) is amend12 ed by striking ‘‘The penalty’’ and inserting ‘‘Except

13 as provided in paragraph (3), the penalty’’.

14 (2) Subparagraph (A) of section 6707(a)(1) is

15 amended by striking ‘‘paragraph (2)’’ and inserting

16 ‘‘paragraph (2) or (3), as the case may be’’.

17 (d) EFFECTIVE DATE.—

18 (1) IN GENERAL.—The amendments made by

19 this section shall apply to any tax shelter (as defined

20 in section 6111(d) of the Internal Revenue Code of

21 1986, as amended by this section) interests in which

22 are offered to potential participants after the date of

23 the enactment of this Act.

24 (2) DUE DATE FOR REGISTRATION.—The due

25 date for registering any tax shelter required to be
797

•HR 2491 RH

1 registered by reason of the amendments made by

2 this section shall be not earlier than the close of a

3 reasonable period after the Secretary of the Treas4 ury prescribes guidance with respect to meeting such

5 requirements.

6 SEC. 13603. DENIAL OF DEDUCTION FOR INTEREST ON

7 LOANS WITH RESPECT TO COMPANY-OWNED

8 INSURANCE.

9 (a) IN GENERAL.—Paragraph (4) of section 264(a)

10 is amended—

11 (1) by inserting ‘‘or endowment or annuity con12 tract’’ after ‘‘life insurance policies’’, and

13 (2) by striking all that follows ‘‘carried on by

14 the taxpayer’’ and inserting a period.

15 (b) PHASEIN OF DISALLOWANCE.—Section 264 is

16 amended by adding at the end the following new sub17 section:

18 ‘‘(d) PHASEIN OF DISALLOWANCE UNDER SUB19 SECTION (a)(4).—In the case of calendar years after 1995

20 and before 2000—

21 ‘‘(1) IN GENERAL.—The amount of interest

22 paid or accrued during any period in any such cal23 endar year with respect to qualified indebtedness

24 which is disallowed by reason of the amendment

25 made by section 13603(a) of the Revenue Reconcili-
798

•HR 2491 RH

1 ation Act of 1995 (determined without regard to this

2 subsection) shall not exceed the applicable percent3 age of such interest which is so disallowed.

4 ‘‘(2) QUALIFIED INDEBTEDNESS.—For pur5 poses of paragraph (1), the term ‘qualified indebted6 ness’ means indebtedness incurred before September

7 18, 1995, with respect to a life insurance policy cov8 ering only the life of the individual who was insured

9 under such policy on such date. Any increase on or

10 after such date in the amount of such indebtedness

11 shall be treated as indebtedness incurred after such

12 date.

13 ‘‘(3) APPLICABLE PERCENTAGE.—For purposes

14 of paragraph (1), the applicable percentage shall be

15 determined in accordance with the following table:

‘‘In the case of periods The applicable

in calendar year: percentage is:

1996 .......................................................................... 20 percent

1997 .......................................................................... 40 percent

1998 .......................................................................... 60 percent

1999 .......................................................................... 80 percent.’’

16 (c) EFFECTIVE DATE.—

17 (1) IN GENERAL.—The amendments made by

18 this section shall apply to interest paid or accrued

19 after December 31, 1995.

20 (2) EXCEPTION.—The amendments made by

21 this section shall not apply to contracts purchased

22 on or before June 20, 1986.
799

•HR 2491 RH

1 (d) 4-YEAR SPREAD OF INCOME INCLUSION ON SUR2 RENDER, ETC. OF CONTRACTS.—

3 (1) IN GENERAL.—In the case of indebtedness

4 with respect to any life insurance policy described in

5 paragraph (4) of section 264(a) of the Internal Rev6 enue Code of 1986, if—

7 (A) the interest paid or accrued after De8 cember 31, 1995, on such indebtedness is not

9 allowed as a deduction under chapter 1 of such

10 Code by reason of such paragraph (4) (as

11 amended by this section), and

12 (B) the entire amount of interest paid or

13 accrued on or before such date on such indebt14 edness was allowed as a deduction under such

15 chapter 1,

16 then (in lieu of any other inclusion in gross income)

17 the qualified amount with respect to such policy

18 shall be includible in gross income ratably over the

19 4 taxable years beginning with the taxable year such

20 amount would (but for this paragraph) be includible.

21 (2) QUALIFIED AMOUNT.—For purposes of

22 paragraph (1), the term ‘‘qualified amount’’ means,

23 with respect to any policy, the amount received

24 under such policy—
800

•HR 2491 RH

1 (A) on the complete surrender, redemption,

2 or maturity of such policy during 1996, or

3 (B) in full discharge during 1996 of the

4 obligation under the policy which is in the na5 ture of a refund of the consideration paid for

6 the policy,

7 but only to the extent such amount is includible in

8 gross income for the taxable year in which the event

9 described in subparagraph (A) or (B) occurs.

10 (3) SPECIAL RULE.—A contract shall not be

11 treated as failing to meet the requirement of section

12 264(c)(1) of the Internal Revenue Code of 1986

13 solely by reason of an occurrence described in sub14 paragraph (A) or (B) of paragraph (2) of this sub15 section.

16 SEC. 13604. TERMINATION OF SUSPENSE ACCOUNTS FOR

17 FAMILY CORPORATIONS REQUIRED TO USE

18 ACCRUAL METHOD OF ACCOUNTING.

19 (a) IN GENERAL.—Subsection (i) of section 447 (re20 lating to method of accounting for corporations engaged

21 in farming) is amended by adding at the end the following

22 new paragraph:

23 ‘‘(7) TERMINATION.—

24 ‘‘(A) IN GENERAL.—No suspense account

25 may be established under this subsection by any
801

•HR 2491 RH

1 corporation required by this section to change

2 its method of accounting for any taxable year

3 ending after September 13, 1995.

4 ‘‘(B) 20-YEAR PHASEOUT OF EXISTING

5 SUSPENSE ACCOUNTS.—Each suspense account

6 under this subsection shall be reduced (but not

7 below zero) for each of the first 20 taxable

8 years beginning after September 13, 1995, by

9 an amount equal to the applicable portion of

10 such account. Any reduction in a suspense ac11 count under this paragraph shall be included in

12 gross income for the taxable year of the reduc13 tion. The amount of the reduction required

14 under this paragraph for any taxable year shall

15 be reduced (but not below zero) by the amount

16 of any reduction required for such taxable year

17 under any other provision of this subsection.

18 ‘‘(C) APPLICABLE PORTION.—For pur19 poses of subparagraph (B), the term ‘applicable

20 portion’ means, for any taxable year, the

21 amount which would ratably reduce the amount

22 in the account (after taking into account prior

23 reductions) to zero over the period consisting of

24 such taxable year and the remaining taxable

25 years in such first 20 taxable years.’’
802

•HR 2491 RH

1 (b) EFFECTIVE DATE.—The amendment made by

2 this section shall apply to taxable years ending after Sep3 tember 13, 1995.

4 SEC. 13605. TERMINATION OF PUERTO RICO AND POSSES5 SION TAX CREDIT.

6 (a) IN GENERAL.—Section 936 is amended by adding

7 at the end the following new subsection:

8 ‘‘(j) TERMINATION.—

9 ‘‘(1) IN GENERAL.—This section shall not apply

10 to any taxable year beginning after December 31,

11 1995.

12 ‘‘(2) EXCEPTION FOR EXISTING CLAIMANTS.—

13 ‘‘(A) IN GENERAL.—Paragraph (1) shall

14 be applied by substituting ‘2005’ for ‘1995’ in

15 the case of an existing credit claimant.

16 ‘‘(B) EXCEPTION TERMINATES IF NEW

17 LINE OF BUSINESS ADDED.—If, after Septem18 ber 13, 1995, a corporation which would (but

19 for this subparagraph) be an existing credit

20 claimant adds a substantial new line of busi21 ness, such corporation shall cease to be treated

22 as an existing credit claimant as of the close of

23 the taxable year ending before the date of such

24 addition.
803

•HR 2491 RH

1 ‘‘(C) EXISTING CREDIT CLAIMANT.—For

2 purposes of this subsection, the term ‘existing

3 credit claimant’ means any corporation which

4 satisfied the conditions of both subparagraph

5 (A) and subparagraph (B) of subsection (a)(2)

6 for at least 1 base period year for which such

7 corporation elected the application of this sec8 tion.

9 ‘‘(3) LIMIT ON CREDIT OF EXISTING CLAIM10 ANTS.—

11 ‘‘(A) IN GENERAL.—In the case of an ex12 isting credit claimant, the aggregate amount of

13 income taken into account under subsection

14 (a)(1) for any taxable year beginning after De15 cember 31, 1995 (hereinafter in this subsection

16 referred to as the ‘current year’), shall not ex17 ceed the adjusted base period income of such

18 claimant.

19 ‘‘(B) COORDINATION WITH SUBSECTION

20 (a)(4).—The amount of income described in

21 subsection (a)(1)(A) which is taken into ac22 count in applying subsection (a)(4) shall be

23 such income as reduced under this paragraph.

24 In determining such reduction, any reduction

25 under subparagraph (A) in the amount which
804

•HR 2491 RH

1 would otherwise be taken into account under

2 subsection (a)(1) shall be allocated between the

3 income described in subparagraph (A) thereof

4 and the income described in subparagraph (B)

5 thereof in proportion to the respective amounts

6 of such incomes.

7 ‘‘(4) ADJUSTED BASE PERIOD INCOME.—For

8 purposes of paragraph (3)—

9 ‘‘(A) IN GENERAL.—The term ‘adjusted

10 base period income’ means the average of the

11 inflation-adjusted possession incomes of the cor12 poration for each base period year.

13 ‘‘(B) INFLATION-ADJUSTED POSSESSION

14 INCOME.—For purposes of subparagraph (A),

15 the inflation-adjusted possession income of any

16 corporation for any base period year shall be an

17 amount equal to the possession income of such

18 corporation for such base period year multiplied

19 by the inflation adjustment percentage for such

20 base period year.

21 ‘‘(C) INFLATION ADJUSTMENT PERCENT22 AGE.—For purposes of subparagraph (B), the

23 inflation adjustment percentage for any base

24 period year means, with respect to the current

25 year, the percentage (if any) by which—
805

•HR 2491 RH

1 ‘‘(i) the CPI for last calendar year

2 ending before the beginning of the current

3 year, exceeds

4 ‘‘(ii) the CPI for last calendar year

5 ending before the beginning of the base pe6 riod year.

7 For purposes of the preceding sentence, the

8 CPI for any calendar year is the CPI (as de9 fined in section 1(f)(5)) for such year under

10 section 1(f)(4).

11 ‘‘(D) INCREASE IN INFLATION ADJUST12 MENT PERCENTAGE FOR GROWTH DURING BASE

13 YEARS.—The inflation adjustment percentage

14 (determined under subparagraph (C) without

15 regard to this subparagraph) for each of the 5

16 taxable years referred to in paragraph (5)(A)

17 shall be increased by—

18 ‘‘(i) 5 percentage points in the case of

19 a taxable year ending during the 1-year pe20 riod ending on September 12, 1995;

21 ‘‘(ii) 10.25 percentage points in the

22 case of a taxable year ending during the 1-

23 year period ending on September 12, 1994;
806

•HR 2491 RH

1 ‘‘(iii) 15.76 percentage points in the

2 case of a taxable year ending during the 1-

3 year period ending on September 12, 1993;

4 ‘‘(iv) 21.55 percentage points in the

5 case of a taxable year ending during the 1-

6 year period ending on September 12, 1992;

7 and

8 ‘‘(v) 27.63 percentage points in the

9 case of a taxable year ending during the 1-

10 year period ending on September 12, 1991.

11 ‘‘(5) BASE PERIOD YEAR.—For purposes of this

12 subsection—

13 ‘‘(A) IN GENERAL.—The term ‘base period

14 year’ means each of 3 taxable years which are

15 among the 5 most recent taxable years of the

16 corporation ending before September 13, 1995,

17 determined by disregarding—

18 ‘‘(i) one taxable year for which the

19 corporation had the largest inflation-ad20 justed possession income, and

21 ‘‘(ii) one taxable year for which the

22 corporation had the smallest inflation-ad23 justed possession income.
807

•HR 2491 RH

1 ‘‘(B) CORPORATIONS NOT HAVING SIGNIFI2 CANT POSSESSION INCOME THROUGHOUT 5-

3 YEAR PERIOD.—

4 ‘‘(i) IN GENERAL.—If a corporation

5 does not have significant possession income

6 for each of the most recent 5 taxable years

7 ending before September 13, 1995, then,

8 in lieu of applying subparagraph (A), the

9 term ‘base period year’ means only those

10 taxable years (of such 5 taxable years) for

11 which the corporation has significant pos12 session income; except that, if such cor13 poration has significant possession income

14 for 4 of such 5 taxable years, the rule of

15 subparagraph (A)(ii) shall apply.

16 ‘‘(ii) SPECIAL RULE.—If there is no

17 year (of such 5 taxable years) for which a

18 corporation has significant possession in19 come—

20 ‘‘(I) the term ‘base period year’

21 means the first taxable year ending on

22 or after September 13, 1995, but

23 ‘‘(II) the amount of possession

24 income for such year which is taken

25 into account under paragraph (4)
808

•HR 2491 RH

1 shall be the amount which would be

2 determined if such year were a short

3 taxable year ending on August 31,

4 1995.

5 ‘‘(iii) SIGNIFICANT POSSESSION IN6 COME.—For purposes of this subpara7 graph, the term ‘significant possession in8 come’ means possession income which ex9 ceeds 2 percent of the possession income of

10 the taxpayer for the taxable year (of the

11 period of 6 taxable years ending with the

12 first taxable year ending on or after Sep13 tember 13, 1995) having the greatest pos14 session income.

15 ‘‘(C) ELECTION TO USE ONE BASE PERIOD

16 YEAR.—

17 ‘‘(i) IN GENERAL.—At the election of

18 the taxpayer, the term ‘base period year’

19 means only the last taxable year of the cor20 poration ending in calendar year 1992.

21 ‘‘(ii) ELECTION.—An election under

22 this subparagraph by any possession cor23 poration may be made only for the cor24 poration’s first taxable year beginning

25 after December 31, 1995, for which it is a
809

•HR 2491 RH

1 possession corporation. The rules of

2 subclauses (II) and (III) of subsection

3 (a)(4)(B)(iii) shall apply to the election

4 under this subparagraph.

5 ‘‘(D) ACQUISITIONS AND DISPOSITIONS.—

6 Rules similar to the rules of subparagraphs (A)

7 and (B) of section 41(f)(3) shall apply for pur8 poses of this subsection.

9 ‘‘(6) POSSESSION INCOME.—For purposes of

10 this subsection, the term ‘possession income’ means

11 the sum of the income referred to in subsection

12 (a)(1)(A) and the income referred to in subsection

13 (a)(1)(B). In no event shall possession income be

14 treated as being less than zero.

15 ‘‘(7) SHORT YEARS.—If the current year or a

16 base period year is a short taxable year, the applica17 tion of this subsection shall be made with such

18 annualizations as the Secretary shall prescribe.’’

19 (b) EFFECTIVE DATE.—The amendment made by

20 this section shall apply to taxable years beginning after

21 December 31, 1995.

22 SEC. 13606. DEPRECIATION UNDER INCOME FORECAST

23 METHOD.

24 (a) GENERAL RULE.—Section 167 (relating to depre25 ciation) is amended by redesignating subsection (g) as
810

•HR 2491 RH

1 subsection (h) and by inserting after subsection (f) the

2 following new subsection:

3 ‘‘(g) DEPRECIATION UNDER INCOME FORECAST

4 METHOD.—

5 ‘‘(1) IN GENERAL.—If the depreciation deduc6 tion allowable under this section to any taxpayer

7 with respect to any property is determined under the

8 income forecast method or any similar method—

9 ‘‘(A) in determining the amount of the de10 preciation deduction under such method, the es11 timated income from the property shall include

12 all estimated income from use of the property,

13 ‘‘(B) the adjusted basis of the property

14 shall only include amounts with respect to

15 which the requirements of section 461(h) are

16 satisfied,

17 ‘‘(C) the depreciation deduction under such

18 method for the 10th taxable year beginning

19 after the taxable year in which the property was

20 placed in service shall be equal to the adjusted

21 basis of such property as of the beginning of

22 such 10th taxable year, and

23 ‘‘(D) such taxpayer shall pay (or be enti24 tled to receive) interest computed under the
811

•HR 2491 RH

1 look-back method of paragraph (2) for any re2 computation year.

3 ‘‘(2) LOOK-BACK METHOD.—The interest com4 puted under the look-back method of this paragraph

5 for any recomputation year shall be determined by—

6 ‘‘(A) first determining the depreciation de7 ductions under this section with respect to such

8 property which would have been allowable for

9 prior taxable years if the determination of the

10 amounts so allowable had been made on the

11 basis of the sum of the following (instead of the

12 estimated income with respect to such prop13 erty)—

14 ‘‘(i) the actual income from such

15 property for periods before the close of the

16 recomputation year, and

17 ‘‘(ii) an estimate of the future income

18 with respect to such property for periods

19 after the recomputation year,

20 ‘‘(B) second, determining (solely for pur21 poses of computing such interest) the overpay22 ment or underpayment of tax for each such

23 prior taxable year which would result solely

24 from the application of subparagraph (A), and
812

•HR 2491 RH

1 ‘‘(C) then using the adjusted overpayment

2 rate (as defined in section 460(b)(7)),

3 compounded daily, on the overpayment or

4 underpayment determined under subparagraph

5 (B).

6 For purposes of the preceding sentence, any cost in7 curred after the property is placed in service (which

8 is not treated as a separate property under para9 graph (5)) shall be taken into account by discount10 ing (using the Federal mid-term rate determined

11 under section 1274(d) as of the time such cost is in12 curred) such cost to its value as of the date the

13 property is placed in service. The taxpayer may elect

14 with respect to any property to have the preceding

15 sentence not apply to such property.

16 ‘‘(3) EXCEPTION FROM LOOK-BACK METHOD.—

17 Paragraph (1)(D) shall not apply with respect to

18 any property which, when placed in service by the

19 taxpayer, had a basis of $100,000 or less.

20 ‘‘(4) RECOMPUTATION YEAR.—For purposes of

21 this subsection, except as provided in regulations,

22 the term ‘recomputation year’ means, with respect to

23 any property, the third and the 10th taxable years

24 beginning after the taxable year in which the prop25 erty was placed in service, unless the actual income
813

•HR 2491 RH

1 from the property for such third or 10th taxable

2 year (as the case may be) and each prior taxable

3 year is within 10 percent of the estimated income

4 from the property for each such year which was

5 taken into account under paragraph (1)(A).

6 ‘‘(5) SPECIAL RULES.—

7 ‘‘(A) CERTAIN COSTS TREATED AS SEPA8 RATE PROPERTY.—For purposes of this section,

9 the following costs shall be treated as separate

10 properties:

11 ‘‘(i) Any costs incurred with respect

12 to any property after the 10th taxable year

13 beginning after the taxable year in which

14 the property was placed in service.

15 ‘‘(ii) Any costs incurred after the

16 property is placed in service and before the

17 close of such 10th taxable year if such

18 costs are significant and give rise to a sig19 nificant increase in the income from the

20 property which was not included in the es21 timated income from the property.

22 ‘‘(B) SYNDICATION INCOME FROM TELE23 VISION SERIES.—In the case of property which

24 is an episode in a television series, estimated in25 come from syndicating such series shall not be
814

•HR 2491 RH

1 required to be taken into account under this

2 subsection before the earlier of—

3 ‘‘(i) the 4th taxable year beginning

4 after the date the first episode in such se5 ries is placed in service, or

6 ‘‘(ii) the earliest taxable year in which

7 the taxpayer had a reasonable expectation

8 that there would be a future syndication

9 of such series.

10 ‘‘(C) COLLECTION OF INTEREST.—For

11 purposes of subtitle F (other than sections

12 6654 and 6655), any interest required to be

13 paid by the taxpayer under paragraph (1) for

14 any recomputation year shall be treated as an

15 increase in the tax imposed by this chapter for

16 such year.

17 ‘‘(D) DETERMINATIONS.—For purposes of

18 this subsection, determinations of the amount

19 of income from any property shall be deter20 mined in the same manner as for purposes of

21 applying the income forecast method; except

22 that any income from the disposition of such

23 property shall be taken into account.

24 ‘‘(E) TREATMENT OF PASS-THRU ENTI25 TIES.—Rules similar to the rules of section
815

•HR 2491 RH

1 460(b)(4) shall apply for purposes of this sub2 section.’’

3 (b) EFFECTIVE DATE.—

4 (1) IN GENERAL.—The amendment made by

5 subsection (a) shall apply to property placed in serv6 ice after September 13, 1995.

7 (2) BINDING CONTRACTS.—The amendment

8 made by subsection (a) shall not apply to any prop9 erty produced or acquired by the taxpayer pursuant

10 to a written contract which was binding on Septem11 ber 13, 1995, and at all times thereafter before such

12 production or acquisition.

13 SEC. 13607. TRANSFERS OF EXCESS PENSION ASSETS.

14 (a) IN GENERAL.—Section 420 (relating to transfers

15 of excess pension assets to retiree health accounts) is

16 amended by adding at the end the following new sub17 section:

18 ‘‘(f) SIMILAR RULES TO APPLY TO OTHER TRANS19 FERS OF EXCESS PLAN ASSETS.—

20 ‘‘(1) IN GENERAL.—If there is a qualified unre21 stricted transfer of any excess pension assets of a

22 defined benefit plan (other than a multiemployer

23 plan) to an employer—

24 ‘‘(A) a trust which is part of such plan

25 shall not be treated as failing to meet the re-
816

•HR 2491 RH

1 quirements of section 401(a) or any other pro2 vision of law solely by reason of such transfer

3 (or any other action authorized under this sec4 tion), and

5 ‘‘(B) such transfer shall not be treated as

6 a prohibited transaction for purposes of section

7 4975.

8 The gross income of the employer shall include the

9 amount of any qualified transfer made during the

10 taxable year.

11 ‘‘(2) QUALIFIED UNRESTRICTED TRANSFER.—

12 For purposes of this section—

13 ‘‘(A) IN GENERAL.—The term ‘qualified

14 unrestricted transfer’ means a transfer—

15 ‘‘(i) of excess pension assets of a de16 fined benefit plan to the employer, and

17 ‘‘(ii) with respect to which the re18 quirements of subsection (c)(2)(A) are met

19 (determined by treating such transfer as a

20 qualified transfer).

21 ‘‘(B) COORDINATION WITH TRANSFERS TO

22 RETIREE HEALTH ACCOUNTS.—Such term shall

23 not include any qualified transfer (as defined in

24 subsection (b)).
817

•HR 2491 RH

1 ‘‘(C) EXPIRATION.—No transfer in any

2 taxable year beginning after December 31,

3 2000, shall be treated as a qualified unre4 stricted transfer.

5 ‘‘(3) DEFINITION AND SPECIAL RULE.—For

6 purposes of this subsection—

7 ‘‘(A) EXCESS PENSION ASSETS.—The term

8 ‘excess pension assets’ has the meaning given

9 such term by subsection (e)(2); except that the

10 amount thereof shall be the lesser of—

11 ‘‘(i) the amount determined as of the

12 most recent valuation date of the plan pre13 ceding the transfer, or

14 ‘‘(ii) the amount determined as of

15 January 1, 1995 (or, if January 1, 1995,

16 is not a valuation date, the most recent

17 prior valuation date).

18 ‘‘(B) COORDINATION WITH SECTION 412.—

19 In the case of a qualified unrestricted trans20 fer—

21 ‘‘(i) any assets transferred in a plan

22 year on or before the valuation date for

23 such year (and any income allocable there24 to) shall, for purposes of section 412, be
818

•HR 2491 RH

1 treated as assets in the plan as of the valu2 ation date for such year, and

3 ‘‘(ii) the plan shall be treated as hav4 ing a net experience loss under section

5 412(b)(2)(B)(iv) in an amount equal to the

6 amount of such transfer and for which am7 ortization charges begin for the first plan

8 year after the plan year in which such

9 transfer occurs, except that such section

10 shall be applied to such amount by sub11 stituting ‘10 plan years’ for ‘5 plan years’.

12 ‘‘(C) TREATMENT OF TRANSFERS.—Ex13 cept for purposes of this section, a qualified un14 restricted transfer shall be treated as a quali15 fied transfer to a health benefits account.’’

16 (b) REVERSION TAX.—Section 4980 (relating to tax

17 on reversion of qualified plan assets to employers) is

18 amended by adding at the end the following new sub19 section:

20 ‘‘(e) SPECIAL RULES FOR QUALIFIED UNRE21 STRICTED TRANSFERS UNDER SECTION 420.—In the

22 case of a qualified unrestricted transfer to which section

23 420(f) applies—

24 ‘‘(1) no tax shall be imposed by subsection (a)

25 if such transfer occurs before July 1, 1996,
819

•HR 2491 RH

1 ‘‘(2) subsection (a) shall be applied by sub2 stituting ‘6.5 percent’ for ‘20 percent’ if such trans3 fer occurs after June 30, 1996, and

4 ‘‘(3) subsection (d) shall not apply.’’

5 (c) EFFECTIVE DATE.—The amendments made by

6 this section shall take effect on January 1, 1995.

7 PART II—LEGAL REFORMS

8 SEC. 13611. REPEAL OF EXCLUSION FOR PUNITIVE DAM9 AGES AND FOR DAMAGES NOT ATTRIB10 UTABLE TO PHYSICAL INJURIES OR SICK11 NESS.

12 (a) IN GENERAL.—Paragraph (2) of section 104(a)

13 (relating to compensation for injuries or sickness) is

14 amended to read as follows:

15 ‘‘(2) the amount of any damages (other than

16 punitive damages) received (whether by suit or

17 agreement and whether as lump sums or as periodic

18 payments) on account of personal physical injuries

19 or physical sickness;’’.

20 (b) EMOTIONAL DISTRESS AS SUCH TREATED AS

21 NOT PHYSICAL INJURY OR PHYSICAL SICKNESS.—Sec22 tion 104(a) is amended by striking the last sentence and

23 inserting the following new sentence: ‘‘For purposes of

24 paragraph (2), emotional distress shall not be treated as

25 a physical injury or physical sickness. The preceding sen-
820

•HR 2491 RH

1 tence shall not apply to an amount of damages not in ex2 cess of the amount paid for medical care (described in sub3 paragraph (A) or (B) of section 213(d)(1)) attributable

4 to emotional distress.’’

5 (c) EFFECTIVE DATE.—

6 (1) IN GENERAL.—Except as provided in para7 graph (2), the amendments made by this section

8 shall apply to amounts received after December 31,

9 1995, in taxable years ending after such date.

10 (2) EXCEPTION.—The amendments made by

11 this section shall not apply to any amount received

12 under a written binding agreement, court decree, or

13 mediation award in effect on (or issued on or before)

14 September 13, 1995.

15 SEC. 13612. REPORTING OF CERTAIN PAYMENTS MADE TO

16 ATTORNEYS.

17 (a) IN GENERAL.—Section 6045 (relating to returns

18 of brokers) is amended by adding at the end the following

19 new subsection:

20 ‘‘(f) RETURN REQUIRED IN THE CASE OF PAY21 MENTS TO ATTORNEYS.—

22 ‘‘(1) IN GENERAL.—Any person engaged in a

23 trade or business and making a payment (in the

24 course of such trade or business) to which this sub25 section applies shall file a return under subsection
821

•HR 2491 RH

1 (a) and a statement under subsection (b) with re2 spect to such payment.

3 ‘‘(2) APPLICATION OF SUBSECTION.—

4 ‘‘(A) IN GENERAL.—This subsection shall

5 apply to any payment to an attorney in connec6 tion with legal services (whether or not such

7 services are performed for the payor).

8 ‘‘(B) EXCEPTION.—This subsection shall

9 not apply to the portion of any payment which

10 is required to be reported under section 6041(a)

11 (or would be so required but for the dollar limi12 tation contained therein) or section 6051.’’

13 (b) REPORTING OF ATTORNEYS FEES PAYABLE TO

14 CORPORATIONS.—The regulations providing an exception

15 under section 6041 of the Internal Revenue Code of 1986

16 for payments made to corporations shall not apply to pay17 ments of attorneys fees.

18 (c) EFFECTIVE DATE.—The amendment made by

19 subsection (a), and subsection (b), shall apply to payments

20 made after December 31, 1995.
822

•HR 2491 RH

1 PART III—TREATMENT OF INDIVIDUALS WHO

2 LOSE UNITED STATES CITIZENSHIP

3 SEC. 13616. REVISION OF INCOME, ESTATE, AND GIFT

4 TAXES ON INDIVIDUALS WHO LOSE UNITED

5 STATES CITIZENSHIP.

6 (a) IN GENERAL.—Subsection (a) of section 877 is

7 amended to read as follows:

8 ‘‘(a) TREATMENT OF EXPATRIATES.—

9 ‘‘(1) IN GENERAL.—Every nonresident alien in10 dividual who, within the 10-year period immediately

11 preceding the close of the taxable year, lost United

12 States citizenship, unless such loss did not have for

13 1 of its principal purposes the avoidance of taxes

14 under this subtitle or subtitle B, shall be taxable for

15 such taxable year in the manner provided in sub16 section (b) if the tax imposed pursuant to such sub17 section exceeds the tax which, without regard to this

18 section, is imposed pursuant to section 871.

19 ‘‘(2) CERTAIN INDIVIDUALS TREATED AS HAV20 ING TAX AVOIDANCE PURPOSE.—For purposes of

21 paragraph (1), an individual shall be treated as hav22 ing a principal purpose to avoid such taxes if—

23 ‘‘(A) the average annual net income tax

24 (as defined in section 38(c)(1)) of such individ25 ual for the period of 5 taxable years ending be-
823

•HR 2491 RH

1 fore the date of the loss of United States citi2 zenship is greater than $100,000, or

3 ‘‘(B) the net worth of the individual as of

4 such date is $500,000 or more.

5 In the case of the loss of United States citizenship

6 in any calendar year after 1996, such $100,000 and

7 $500,000 amounts shall be increased by an amount

8 equal to such dollar amount multiplied by the cost9 of-living adjustment determined under section

10 1(f)(3) for such calendar year by substituting ‘1994’

11 for ‘1992’ in subparagraph (B) thereof. Any in12 crease under the preceding sentence shall be round13 ed to the nearest multiple of $1,000.’’

14 (b) EXCEPTIONS.—

15 (1) IN GENERAL.—Section 877 is amended by

16 striking subsection (d), by redesignating subsection

17 (c) as subsection (d), and by inserting after sub18 section (b) the following new subsection:

19 ‘‘(c) TAX AVOIDANCE NOT PRESUMED IN CERTAIN

20 CASES.—

21 ‘‘(1) IN GENERAL.—Subsection (a)(2) shall not

22 apply to an individual if—

23 ‘‘(A) such individual is described in a sub24 paragraph of paragraph (2) of this subsection,

25 and
824

•HR 2491 RH

1 ‘‘(B) within the 1-year period beginning on

2 the date of the loss of United States citizenship,

3 such individual submits a ruling request for the

4 Secretary’s determination as to whether such

5 loss has for 1 of its principal purposes the

6 avoidance of taxes under this subtitle or subtitle

7 B.

8 ‘‘(2) INDIVIDUALS DESCRIBED.—

9 ‘‘(A) DUAL CITIZENSHIP, ETC.—An indi10 vidual is described in this subparagraph if—

11 ‘‘(i) the individual became at birth a

12 citizen of the United States and a citizen

13 of another country and continues to be a

14 citizen of such other country, or

15 ‘‘(ii) the individual becomes (not later

16 than the close of a reasonable period after

17 loss of United States citizenship) a citizen

18 of the country in which—

19 ‘‘(I) such individual was born,

20 ‘‘(II) if such individual is mar21 ried, such individual’s spouse was

22 born, or

23 ‘‘(III) either of such individual’s

24 parents were born.
825

•HR 2491 RH

1 ‘‘(B) LONG-TERM FOREIGN RESIDENTS.—

2 An individual is described in this subparagraph

3 if, for each year in the 10-year period ending on

4 the date of loss of United States citizenship, the

5 individual was present in the United States for

6 30 days or less. The rule of section

7 7701(b)(3)(D)(ii) shall apply for purposes of

8 this subparagraph.

9 ‘‘(C) RENUNCIATION UPON REACHING AGE

10 OF MAJORITY.—An individual is described in

11 this subparagraph if the individual’s loss of

12 United States citizenship occurs before such individual attains age 181 13 ⁄2.

14 ‘‘(D) INDIVIDUALS SPECIFIED IN REGULA15 TIONS.—An individual is described in this sub16 paragraph if the individual is described in a

17 category of individuals prescribed by regulation

18 by the Secretary.’’

19 (2) TECHNICAL AMENDMENT.—Paragraph (1)

20 of section 877(b) of such Code is amended by strik21 ing ‘‘subsection (c)’’ and inserting ‘‘subsection (d)’’.

22 (c) TREATMENT OF PROPERTY DISPOSED OF IN

23 NONRECOGNITION TRANSACTIONS; TREATMENT OF DIS24 TRIBUTIONS FROM CERTAIN CONTROLLED FOREIGN
826

•HR 2491 RH

1 CORPORATIONS.—Subsection (d) of section 877, as redes2 ignated by subsection (b), is amended to read as follows:

3 ‘‘(d) SPECIAL RULES FOR SOURCE, ETC.—For pur4 poses of subsection (b)—

5 ‘‘(1) SOURCE RULES.—The following items of

6 gross income shall be treated as income from sources

7 within the United States:

8 ‘‘(A) SALE OF PROPERTY.—Gains on the

9 sale or exchange of property (other than stock

10 or debt obligations) located in the United

11 States.

12 ‘‘(B) STOCK OR DEBT OBLIGATIONS.—

13 Gains on the sale or exchange of stock issued

14 by a domestic corporation or debt obligations of

15 United States persons or of the United States,

16 a State or political subdivision thereof, or the

17 District of Columbia.

18 ‘‘(C) INCOME OR GAIN DERIVED FROM

19 CONTROLLED FOREIGN CORPORATION.—Any in20 come or gain derived from stock in a foreign

21 corporation but only—

22 ‘‘(i) if the individual losing United

23 States citizenship owned (within the mean24 ing of section 958(a)), or is considered as

25 owning (by applying the ownership rules of
827

•HR 2491 RH

1 section 958(b)), at any time during the 2-

2 year period ending on the date of the loss

3 of United States citizenship, more than 50

4 percent of—

5 ‘‘(I) the total combined voting

6 power of all classes of stock entitled

7 to vote of such corporation, or

8 ‘‘(II) the total value of the stock

9 of such corporation, and

10 ‘‘(ii) to the extent such income or gain

11 does not exceed the earnings and profits

12 attributable to such stock which were

13 earned or accumulated before the loss of

14 citizenship and during periods that the

15 ownership requirements of clause (i) are

16 met.

17 ‘‘(2) GAIN RECOGNITION ON CERTAIN EX18 CHANGES.—

19 ‘‘(A) IN GENERAL.—In the case of any ex20 change of property to which this paragraph ap21 plies, notwithstanding any other provision of

22 this title, such property shall be treated as sold

23 for its fair market value on the date of such ex24 change, and any gain shall be recognized for

25 the taxable year which includes such date.
828

•HR 2491 RH

1 ‘‘(B) EXCHANGES TO WHICH PARAGRAPH

2 APPLIES.—This paragraph shall apply to any

3 exchange during the 10-year period described in

4 subsection (a) if—

5 ‘‘(i) gain would not (but for this para6 graph) be recognized on such exchange in

7 whole or in part for purposes of this sub8 title,

9 ‘‘(ii) income derived from such prop10 erty was from sources within the United

11 States (or, if no income was so derived,

12 would have been from such sources), and

13 ‘‘(iii) income derived from the prop14 erty acquired in the exchange would be

15 from sources outside the United States.

16 ‘‘(C) EXCEPTION.—Subparagraph (A)

17 shall not apply if the individual enters into an

18 agreement with the Secretary which specifies

19 that any income or gain derived from the prop20 erty acquired in the exchange (or any other

21 property which has a basis determined in whole

22 or part by reference to such property) during

23 such 10-year period shall be treated as from

24 sources within the United States. If the prop25 erty transferred in the exchange is disposed of
829

•HR 2491 RH

1 by the person acquiring such property, such

2 agreement shall terminate and any gain which

3 was not recognized by reason of such agreement

4 shall be recognized as of the date of such dis5 position.

6 ‘‘(D) SECRETARY MAY EXTEND PERIOD.—

7 To the extent provided in regulations prescribed

8 by the Secretary, subparagraph (B) shall be ap9 plied by substituting the 15-year period begin10 ning 5 years before the loss of United States

11 citizenship for the 10-year period referred to

12 therein.

13 ‘‘(E) SECRETARY MAY REQUIRE RECOGNI14 TION OF GAIN IN CERTAIN CASES.—To the ex15 tent provided in regulations prescribed by the

16 Secretary—

17 ‘‘(i) the removal of appreciated tan18 gible personal property from the United

19 States, and

20 ‘‘(ii) any other occurrence which

21 (without recognition of gain) results in a

22 change in the source of the income or gain

23 from property from sources within the

24 United States to sources outside the Unit25 ed States,
830

•HR 2491 RH

1 shall be treated as an exchange to which this

2 paragraph applies.

3 ‘‘(3) SUBSTANTIAL DIMINISHING OF RISKS OF

4 OWNERSHIP.—For purposes of determining whether

5 this section applies to any gain on the sale or ex6 change of any property, the running of the 10-year

7 period described in subsection (a) shall be suspended

8 for any period during which the individual’s risk of

9 loss with respect to the property is substantially di10 minished by—

11 ‘‘(A) the holding of a put with respect to

12 such property (or similar property),

13 ‘‘(B) the holding by another person of a

14 right to acquire the property, or

15 ‘‘(C) a short sale or any other trans16 action.’’

17 (d) CREDIT FOR FOREIGN TAXES IMPOSED ON UNIT18 ED STATES SOURCE INCOME.—

19 (1) Subsection (b) of section 877 is amended by

20 adding at the end the following new sentence: ‘‘The

21 tax imposed solely by reason of this section shall be

22 reduced (but not below zero) by the amount of any

23 income, war profits, and excess profits taxes (within

24 the meaning of section 903) paid to any foreign

25 country or possession of the United States on any
831

•HR 2491 RH

1 income of the taxpayer on which tax is imposed sole2 ly by reason of this section.’’

3 (2) Subsection (a) of section 877, as amended

4 by subsection (a), is amended by inserting ‘‘(after

5 any reduction in such tax under the last sentence of

6 such subsection)’’ after ‘‘such subsection’’.

7 (e) COMPARABLE ESTATE AND GIFT TAX TREAT8 MENT.—

9 (1) ESTATE TAX.—

10 (A) IN GENERAL.—Subsection (a) of sec11 tion 2107 is amended to read as follows:

12 ‘‘(a) TREATMENT OF EXPATRIATES.—

13 ‘‘(1) RATE OF TAX.—A tax computed in accord14 ance with the table contained in section 2001 is

15 hereby imposed on the transfer of the taxable estate,

16 determined as provided in section 2106, of every de17 cedent nonresident not a citizen of the United States

18 if, within the 10-year period ending with the date of

19 death, such decedent lost United States citizenship,

20 unless such loss did not have for 1 of its principal

21 purposes the avoidance of taxes under this subtitle

22 or subtitle A.

23 ‘‘(2) CERTAIN INDIVIDUALS TREATED AS HAV24 ING TAX AVOIDANCE PURPOSE.—
832

•HR 2491 RH

1 ‘‘(A) IN GENERAL.—For purposes of para2 graph (1), an individual shall be treated as hav3 ing a principal purpose to avoid such taxes if

4 such individual is so treated under section

5 877(a)(2).

6 ‘‘(B) EXCEPTION.—Subparagraph (A)

7 shall not apply to a decedent meeting the re8 quirements of section 877(c)(1).’’

9 (B) CREDIT FOR FOREIGN DEATH

10 TAXES.—Subsection (c) of section 2107 is

11 amended by redesignating paragraph (2) as

12 paragraph (3) and by inserting after paragraph

13 (1) the following new paragraph:

14 ‘‘(2) CREDIT FOR FOREIGN DEATH TAXES.—

15 ‘‘(A) IN GENERAL.—The tax imposed by

16 subsection (a) shall be credited with the amount

17 of any estate, inheritance, legacy, or succession

18 taxes actually paid to any foreign country in re19 spect of any property which is included in the

20 gross estate solely by reason of subsection (b).

21 ‘‘(B) LIMITATION ON CREDIT.—The credit

22 allowed by subparagraph (A) for such taxes

23 paid to a foreign country shall not exceed the

24 lesser of—
833

•HR 2491 RH

1 ‘‘(i) the amount which bears the same

2 ratio to the amount of such taxes actually

3 paid to such foreign country in respect of

4 property included in the gross estate as the

5 value of the property included in the gross

6 estate solely by reason of subsection (b)

7 bears to the value of all property subjected

8 to such taxes by such foreign country, or

9 ‘‘(ii) such property’s proportionate

10 share of the excess of—

11 ‘‘(I) the tax imposed by sub12 section (a), over

13 ‘‘(II) the tax which would be im14 posed by section 2101 but for this

15 section.

16 ‘‘(C) PROPORTIONATE SHARE.—For pur17 poses of subparagraph (B), a property’s propor18 tionate share is the percentage which the value

19 of the property which is included in the gross

20 estate solely by reason of subsection (b) bears

21 to the total value of the gross estate.’’

22 (C) EXPANSION OF INCLUSION IN GROSS

23 ESTATE OF STOCK OF FOREIGN CORPORA24 TIONS.—Paragraph (2) of section 2107(b) is

25 amended by striking ‘‘more than 50 percent of’’
834

•HR 2491 RH

1 and all that follows and inserting ‘‘more than

2 50 percent of—

3 ‘‘(A) the total combined voting power of all

4 classes of stock entitled to vote of such corpora5 tion, or

6 ‘‘(B) the total value of the stock of such

7 corporation,’’.

8 (2) GIFT TAX.—

9 (A) IN GENERAL.—Paragraph (3) of sec10 tion 2501(a) is amended to read as follows:

11 ‘‘(3) EXCEPTION.—

12 ‘‘(A) CERTAIN INDIVIDUALS.—Paragraph

13 (2) shall not apply in the case of a donor who,

14 within the 10-year period ending with the date

15 of transfer, lost United States citizenship, un16 less such loss did not have for 1 of its principal

17 purposes the avoidance of taxes under this sub18 title or subtitle A.

19 ‘‘(B) CERTAIN INDIVIDUALS TREATED AS

20 HAVING TAX AVOIDANCE PURPOSE.—For pur21 poses of subparagraph (A), an individual shall

22 be treated as having a principal purpose to

23 avoid such taxes if such individual is so treated

24 under section 877(a)(2).
835

•HR 2491 RH

1 ‘‘(C) EXCEPTION FOR CERTAIN INDIVID2 UALS.—Subparagraph (B) shall not apply to a

3 decedent meeting the requirements of section

4 877(c)(1).

5 ‘‘(D) CREDIT FOR FOREIGN GIFT TAXES.—

6 The tax imposed by this section solely by reason

7 of this paragraph shall be credited with the

8 amount of any gift tax actually paid to any for9 eign country in respect of any gift which is tax10 able under this section solely by reason of this

11 paragraph.’’

12 (f) COMPARABLE TREATMENT OF LAWFUL PERMA13 NENT RESIDENTS WHO CEASE TO BE TAXED AS RESI14 DENTS.—

15 (1) IN GENERAL.—Section 877 is amended by

16 redesignating subsection (e) as subsection (f) and by

17 inserting after subsection (d) the following new sub18 section:

19 ‘‘(e) COMPARABLE TREATMENT OF LAWFUL PERMA20 NENT RESIDENTS WHO CEASE TO BE TAXED AS RESI21 DENTS.—

22 ‘‘(1) IN GENERAL.—Any long-term resident of

23 the United States who—
836

•HR 2491 RH

1 ‘‘(A) ceases to be a lawful permanent resi2 dent of the United States (within the meaning

3 of section 7701(b)(6)), or

4 ‘‘(B) commences to be treated as a resi5 dent of a foreign country under the provisions

6 of a tax treaty between the United States and

7 the foreign country and who does not waive the

8 benefits of such treaty applicable to residents of

9 the foreign country,

10 shall be treated for purposes of this section and sec11 tions 2107, 2501, and 6039F in the same manner

12 as if such resident were a citizen of the United

13 States who lost United States citizenship on the date

14 of such cessation or commencement.

15 ‘‘(2) LONG-TERM RESIDENT.—For purposes of

16 this subsection, the term ‘long-term resident’ means

17 any individual (other than a citizen of the United

18 States) who is a lawful permanent resident of the

19 United States in at least 8 taxable years during the

20 period of 15 taxable years ending with the taxable

21 year during which the event described in subpara22 graph (A) or (B) of paragraph (1) occurs. For pur23 poses of the preceding sentence, an individual shall

24 not be treated as a lawful permanent resident for

25 any taxable year if such individual is treated as a
837

•HR 2491 RH

1 resident of a foreign country for the taxable year

2 under the provisions of a tax treaty between the

3 United States and the foreign country and does not

4 waive the benefits of such treaty applicable to resi5 dents of the foreign country.

6 ‘‘(3) SPECIAL RULES.—

7 ‘‘(A) EXCEPTIONS NOT TO APPLY.—Sub8 section (c) shall not apply to an individual who

9 is treated as provided in paragraph (1).

10 ‘‘(B) STEP-UP IN BASIS.—Solely for pur11 poses of determining any tax imposed by reason

12 of this subsection, property which was held by

13 the long-term resident on the date the individ14 ual first became a resident of the United States

15 shall be treated as having a basis on such date

16 of not less than the fair market value of such

17 property on such date. The preceding sentence

18 shall not apply if the individual elects not to

19 have such sentence apply. Such an election,

20 once made, shall be irrevocable.

21 ‘‘(4) AUTHORITY TO EXEMPT INDIVIDUALS.—

22 This subsection shall not apply to an individual who

23 is described in a category of individuals prescribed

24 by regulation by the Secretary.
838

•HR 2491 RH

1 ‘‘(5) REGULATIONS.—The Secretary shall pre2 scribe such regulations as may be appropriate to

3 carry out this subsection, including regulations pro4 viding for the application of this subsection in cases

5 where an alien individual becomes a resident of the

6 United States during the 10-year period after being

7 treated as provided in paragraph (1).’’

8 (2) CONFORMING AMENDMENTS.—

9 (A) Section 2107 is amended by striking

10 subsection (d), by redesignating subsection (e)

11 as subsection (d), and by inserting after sub12 section (d) (as so redesignated) the following

13 new subsection:

14 ‘‘(e) CROSS REFERENCE.—

‘‘For comparable treatment of long-term lawful

permanent residents who ceased to be taxed as residents, see section 877(e).’’

15 (B) Paragraph (3) of section 2501(a) (as

16 amended by subsection (e)) is amended by add17 ing at the end the following new subparagraph:

18 ‘‘(E) CROSS REFERENCE.—

‘‘For comparable treatment of long-term lawful

permanent residents who ceased to be taxed as residents, see section 877(e).’’

19 (g) EFFECTIVE DATE.—

20 (1) IN GENERAL.—The amendments made by

21 this section shall apply to—
839

•HR 2491 RH

1 (A) individuals losing United States citi2 zenship (within the meaning of section 877 of

3 the Internal Revenue Code of 1986) on or after

4 February 6, 1995, and

5 (B) long-term residents of the United

6 States with respect to whom an event described

7 in subparagraph (A) or (B) of section 877(e)(1)

8 of such Code occurs on or after June 13, 1995.

9 (2) SPECIAL RULE.—

10 (A) IN GENERAL.—In the case of an indi11 vidual who performed an act of expatriation

12 specified in paragraph (1), (2), (3), or (4) of

13 section 349(a) of the Immigration and Nation14 ality Act (8 U.S.C. 1481(a)(1)–(4)) before Feb15 ruary 6, 1995, but who did not, on or before

16 such date, furnish to the United States Depart17 ment of State a signed statement of voluntary

18 relinquishment of United States nationality con19 firming the performance of such act, the

20 amendments made by this section shall apply to

21 such individual except that—

22 (i) the 10-year period described in

23 section 877(a) of such Code shall not ex24 pire before the end of the 10-year period
840

•HR 2491 RH

1 beginning on the date such statement is so

2 furnished, and

3 (ii) the 1-year period referred to in

4 section 877(c) of such Code, as amended

5 by this section, shall not expire before the

6 date which is 1 year after the date of the

7 enactment of this Act.

8 (B) EXCEPTION.—Subparagraph (A) shall

9 not apply if the individual establishes to the

10 satisfaction of the Secretary of the Treasury

11 that such loss of United States citizenship oc12 curred before February 6, 1994.

13 SEC. 13617. INFORMATION ON INDIVIDUALS LOSING UNIT14 ED STATES CITIZENSHIP.

15 (a) IN GENERAL.—Subpart A of part III of sub16 chapter A of chapter 61 is amended by inserting after sec17 tion 6039E the following new section:

18 ‘‘SEC. 6039F. INFORMATION ON INDIVIDUALS LOSING

19 UNITED STATES CITIZENSHIP.

20 ‘‘(a) IN GENERAL.—Notwithstanding any other pro21 vision of law, any individual who loses United States citi22 zenship (within the meaning of section 877(a)) shall pro23 vide a statement which includes the information described

24 in subsection (b). Such statement shall be—
841

•HR 2491 RH

1 ‘‘(1) provided not later than the earliest date of

2 any act referred to in subsection (c), and

3 ‘‘(2) provided to the person or court referred to

4 in subsection (c) with respect to such act.

5 ‘‘(b) INFORMATION TO BE PROVIDED.—Information

6 required under subsection (a) shall include—

7 ‘‘(1) the taxpayer’s TIN,

8 ‘‘(2) the mailing address of such individual’s

9 principal foreign residence,

10 ‘‘(3) the foreign country in which such individ11 ual is residing,

12 ‘‘(4) the foreign country of which such individ13 ual is a citizen,

14 ‘‘(5) in the case of an individual having a net

15 worth of at least the dollar amount applicable under

16 section 877(a)(2)(B), information detailing the as17 sets and liabilities of such individual, and

18 ‘‘(6) such other information as the Secretary

19 may prescribe.

20 ‘‘(c) ACTS DESCRIBED.—For purposes of this sec21 tion, the acts referred to in this subsection are—

22 ‘‘(1) the individual’s renunciation of his United

23 States nationality before a diplomatic or consular of24 ficer of the United States pursuant to paragraph (5)
842

•HR 2491 RH

1 of section 349(a) of the Immigration and Nationality

2 Act (8 U.S.C. 1481(a)(5)),

3 ‘‘(2) the individual’s furnishing to the United

4 States Department of State a signed statement of

5 voluntary relinquishment of United States national6 ity confirming the performance of an act of expatria7 tion specified in paragraph (1), (2), (3), or (4) of

8 section 349(a) of the Immigration and Nationality

9 Act (8 U.S.C. 1481(a)(1)–(4)),

10 ‘‘(3) the issuance by the United States Depart11 ment of State of a certificate of loss of nationality

12 to the individual, or

13 ‘‘(4) the cancellation by a court of the United

14 States of a naturalized citizen’s certificate of natu15 ralization.

16 ‘‘(d) PENALTY.—Any individual failing to provide a

17 statement required under subsection (a) shall be subject

18 to a penalty for each year (of the 10-year period beginning

19 on the date of loss of United States citizenship) during

20 any portion of which such failure continues in an amount

21 equal to the greater of—

22 ‘‘(1) 5 percent of the tax required to be paid

23 under section 877 for the taxable year ending during

24 such year, or

25 ‘‘(2) $1,000,
843

•HR 2491 RH

1 unless it is shown that such failure is due to reasonable

2 cause and not to willful neglect.

3 ‘‘(e) INFORMATION TO BE PROVIDED TO SEC4 RETARY.—Notwithstanding any other provision of law—

5 ‘‘(1) any Federal agency or court which collects

6 (or is required to collect) the statement under sub7 section (a) shall provide to the Secretary—

8 ‘‘(A) a copy of any such statement, and

9 ‘‘(B) the name (and any other identifying

10 information) of any individual refusing to com11 ply with the provisions of subsection (a),

12 ‘‘(2) the Secretary of State shall provide to the

13 Secretary a copy of each certificate as to the loss of

14 American nationality under section 358 of the Immi15 gration and Nationality Act which is approved by

16 the Secretary of State, and

17 ‘‘(3) the Federal agency primarily responsible

18 for administering the immigration laws shall provide

19 to the Secretary the name of each lawful permanent

20 resident of the United States (within the meaning of

21 section 7701(b)(6)) whose status as such has been

22 revoked or has been administratively or judicially de23 termined to have been abandoned.

24 Notwithstanding any other provision of law, not later than

25 30 days after the close of each calendar quarter, the Sec-
844

•HR 2491 RH

1 retary shall publish in the Federal Register the name of

2 each individual losing United States citizenship (within

3 the meaning of section 877(a)) with respect to whom the

4 Secretary receives information under the preceding sen5 tence during such quarter.

6 ‘‘(f) REPORTING BY LONG-TERM LAWFUL PERMA7 NENT RESIDENTS WHO CEASE TO BE TAXED AS RESI8 DENTS.—In lieu of applying the last sentence of sub9 section (a), any individual who is required to provide a

10 statement under this section by reason of section

11 877(e)(1) shall provide such statement with the return of

12 tax imposed by chapter 1 for the taxable year during

13 which the event described in such section occurs.

14 ‘‘(g) EXEMPTION.—The Secretary may by regula15 tions exempt any class of individuals from the require16 ments of this section if he determines that applying this

17 section to such individuals is not necessary to carry out

18 the purposes of this section.’’

19 (b) CLERICAL AMENDMENT.—The table of sections

20 for such subpart A is amended by inserting after the item

21 relating to section 6039E the following new item:

‘‘Sec. 6039F. Information on individuals losing United States citizenship.’’

22 (c) EFFECTIVE DATE.—The amendments made by

23 this section shall apply to—
845

•HR 2491 RH

1 (1) individuals losing United States citizenship

2 (within the meaning of section 877 of the Internal

3 Revenue Code of 1986) after the date of the enact4 ment of this Act, and

5 (2) long-term residents of the United States

6 with respect to whom an event described in subpara7 graph (A) or (B) of section 877(e)(1) of such Code

8 occurs after such date.

9 SEC. 13618. REPORT ON TAX COMPLIANCE BY UNITED

10 STATES CITIZENS AND RESIDENTS LIVING

11 ABROAD.

12 Not later than 90 days after the date of the enact13 ment of this Act, the Secretary of the Treasury shall pre14 pare and submit to the Committee on Ways and Means

15 of the House of Representatives and the Committee on

16 Finance of the Senate a report—

17 (1) describing the compliance with subtitle A of

18 the Internal Revenue Code of 1986 by citizens and

19 lawful permanent residents of the United States

20 (within the meaning of section 7701(b)(6) of such

21 Code) residing outside the United States, and

22 (2) recommending measures to improve such

23 compliance (including improved coordination be24 tween executive branch agencies).
846

•HR 2491 RH

1 PART IV—REFORMS RELATING TO ENERGY

2 PROVISIONS

3 SEC. 13621. TERMINATION OF CREDIT FOR ELECTRICITY

4 PRODUCED FROM CERTAIN RENEWABLE RE5 SOURCES.

6 (a) FACILITIES MUST BE PLACED IN SERVICE BE7 FORE SEPTEMBER 14, 1995.—Paragraph (3) of section

8 45(c) (defining qualified facility) is amended by striking

9 ‘‘July 1, 1999’’ and inserting ‘‘September 14, 1995’’.

10 (b) EFFECTIVE DATE.—

11 (1) IN GENERAL.—The amendment made by

12 this section shall apply to taxable years ending after

13 September 13, 1995.

14 (2) BINDING CONTRACTS.—The amendment

15 made by this section shall not apply to any facility—

16 (A) which is constructed or acquired by the

17 taxpayer pursuant to a written contract which

18 was binding on September 13, 1995, and at all

19 times thereafter before such construction or ac20 quisition, and

21 (B) which is placed in service before Sep22 tember 14, 1996.

23 SEC. 13622. REDUCTION OF INCENTIVES FOR ALCOHOL

24 FUELS.

25 (a) DENIAL OF CREDIT FOR ALCOHOL USED TO

26 PRODUCE ETHER.—Subsection (b) of section 40 is
847

•HR 2491 RH

1 amended by adding at the end the following new para2 graph:

3 ‘‘(6) DENIAL OF CREDIT FOR ALCOHOL USED

4 TO PRODUCE ETHER.—No credit shall be allowed

5 under this section for alcohol used to produce any

6 ether.’’

7 (b) LIMITATION ON ALCOHOL ELIGIBLE FOR CREDIT

8 FOR ALCOHOL USED AS FUEL—

9 (1) IN GENERAL.—Subparagraph (A) of section

10 40(d)(1) (defining alcohol) is amended by striking

11 ‘‘or’’ at the end of clause (i), by striking the period

12 at the end of clause (ii) and inserting ‘‘, or’’, and

13 by adding at the end the following new clause:

14 ‘‘(iii) alcohol produced by a still (or

15 other distilling apparatus) placed in service

16 after September 13, 1995.’’

17 (2) FUTURE CREDIT LIMITED TO AVERAGE HIS18 TORICAL PRODUCTION.—Section 40 is amended by

19 adding at the end the following new subsection:

20 ‘‘(i) EXPANDED PRODUCTION INELIGIBLE FOR

21 CREDIT.—

22 ‘‘(1) IN GENERAL.—Subsection (a) shall apply

23 to alcohol produced after December 31, 1995, only

24 if the alcohol is designated under this subsection by

25 a producer who is registered under section 4101.
848

•HR 2491 RH

1 ‘‘(2) DESIGNATION BASED ON HISTORICAL PRO2 DUCTION.—The amount of alcohol produced by a

3 producer during any calendar year which may be

4 designated under this subsection by any producer

5 other than an eligible small ethanol producer is the

6 amount equal to the average annual amount of alco7 hol (as defined in subsection (d)(1)(A) without re8 gard to clause (iii))—

9 ‘‘(A) which was produced by such producer

10 (other than casual off-farm production) during

11 the 3-year period ending on August 31, 1995,

12 and

13 ‘‘(B) which was sold or used by such pro14 ducer for any purpose described in clause (i) of

15 subsection (b)(4)(B).

16 For purposes of the preceding sentence, a rule simi17 lar to the rule of subsection (b)(4)(D) shall apply.

18 ‘‘(3) PRODUCTION FOR LESS THAN ENTIRE

19 BASE PERIOD.—

20 ‘‘(A) IN GENERAL.—If alcohol is produced

21 by a producer for less than the entire 3-year pe22 riod referred to in paragraph (2)(A), the aver23 age referred to in paragraph (2) shall be treat24 ed as being equal to 50 percent of the annual
849

•HR 2491 RH

1 productive capacity of such producer as of Sep2 tember 13, 1995.

3 ‘‘(B) PRODUCER MAY ESTABLISH HIGHER

4 AVERAGE PRODUCTION.—In the case of a pro5 ducer who produced alcohol during at least the

6 last 3 months of such 3-year period, subpara7 graph (A) shall be applied by substituting for

8 ‘50 percent’ the percentage established by such

9 producer to the satisfaction of the Secretary as

10 the percentage which such producer’s normal

11 alcohol production is of its productive capacity.

12 ‘‘(4) ACQUISITIONS AND DISPOSITIONS.—Rules

13 similar to the rules of subparagraphs (A) and (B) of

14 section 41(f)(3) shall apply for purposes of this sub15 section.’’

16 (3) CONFORMING AMENDMENT.—Paragraph (1)

17 of section 40(g) is amended by striking ‘‘clauses (i)

18 and (ii)’’ and inserting ‘‘clauses (i), (ii), and (iii)’’.

19 (c) REDUCTION OF CREDIT FOR ETHANOL BY REA20 SON OF CARBON DIOXIDE BYPRODUCT BENEFIT.—Sub21 section (h) of section 40 is amended—

22 (1) by striking ‘‘54 cents’’ each place it appears

23 and inserting ‘‘51 cents’’, and

24 (2) by striking ‘‘40 cents’’ each place it appears

25 and inserting ‘‘38.25 cents’’.
850

•HR 2491 RH

1 (d) CONFORMING REDUCTIONS OF OTHER INCEN2 TIVES FOR ETHANOL FUEL.—

3 (1) REPEAL OF REDUCED RATE ON ETHANOL

4 FUEL PRODUCED OTHER THAN FROM PETROLEUM

5 OR NATURAL GAS.—Subsection (b) of section 4041

6 is amended to read as follows:

7 ‘‘(b) EXEMPTION FOR OFF-HIGHWAY BUSINESS

8 USE.—

9 ‘‘(1) IN GENERAL.—No tax shall be imposed by

10 subsection (a) or (d)(1) on liquids sold for use or

11 used in an off-highway business use.

12 ‘‘(2) TAX WHERE OTHER USE.—If a liquid on

13 which no tax was imposed by reason of paragraph

14 (1) is used otherwise than in an off-highway busi15 ness use, a tax shall be imposed by paragraph

16 (1)(B), (2)(B), or (3)(A)(ii) of subsection (a)

17 (whichever is appropriate) and by the corresponding

18 provision of subsection (d)(1) (if any).

19 ‘‘(3) OFF-HIGHWAY BUSINESS USE DEFINED.—

20 For purposes of this subsection, the term ‘off-high21 way business use’ has the meaning given to such

22 term by section 6421(e)(2); except that such term

23 shall not, for purposes of subsection (a)(1), include

24 use in a diesel-powered train.’’
851

•HR 2491 RH

1 (2) REPEAL OF REDUCED RATE ON ETHANOL

2 FUEL PRODUCED FROM NATURAL GAS.—Subsection

3 (m) of section 4041 is amended—

4 (A) by striking ‘‘or ethanol’’ each place it

5 appears (including the heading of paragraph

6 (2)), and

7 (B) by striking ‘‘, ethanol, or other alco8 hol’’ in paragraph (2) and inserting ‘‘or other

9 alcohol (other than ethanol)’’.

10 (e) CONFORMING AMENDMENTS TO EXCISE TAXES;

11 FUEL ALCOHOL TAXED IN SAME MANNER AS OTHER

12 MOTOR FUELS.—

13 (1) IN GENERAL.—Paragraph (1) of section

14 4083(a) (defining taxable fuel) is amended by strik15 ing ‘‘and’’ at the end of subparagraph (A), by strik16 ing the period at the end of subparagraph (B) and

17 inserting ‘‘, and’’, and by adding at the end the fol18 lowing:

19 ‘‘(C) fuel alcohol.’’

20 (2) FUEL ALCOHOL.—Subsection (a) of section

21 4083 is amended by adding at the end the following

22 new paragraph:

23 ‘‘(4) FUEL ALCOHOL.—The term ‘fuel alcohol’

24 means any alcohol (including ethanol and meth25 anol)—
852

•HR 2491 RH

1 ‘‘(A) which is produced other than from

2 petroleum, natural gas, or coal (including peat),

3 and

4 ‘‘(B) which is withdrawn from the distillery

5 where produced free of tax under chapter 51 by

6 reason of section 5181 or so much of section

7 5214(a)(1) as relates to fuel use.

8 Such term shall not include alcohol designated under

9 section 40(i).’’

10 (3) RATE OF TAX.—Clause (i) of section

11 4081(a)(2)(A) is amended by inserting ‘‘or fuel alco12 hol’’ after ‘‘gasoline’’.

13 (4) SPECIAL RULES FOR IMPOSITION OF TAX.—

14 (A) Paragraph (1) of section 4081(a) is

15 amended by adding at the end the following

16 new subparagraph:

17 ‘‘(C) SPECIAL RULES FOR FUEL ALCO18 HOL.—In the case of fuel alcohol—

19 ‘‘(i) the distillery where produced shall

20 be treated as a refinery, and

21 ‘‘(ii) subparagraph (B) shall be ap22 plied by including transfers by truck or rail

23 in excess of such minimum quantities as

24 the Secretary shall prescribe.’’
853

•HR 2491 RH

1 (B) Paragraph (1) of section 4081(b) is

2 amended by inserting ‘‘(other than fuel alcohol

3 designated under section 40(i))’’ after ‘‘taxable

4 fuel’’.

5 (5) REPEAL OF REDUCED RATES ON ALCOHOL

6 FUELS.—

7 (A) Section 4041 is amended by striking

8 subsection (k).

9 (B) Section 4081 is amended by striking

10 subsection (c).

11 (C) Section 4091 is amended by striking

12 subsection (c).

13 (6) CONFORMING AMENDMENTS.—

14 (A) Subsection (c) of section 40 is amend15 ed by striking all that follows ‘‘application of’’

16 and inserting ‘‘the last sentence of section

17 4083(a)(4)’’.

18 (B) Paragraph (4) of section 40(d) is

19 amended to read as follows:

20 ‘‘(4) VOLUME OF ALCOHOL.—For purposes of

21 determining under subsection (a) the number of gal22 lons of alcohol with respect to which a credit is al23 lowable under subsection (a), the volume of alcohol

24 shall include the volume of any denaturant (includ25 ing gasoline) which is added under any formulas ap-
854

•HR 2491 RH

1 proved by the Secretary to the extent that such de2 naturants do not exceed 5 percent of the volume of

3 such alcohol (including denaturants).’’

4 (C) Paragraph (2) of section 4041(a) is

5 amended by adding at the end the following:

6 ‘‘No tax shall be imposed by this paragraph on

7 the sale or use of any liquid if tax was imposed

8 on such liquid under section 4081 and the tax

9 thereon was not credited or refunded.’’

10 (D) Section 6427 is amended by striking

11 subsection (f).

12 (E) Subsection (i) of section 6427 is

13 amended by striking paragraph (3).

14 (F) Paragraph (2) of section 6427(k) is

15 amended by striking ‘‘(3)’’.

16 (G)(i) Paragraph (1) of section 6427(l) is

17 amended by striking ‘‘or’’ at the end of sub18 paragraph (A), by redesignating subparagraph

19 (B) as subparagraph (C), and by inserting after

20 subparagraph (A) the following new subpara21 graph:

22 ‘‘(B) any fuel alcohol (as defined in section

23 4083) on which tax has been imposed by sec24 tion 4081, or’’.
855

•HR 2491 RH

1 (ii) Paragraph (2) of section 6427(l) is

2 amended by striking ‘‘and’’ at the end of sub3 paragraph (A), by redesignating subparagraph

4 (B) as subparagraph (C), and by inserting after

5 subparagraph (A) the following new subpara6 graph:

7 ‘‘(B) in the case of fuel alcohol (as so de8 fined), any use which is exempt from the tax

9 imposed by section 4041(a)(2) other than by

10 reason of a prior imposition of tax, and’’.

11 (iii) The heading of subsection (l) of sec12 tion 6427 is amended by inserting ‘‘, FUEL AL13 COHOL,’’ after ‘‘DIESEL FUEL’’.

14 (H) Sections 9503(b)(1)(E) and

15 9508(b)(2) are each amended by striking ‘‘and

16 kerosene’’ and inserting ‘‘kerosene, and fuel al17 cohol’’.

18 (I) Section 9502 is amended by striking

19 subsection (e) and by redesignating subsection

20 (f) as subsection (e).

21 (J) Subsection (e) of section 9502 (as re22 designated by subparagraph (I)) is amended by

23 striking paragraph (2) and by redesignating

24 paragraph (3) as paragraph (2).
856

•HR 2491 RH

1 (K) Subsection (b) of section 9503 is

2 amended by striking paragraph (5).

3 (L) Paragraph (3) of section 9503(f) is

4 amended to read as follows:

5 ‘‘(3) PARTIALLY EXEMPT METHANOL OR ETHA6 NOL FUEL.—In the case of a rate of tax determined

7 under section 4041(m), the Highway Trust Fund fi8 nancing rate is the excess (if any) of the rate so de9 termined over—

10 ‘‘(A) 5.55 cents per gallon after September

11 30, 1993, and before October 1, 1995, and

12 ‘‘(B) 4.3 cents per gallon after September

13 30, 1995.’’

14 (f) INCREASE IN SMALL ETHANOL PRODUCER CRED15 IT.—Subparagraph (A) of section 40(b)(4) is amended by

16 striking ‘‘10 cents’’ and inserting ‘‘13 cents’’.

17 (g) EFFECTIVE DATE.—

18 (1) AMENDMENTS RELATING TO CREDIT.—The

19 amendments made by subsections (a), (b), (c), and

20 (f) shall apply to alcohol produced after December

21 31, 1995, in taxable years ending after such date.

22 (2) AMENDMENTS RELATING TO EXCISE

23 TAXES.—The amendments made by subsections (d)

24 and (e) shall take effect on January 1, 1996.
857

•HR 2491 RH

1 (3) STILLS PLACED IN SERVICE PURSUANT TO

2 BINDING CONTRACTS.—For purposes of subsections

3 (d)(1)(A)(iii) and (i)(3)(A) of section 40 of the In4 ternal Revenue Code of 1986, as amended by this

5 section, a still (or other distilling apparatus) shall be

6 treated as placed in service before September 14,

7 1995, if such still (or other apparatus)—

8 (A) is constructed or acquired by the tax9 payer pursuant to a written contract which was

10 binding on September 13, 1995, and at all

11 times thereafter before such construction or ac12 quisition, and

13 (B) is placed in service before September

14 14, 1996.

15 (h) FLOOR STOCK TAXES.—

16 (1) IMPOSITION OF TAX.—In the case of fuel al17 cohol which is held on January 1, 1996, by any per18 son, there is hereby imposed a floor stocks tax of

19 18.4 cents per gallon.

20 (2) LIABILITY FOR TAX AND METHOD OF PAY21 MENT.—

22 (A) LIABILITY FOR TAX.—A person hold23 ing fuel alcohol on January 1, 1996, to which

24 the tax imposed by paragraph (1) applies shall

25 be liable for such tax.
858

•HR 2491 RH

1 (B) METHOD OF PAYMENT.—The tax im2 posed by paragraph (1) shall be paid in such

3 manner as the Secretary shall prescribe.

4 (C) TIME FOR PAYMENT.—The tax im5 posed by paragraph (1) shall be paid on or be6 fore June 30, 1996.

7 (3) DEFINITIONS.—For purposes of this sub8 section—

9 (A) FUEL ALCOHOL.—The term ‘‘fuel alco10 hol’’ has the meaning given such term by sec11 tion 4083 of the Internal Revenue Code of

12 1986, as amended by this section.

13 (B) HELD BY A PERSON.—Fuel alcohol

14 shall be considered as ‘‘held by a person’’ if

15 title thereto has passed to such person (whether

16 or not delivery to the person has been made).

17 (C) SECRETARY.—The term ‘‘Secretary’’

18 means the Secretary of the Treasury or his del19 egate.

20 (4) EXCEPTION FOR EXEMPT USES.—The tax

21 imposed by paragraph (1) shall not apply to fuel al22 cohol held by any person exclusively for any use to

23 the extent a credit or refund of the tax imposed by

24 section 4081 of the Internal Revenue Code of 1986

25 is allowable for such use.
859

•HR 2491 RH

1 (5) EXCEPTION FOR FUEL HELD IN VEHICLE

2 TANK.—No tax shall be imposed by paragraph (1)

3 on fuel alcohol held in the tank of a motor vehicle

4 or motorboat.

5 (6) EXCEPTION FOR CERTAIN AMOUNTS OF

6 FUEL.—

7 (A) IN GENERAL.—No tax shall be im8 posed by paragraph (1) on fuel alcohol held on

9 January 1, 1996, by any person if the aggre10 gate amount of fuel alcohol held by such person

11 on such date does not exceed 2,000 gallons.

12 The preceding sentence shall apply only if such

13 person submits to the Secretary (at the time

14 and in the manner required by the Secretary)

15 such information as the Secretary shall require

16 for purposes of this paragraph.

17 (B) EXEMPT FUEL.—For purposes of sub18 paragraph (A), there shall not be taken into ac19 count fuel held by any person which is exempt

20 from the tax imposed by paragraph (1) by rea21 son of paragraph (4) or (5).

22 (C) CONTROLLED GROUPS.—For purposes

23 of this paragraph—

24 (i) CORPORATIONS.—
860

•HR 2491 RH

1 (I) IN GENERAL.—All persons

2 treated as a controlled group shall be

3 treated as 1 person.

4 (II) CONTROLLED GROUP.—The

5 term ‘‘controlled group’’ has the

6 meaning given to such term by sub7 section (a) of section 1563 of such

8 Code; except that for such purposes

9 the phrase ‘‘more than 50 percent’’

10 shall be substituted for the phrase ‘‘at

11 least 80 percent’’ each place it ap12 pears in such subsection.

13 (ii) NONINCORPORATED PERSONS

14 UNDER COMMON CONTROL.—Under regula15 tions prescribed by the Secretary, prin16 ciples similar to the principles of clause (i)

17 shall apply to a group of persons under

18 common control where 1 or more of such

19 persons is not a corporation.

20 (7) OTHER LAWS APPLICABLE.—All provisions

21 of law, including penalties, applicable with respect to

22 the taxes imposed by section 4081 of such Code

23 shall, insofar as applicable and not inconsistent with

24 the provisions of this subsection, apply with respect

25 to the floor stock taxes imposed by paragraph (1) to
861

•HR 2491 RH

1 the same extent as if such taxes were imposed by

2 such section 4081.

3 SEC. 13623. EXCLUSION FOR ENERGY CONSERVATION SUB4 SIDIES LIMITED TO SUBSIDIES WITH RE5 SPECT TO DWELLING UNITS.

6 (a) IN GENERAL.—Paragraph (1) of section 136(c)

7 (defining energy conservation measure) is amended by

8 striking ‘‘energy demand—’’ and all that follows and in9 serting ‘‘energy demand with respect to a dwelling unit.’’

10 (b) CONFORMING AMENDMENTS.—

11 (1) Subsection (a) of section 136 is amended to

12 read as follows:

13 ‘‘(a) EXCLUSION.—Gross income shall not include

14 the value of any subsidy provided (directly or indirectly)

15 by a public utility to a customer for the purchase or instal16 lation of any energy conservation measure.’’

17 (2) Paragraph (2) of section 136(c) is amend18 ed—

19 (A) by striking subparagraph (A) and by

20 redesignating subparagraphs (B) and (C) as

21 subparagraphs (A) and (B), respectively, and

22 (B) by striking ‘‘AND SPECIAL RULES’’ in

23 the paragraph heading.

24 (c) EFFECTIVE DATE.—The amendments made by

25 this section shall apply to amounts received after Septem-
862

•HR 2491 RH

1 ber 13, 1995, unless received pursuant to a written bind2 ing contract in effect on September 13, 1995, and at all

3 times thereafter.

4 PART V—REFORMS RELATING TO

5 NONRECOGNITION PROVISIONS

6 SEC. 13626. BASIS ADJUSTMENT TO PROPERTY HELD BY

7 CORPORATION WHERE STOCK IN CORPORA8 TION IS REPLACEMENT PROPERTY UNDER

9 INVOLUNTARY CONVERSION RULES.

10 (a) IN GENERAL.—Subsection (b) of section 1033 is

11 amended to read as follows:

12 ‘‘(b) BASIS OF PROPERTY ACQUIRED THROUGH IN13 VOLUNTARY CONVERSION.—

14 ‘‘(1) CONVERSIONS DESCRIBED IN SUBSECTION

15 (a)(1).—If the property was acquired as the result

16 of a compulsory or involuntary conversion described

17 in subsection (a)(1), the basis shall be the same as

18 in the case of the property so converted—

19 ‘‘(A) decreased in the amount of any

20 money received by the taxpayer which was not

21 expended in accordance with the provisions of

22 law (applicable to the year in which such con23 version was made) determining the taxable sta24 tus of the gain or loss upon such conversion,

25 and
863

•HR 2491 RH

1 ‘‘(B) increased in the amount of gain or

2 decreased in the amount of loss to the taxpayer

3 recognized upon such conversion under the law

4 applicable to the year in which such conversion

5 was made.

6 ‘‘(2) CONVERSIONS DESCRIBED IN SUBSECTION

7 (a)(2).—In the case of property purchased by the

8 taxpayer in a transaction described in subsection

9 (a)(2) which resulted in the nonrecognition of any

10 part of the gain realized as the result of a compul11 sory or involuntary conversion, the basis shall be the

12 cost of such property decreased in the amount of the

13 gain not so recognized; and if the property pur14 chased consists of more than 1 piece of property, the

15 basis determined under this sentence shall be allo16 cated to the purchased properties in proportion to

17 their respective costs.

18 ‘‘(3) PROPERTY HELD BY CORPORATION THE

19 STOCK OF WHICH IS REPLACEMENT PROPERTY.—

20 ‘‘(A) IN GENERAL.—If the basis of stock

21 in a corporation is decreased under paragraph

22 (2), an amount equal to such decrease shall also

23 be applied to reduce the basis of property held

24 by the corporation at the time the taxpayer ac-
864

•HR 2491 RH

1 quired control (as defined in subsection

2 (a)(2)(E)) of such corporation.

3 ‘‘(B) LIMITATION.—Subparagraph (A)

4 shall not apply to the extent that it would (but

5 for this subparagraph) require a reduction in

6 the aggregate adjusted bases of the property of

7 the corporation below the taxpayer’s adjusted

8 basis of the stock in the corporation (deter9 mined immediately after such basis is decreased

10 under paragraph (2)).

11 ‘‘(C) ALLOCATION OF BASIS REDUCTION.—

12 The decrease required under subparagraph (A)

13 shall be allocated—

14 ‘‘(i) first to property which is similar

15 or related in service or use to the converted

16 property,

17 ‘‘(ii) second to depreciable property

18 (as defined in section 1017(b)(3)(B)) not

19 described in clause (i), and

20 ‘‘(iii) then to other property.

21 ‘‘(D) SPECIAL RULES.—

22 ‘‘(i) REDUCTION NOT TO EXCEED AD23 JUSTED BASIS OF PROPERTY.—No reduc24 tion in the basis of any property under this

25 paragraph shall exceed the adjusted basis
865

•HR 2491 RH

1 of such property (determined without re2 gard to such reduction).

3 ‘‘(ii) ALLOCATION OF REDUCTION

4 AMONG PROPERTIES.—If more than 1

5 property is described in a clause of sub6 paragraph (C), the reduction under this

7 paragraph shall be allocated among such

8 property in proportion to the adjusted

9 bases of such property (determined without

10 regard to such reduction).’’

11 (b) EFFECTIVE DATE.—The amendment made by

12 this section shall apply to involuntary conversions occur13 ring after September 13, 1995.

14 SEC. 13627. EXPANSION OF REQUIREMENT THAT INVOLUN15 TARILY CONVERTED PROPERTY BE RE16 PLACED WITH PROPERTY ACQUIRED FROM

17 AN UNRELATED PERSON.

18 (a) IN GENERAL.—Subsection (i) of section 1033 is

19 amended to read as follows:

20 ‘‘(i) REPLACEMENT PROPERTY MUST BE ACQUIRED

21 FROM UNRELATED PERSON IN CERTAIN CASES.—

22 ‘‘(1) IN GENERAL.—If the property which is in23 voluntarily converted is held by a taxpayer to which

24 this subsection applies, subsection (a) shall not apply

25 if the replacement property or stock is acquired from
866

•HR 2491 RH

1 a related person. The preceding sentence shall not

2 apply to the extent that the related person acquired

3 the replacement property or stock from an unrelated

4 person during the period applicable under subsection

5 (a)(2)(B).

6 ‘‘(2) TAXPAYERS TO WHICH SUBSECTION AP7 PLIES.—This subsection shall apply to—

8 ‘‘(A) a C corporation,

9 ‘‘(B) a partnership in which 1 or more C

10 corporations own, directly or indirectly (deter11 mined in accordance with section 707(b)(3)),

12 more than 50 percent of the capital interest, or

13 profits interest, in such partnership at the time

14 of the involuntary conversion, and

15 ‘‘(C) any other taxpayer if, with respect to

16 property which is involuntarily converted during

17 the taxable year, the aggregate of the amount

18 of realized gain on such property on which

19 there is realized gain exceeds $100,000.

20 In the case of a partnership, subparagraph (C) shall

21 apply with respect to the partnership and with re22 spect to each partner. A similar rule shall apply in

23 the case of an S corporation and its shareholders.

24 ‘‘(3) RELATED PERSON.—For purposes of this

25 subsection, a person is related to another person if
867

•HR 2491 RH

1 the person bears a relationship to the other person

2 described in section 267(b) or 707(b)(1).’’

3 (b) EFFECTIVE DATE.—The amendment made by

4 this section shall apply to involuntary conversions occur5 ring after September 13, 1995.

6 SEC. 13628. NO ROLLOVER OR EXCLUSION OF GAIN ON

7 SALE OF PRINCIPAL RESIDENCE WHICH IS

8 ATTRIBUTABLE TO DEPRECIATION DEDUC9 TIONS.

10 (a) IN GENERAL.—Subsection (d) of section 1034

11 (relating to limitations) is amended by adding at the end

12 the following new paragraph:

13 ‘‘(3) RECOGNITION OF GAIN ATTRIBUTABLE TO

14 DEPRECIATION.—Subsection (a) shall not apply to

15 so much of the gain from the sale of any residence

16 as does not exceed the portion of the depreciation

17 adjustments (as defined in section 1250(b)(3)) at18 tributable to periods after December 31, 1995, in re19 spect of such residence.’’

20 (b) COMPARABLE TREATMENT UNDER 1-TIME EX21 CLUSION OF GAIN ON SALE OF PRINCIPAL RESIDENCE.—

22 Subsection (d) of section 121 is amended by adding at

23 the end the following new paragraph:

24 ‘‘(10) RECOGNITION OF GAIN ATTRIBUTABLE

25 TO DEPRECIATION.—
868

•HR 2491 RH

1 ‘‘(A) IN GENERAL.—Subsection (a) shall

2 not apply to so much of the gain from the sale

3 of any property as does not exceed the portion

4 of the depreciation adjustments (as defined in

5 section 1250(b)(3)) attributable to periods after

6 December 31, 1995, in respect of such prop7 erty.

8 ‘‘(B) COORDINATION WITH PARAGRAPH

9 (5).—If this section does not apply to gain at10 tributable to a portion of a residence by reason

11 of paragraph (5), subparagraph (A) shall not

12 apply to depreciation adjustments attributable

13 to such portion.’’

14 (c) EFFECTIVE DATE.—The amendments made by

15 this section shall apply to taxable years ending after De16 cember 31, 1995.

17 SEC. 13629. NONRECOGNITION OF GAIN ON SALE OF PRIN18 CIPAL RESIDENCE BY NONCITIZENS LIMITED

19 TO NEW RESIDENCES LOCATED IN THE UNIT20 ED STATES.

21 (a) IN GENERAL.—Subsection (d) of section 1034

22 (relating to limitations) (as amended by section 13628)

23 is amended by adding at the end the following new para24 graph:
869

•HR 2491 RH

1 ‘‘(4) NEW RESIDENCE MUST BE LOCATED IN

2 UNITED STATES IN CERTAIN CASES.—

3 ‘‘(A) IN GENERAL.—In the case of a sale

4 of an old residence by a taxpayer—

5 ‘‘(i) who is not a citizen of the United

6 States at the time of sale, and

7 ‘‘(ii) who is not a citizen or resident

8 of the United States on the date which is

9 2 years after the date of the sale of such

10 old residence,

11 subsection (a) shall apply only if the new resi12 dence is located in the United States or a pos13 session of the United States.

14 ‘‘(B) PROPERTY HELD JOINTLY BY HUS15 BAND AND WIFE.—Subparagraph (A) shall not

16 apply if—

17 ‘‘(i) the old residence is held by a hus18 band and wife as joint tenants, tenants by

19 the entirety, or community property,

20 ‘‘(ii) such husband and wife make a

21 joint return for the taxable year of the sale

22 or exchange, and

23 ‘‘(iii) one spouse is a citizen of the

24 United States at the time of sale.’’

25 (b) EFFECTIVE DATE.—
870

•HR 2491 RH

1 (1) IN GENERAL.—The amendment made by

2 this section shall apply to sales of old residences

3 after December 31, 1995.

4 (2) TREATMENT OF PURCHASES OF NEW RESI5 DENCES.—The amendment made by this section

6 shall not apply to new residences—

7 (A) purchased before September 13, 1995,

8 or

9 (B) purchased on or after such date pursu10 ant to a binding contract in effect on such date

11 and at all times thereafter before such pur12 chase.

13 (3) CERTAIN RULES TO APPLY.—For purposes

14 of this subsection, the rules of paragraphs (1), (2),

15 and (3) of section 1034(c) of the Internal Revenue

16 Code of 1986 shall apply.

17 PART VI—REFORMS RELATING TO GAMING

18 ACTIVITIES

19 SEC. 13631. TREATMENT OF INDIAN GAMING ACTIVITIES

20 UNDER UNRELATED BUSINESS INCOME TAX.

21 (a) IN GENERAL.—Paragraph (2) of section 511(a)

22 (relating to imposition of tax on unrelated business income

23 of charitable, etc., organizations) is amended by adding

24 at the end the following new subparagraph:
871

•HR 2491 RH

1 ‘‘(C) GAMING ACTIVITIES OF INDIAN

2 TRIBES.—

3 ‘‘(i) IN GENERAL.—The tax imposed

4 by paragraph (1) shall apply to any Indian

5 tribal organization; except that, notwith6 standing any other provision of this part,

7 in the case of such an organization, the

8 term ‘unrelated trade or business’ means

9 only a trade or business of conducting any

10 class II or class III gaming activity (as de11 fined in section 4 of the Indian Gaming

12 Regulatory Act (25 U.S.C. 2701 et seq.),

13 as in effect on the date of the enactment

14 of this subparagraph), including a gaming

15 activity described in section 513(a)(1).

16 ‘‘(ii) INDIAN TRIBAL ORGANIZA17 TION.—For purposes of clause (i), the

18 term ‘Indian tribal organization’ means

19 any Indian tribe and any organization

20 which is immune or exempt from tax under

21 this subtitle solely by reason of being

22 owned or controlled by an Indian tribe.’’

23 (b) TREATMENT OF AMOUNTS PAID FOR CHARI24 TABLE PURPOSES, ETC., BY REASON OF STATE OR FED-
872

•HR 2491 RH

1 ERAL LAW.—Subsection (b) of section 512 is amended by

2 adding at the end the following new paragraph:

3 ‘‘(17) In the case of an Indian tribal organiza4 tion (as defined in section 511(a)(3)), if, by reason

5 of State or Federal law or of a contract with the

6 United States or with any State or political subdivi7 sion thereof, such organization is required to use

8 any portion of the net proceeds of any gaming activ9 ity for specified purposes, the deduction for so using

10 such proceeds shall be treated as allowed under sec11 tion 170 for purposes of applying paragraph (10).

12 The preceding sentence shall not apply to such pro13 ceeds which are paid as general revenues to the

14 United States or to any State or political subdivision

15 thereof.’’

16 (c) EFFECTIVE DATE.—The amendments made by

17 this section shall take effect on January 1, 1996.

18 (d) STUDY OF GAMBLING CONDUCTED BY TAX-EX19 EMPT ORGANIZATIONS.—The Secretary of the Treasury or

20 his delegate shall conduct a study on the nature and ex21 tent of gaming activities conducted by organizations ex22 empt from tax under section 501(a) of the Internal Reve23 nue Code of 1986, including an examination of—

24 (1) the types of gaming activities (including

25 bingo, pull tabs, and casino nights) engaged in by
873

•HR 2491 RH

1 charities and other nonprofit organizations and the

2 frequency of such activities;

3 (2) the dollar volume of such gaming activities;

4 (3) the nature and extent of the involvement of

5 for-profit entities and private parties in the manage6 ment or operation of gaming activities of such orga7 nizations;

8 (4) competition between taxable gaming activi9 ties and gaming activities that are exempt from Fed10 eral income tax; and

11 (5) an analysis of the present law tax treatment

12 of gaming activities of tax-exempt organizations.

13 The study may include any recommendations for change,

14 including examination of the South End decision and the

15 special exception for bingo games. The Secretary shall

16 submit the results of the study to the Committee on Ways

17 and Means of the House of Representatives and the Com18 mittee on Finance of the Senate not later than July 1,

19 1996.

20 SEC. 13632. REPEAL OF TARGETED EXEMPTION FROM TAX

21 ON UNRELATED TRADE OR BUSINESS IN22 COME FROM GAMBLING IN CERTAIN STATES.

23 (a) IN GENERAL.—Section 311 of the Tax Reform

24 Act of 1984 is hereby repealed.
874

•HR 2491 RH

1 (b) EFFECTIVE DATE.—The amendment made by

2 subsection (a) shall apply to games of chance conducted

3 after December 31, 1995, in taxable years ending after

4 such date.

5 SEC. 13633. EXTENSION OF WITHHOLDING TO CERTAIN

6 GAMBLING WINNINGS.

7 (a) REPEAL OF EXEMPTION FOR BINGO AND

8 KENO.—Paragraph (5) of section 3402(q) is amended to

9 read as follows:

10 ‘‘(5) EXEMPTION FOR SLOT MACHINES.—The

11 tax imposed under paragraph (1) shall not apply to

12 winnings from a slot machine.’’

13 (b) THRESHOLD AMOUNT.—Paragraph (3) of section

14 3402(q) is amended—

15 (1) by striking ‘‘(B) and (C)’’ in subparagraph

16 (A) and inserting ‘‘(B), (C), and (D)’’, and

17 (2) by adding at the end the following new sub18 paragraph:

19 ‘‘(D) BINGO AND KENO.—Proceeds of

20 more than $5,000 from a wager placed in a

21 bingo or keno game.’’

22 (c) EFFECTIVE DATE.—The amendments made by

23 this section shall take effect on January 1, 1996.
875

•HR 2491 RH

1 PART VII—OTHER REFORMS

2 SEC. 13636. SUNSET OF LOW-INCOME HOUSING CREDIT.

3 (a) REPEAL OF REALLOCATION OF UNUSED CRED4 ITS AMONG STATES.—Subparagraph (D) of section

5 42(h)(3) is amended by adding at the end the following

6 new clause:

7 ‘‘(v) TERMINATION.—No amount may

8 be allocated under this paragraph for any

9 calendar year after 1995.’’

10 (b) TERMINATION.—Section 42 is amended by add11 ing at the end the following new subsection:

12 ‘‘(o) TERMINATION.—

13 ‘‘(1) IN GENERAL.—Except as provided in para14 graph (2)—

15 ‘‘(A) clause (i) of subsection (h)(3)(C)

16 shall not apply to any amount allocated after

17 December 31, 1997, and

18 ‘‘(B) subsection (h)(4) shall not apply to

19 any building placed in service after such date.

20 ‘‘(2) EXCEPTION FOR BOND-FINANCED BUILD21 INGS IN PROGRESS.—For purposes of paragraph

22 (1)(B), a building shall be treated as placed in serv23 ice before January 1, 1998, if—

24 ‘‘(A) the bonds with respect to such build25 ing are issued before such date,
876

•HR 2491 RH

1 ‘‘(B) the taxpayer’s basis in the project (of

2 which the building is a part) as of December

3 31, 1997, is more than 10 percent of the tax4 payer’s reasonably expected basis in such

5 project as of December 31, 1999, and

6 ‘‘(C) such building is placed in service be7 fore January 1, 2000.’’

8 SEC. 13637. REPEAL OF CREDIT FOR CONTRIBUTIONS TO

9 COMMUNITY DEVELOPMENT CORPORATIONS.

10 (a) IN GENERAL.—Section 13311 of the Revenue

11 Reconciliation Act of 1993 (relating to credit for contribu12 tions to certain community development corporations) is

13 hereby repealed.

14 (b) EFFECTIVE DATE.—The amendment made by

15 subsection (a) shall apply to contributions made after the

16 date of the enactment of this Act (other than contributions

17 made pursuant to a legally enforceable agreement which

18 is effect on the date of the enactment of this Act).

19 SEC. 13638. REPEAL OF DIESEL FUEL TAX REBATE TO PUR20 CHASERS OF DIESEL-POWERED AUTO21 MOBILES AND LIGHT TRUCKS.

22 (a) IN GENERAL.—Section 6427 is amended by strik23 ing subsection (g).

24 (b) CONFORMING AMENDMENTS.—
877

•HR 2491 RH

1 (1) Paragraph (3) of section 34(a) is amended

2 to read as follows:

3 ‘‘(3) under section 6427 with respect to fuels

4 used for nontaxable purposes or resold during the

5 taxable year (determined without regard to section

6 6427(k)).’’

7 (2) Paragraphs (1) and (2)(A) of section

8 6427(i) are each amended—

9 (A) by striking ‘‘(g),’’, and

10 (B) by striking ‘‘(or a qualified diesel pow11 ered highway vehicle purchased)’’ each place it

12 appears.

13 (c) EFFECTIVE DATE.—The amendments made by

14 this section shall apply to vehicles purchased after Decem15 ber 31, 1995.

16 SEC. 13639. APPLICATION OF FAILURE-TO-PAY PENALTY TO

17 SUBSTITUTE RETURNS.

18 (a) GENERAL RULE.—Section 6651 (relating to fail19 ure to file tax return or to pay tax) is amended by adding

20 at the end the following new subsection:

21 ‘‘(g) TREATMENT OF RETURNS PREPARED BY SEC22 RETARY UNDER SECTION 6020(b).—In the case of any

23 return made by the Secretary under section 6020(b)—
878

•HR 2491 RH

1 ‘‘(1) such return shall be disregarded for pur2 poses of determining the amount of the addition

3 under paragraph (1) of subsection (a), but

4 ‘‘(2) such return shall be treated as the return

5 filed by the taxpayer for purposes of determining the

6 amount of the addition under paragraphs (2) and

7 (3) of subsection (a).’’

8 (b) EFFECTIVE DATE.—The amendment made by

9 subsection (a) shall apply in the case of any return the

10 due date for which (determined without regard to exten11 sions) is after the date of the enactment of this Act.

12 SEC. 13640. REPEAL OF SPECIAL RULE FOR RENTAL USE OF

13 VACATION HOMES, ETC., FOR LESS THAN 15

14 DAYS.

15 (a) IN GENERAL.—Section 280A (relating to dis16 allowance of certain expenses in connection with business

17 use of home, rental of vacation homes, etc.) is amended

18 by striking subsection (g).

19 (b) NO BASIS REDUCTION UNLESS DEPRECIATION

20 CLAIMED.—Section 1016 is amended by redesignating

21 subsection (e) as subsection (f) and by inserting after sub22 section (d) the following new subsection:

23 ‘‘(e) SPECIAL RULE WHERE RENTAL USE OF VACA24 TION HOME, ETC., FOR LESS THAN 15 DAYS.—If a dwell25 ing unit is used during the taxable year by the taxpayer
879

•HR 2491 RH

1 as a residence and such dwelling unit is actually rented

2 for less than 15 days during the taxable year, the reduc3 tion under subsection (a)(2) by reason of such rental use

4 in any taxable year beginning after December 31, 1995,

5 shall not exceed the depreciation deduction allowed for

6 such rental use.’’

7 (c) EFFECTIVE DATE.—The amendments made by

8 this section shall apply to taxable years beginning after

9 December 31, 1995.

10 SEC. 13641. ELECTION TO CEASE STATUS AS QUALIFIED

11 SCHOLARSHIP FUNDING CORPORATION.

12 (a) IN GENERAL.—Subsection (d) of section 150 (re13 lating to definitions and special rules) is amended by add14 ing at the end thereof the following new paragraph:

15 ‘‘(3) ELECTION TO CEASE STATUS AS QUALI16 FIED SCHOLARSHIP FUNDING CORPORATION.—

17 ‘‘(A) IN GENERAL.—Any qualified scholar18 ship funding bond, and qualified student loan

19 bond, outstanding on the date of the issuer’s

20 election under this paragraph (and any bond

21 (or series of bonds) issued to refund such a

22 bond) shall not fail to be a tax-exempt bond

23 solely because the issuer ceases to be described

24 in subparagraphs (A) and (B) of paragraph (2)
880

•HR 2491 RH

1 if the issuer meets the requirements of subpara2 graphs (B) and (C) of this paragraph.

3 ‘‘(B) ASSETS AND LIABILITIES OF ISSUER

4 TRANSFERRED TO TAXABLE SUBSIDIARY.—The

5 requirements of this subparagraph are met by

6 an issuer if—

7 ‘‘(i) all of the student loan notes of

8 the issuer and other assets pledged to se9 cure the repayment of qualified scholarship

10 funding bond indebtedness of the issuer

11 are transferred to another corporation

12 within a reasonable period after the elec13 tion is made under this paragraph;

14 ‘‘(ii) such transferee corporation as15 sumes or otherwise provides for the pay16 ment of all of the qualified scholarship

17 funding bond indebtedness of the issuer

18 within a reasonable period after the elec19 tion is made under this paragraph;

20 ‘‘(iii) to the extent permitted by law,

21 such transferee corporation assumes all of

22 the responsibilities, and succeeds to all of

23 the rights, of the issuer under the issuer’s

24 agreements with the Secretary of Edu25 cation in respect of student loans;
881

•HR 2491 RH

1 ‘‘(iv) immediately after such transfer,

2 the issuer, together with any other issuer

3 which has made an election under this

4 paragraph in respect of such transferee,

5 hold all of the senior stock in such trans6 feree corporation; and

7 ‘‘(v) such transferee corporation is not

8 exempt from tax under this chapter.

9 ‘‘(C) ISSUER TO OPERATE AS INDEPEND10 ENT ORGANIZATION DESCRIBED IN SECTION

11 501(c)(3).—The requirements of this subpara12 graph are met by an issuer if, within a reason13 able period after the transfer referred to in sub14 paragraph (B)—

15 ‘‘(i) the issuer is described in section

16 501(c)(3) and exempt from tax under sec17 tion 501(a);

18 ‘‘(ii) the issuer no longer is described

19 in subparagraphs (A) and (B) of para20 graph (2); and

21 ‘‘(iii) at least 80 percent of the mem22 bers of the board of directors of the issuer

23 are independent members.
882

•HR 2491 RH

1 ‘‘(D) SENIOR STOCK.—For purposes of

2 this paragraph, the term ‘senior stock’ means

3 stock—

4 ‘‘(i) which participates pro rata and

5 fully in the equity value of the corporation

6 with all other common stock of the cor7 poration but which has the right to pay8 ment of liquidation proceeds prior to pay9 ment of liquidation proceeds in respect of

10 other common stock of the corporation;

11 ‘‘(ii) which has a fixed right upon liq12 uidation and upon redemption to an

13 amount equal to the greater of—

14 ‘‘(I) the fair market value of such

15 stock on the date of liquidation or re16 demption (whichever is applicable); or

17 ‘‘(II) the fair market value of all

18 assets transferred in exchange for

19 such stock and reduced by the amount

20 of all liabilities of the corporation

21 which has made an election under this

22 paragraph assumed by the transferee

23 corporation in such transfer;

24 ‘‘(iii) the holder of which has the right

25 to require the transferee corporation to re-
883

•HR 2491 RH

1 deem on a date that is not later than 10

2 years after the date on which an election

3 under this paragraph was made and pursu4 ant to such election such stock was issued;

5 and

6 ‘‘(iv) in respect of which, during the

7 time such stock is outstanding, there is not

8 outstanding any equity interest in the cor9 poration having any liquidation, redemp10 tion or dividend rights in the corporation

11 which are superior to those of such stock.

12 ‘‘(E) INDEPENDENT MEMBER.—The term

13 ‘independent member’ means a member of the

14 board of directors of the issuer who (except for

15 services as a member of such board) receives no

16 compensation directly or indirectly—

17 ‘‘(i) for services performed in connec18 tion with such transferee corporation, or

19 ‘‘(ii) for services as a member of the

20 board of directors or as an officer of such

21 transferee corporation.

22 For purposes of clause (ii), the term ‘officer’ in23 cludes any individual having powers or respon24 sibilities similar to those of officers.
884

•HR 2491 RH

1 ‘‘(F) COORDINATION WITH CERTAIN PRI2 VATE FOUNDATION TAXES.—For purposes of

3 sections 4942 (relating to the excise tax on a

4 failure to distribute income) and 4943 (relating

5 to the excise tax on excess business holdings),

6 the transferee corporation referred to in sub7 paragraph (B) shall be treated as a functionally

8 related business (within the meaning of section

9 4942(j)(4)) with respect to the issuer during

10 the period commencing with the date on which

11 an election is made under this paragraph and

12 ending on the date that is the earlier of—

13 ‘‘(i) the last day of the last taxable

14 year for which more than 50 percent of the

15 gross income of such transferee corpora16 tion is derived from, or more than 50 per17 cent of the assets (by value) of such trans18 feree corporation consists of, student loan

19 notes incurred under the Higher Education

20 Act of 1965; or

21 ‘‘(ii) the last day of the taxable year

22 of the issuer during which occurs the date

23 which is 10 years after the date on which

24 the election under this paragraph is made.
885

•HR 2491 RH

1 ‘‘(G) ELECTION.—An election under this

2 paragraph may be revoked only with the con3 sent of the Secretary.’’

4 (b) EFFECTIVE DATE.—The amendment made by

5 this section shall take effect on the date of the enactment

6 of this Act.

7 SEC. 13642. CERTAIN AMOUNTS DERIVED FROM FOREIGN

8 CORPORATIONS TREATED AS UNRELATED

9 BUSINESS TAXABLE INCOME.

10 (a) GENERAL RULE.—Subsection (b) of section 512

11 (relating to modifications) is amended by adding at the

12 end thereof the following new paragraph:

13 ‘‘(18) TREATMENT OF CERTAIN AMOUNTS DE14 RIVED FROM FOREIGN CORPORATIONS.—

15 ‘‘(A) IN GENERAL.—Notwithstanding para16 graph (1), any amount included in gross income

17 under section 951(a)(1)(A) shall be included as

18 an item of gross income derived from an unre19 lated trade or business to the extent the

20 amount so included is attributable to insurance

21 income (as defined in section 953) which, if de22 rived directly by the organization, would be

23 treated as gross income from an unrelated

24 trade or business. There shall be allowed all de25 ductions directly connected with amounts in-
886

•HR 2491 RH

1 cluded in gross income under the preceding sen2 tence.

3 ‘‘(B) EXCEPTION.—Subparagraph (A)

4 shall not apply to income attributable to a pol5 icy of insurance or reinsurance with respect to

6 which the person (directly or indirectly) insured

7 is—

8 ‘‘(i) such organization,

9 ‘‘(ii) an affiliate of such organization

10 which is exempt from tax under section

11 501(a), or

12 ‘‘(iii) a director, officer, or employee

13 of such organization or affiliate but only if

14 the insurance covers solely risks associated

15 with the performance of services for the

16 benefit of such organization or affiliate.

17 ‘‘(C) REGULATIONS.—The Secretary shall

18 prescribe such regulations as may be necessary

19 or appropriate to carry out the purposes of this

20 paragraph, including regulations for the appli21 cation of this paragraph in the case of income

22 paid through 1 or more entities or between 2 or

23 more chains of entities.’’

24 (b) EFFECTIVE DATE.—The amendment made by

25 this section shall apply to amounts included in gross in-
887

•HR 2491 RH

1 come in any taxable year beginning after December 31,

2 1995.

3 PART VIII—EXCISE TAX ON AMOUNTS OF

4 PRIVATE EXCESS BENEFITS

5 SEC. 13646. EXCISE TAXES FOR FAILURE BY CERTAIN

6 CHARITABLE ORGANIZATIONS TO MEET CER7 TAIN QUALIFICATION REQUIREMENTS.

8 (a) IN GENERAL.—Chapter 42 (relating to private

9 foundations and certain other tax-exempt organizations)

10 is amended by redesignating subchapter D as subchapter

11 E and by inserting after subchapter C the following new

12 subchapter:

13 ‘‘Subchapter D—Failure By Certain

14 Charitable Organizations To

15 Meet Certain Qualification Re16 quirements

‘‘Sec. 4958. Taxes on excess benefit transactions.

17 ‘‘SEC. 4958. TAXES ON EXCESS BENEFIT TRANSACTIONS.

18 ‘‘(a) INITIAL TAXES.—

19 ‘‘(1) ON THE DISQUALIFIED PERSON.—There is

20 hereby imposed on each excess benefit transaction a

21 tax equal to 25 percent of the excess benefit. The

22 tax imposed by this paragraph shall be paid by any

23 disqualified person referred to in subsection (f)(1)

24 with respect to such transaction.
888

•HR 2491 RH

1 ‘‘(2) ON THE MANAGEMENT.—In any case in

2 which a tax is imposed by paragraph (1), there is

3 hereby imposed on the participation of any organiza4 tion manager in the excess benefit transaction,

5 knowing that it is such a transaction, a tax equal to

6 10 percent of the excess benefit, unless such partici7 pation is not willful and is due to reasonable cause.

8 The tax imposed by this paragraph shall be paid by

9 any organization manager who participated in the

10 excess benefit transaction.

11 ‘‘(b) ADDITIONAL TAX ON THE DISQUALIFIED PER12 SON.—In any case in which an initial tax is imposed by

13 subsection (a)(1) on an excess benefit transaction and the

14 excess benefit involved in such transaction is not corrected

15 within the taxable period, there is hereby imposed a tax

16 equal to 200 percent of the excess benefit involved. The

17 tax imposed by this subsection shall be paid by any dis18 qualified person referred to in subsection (f)(1) with re19 spect to such transaction.

20 ‘‘(c) EXCESS BENEFIT TRANSACTION; EXCESS BEN21 EFIT.—For purposes of this section—

22 ‘‘(1) EXCESS BENEFIT TRANSACTION.—

23 ‘‘(A) IN GENERAL.—The term ‘excess ben24 efit transaction’ means any transaction in

25 which an economic benefit is provided by an ap-
889

•HR 2491 RH

1 plicable tax-exempt organization directly or in2 directly to or for the use of any disqualified

3 person if the value of the economic benefit pro4 vided exceeds the value of the consideration (in5 cluding the performance of services) received

6 for providing such benefit. For purposes of the

7 preceding sentence, an economic benefit shall

8 not be treated as consideration for the perform9 ance of services unless such organization clearly

10 indicated its intent to so treat such benefit.

11 ‘‘(B) EXCESS BENEFIT.—The term ‘excess

12 benefit’ means the excess referred to in sub13 paragraph (A).

14 ‘‘(2) AUTHORITY TO INCLUDE CERTAIN OTHER

15 PRIVATE INUREMENT.—To the extent provided in

16 regulations prescribed by the Secretary, the term

17 ‘excess benefit transaction’ includes any transaction

18 in which the amount of any economic benefit pro19 vided to or for the use of a disqualified person is de20 termined in whole or in part by the revenues of 1

21 or more activities of the organization but only if

22 such transaction results in inurement not permitted

23 under paragraph (3) or (4) of section 501(c), as the

24 case may be. In the case of any such transaction,
890

•HR 2491 RH

1 the excess benefit shall be the amount of the

2 inurement not so permitted.

3 ‘‘(d) SPECIAL RULES.—For purposes of this sec4 tion—

5 ‘‘(1) JOINT AND SEVERAL LIABILITY.—If more

6 than 1 person is liable for any tax imposed by sub7 section (a) or subsection (b), all such persons shall

8 be jointly and severally liable for such tax.

9 ‘‘(2) LIMIT FOR MANAGEMENT.—With respect

10 to any 1 excess benefit transaction, the maximum

11 amount of the tax imposed by subsection (a)(2) shall

12 not exceed $10,000.

13 ‘‘(e) APPLICABLE TAX-EXEMPT ORGANIZATION.—

14 For purposes of this subchapter, the term ‘applicable tax15 exempt organization’ means any organization which (with16 out regard to any excess benefit) would be described in

17 paragraph (3) or (4) of section 501(c) and exempt from

18 tax under section 501(a). Such term shall not include a

19 private foundation (as defined in section 509(a)).

20 ‘‘(f) OTHER DEFINITIONS.—For purposes of this sec21 tion—

22 ‘‘(1) DISQUALIFIED PERSON.—The term ‘dis23 qualified person’ means, with respect to any trans24 action—
891

•HR 2491 RH

1 ‘‘(A) any person who was, at any time dur2 ing the 5-year period ending on the date of

3 such transaction—

4 ‘‘(i) an organization manager, or

5 ‘‘(ii) an individual (other than an or6 ganization manager) in a position to exer7 cise substantial influence over the affairs

8 of the organization,

9 ‘‘(B) a member of the family of an individ10 ual described in subparagraph (A), and

11 ‘‘(C) a 35-percent controlled entity.

12 ‘‘(2) ORGANIZATION MANAGER.—The term ‘or13 ganization manager’ means, with respect to any ap14 plicable tax-exempt organization, any officer, direc15 tor, or trustee of such organization (or any individ16 ual having powers or responsibilities similar to those

17 of officers, directors, or trustees of the organiza18 tion).

19 ‘‘(3) 35-PERCENT CONTROLLED ENTITY.—

20 ‘‘(A) IN GENERAL.—The term ‘35-percent

21 controlled entity’ means—

22 ‘‘(i) a corporation in which persons

23 described in subparagraph (A) or (B) of

24 paragraph (1) own more than 35 percent

25 of the total combined voting power,
892

•HR 2491 RH

1 ‘‘(ii) a partnership in which such per2 sons own more than 35 percent of the

3 profits interest, and

4 ‘‘(iii) a trust or estate in which such

5 persons own more than 35 percent of the

6 beneficial interest.

7 ‘‘(B) CONSTRUCTIVE OWNERSHIP

8 RULES.—Rules similar to the rules of para9 graphs (3) and (4) of section 4946(a) shall

10 apply for purposes of this paragraph.

11 ‘‘(4) FAMILY MEMBERS.—The members of an

12 individual’s family shall be determined under section

13 4946(d); except that such members also shall in14 clude the brothers and sisters (whether by the whole

15 or half blood) of the individual and their spouses.

16 ‘‘(5) TAXABLE PERIOD.—The term ‘taxable pe17 riod’ means, with respect to any excess benefit

18 transaction, the period beginning with the date on

19 which the transaction occurs and ending on the ear20 liest of—

21 ‘‘(A) the date of mailing a notice of defi22 ciency under section 6212 with respect to the

23 tax imposed by subsection (a)(1), or

24 ‘‘(B) the date on which the tax imposed by

25 subsection (a)(1) is assessed.
893

•HR 2491 RH

1 ‘‘(6) CORRECTION.—The terms ‘correction’ and

2 ‘correct’ mean, with respect to any excess benefit

3 transaction, undoing the excess benefit to the extent

4 possible, and where fully undoing the excess benefit

5 is not possible, such additional corrective action as

6 is prescribed by the Secretary by regulations.

7 ‘‘(g) TREATMENT OF PREVIOUSLY EXEMPT ORGANI8 ZATIONS.—

9 ‘‘(1) IN GENERAL.—For purposes of this sec10 tion, the status of any organization as an applicable

11 tax-exempt organization shall be terminated only

12 if—

13 ‘‘(A)(i) such organization notifies the Sec14 retary (at such time and in such manner as the

15 Secretary may by regulations prescribe) of its

16 intent to accomplish such termination, or

17 ‘‘(ii) there is a final determination by the

18 Secretary that such status has terminated, and

19 ‘‘(B)(i) such organization pays the tax im20 posed by paragraph (2) (or any portion not

21 abated pursuant to paragraph (3)), or

22 ‘‘(ii) the entire amount of such tax is

23 abated pursuant to paragraph (3).
894

•HR 2491 RH

1 ‘‘(2) IMPOSITION OF TAX.—There is hereby im2 posed on each organization referred to in paragraph

3 (1) a tax equal to the lesser of—

4 ‘‘(A) the amount which the organization

5 substantiates by adequate records or other cor6 roborating evidence as the aggregate tax benefit

7 resulting from its exemption from tax under

8 section 501(a), or

9 ‘‘(B) the value of the net assets of such or10 ganization.

11 ‘‘(3) ABATEMENT OF TAX.—The Secretary may

12 abate the unpaid portion of the assessment of any

13 tax imposed by paragraph (2), or any liability in re14 spect thereof, if the applicable tax-exempt organiza15 tion distributes all of its net assets to 1 or more or16 ganizations each of which has been in existence, and

17 described in section 501(c)(3), for a continuous pe18 riod of at least 60 calendar months. If the distribut19 ing organization is described in section 501(c)(4),

20 the preceding sentence shall be applied by treating

21 the reference to section 501(c)(3) as including a ref22 erence to section 501(c)(4).

23 ‘‘(4) CERTAIN RULES MADE APPLICABLE.—

24 Rules similar to the rules of subsections (d), (e), and
895

•HR 2491 RH

1 (f) of section 507 shall apply for purposes of this

2 subsection.’’

3 (b) APPLICATION OF PRIVATE INUREMENT RULE TO

4 TAX-EXEMPT ORGANIZATIONS DESCRIBED IN SECTION

5 501(c)(4).—Paragraph (4) of section 501(c) is amended

6 by inserting ‘‘(A)’’ after ‘‘(4)’’ and by adding at the end

7 the following:

8 ‘‘(B) Subparagraph (A) shall not apply to an

9 entity unless no part of the net earnings of such en10 tity inures to the benefit of any private shareholder

11 or individual.’’

12 (c) TECHNICAL AND CONFORMING AMENDMENTS.—

13 (1) Subsection (e) of section 4955 is amend14 ed—

15 (A) by striking ‘‘SECTION 4945’’ in the

16 heading and inserting ‘‘SECTIONS 4945 and

17 4958’’, and

18 (B) by inserting before the period ‘‘or an

19 excess benefit for purposes of section 4958’’.

20 (2) Subsections (a), (b), and (c) of section 4963

21 are each amended by inserting ‘‘4958,’’ after

22 ‘‘4955,’’.

23 (3) Subsection (e) of section 6213 is amended

24 by inserting ‘‘4958 (relating to private excess bene25 fit),’’ before ‘‘4971’’.
896

•HR 2491 RH

1 (4) Paragraphs (2) and (3) of section 7422(g)

2 are each amended by inserting ‘‘4958,’’ after

3 ‘‘4955,’’.

4 (5) Subsection (b) of section 7454 is amended

5 by inserting ‘‘or whether an organization manager

6 (as defined in section 4958(f)(2)) has ‘knowingly’

7 participated in an excess benefit transaction (as de8 fined in section 4958(c)),’’ after ‘‘section 4912(b),’’.

9 (6) The table of subchapters for chapter 42 is

10 amended by striking the last item and inserting the

11 following:

‘‘Subchapter D. Failure by certain charitable organizations to

meet certain qualification requirements.

‘‘Subchapter E. Abatement of first and second tier taxes in certain cases.’’

12 (d) EFFECTIVE DATES.—

13 (1) IN GENERAL.—The amendments made by

14 this section (other than subsection (b)) shall apply

15 to excess benefit transactions occurring on or after

16 September 14, 1995.

17 (2) BINDING CONTRACTS FOR PERSONAL SERV18 ICES.—The amendments referred to in paragraph

19 (1) shall not apply to any transaction pursuant to

20 any written contract for the performance of personal

21 services which was binding on September 13, 1995,

22 and at all times thereafter before such transaction

23 occurred.
897

•HR 2491 RH

1 (3) APPLICATION OF PRIVATE INUREMENT

2 RULE TO TAX-EXEMPT ORGANIZATIONS DESCRIBED

3 IN SECTION 501(C)(4).—

4 (A) IN GENERAL.—The amendment made

5 by subsection (b) shall apply to inurement oc6 curring on or after September 14, 1995.

7 (B) BINDING CONTRACTS.—The amend8 ment made by subsection (b) shall not apply to

9 any inurement occurring before January 1,

10 1997, pursuant to a written contract which was

11 binding on September 13, 1995, and at all

12 times thereafter before such inurement oc13 curred.

14 SEC. 13647. REPORTING OF CERTAIN EXCISE TAXES AND

15 OTHER INFORMATION.

16 (a) REPORTING BY ORGANIZATIONS DESCRIBED IN

17 SECTION 501(c)(3).—Subsection (b) of section 6033 (re18 lating to certain organizations described in section

19 501(c)(3)) is amended by striking ‘‘and’’ at the end of

20 paragraph (9), by redesignating paragraph (10) as para21 graph (14), and by inserting after paragraph (9) the fol22 lowing new paragraphs:

23 ‘‘(10) the respective amounts (if any) of the

24 taxes paid by the organization during the taxable

25 year under the following provisions:
898

•HR 2491 RH

1 ‘‘(A) section 4911 (relating to tax on ex2 cess expenditures to influence legislation),

3 ‘‘(B) section 4912 (relating to tax on dis4 qualifying lobbying expenditures of certain or5 ganizations), and

6 ‘‘(C) section 4955 (relating to taxes on po7 litical expenditures of section 501(c)(3) organi8 zations),

9 ‘‘(11) the respective amounts (if any) of the

10 taxes paid by the organization or any disqualified

11 person during the taxable year under section 4958

12 (relating to taxes on private excess benefit from cer13 tain charitable organizations),

14 ‘‘(12) such information as the Secretary may

15 require with respect to any excess benefit trans16 action (as defined in section 4958),

17 ‘‘(13) the name of each disqualified person who

18 receives an economic benefit from an applicable tax19 exempt organization (as defined in section 4958(e))

20 and such other information as the Secretary may

21 prescribe with respect to such benefit, and’’.

22 (b) ORGANIZATIONS DESCRIBED IN SECTION

23 501(c)(4).—Section 6033 is amended by redesignating

24 subsection (f) as subsection (g) and by inserting after sub25 section (e) the following new subsection:
899

•HR 2491 RH

1 ‘‘(f) CERTAIN ORGANIZATIONS DESCRIBED IN SEC2 TION 501(c)(4).—Every organization described in section

3 501(c)(4) which is subject to the requirements of sub4 section (a) shall include on the return required under sub5 section (a) the information referred to in paragraphs (10),

6 (11), (12) and (13) of subsection (b) with respect to such

7 organization.’’

8 (c) EFFECTIVE DATE.—The amendments made by

9 this section shall apply to returns for taxable years begin10 ning after the date of the enactment of this Act.

11 SEC. 13648. EXEMPT ORGANIZATIONS REQUIRED TO PRO12 VIDE COPY OF RETURN.

13 (a) GENERAL RULE.—

14 (1) Subparagraph (A) of section 6104(e)(1) (re15 lating to public inspection of annual returns) is

16 amended to read as follows:

17 ‘‘(A) IN GENERAL.—During the 3-year pe18 riod beginning on the filing date—

19 ‘‘(i) a copy of the annual return filed

20 under section 6033 (relating to returns by

21 exempt organizations) by any organization

22 to which this paragraph applies shall be

23 made available by such organization for in24 spection during regular business hours by

25 any individual at the principal office of
900

•HR 2491 RH

1 such organization and, if such organization

2 regularly maintains 1 or more regional or

3 district offices having 3 or more employees,

4 at each such regional or district office, and

5 ‘‘(ii) upon request of an individual

6 made at such principal office or such a re7 gional or district office, a copy of such an8 nual return shall be provided to such indi9 vidual without charge other than a reason10 able fee for any reproduction and mailing

11 costs.

12 If the request under clause (ii) is made in per13 son, such copy shall be provided immediately

14 and, if made other than in person, shall be pro15 vided within 30 days.’’

16 (2) Clause (ii) of section 6104(e)(2)(A) is

17 amended by inserting before the period at the end

18 thereof the following: ‘‘(and, upon request of an in19 dividual made at such principal office or such a re20 gional or district office, a copy of the material re21 quired to be available for inspection under this sub22 paragraph shall be provided (in accordance with the

23 last sentence of paragraph (1)(A)) to such individual

24 without charge other than a reasonable fee for any

25 reproduction and mailing costs)’’.
901

•HR 2491 RH

1 (3) Subsection (e) of section 6104 is amended

2 by adding at the end the following new paragraph:

3 ‘‘(3) LIMITATION.—Paragraph (1)(A)(ii) (and

4 the corresponding provision of paragraph (2)) shall

5 not apply to any request if the Secretary determines,

6 upon application by an organization, that such re7 quest is part of a harassment campaign and that

8 compliance with such request is not in the public in9 terest.’’

10 (b) ADVERTISEMENTS ETC., REQUIRED TO DIS11 CLOSE AVAILABILITY OF ANNUAL RETURN.—

12 (1) Paragraph (1) of section 6104(e) is amend13 ed by adding at the end thereof the following new

14 subparagraph:

15 ‘‘(E) ADVERTISEMENTS ETC., REQUIRED

16 TO DISCLOSE AVAILABILITY OF ANNUAL RE17 TURN.—In the case of an organization required

18 by subparagraph (A) to provide a copy of its

19 annual return under section 6033 upon request

20 to individuals, each written advertisement or so21 licitation by (or on behalf of) such organization

22 shall contain an express statement (in a con23 spicuous and easily recognizable format) that

24 such return shall be provided to individuals

25 upon request.’’
902

•HR 2491 RH

1 (2) Section 6716, as added by section 13649 of

2 this title, is amended—

3 (A) by striking ‘‘section 6116’’ each place

4 it appears and inserting ‘‘section 6116 or sec5 tion 6104(e)(1)(E)’’,

6 (B) by striking ‘‘$1,000’’ in subsection (a)

7 and inserting ‘‘$1,000 ($100 in the case of a

8 failure to meet the requirements of

9 6104(e)(1)(E))’’, and

10 (C) by inserting before the period at the

11 end of the section heading ‘‘; FAILURE OF

12 CERTAIN EXEMPT ORGANIZATIONS TO DIS13 CLOSE AVAILABILITY OF ANNUAL RE14 TURN’’.

15 (3) Subparagraph (C) of section 6652(c)(1) is

16 amended by striking ‘‘(e)(1)’’ and inserting ‘‘(e)(1)

17 (other than subparagraph (E))’’, by striking ‘‘$10’’

18 and inserting ‘‘$20’’, and by striking ‘‘$5,000’’ and

19 inserting ‘‘$10,000’’.

20 (4) Subparagraph (D) of section 6652(c)(1) is

21 amended by striking ‘‘$10’’ and inserting ‘‘$20’’.

22 (5) The item relating to section 6716 in the

23 table of sections for part I of subchapter B of chap24 ter 68 is amended by inserting before the period ‘‘;
903

•HR 2491 RH

1 failure of certain exempt organizations to disclose

2 availability of annual return’’.

3 (c) INCREASE IN PENALTY FOR WILLFUL FAILURE

4 TO ALLOW PUBLIC INSPECTION OF CERTAIN RETURNS,

5 ETC.—Section 6685 is amended by striking ‘‘$1,000’’ and

6 inserting ‘‘$5,000’’.

7 (d) COPIES OF RETURNS OF EXEMPT ORGANIZA8 TIONS AVAILABLE FROM SECRETARY IN CERTAIN

9 CASES.—Subsection (b) of section 6104 is amended to

10 read as follows:

11 ‘‘(b) INSPECTION OF ANNUAL INFORMATION RE12 TURNS.—

13 ‘‘(1) IN GENERAL.—The information required

14 to be furnished by sections 6033, 6034, and 6058,

15 together with the names and addresses of such orga16 nizations and trusts, shall be made available to the

17 public at such times and in such places as the Sec18 retary may prescribe. Nothing in this subsection

19 shall authorize the Secretary to disclose the name or

20 address of any contributor to any organization or

21 trust (other than a private foundation, as defined in

22 section 509(a)) which is required to furnish such in23 formation.

24 ‘‘(2) COPIES PROVIDED OF RETURNS FILED

25 UNDER SECTION 6033 AND APPLICATIONS FILED
904

•HR 2491 RH

1 UNDER SECTION 508 IN CERTAIN CASES.—The Sec2 retary shall provide copies of returns filed under sec3 tion 6033 and applications for exemption filed under

4 section 508 by any organization to which subsection

5 (d) or (e)(1) applies to any person who agrees (sub6 ject to such conditions as the Secretary shall pre7 scribe)—

8 ‘‘(A) to accept broad categories of such re9 turns and applications, and

10 ‘‘(B) to provide electronic access to the

11 provided returns and applications on an elec12 tronic network available to the general public.

13 Such copies shall be provided without charge if such

14 person agrees to provide such access without charge.

15 Otherwise, the Secretary may impose a reasonable

16 fee for any reproduction and mailing costs.

17 ‘‘(3) RETURNS AND APPLICATIONS FILED BE18 FORE 1996.—Paragraph (2) shall apply to returns

19 and applications filed before January 1, 1996, only

20 to the extent provided by the Secretary.’’

21 (e) EFFECTIVE DATE.—The amendments made by

22 this section shall take effect on January 1, 1996 (or, if

23 later, the 90th day after the date of the enactment of this

24 Act).
905

•HR 2491 RH

1 SEC. 13649. CERTAIN ORGANIZATIONS REQUIRED TO DIS2 CLOSE NONEXEMPT STATUS.

3 (a) GENERAL RULE.—Subchapter B of chapter 61

4 (relating to miscellaneous provisions) is amended by redes5 ignating section 6116 as section 6117 and by inserting

6 after section 6115 the following new section:

7 ‘‘SEC. 6116. CERTAIN ORGANIZATIONS REQUIRED TO DIS8 CLOSE NONEXEMPT STATUS.

9 ‘‘(a) IN GENERAL.—If—

10 ‘‘(1) in an advertisement or solicitation by (or

11 on behalf of) an organization, such organization is

12 referred to as being nonprofit, and

13 ‘‘(2) such organization is not exempt from tax

14 under subtitle A,

15 such advertisement or solicitation shall contain an express

16 statement (in a conspicuous and easily recognizable for17 mat) that such organization is not exempt from Federal

18 income taxes.

19 ‘‘(b) CROSS REFERENCE.—

‘‘For penalties for violation of subsection (a), see

section 6716.’’

20 (b) PENALTY.—Part I of subchapter B of chapter 68

21 is amended by adding at the end thereof the following new

22 section:
906

•HR 2491 RH

1 ‘‘SEC. 6716. FAILURE TO DISCLOSE NONEXEMPT STATUS.

2 ‘‘(a) IMPOSITION OF PENALTY.—If there is a failure

3 to meet the requirements of section 6116 with respect to

4 any advertisement or solicitation by (or on behalf of) an

5 organization, such organization shall pay a penalty of

6 $1,000 for each day on which such a failure occurred. The

7 maximum penalty imposed under this subsection on fail8 ures by any organization during any calendar year shall

9 not exceed $10,000.

10 ‘‘(b) REASONABLE CAUSE EXEMPTION.—No penalty

11 shall be imposed under this section with respect to any

12 failure if it is shown that such failure is due to reasonable

13 cause.

14 ‘‘(c) $10,000 LIMITATION NOT TO APPLY WHERE

15 INTENTIONAL DISREGARD.—If any failure to which sub16 section (a) applies is due to intentional disregard of the

17 requirements of section 6116—

18 ‘‘(1) the penalty under subsection (a) for the

19 day on which failure occurred shall be the greater

20 of—

21 ‘‘(A) $1,000, or

22 ‘‘(B) 50 percent of the aggregate cost of

23 the advertisements and solicitations which oc24 curred on such day and with respect to which

25 there was such failure,
907

•HR 2491 RH

1 ‘‘(2) the $10,000 limitation of subsection (a)

2 shall not apply to any penalty under subsection (a)

3 for the day on which such failure occurred, and

4 ‘‘(3) such penalty shall not be taken into ac5 count in applying such limitation to other penalties

6 under subsection (a).

7 ‘‘(d) DAY ON WHICH FAILURE OCCURS.—For pur8 poses of this section, rules similar to the rules of section

9 6710(d) shall apply in determining the day on which any

10 failure occurs.’’

11 (c) CLERICAL AMENDMENTS.—

12 (1) The table of sections for subchapter B of

13 chapter 61 is amended by striking the item relating

14 to section 6116 and inserting the following:

‘‘Sec. 6116. Certain organizations required to disclose

nonexempt status.

‘‘Sec. 6117. Cross reference.’’

15 (2) The table of sections of part I of subchapter

16 B of chapter 68 is amended by adding at the end

17 thereof the following new item:

‘‘Sec. 6716. Failure to disclose nonexempt status.’’

18 (d) EFFECTIVE DATE.—The amendments made by

19 this section shall take effect on January 1, 1996 (or, if

20 later, the 90th day after the date of the enactment of this

21 Act).
908

•HR 2491 RH

1 SEC. 13650. INCREASE IN PENALTIES ON EXEMPT ORGANI2 ZATIONS FOR FAILURE TO FILE COMPLETE

3 AND TIMELY ANNUAL RETURNS.

4 (a) IN GENERAL.—Subparagraph (A) of section

5 6652(c)(1) (relating to annual returns under section

6 6033) is amended by striking ‘‘$10’’ and inserting ‘‘$20’’

7 and by striking ‘‘$5,000’’ and inserting ‘‘$10,000’’.

8 (b) LARGER PENALTY ON ORGANIZATIONS HAVING

9 GROSS RECEIPTS IN EXCESS OF $1,000,000.—Subpara10 graph (A) of section 6652(c)(1) is amended by adding at

11 the end the following new sentence: ‘‘In the case of an

12 organization having gross receipts exceeding $1,000,000

13 for any year, with respect to the return required under

14 section 6033 for such year, the first sentence of this sub15 paragraph shall be applied by substituting ‘$100’ for ‘$20’

16 and, in lieu of applying the second sentence of this sub17 paragraph, the maximum penalty under this subparagraph

18 shall not exceed $50,000.’’

19 (c) EFFECTIVE DATE.—The amendments made by

20 this section shall apply to returns for taxable years ending

21 on or after December 31, 1995.

22 SEC. 13651. STUDIES.

23 (a) IN GENERAL.—The Secretary of the Treasury or

24 his delegate shall conduct a study of—

25 (1) whether the statutory prohibition on private

26 inurement, and the provisions of section 4958 of the
909

•HR 2491 RH

1 Internal Revenue Code of 1986 (as added by this

2 part), should apply to other tax-exempt organiza3 tions,

4 (2) whether State officials responsible for

5 overseeing charitable organizations should be pro6 vided with Federal tax information in addition to the

7 information available under section 6103 of such

8 Code for purposes of such oversight, and

9 (3) whether the return required to be filed by

10 section 6033 of such Code should be modified to as11 sure the return’s utility to such Secretary and to the

12 public and to reduce any unnecessary reporting bur13 dens.

14 (b) REPORT.—Not later than January 1, 1997, the

15 report of such study shall be submitted to the Committee

16 on Ways and Means of the House of Representatives and

17 the Committee on Finance of the Senate.

18 Subtitle G—Reform of the Earned

19 Income Tax Credit

20 SEC. 13701. REPEAL OF EARNED INCOME CREDIT FOR INDI21 VIDUALS WITHOUT QUALIFYING CHILDREN;

22 MODIFICATIONS TO CREDIT PHASEOUT.

23 (a) REPEAL OF CREDIT FOR INDIVIDUALS WITHOUT

24 CHILDREN.—Subparagraph (A) of section 32(c)(1) (defin25 ing eligible individual) is amended to read as follows:
910

•HR 2491 RH

1 ‘‘(A) IN GENERAL.—The term ‘eligible in2 dividual’ means any individual who has a quali3 fying child for the taxable year.’’

4 (b) MODIFICATIONS TO PHASEOUT.—

5 (1) Subsection (b) of section 32 is amended to

6 read as follows:

7 ‘‘(b) PERCENTAGES.—

8 ‘‘(1) IN GENERAL.—The credit percentage and

9 the phaseout percentage shall be determined as

10 follows:

‘‘In the case of an eligible individual with:The credit percentage

is:

The phaseout percentage

is:

1 qualifying child ..................... 34 ............................. 18

2 or more qualifying children .. 40 ............................. 23

11 ‘‘(2) AMOUNTS.—The earned income amount

12 and the phaseout amount shall be determined as

13 follows:

‘‘In the case of an eligible individual with:The earned income

amount is: The phaseout amount is:

1 qualifying child ..................... $6,340 ...................... $11,630

2 or more qualifying children .. $8,910 ...................... $11,630.’’

14 (2) Subsection (j) of section 32 is amended—

15 (A) by striking ‘‘subsection (b)(2)(A)’’ and

16 inserting ‘‘subsection (b)(2)’’,

17 (B) by striking ‘‘1994’’ and inserting

18 ‘‘1996’’, and

19 (C) by striking ‘‘1993’’ and inserting

20 ‘‘1995’’.
911

•HR 2491 RH

1 (c) EFFECTIVE DATE.—The amendments made by

2 this section shall apply to taxable years beginning after

3 December 31, 1995.

4 SEC. 13702. MODIFICATION OF ADJUSTED GROSS INCOME

5 USED FOR PHASEOUT.

6 (a) IN GENERAL.—Subsections (a)(2)(B), (c)(1)(C),

7 and (f)(2)(B) of section 32 are each amended by striking

8 ‘‘adjusted gross income’’ each place it appears and insert9 ing ‘‘modified adjusted gross income’’.

10 (b) MODIFIED ADJUSTED GROSS INCOME.—Sub11 section (c) of section 32 is amended by adding at the end

12 the following new paragraph:

13 ‘‘(5) MODIFIED ADJUSTED GROSS INCOME.—

14 For purposes of this section, the term ‘modified ad15 justed gross income’ means adjusted gross income

16 increased by—

17 ‘‘(A) any amount received as a pension or

18 annuity, and any distribution or payment re19 ceived from an individual retirement plan, by

20 the taxpayer during the taxable year to the ex21 tent not otherwise included in gross income,

22 and

23 ‘‘(B) the social security benefits (as de24 fined in section 86(d)) received by the taxpayer
912

•HR 2491 RH

1 during the taxable year to the extent not in2 cluded in gross income.

3 Any amount which is not includible in gross income

4 by reason of paragraph (3), (4), or (5) of section

5 408(d) or section 402(c), 403(a)(4), 403(b)(8), or

6 457(e)(10) shall be treated as not described in sub7 paragraph (A).’’

8 (c) EFFECTIVE DATE.—The amendments made by

9 this section shall apply to taxable years beginning after

10 December 31, 1995.

11 SEC. 13703. EARNED INCOME TAX CREDIT DENIED TO INDI12 VIDUALS NOT AUTHORIZED TO BE EM13 PLOYED IN THE UNITED STATES.

14 (a) IN GENERAL.—Section 32(c)(1) (relating to indi15 viduals eligible to claim the earned income tax credit) is

16 amended by adding at the end the following new subpara17 graph:

18 ‘‘(F) IDENTIFICATION NUMBER REQUIRE19 MENT.—The term ‘eligible individual’ does not

20 include any individual who does not include on

21 the return of tax for the taxable year—

22 ‘‘(i) such individual’s taxpayer identi23 fication number, and

24 ‘‘(ii) if the individual is married (with25 in the meaning of section 7703), the tax-
913

•HR 2491 RH

1 payer identification number of such indi2 vidual’s spouse.’’

3 (b) SPECIAL IDENTIFICATION NUMBER.—Section 32

4 is amended by adding at the end the following new sub5 section:

6 ‘‘(l) IDENTIFICATION NUMBERS.—Solely for pur7 poses of subsections (c)(1)(F) and (c)(3)(D), a taxpayer

8 identification number means a social security number is9 sued to an individual by the Social Security Administra10 tion (other than a social security number issued pursuant

11 to clause (II) (or that portion of clause (III) that relates

12 to clause (II)) of section 205(c)(2)(B)(i) of the Social Se13 curity Act).’’

14 (c) EXTENSION OF PROCEDURES APPLICABLE TO

15 MATHEMATICAL OR CLERICAL ERRORS.—Section

16 6213(g)(2) (relating to the definition of mathematical or

17 clerical errors) is amended by striking ‘‘and’ at the end

18 of subparagraph (D), by striking the period at the end

19 of subparagraph (E) and inserting a comma, and by in20 serting after subparagraph (E) the following new subpara21 graphs:

22 ‘‘(F) an omission of a correct taxpayer

23 identification number required under section 32

24 (relating to the earned income tax credit) to be

25 included on a return, and
914

•HR 2491 RH

1 ‘‘(G) an entry on a return claiming the

2 credit under section 32 with respect to net

3 earnings from self-employment described in sec4 tion 32(c)(2)(A) to the extent the tax imposed

5 by section 1401 (relating to self-employment

6 tax) on such net earnings has not been paid.’’

7 (d) EFFECTIVE DATE.—The amendments made by

8 this section shall apply to taxable years beginning after

9 December 31, 1995.

10 Subtitle H—Increase in Public

11 Debt Limit

12 SEC. 13801. INCREASE IN PUBLIC DEBT LIMIT.

13 Subsection (b) of section 3101 of title 31, United

14 States Code, is amended by striking the dollar amount

15 contained therein and inserting ‘‘$5,500,000,000,000’’.

16 Subtitle I—Coal Industry Retiree

17 Health Equity

18 SEC. 13901. REPEAL OF REACHBACK PROVISIONS OF COAL

19 INDUSTRY HEALTH BENEFIT SYSTEM.

20 (a) AMENDMENTS RELATED TO DEFINITIONS.—

21 (1) AGREEMENTS.—

22 (A) IN GENERAL.—Paragraph (1) of sec23 tion 9701(b) (relating to agreements) is amend24 ed to read as follows:

25 ‘‘(1) COAL WAGE AGREEMENTS.—
915

•HR 2491 RH

1 ‘‘(A) 1988 AGREEMENT.—The term ‘1988

2 agreement’ means the collective bargaining

3 agreement between the settlors which became

4 effective on February 1, 1988.

5 ‘‘(B) COAL WAGE AGREEMENT.—The term

6 ‘coal wage agreement’ means any predecessor to

7 the 1988 agreement.’’

8 (B) CONFORMING AMENDMENT.—Section

9 9701(b) is amended by striking paragraph (3).

10 (2) OPERATORS.—

11 (A) SIGNATORY OPERATOR.—Paragraph

12 (1) of section 9701(c) (relating to operators) is

13 amended to read as follows:

14 ‘‘(1) SIGNATORY OPERATOR.—The term ‘signa15 tory operator’ means a 1988 agreement operator.’’

16 (B) 1988 AGREEMENT OPERATOR.—Para17 graph (3) of section 9701(c) is amended to read

18 as follows:

19 ‘‘(3) 1988 AGREEMENT OPERATOR.—The term

20 ‘1988 agreement operator’ means—

21 ‘‘(A) an operator which was a signatory to

22 the 1988 agreement, or

23 ‘‘(B) a person in business which, during

24 the term of the 1988 agreement, was a signa25 tory to an agreement (other than the National
916

•HR 2491 RH

1 Coal Mine Construction Agreement and the

2 Coal Haulers’ Agreement) containing pension

3 and health care contribution and benefit provi4 sions which are the same as those contained in

5 the 1988 agreement.

6 Such term shall not include any operator who was

7 assessed, and did pay the full amount of, contractual

8 withdrawal liability to the 1950 UMWA Benefit

9 Plan, the 1974 UMWA Benefit Plan, or the Com10 bined Fund.’’

11 (C) LAST SIGNATORY OPERATOR.—Section

12 9701(c)(4) is amended by inserting ‘‘bitu13 minous’’ before ‘‘coal’’ each place it appears.

14 (b) COMBINED BENEFIT FUND.—Section 9702(b)(1)

15 is amended to read as follows:

16 ‘‘(b) BOARD OF TRUSTEES.—

17 ‘‘(1) IN GENERAL.—For purposes of subsection

18 (a), the board of trustees for the Combined Fund

19 shall be appointed as follows:

20 ‘‘(A) two individuals who represent employ21 ers in the coal mining industry shall be des22 ignated by the BCOA;

23 ‘‘(B) two individuals designated by the

24 United Mine Workers of America; and
917

•HR 2491 RH

1 ‘‘(C) three persons selected by the persons

2 appointed under subparagraphs (A) and (B).’’

3 (c) ASSIGNMENT OF ELIGIBLE BENEFICIARIES.—

4 Subsection (a) of section 9706 is amended by adding at

5 the end the following new flush sentence:

6 ‘‘For purposes of assessing premiums on or after October

7 1, 1995, under this chapter, the Commissioner of Social

8 Security shall, effective October 1, 1995, revoke all assign9 ments previously made (and shall make no further assign10 ments and shall terminate all unpaid liabilities for any

11 pending assignments) to all persons other than signatory

12 operators and shall deem each affected coal industry re13 tiree who is an eligible beneficiary to be an unassigned

14 beneficiary under section 9706. The preceding sentence

15 shall not be construed to prevent any transfer, or any

16 treatment of a successor as an assigned operator, under

17 subsection (b)(2).’’

18 (d) 1992 UMWA BENEFIT PLAN.—Section 9712(d)

19 is amended—

20 (1) by striking paragraph (3) and by redesig21 nating paragraphs (4), (5), and (6) as paragraphs

22 (3), (4), and (5), respectively, and

23 (2) by striking ‘‘or last signatory operator de24 scribed in paragraph (3),’’ in paragraph (3) (as re25 designated under paragraph (1)).
918

•HR 2491 RH

1 (e) INFORMATION REQUIREMENTS.—

2 (1) IN GENERAL.—Subsection (h) of section

3 9704 is amended by adding at the end the following

4 new paragraph:

5 ‘‘(2) INFORMATION TO CONTRIBUTORS.—

6 ‘‘(A) IN GENERAL.—The trustees of the

7 Combined Fund shall, within 30 days of a writ8 ten request, make available to any person re9 quired to make contributions to the Combined

10 Fund, or their agent—

11 ‘‘(i) all documents which reflect its fi12 nancial and operational status, including

13 documents under which it is operated, and

14 ‘‘(ii) all documents prepared at the re15 quest of the trustees or staff of the Com16 bined Fund which form the basis for any

17 of its actions or reports, including the eli18 gibility of participants in predecessor

19 plans.

20 ‘‘(B) FEES.—The trustees may charge rea21 sonable fees (not in excess of actual expenses)

22 for providing documents under this paragraph.’’

23 (2) CONFORMING AMENDMENT.—Subsection (h)

24 of section 9704 is amended by striking ‘‘(h) INFOR25 MATION.—The’’ and inserting the following:
919

•HR 2491 RH

1 ‘‘(h) INFORMATION.—

2 ‘‘(1) INFORMATION TO SECRETARY.—The’’.

3 (f) EFFECTIVE DATE.—The amendments made by

4 this section shall apply to plan years beginning after Sep5 tember 30, 1995.

6 TITLE XIV—COMMITTEE ON

7 WAYS AND MEANS—TAX SIM8 PLIFICATION

9 SEC. 14001. SHORT TITLE; AMENDMENT TO 1986 CODE.

10 (a) SHORT TITLE.—This title may be cited as the

11 ‘‘Tax Simplification Act of 1995’’.

12 (b) AMENDMENT OF 1986 CODE.—Except as other13 wise expressly provided, whenever in this title an amend14 ment or repeal is expressed in terms of an amendment

15 to, or repeal of, a section or other provision, the reference

16 shall be considered to be made to a section or other provi17 sion of the Internal Revenue Code of 1986.

18 (c) TABLE OF CONTENTS.—The table of contents for

19 this title is as follows:

TITLE XIV—COMMITTEE ON WAYS AND MEANS—TAX

SIMPLIFICATION

Sec. 14001. Short title; amendment to 1986 Code.

Subtitle A—Provisions Relating to Individuals

PART I—PROVISIONS RELATING TO ROLLOVER OF GAIN ON SALE OF

PRINCIPAL RESIDENCE

Sec. 14101. Multiple sales within rollover period.

Sec. 14102. Special rules in case of divorce.

Sec. 14103. One-time exclusion of gain from sale of principal residence for certain spouses.
920

•HR 2491 RH

PART II—OTHER PROVISIONS

Sec. 14111. Payment of tax by commercially acceptable means.

Sec. 14112. Simplified foreign tax credit limitation for individuals.

Sec. 14113. Treatment of personal transactions by individuals under foreign

currency rules.

Sec. 14114. Treatment of certain reimbursed expenses of rural mail carriers.

Sec. 14115. Exclusion of combat pay from withholding limited to amount excludable from gross income.

Sec. 14116. Treatment of traveling expenses of certain Federal employees engaged in criminal investigations.

Subtitle B—Pension Simplification

PART I—SIMPLIFIED DISTRIBUTION RULES

Sec. 14201. Repeal of 5-year income averaging for lump-sum distributions.

Sec. 14202. Repeal of $5,000 exclusion of employees’ death benefits.

Sec. 14203. Simplified method for taxing annuity distributions under certain

employer plans.

Sec. 14204. Required distributions.

PART II—INCREASED ACCESS TO PENSION PLANS

Sec. 14211. Modifications of simplified employee pensions.

Sec. 14212. State and local governments and tax-exempt organizations eligible

under section 401(k).

PART III—NONDISCRIMINATION PROVISIONS

Sec. 14221. Definition of highly compensated employees.

Sec. 14222. Repeal of family aggregation rules.

Sec. 14223. Modification of additional participation requirements.

Sec. 14224. Nondiscrimination rules for qualified cash or deferred arrangements and matching contributions.

PART IV—MISCELLANEOUS SIMPLIFICATION

Sec. 14231. Treatment of leased employees.

Sec. 14232. Plans covering self-employed individuals.

Sec. 14233. Elimination of special vesting rule for multiemployer plans.

Sec. 14234. Distributions under rural cooperative plans.

Sec. 14235. Treatment of governmental plans under section 415.

Sec. 14236. Uniform retirement age.

Sec. 14237. Uniform penalty provisions to apply to certain pension reporting

requirements.

Sec. 14238. Contributions on behalf of disabled employees.

Sec. 14239. Treatment of deferred compensation plans of State and local governments and tax-exempt organizations.

Sec. 14240. Trust requirement for deferred compensation plans of State and

local governments.

Sec. 14241. Transition rule for computing maximum benefits under section 415

limitations.

Sec. 14242. Multiple salary reduction agreements permitted under section

403(b).

Sec. 14243. Waiver of minimum period for joint and survivor annuity explanation before annuity starting date.
921

•HR 2491 RH

Sec. 14244. Repeal of limitation in case of defined benefit plan and defined

contribution plan for same employee.

Sec. 14245. Date for adoption of plan amendments.

Subtitle C—Treatment of Large Partnerships

PART I—GENERAL PROVISIONS

Sec. 14301. Simplified flow-through for large partnerships.

Sec. 14302. Simplified audit procedures for large partnerships.

Sec. 14303. Due date for furnishing information to partners of large partnerships.

Sec. 14304. Returns may be required on magnetic media.

Sec. 14305. Treatment of partnership items of individual retirement accounts.

Sec. 14306. Effective date.

PART II—PROVISIONS RELATED TO CERTAIN PARTNERSHIP PROCEEDINGS

Sec. 14311. Treatment of partnership items in deficiency proceedings.

Sec. 14312. Partnership return to be determinative of audit procedures to be

followed.

Sec. 14313. Provisions relating to statute of limitations.

Sec. 14314. Expansion of small partnership exception.

Sec. 14315. Exclusion of partial settlements from 1-year limitation on assessment.

Sec. 14316. Extension of time for filing a request for administrative adjustment.

Sec. 14317. Availability of innocent spouse relief in context of partnership proceedings.

Sec. 14318. Determination of penalties at partnership level.

Sec. 14319. Provisions relating to court jurisdiction, etc.

Sec. 14320. Treatment of premature petitions filed by notice partners or 5-percent groups.

Sec. 14321. Bonds in case of appeals from certain proceeding.

Sec. 14322. Suspension of interest where delay in computational adjustment resulting from certain settlements.

Sec. 14323. Special rules for administrative adjustment requests with respect

to bad debts or worthless securities.

Subtitle D—Foreign Provisions

PART I—MODIFICATIONS TO TREATMENT OF PASSIVE FOREIGN INVESTMENT

COMPANIES

Sec. 14401. United States shareholders of controlled foreign corporations not

subject to PFIC inclusion.

Sec. 14402. Election of mark to market for marketable stock in passive foreign

investment company.

Sec. 14403. Modifications to definition of passive income.

Sec. 14404. Effective date.

PART II—TREATMENT OF CONTROLLED FOREIGN CORPORATIONS

Sec. 14411. Gain on certain stock sales by controlled foreign corporations treated as dividends.

Sec. 14412. Miscellaneous modifications to subpart F.

Sec. 14413. Indirect foreign tax credit allowed for certain lower tier companies.
922

•HR 2491 RH

Sec. 14414. Repeal of inclusion of certain earnings invested in excess passive

assets.

PART III—OTHER PROVISIONS

Sec. 14421. Exchange rate used in translating foreign taxes.

Sec. 14422. Election to use simplified section 904 limitation for alternative

minimum tax.

Sec. 14423. Modification of section 1491.

Sec. 14424. Modification of section 367(b).

Sec. 14425. Increase in filing thresholds for returns as to organization of foreign corporations and acquisitions of stock in such corporations.

Sec. 14426. Application of uniform capitalization rules to foreign persons.

Sec. 14427. Certain prizes and awards.

Sec. 14428. Treatment for estate tax purposes of short-term obligations held by

nonresident aliens.

Subtitle E—Other Income Tax Provisions

PART I—PROVISIONS RELATING TO S CORPORATIONS

Sec. 14501. S corporations permitted to have 75 shareholders.

Sec. 14502. Electing small business trusts.

Sec. 14503. Expansion of post-death qualification for certain trusts.

Sec. 14504. Financial institutions permitted to hold safe harbor debt.

Sec. 14505. Rules relating to inadvertent terminations and invalid elections.

Sec. 14506. Agreement to terminate year.

Sec. 14507. Expansion of post-termination transition period.

Sec. 14508. S corporations permitted to hold subsidiaries.

Sec. 14509. Treatment of distributions during loss years.

Sec. 14510. Treatment of S corporations under subchapter C.

Sec. 14511. Elimination of certain earnings and profits.

Sec. 14512. Carryover of disallowed losses and deductions under at-risk rules

allowed.

Sec. 14513. Adjustments to basis of inherited S stock to reflect certain items

of income.

Sec. 14514. S corporations eligible for rules applicable to real property subdivided for sale by noncorporate taxpayers.

Sec. 14515. Effective date.

PART II—PROVISIONS RELATING TO REGULATED INVESTMENT COMPANIES

Sec. 14521. Repeal of 30-percent gross income limitation.

PART III—PROVISIONS RELATING TO REAL ESTATE INVESTMENT TRUSTS

Sec. 14531. Clarification of limitation on maximum number of shareholders.

Sec. 14532. De minimis rule for tenant services income.

Sec. 14533. Attribution rules applicable to tenant ownership.

Sec. 14534. Credit for tax paid by REIT on retained capital gains.

Sec. 14535. Repeal of 30-percent gross income requirement.

Sec. 14536. Modification of earnings and profits rules for determining whether

REIT has earnings and profits from non-REIT year.

Sec. 14537. Treatment of foreclosure property.

Sec. 14538. Payments under hedging instruments.

Sec. 14539. Excess noncash income.
923

•HR 2491 RH

Sec. 14540. Prohibited transaction safe harbor.

Sec. 14541. Shared appreciation mortgages.

Sec. 14542. Wholly owned subsidiaries.

Sec. 14543. Effective date.

PART IV—ACCOUNTING PROVISIONS

Sec. 14551. Modifications to look-back method for long-term contracts.

Sec. 14552. Application of mark to market accounting method to traders in securities.

Sec. 14553. Modification of ruling amounts for nuclear decommissioning costs.

Sec. 14554. Election of alternative taxable years by partnerships and S corporations.

Sec. 14555. Special rule for crop insurance proceeds and disaster payments.

PART V—TAX-EXEMPT BOND PROVISIONS

Sec. 14561. Repeal of $100,000 limitation on unspent proceeds under 1-year

exception from rebate.

Sec. 14562. Exception from rebate for earnings on bona fide debt service fund

under construction bond rules.

Sec. 14563. Repeal of debt service-based limitation on investment in certain

nonpurpose investments.

Sec. 14564. Repeal of expired provisions.

Sec. 14565. Effective dates.

PART VI—INSURANCE PROVISIONS

Sec. 14571. Treatment of certain insurance contracts on retired lives.

Sec. 14572. Treatment of modified guaranteed contracts.

Sec. 14573. Minimum tax treatment of certain property and casualty insurance

companies.

PART VII—OTHER PROVISIONS

Sec. 14581. Closing of partnership taxable year with respect to deceased partner, etc.

Sec. 14582. Credit for Social Security taxes paid with respect to employee cash

tips.

Sec. 14583. Due date for first quarter estimated tax payments by private foundations.

Sec. 14584. Treatment of dues paid to agricultural or horticultural organizations.

Subtitle F—Estates and Trusts

PART I—INCOME TAX PROVISIONS

Sec. 14601. Certain revocable trusts treated as part of estate.

Sec. 14602. Distributions during first 65 days of taxable year of estate.

Sec. 14603. Separate share rules available to estates.

Sec. 14604. Executor of estate and beneficiaries treated as related persons for

disallowance of losses, etc.

Sec. 14605. Limitation on taxable year of estates.

Sec. 14606. Repeal of certain throwback rules applicable to domestic trusts.

Sec. 14607. Treatment of funeral trusts.

PART II—ESTATE AND GIFT TAX PROVISIONS
924

•HR 2491 RH

Sec. 14611. Clarification of waiver of certain rights of recovery.

Sec. 14612. Adjustments for gifts within 3 years of decedent’s death.

Sec. 14613. Clarification of qualified terminable interest rules.

Sec. 14614. Transitional rule under section 2056A.

Sec. 14615. Opportunity to correct certain failures under section 2032A.

Sec. 14616. Unified credit of decedent increased by unified credit of spouse

used on split gift included in decedent’s gross estate.

Sec. 14617. Reformation of defective bequests, etc. to spouse of decedent.

Sec. 14618. Gifts may not be revalued for estate tax purposes after expiration

of statute of limitations.

Sec. 14619. Clarifications relating to disclaimers.

Sec. 14620. Clarification of treatment of survivor annuities under qualified terminable interest rules.

Sec. 14621. Treatment under qualified domestic trust rules of forms of ownership which are not trusts.

Sec. 14622. Authority to waive requirement of United States trustee for qualified domestic trusts.

PART III—GENERATION-SKIPPING TAX PROVISIONS

Sec. 14631. Severing of trusts holding property having an inclusion ratio of

greater than zero.

Sec. 14632. Clarification of who is transferor where subsequent gift by reason

of power of appointment.

Sec. 14633. Taxable termination not to include direct skips.

Sec. 14634. Expansion of exception from generation-skipping transfer tax for

transfers to individuals with deceased parents.

Subtitle G—Excise Tax Simplification

PART I—PROVISIONS RELATED TO DISTILLED SPIRITS, WINES, AND BEER

Sec. 14701. Credit or refund for imported bottled distilled spirits returned to

distilled spirits plant.

Sec. 14702. Authority to cancel or credit export bonds without submission of

records.

Sec. 14703. Repeal of required maintenance of records on premises of distilled

spirits plant.

Sec. 14704. Fermented material from any brewery may be received at a distilled spirits plant.

Sec. 14705. Repeal of requirement for wholesale dealers in liquors to post sign.

Sec. 14706. Refund of tax on wine returned to bond not limited to

unmerchantable wine.

Sec. 14707. Use of additional ameliorating material in certain wines.

Sec. 14708. Domestically produced beer may be withdrawn free of tax for use

of foreign embassies, legations, etc.

Sec. 14709. Beer may be withdrawn free of tax for destruction.

Sec. 14710. Authority to allow drawback on exported beer without submission

of records.

Sec. 14711. Transfer to brewery of beer imported in bulk without payment of

tax.

PART II—CONSOLIDATION OF TAXES ON AVIATION GASOLINE

Sec. 14721. Consolidation of taxes on aviation gasoline.

PART III—OTHER EXCISE TAX PROVISIONS
925

•HR 2491 RH

Sec. 14731. Authority to grant exemptions from registration requirements.

Sec. 14732. Certain combinations not treated as manufacture under retail sales

tax on heavy trucks.

Sec. 14733. Exemption from diesel fuel dyeing requirements with respect to

certain States.

Sec. 14734. Repeal of expired provisions.

Subtitle H—Administrative Provisions

PART I—GENERAL PROVISIONS

Sec. 14801. Repeal of authority to disclose whether prospective juror has been

audited.

Sec. 14802. Clarification of statute of limitations.

Sec. 14803. Certain notices disregarded under provision increasing interest rate

on large corporate underpayments.

Sec. 14804. Clarification of authority to withhold Puerto Rico income taxes

from salaries of Federal employees.

PART II—TAX COURT PROCEDURES

Sec. 14811. Overpayment determinations of tax court.

Sec. 14812. Awarding of administrative costs.

Sec. 14813. Redetermination of interest pursuant to motion.

Sec. 14814. Application of net worth requirement for awards of litigation costs.

PART III—AUTHORITY FOR CERTAIN COOPERATIVE AGREEMENTS

Sec. 14821. Cooperative agreements with State tax authorities.

1 Subtitle A—Provisions Relating to

2 Individuals

3 PART I—PROVISIONS RELATING TO ROLLOVER

4 OF GAIN ON SALE OF PRINCIPAL RESIDENCE

5 SEC. 14101. MULTIPLE SALES WITHIN ROLLOVER PERIOD.

6 (a) GENERAL RULE.—

7 (1) Section 1034 (relating to rollover of gain on

8 sale of principal residence) is amended by striking

9 subsection (d).

10 (2) Paragraph (4) of section 1034(c) is amend11 ed to read as follows:
926

•HR 2491 RH

1 ‘‘(4) If the taxpayer, during the period de2 scribed in subsection (a), purchases more than 1 res3 idence which is used by him as his principal resi4 dence at some time within 2 years after the date of

5 the sale of the old residence, only the first of such

6 residences so used by him after the date of such sale

7 shall constitute the new residence.’’

8 (3) Subsections (h)(1) and (k) of section 1034

9 are each amended by striking ‘‘(other than the 2

10 years referred to in subsection (c)(4))’’.

11 (b) EFFECTIVE DATE.—The amendments made by

12 this section shall apply to sales of old residences (within

13 the meaning of section 1034 of the Internal Revenue Code

14 of 1986) after the date of the enactment of this Act.

15 SEC. 14102. SPECIAL RULES IN CASE OF DIVORCE.

16 (a) IN GENERAL.—Subsection (c) of section 1034 is

17 amended by adding at the end the following new para18 graph:

19 ‘‘(5) If—

20 ‘‘(A) a residence is sold by an individual

21 pursuant to a divorce or marital separation,

22 and

23 ‘‘(B) the taxpayer used such residence as

24 his principal residence at any time during the

25 2-year period ending on the date of such sale,
927

•HR 2491 RH

1 for purposes of this section, such residence shall be

2 treated as the taxpayer’s principal residence at the

3 time of such sale.’’

4 (b) EFFECTIVE DATE.—The amendment made by

5 subsection (a) shall apply to sales of old residences (within

6 the meaning of section 1034 of the Internal Revenue Code

7 of 1986) after the date of the enactment of this Act.

8 SEC. 14103. ONE-TIME EXCLUSION OF GAIN FROM SALE OF

9 PRINCIPAL RESIDENCE FOR CERTAIN

10 SPOUSES.

11 (a) IN GENERAL.—Paragraph (2) of section 121(b)

12 (relating to one-time exclusion of gain from sale of prin13 cipal residence by individual who has attained age 55) is

14 amended by adding at the end the following new sentence:

15 ‘‘For purposes of applying the preceding sentence to indi16 viduals who are married to each other, an election by one

17 individual with respect to a sale or exchange occurring be18 fore the marriage shall be disregarded for purposes of per19 mitting an election with respect to property owned and

20 used by the other individual as his principal residence

21 throughout the 3-year period ending on the date of the

22 marriage.’’

23 (b) EFFECTIVE DATE.—The amendment made by

24 subsection (a) shall apply for purposes of determining

25 whether an election may be made under section 121 of
928

•HR 2491 RH

1 the Internal Revenue Code of 1986 with respect to a sale

2 or exchange occurring after September 13, 1995.

3 PART II—OTHER PROVISIONS

4 SEC. 14111. PAYMENT OF TAX BY COMMERCIALLY ACCEPT5 ABLE MEANS.

6 (a) GENERAL RULE.—Section 6311 is amended to

7 read as follows:

8 ‘‘SEC. 6311. PAYMENT OF TAX BY COMMERCIALLY ACCEPT9 ABLE MEANS.

10 ‘‘(a) AUTHORITY TO RECEIVE.—It shall be lawful for

11 the Secretary to receive for internal revenue taxes (or in

12 payment for internal revenue stamps) any commercially

13 acceptable means that the Secretary deems appropriate to

14 the extent and under the conditions provided in regula15 tions prescribed by the Secretary.

16 ‘‘(b) ULTIMATE LIABILITY.—If a check, money

17 order, or other method of payment, including payment by

18 credit card, debit card, or charge card so received is not

19 duly paid, or is paid and subsequently charged back to

20 the Secretary, the person by whom such check, or money

21 order, or other method of payment has been tendered shall

22 remain liable for the payment of the tax or for the stamps,

23 and for all legal penalties and additions, to the same ex24 tent as if such check, money order, or other method of

25 payment had not been tendered.
929

•HR 2491 RH

1 ‘‘(c) LIABILITY OF BANKS AND OTHERS.—If any cer2 tified, treasurer’s, or cashier’s check (or other guaranteed

3 draft), or any money order, or any other means of pay4 ment that has been guaranteed by a financial institution

5 (such as a credit card, debit card, or charge card trans6 action which has been guaranteed expressly by a financial

7 institution) so received is not duly paid, the United States

8 shall, in addition to its right to exact payment from the

9 party originally indebted therefor, have a lien for—

10 ‘‘(1) the amount of such check (or draft) upon

11 all assets of the financial institution on which

12 drawn,

13 ‘‘(2) the amount of such money order upon all

14 the assets of the issuer thereof, or

15 ‘‘(3) the guaranteed amount of any other trans16 action upon all the assets of the institution making

17 such guarantee,

18 and such amount shall be paid out of such assets in pref19 erence to any other claims whatsoever against such finan20 cial institution, issuer, or guaranteeing institution, except

21 the necessary costs and expenses of administration and

22 the reimbursement of the United States for the amount

23 expended in the redemption of the circulating notes of

24 such financial institution.

25 ‘‘(d) PAYMENT BY OTHER MEANS.—
930

•HR 2491 RH

1 ‘‘(1) AUTHORITY TO PRESCRIBE REGULA2 TIONS.—The Secretary shall prescribe such regula3 tions as the Secretary deems necessary to receive

4 payment by commercially acceptable means, includ5 ing regulations that—

6 ‘‘(A) specify which methods of payment by

7 commercially acceptable means will be accept8 able,

9 ‘‘(B) specify when payment by such means

10 will be considered received,

11 ‘‘(C) identify types of nontax matters re12 lated to payment by such means that are to be

13 resolved by persons ultimately liable for pay14 ment and financial intermediaries, without the

15 involvement of the Secretary, and

16 ‘‘(D) ensure that tax matters will be re17 solved by the Secretary, without the involve18 ment of financial intermediaries.

19 ‘‘(2) AUTHORITY TO ENTER INTO CON20 TRACTS.—Notwithstanding section 3718(f) of title

21 31, United States Code, the Secretary is authorized

22 to enter into contracts to obtain services related to

23 receiving payment by other means where cost bene24 ficial to the Government. The Secretary may not pay
931

•HR 2491 RH

1 any fee or provide any other consideration under

2 such contracts.

3 ‘‘(3) SPECIAL PROVISIONS FOR USE OF CREDIT

4 CARDS.—If use of credit cards is accepted as a

5 method of payment of taxes pursuant to subsection

6 (a)—

7 ‘‘(A) a payment of internal revenue taxes

8 (or a payment for internal revenue stamps) by

9 a person by use of a credit card shall not be

10 subject to section 161 of the Truth-in-Lending

11 Act (15 U.S.C. 1666), or to any similar provi12 sions of State law, if the error alleged by the

13 person is an error relating to the underlying tax

14 liability, rather than an error relating to the

15 credit card account such as a computational

16 error or numerical transposition in the credit

17 card transaction or an issue as to whether the

18 person authorized payment by use of the credit

19 card,

20 ‘‘(B) a payment of internal revenue taxes

21 (or a payment for internal revenue stamps)

22 shall not be subject to section 170 of the Truth23 in-Lending Act (15 U.S.C. 1666i), or to any

24 similar provisions of State law,
932

•HR 2491 RH

1 ‘‘(C) a payment of internal revenue taxes

2 (or a payment for internal revenue stamps) by

3 a person by use of a debit card shall not be

4 subject to section 908 of the Electronic Fund

5 Transfer Act (15 U.S.C. 1693f), or to any simi6 lar provisions of State law, if the error alleged

7 by the person is an error relating to the under8 lying tax liability, rather than an error relating

9 to the debit card account such as a computa10 tional error or numerical transposition in the

11 debit card transaction or an issue as to whether

12 the person authorized payment by use of the

13 debit card,

14 ‘‘(D) the term ‘creditor’ under section

15 103(f) of the Truth-in-Lending Act (15 U.S.C.

16 1602(f)) shall not include the Secretary with re17 spect to credit card transactions in payment of

18 internal revenue taxes (or payment for internal

19 revenue stamps), and

20 ‘‘(E) notwithstanding any other provision

21 of law to the contrary, in the case of payment

22 made by credit card or debit card transaction of

23 an amount owed to a person as the result of the

24 correction of an error under section 161 of the

25 Truth-in-Lending Act (15 U.S.C. 1666) or sec-
933

•HR 2491 RH

1 tion 908 of the Electronic Fund Transfer Act

2 (15 U.S.C. 1693f), the Secretary is authorized

3 to provide such amount to such person as a

4 credit to that person’s credit card or debit card

5 account through the applicable credit card or

6 debit card system.

7 ‘‘(e) CONFIDENTIALITY OF INFORMATION.—

8 ‘‘(1) IN GENERAL.—Except as otherwise au9 thorized by this subsection, no person may use or

10 disclose any information relating to credit or debit

11 card transactions obtained pursuant to section

12 6103(k)(8) other than for purposes directly related

13 to the processing of such transactions, or the billing

14 or collection of amounts charged or debited pursuant

15 thereto.

16 ‘‘(2) EXCEPTIONS.—

17 ‘‘(A) Debit or credit card issuers or others

18 acting on behalf of such issuers may also use

19 and disclose such information for purposes di20 rectly related to servicing an issuer’s accounts.

21 ‘‘(B) Debit or credit card issuers or others

22 directly involved in the processing of credit or

23 debit card transactions or the billing or collec24 tion of amounts charged or debited thereto may
934

•HR 2491 RH

1 also use and disclose such information for pur2 poses directly related to—

3 ‘‘(i) statistical risk and profitability

4 assessment;

5 ‘‘(ii) transferring receivables, ac6 counts, or interest therein;

7 ‘‘(iii) auditing the account informa8 tion;

9 ‘‘(iv) complying with Federal, State,

10 or local law; and

11 ‘‘(v) properly authorized civil, crimi12 nal, or regulatory investigation by Federal,

13 State, or local authorities.

14 ‘‘(3) PROCEDURES.—Use and disclosure of in15 formation under this paragraph shall be made only

16 to the extent authorized by written procedures pro17 mulgated by the Secretary.

18 ‘‘(4) CROSS REFERENCE.—

‘‘For provision providing for civil damages for violation of paragraph (1), see section 7431.’’

19 (b) CLERICAL AMENDMENT.—The table of sections

20 for subchapter B of chapter 64 is amended by striking

21 the item relating to section 6311 and inserting the follow22 ing:

‘‘Sec. 6311. Payment of tax by commercially acceptable means.’’
935

•HR 2491 RH

1 (c) AMENDMENTS TO SECTIONS 6103 AND 7431

2 WITH RESPECT TO DISCLOSURE AUTHORIZATION.—

3 (1) Subsection (k) of section 6103 (relating to

4 confidentiality and disclosure of returns and return

5 information) is amended by adding at the end the

6 following new paragraph:

7 ‘‘(8) DISCLOSURE OF INFORMATION TO ADMIN8 ISTER SECTION 6311.—The Secretary may disclose

9 returns or return information to financial institu10 tions and others to the extent the Secretary deems

11 necessary for the administration of section 6311.

12 Disclosures of information for purposes other than

13 to accept payments by checks or money orders shall

14 be made only to the extent authorized by written

15 procedures promulgated by the Secretary.’’

16 (2) Section 7431 (relating to civil damages for

17 unauthorized disclosure of returns and return infor18 mation) is amended by adding at the end the follow19 ing new subsection:

20 ‘‘(g) SPECIAL RULE FOR INFORMATION OBTAINED

21 UNDER SECTION 6103(k)(8).—For purposes of this sec22 tion, any reference to section 6103 shall be treated as in23 cluding a reference to section 6311(e).’’

24 (3) Section 6103(p)(3)(A) is amended by strik25 ing ‘‘or (6)’’ and inserting ‘‘(6), or (8)’’.
936

•HR 2491 RH

1 (d) EFFECTIVE DATE.—The amendments made by

2 this section shall take effect on the day 9 months after

3 the date of the enactment of this Act.

4 SEC. 14112. SIMPLIFIED FOREIGN TAX CREDIT LIMITATION

5 FOR INDIVIDUALS.

6 (a) GENERAL RULE.—Section 904 (relating to limi7 tations on foreign tax credit) is amended by redesignating

8 subsection (j) as subsection (k) and by inserting after sub9 section (i) the following new subsection:

10 ‘‘(j) SIMPLIFIED LIMITATION FOR CERTAIN INDIVID11 UALS.—

12 ‘‘(1) IN GENERAL.—In the case of an individual

13 to whom this subsection applies for any taxable year,

14 the limitation of subsection (a) shall be the lesser

15 of—

16 ‘‘(A) 25 percent of such individual’s gross

17 income for the taxable year from sources with18 out the United States, or

19 ‘‘(B) the amount of the creditable foreign

20 taxes paid or accrued by the individual during

21 the taxable year (determined without regard to

22 subsection (c)).

23 No taxes paid or accrued by the individual during

24 such taxable year may be deemed paid or accrued in

25 any other taxable year under subsection (c).
937

•HR 2491 RH

1 ‘‘(2) INDIVIDUALS TO WHOM SUBSECTION AP2 PLIES.—This subsection shall apply to an individual

3 for any taxable year if—

4 ‘‘(A) the entire amount of such individual’s

5 gross income for the taxable year from sources

6 without the United States consists of qualified

7 passive income,

8 ‘‘(B) the amount of the creditable foreign

9 taxes paid or accrued by the individual during

10 the taxable year does not exceed $200 ($400 in

11 the case of a joint return), and

12 ‘‘(C) such individual elects to have this

13 subsection apply for the taxable year.

14 ‘‘(3) DEFINITIONS.—For purposes of this sub15 section—

16 ‘‘(A) QUALIFIED PASSIVE INCOME.—The

17 term ‘qualified passive income’ means any item

18 of gross income if—

19 ‘‘(i) such item of income is passive in20 come (as defined in subsection (d)(2)(A)

21 without regard to clause (iii) thereof), and

22 ‘‘(ii) such item of income is shown on

23 a payee statement furnished to the individ24 ual.
938

•HR 2491 RH

1 ‘‘(B) CREDITABLE FOREIGN TAXES.—The

2 term ‘creditable foreign taxes’ means any taxes

3 for which a credit is allowable under section

4 901; except that such term shall not include

5 any tax unless such tax is shown on a payee

6 statement furnished to such individual.

7 ‘‘(C) PAYEE STATEMENT.—The term

8 ‘payee statement’ has the meaning given to

9 such term by section 6724(d)(2).

10 ‘‘(D) ESTATES AND TRUSTS NOT ELIGI11 BLE.—This subsection shall not apply to any

12 estate or trust.’’

13 (b) EFFECTIVE DATE.—The amendment made by

14 subsection (a) shall apply to taxable years beginning after

15 December 31, 1995.

16 SEC. 14113. TREATMENT OF PERSONAL TRANSACTIONS BY

17 INDIVIDUALS UNDER FOREIGN CURRENCY

18 RULES.

19 (a) GENERAL RULE.—Subsection (e) of section 988

20 (relating to application to individuals) is amended to read

21 as follows:

22 ‘‘(e) APPLICATION TO INDIVIDUALS.—

23 ‘‘(1) IN GENERAL.—The preceding provisions of

24 this section shall not apply to any section 988 trans-
939

•HR 2491 RH

1 action entered into by an individual which is a per2 sonal transaction.

3 ‘‘(2) EXCLUSION FOR CERTAIN PERSONAL

4 TRANSACTIONS.—If—

5 ‘‘(A) nonfunctional currency is disposed of

6 by an individual in any transaction, and

7 ‘‘(B) such transaction is a personal trans8 action,

9 no gain shall be recognized for purposes of this sub10 title by reason of changes in exchange rates after

11 such currency was acquired by such individual and

12 before such disposition. The preceding sentence shall

13 not apply if the gain which would otherwise be rec14 ognized exceeds $200.

15 ‘‘(3) PERSONAL TRANSACTIONS.—For purposes

16 of this subsection, the term ‘personal transaction’

17 means any transaction entered into by an individual,

18 except that such term shall not include any trans19 action to the extent that expenses properly allocable

20 to such transaction meet the requirements of section

21 162 or 212 (other than that part of section 212

22 dealing with expenses incurred in connection with

23 taxes).’’
940

•HR 2491 RH

1 (b) EFFECTIVE DATE.—The amendments made by

2 this section shall apply to taxable years beginning after

3 December 31, 1995.

4 SEC. 14114. TREATMENT OF CERTAIN REIMBURSED EX5 PENSES OF RURAL MAIL CARRIERS.

6 (a) IN GENERAL.—Section 162 (relating to trade or

7 business expenses) is amended by redesignating subsection

8 (o) as subsection (p) and by inserting after subsection (n)

9 the following new subsection:

10 ‘‘(o) TREATMENT OF CERTAIN REIMBURSED EX11 PENSES OF RURAL MAIL CARRIERS.—

12 ‘‘(1) GENERAL RULE.—In the case of any em13 ployee of the United States Postal Service who per14 forms services involving the collection and delivery of

15 mail on a rural route and who receives qualified re16 imbursements for the expenses incurred by such em17 ployee for the use of a vehicle in performing such

18 services—

19 ‘‘(A) the amount allowable as a deduction

20 under this chapter for the use of a vehicle in

21 performing such services shall be equal to the

22 amount of such qualified reimbursements; and

23 ‘‘(B) such qualified reimbursements shall

24 be treated as paid under a reimbursement or

25 other expense allowance arrangement for pur-
941

•HR 2491 RH

1 poses of section 62(a)(2)(A) (and section 62(c)

2 shall not apply to such qualified reimburse3 ments).

4 ‘‘(2) DEFINITION OF QUALIFIED REIMBURSE5 MENTS.—For purposes of this subsection, the term

6 ‘qualified reimbursements’ means the amounts paid

7 by the United States Postal Service to employees as

8 an equipment maintenance allowance under the

9 1991 collective bargaining agreement between the

10 United States Postal Service and the National Rural

11 Letter Carriers’ Association. Amounts paid as an

12 equipment maintenance allowance by such Postal

13 Service under later collective bargaining agreements

14 that supersede the 1991 agreement shall be consid15 ered qualified reimbursements if such amounts do

16 not exceed the amounts that would have been paid

17 under the 1991 agreement, adjusted for changes in

18 the Consumer Price Index (as defined in section

19 1(f)(5)) since 1991.’’

20 (b) TECHNICAL AMENDMENT.—Section 6008 of the

21 Technical and Miscellaneous Revenue Act of 1988 is here22 by repealed.

23 (c) EFFECTIVE DATE.—The amendments made by

24 this section shall apply to taxable years beginning after

25 December 31, 1995.
942

•HR 2491 RH

1 SEC. 14115. EXCLUSION OF COMBAT PAY FROM WITHHOLD2 ING LIMITED TO AMOUNT EXCLUDABLE

3 FROM GROSS INCOME.

4 (a) IN GENERAL.—Paragraph (1) of section 3401(a)

5 (defining wages) is amended by inserting before the semi6 colon the following: ‘‘to the extent remuneration for such

7 service is excludable from gross income under such sec8 tion’’.

9 (b) EFFECTIVE DATE.—The amendment made by

10 subsection (a) shall apply to remuneration paid after De11 cember 31, 1995.

12 SEC. 14116. TREATMENT OF TRAVELING EXPENSES OF CER13 TAIN FEDERAL EMPLOYEES ENGAGED IN

14 CRIMINAL INVESTIGATIONS.

15 (a) IN GENERAL.—Subsection (a) of section 162 is

16 amended by adding at the end the following new sentence:

17 ‘‘The preceding sentence shall not apply to any Federal

18 employee during any period for which such employee is

19 certified by the Attorney General (or the designee thereof)

20 as traveling on behalf of the United States in temporary

21 duty status to investigate, or provide support services for

22 the investigation of, a Federal crime.’’

23 (b) EFFECTIVE DATE.—The amendment made by

24 subsection (a) shall apply to taxable years ending after

25 the date of the enactment of this Act.
943

•HR 2491 RH

1 Subtitle B—Pension Simplification

2 PART I—SIMPLIFIED DISTRIBUTION RULES

3 SEC. 14201. REPEAL OF 5-YEAR INCOME AVERAGING FOR

4 LUMP-SUM DISTRIBUTIONS.

5 (a) IN GENERAL.—Subsection (d) of section 402 (re6 lating to taxability of beneficiary of employees’ trust) is

7 amended by adding at the end the following new para8 graph:

9 ‘‘(8) TERMINATION.—

10 ‘‘(A) IN GENERAL.—Except as provided in

11 subparagraph (B), this subsection shall not

12 apply to any taxable year beginning after De13 cember 31, 1995.

14 ‘‘(B) RETENTION OF CERTAIN TRANSITION

15 RULES.—Subparagraph (A) shall not apply to

16 any distribution for which the taxpayer elects

17 the benefits of section 1122 (h)(3) or (h)(5) of

18 the Tax Reform Act of 1986.’’

19 SEC. 14202. REPEAL OF $5,000 EXCLUSION OF EMPLOYEES’

20 DEATH BENEFITS.

21 (a) IN GENERAL.—Subsection (b) of section 101 is

22 hereby repealed.

23 (b) CONFORMING AMENDMENTS.—
944

•HR 2491 RH

1 (1) Subsection (c) of section 101 is amended by

2 striking ‘‘subsection (a) or (b)’’ and inserting ‘‘sub3 section (a)’’.

4 (2) Sections 406(e) and 407(e) are each amend5 ed by striking paragraph (2) and by redesignating

6 paragraph (3) as paragraph (2).

7 (3) Section 7701(a)(20) is amended by striking

8 ‘‘, for the purposes of applying the provisions of sec9 tion 101(b) with respect to employees’ death bene10 fits’’.

11 (c) EFFECTIVE DATE.—The amendments made by

12 this section shall apply to taxable years beginning after

13 December 31, 1995.

14 SEC. 14203. SIMPLIFIED METHOD FOR TAXING ANNUITY

15 DISTRIBUTIONS UNDER CERTAIN EMPLOYER

16 PLANS.

17 (a) GENERAL RULE.—Subsection (d) of section 72

18 (relating to annuities; certain proceeds of endowment and

19 life insurance contracts) is amended to read as follows:

20 ‘‘(d) SPECIAL RULES FOR QUALIFIED EMPLOYER

21 RETIREMENT PLANS.—

22 ‘‘(1) SIMPLIFIED METHOD OF TAXING ANNUITY

23 PAYMENTS.—
945

•HR 2491 RH

1 ‘‘(A) IN GENERAL.—In the case of any

2 amount received as an annuity under a quali3 fied employer retirement plan—

4 ‘‘(i) subsection (b) shall not apply,

5 and

6 ‘‘(ii) the investment in the contract

7 shall be recovered as provided in this para8 graph.

9 ‘‘(B) METHOD OF RECOVERING INVEST10 MENT IN CONTRACT.—

11 ‘‘(i) IN GENERAL.—Gross income

12 shall not include so much of any monthly

13 annuity payment under a qualified em14 ployer retirement plan as does not exceed

15 the amount obtained by dividing—

16 ‘‘(I) the investment in the con17 tract (as of the annuity starting date),

18 by

19 ‘‘(II) the number of anticipated

20 payments determined under the table

21 contained in clause (iii) (or, in the

22 case of a contract to which subsection

23 (c)(3)(B) applies, the number of

24 monthly annuity payments under such

25 contract).
946

•HR 2491 RH

1 ‘‘(ii) CERTAIN RULES MADE APPLICA2 BLE.—Rules similar to the rules of para3 graphs (2) and (3) of subsection (b) shall

4 apply for purposes of this paragraph.

5 ‘‘(iii) NUMBER OF ANTICIPATED PAY6 MENTS.—

‘‘If the age of the

primary annuitant on The number

the annuity starting of anticipated

date is: payments is:

Not more than 55 .................................. 300

More than 55 but not more than 60 ..... 260

More than 60 but not more than 65 ..... 240

More than 65 but not more than 70 ..... 170

More than 70 ......................................... 120

7 ‘‘(C) ADJUSTMENT FOR REFUND FEATURE

8 NOT APPLICABLE.—For purposes of this para9 graph, investment in the contract shall be de10 termined under subsection (c)(1) without re11 gard to subsection (c)(2).

12 ‘‘(D) SPECIAL RULE WHERE LUMP SUM

13 PAID IN CONNECTION WITH COMMENCEMENT

14 OF ANNUITY PAYMENTS.—If, in connection with

15 the commencement of annuity payments under

16 any qualified employer retirement plan, the tax17 payer receives a lump sum payment—

18 ‘‘(i) such payment shall be taxable

19 under subsection (e) as if received before

20 the annuity starting date, and
947

•HR 2491 RH

1 ‘‘(ii) the investment in the contract

2 for purposes of this paragraph shall be de3 termined as if such payment had been so

4 received.

5 ‘‘(E) EXCEPTION.—This paragraph shall

6 not apply in any case where the primary annu7 itant has attained age 75 on the annuity start8 ing date unless there are fewer than 5 years of

9 guaranteed payments under the annuity.

10 ‘‘(F) ADJUSTMENT WHERE ANNUITY PAY11 MENTS NOT ON MONTHLY BASIS.—In any case

12 where the annuity payments are not made on a

13 monthly basis, appropriate adjustments in the

14 application of this paragraph shall be made to

15 take into account the period on the basis of

16 which such payments are made.

17 ‘‘(G) QUALIFIED EMPLOYER RETIREMENT

18 PLAN.—For purposes of this paragraph, the

19 term ‘qualified employer retirement plan’ means

20 any plan or contract described in paragraph

21 (1), (2), or (3) of section 4974(c).

22 ‘‘(2) TREATMENT OF EMPLOYEE CONTRIBU23 TIONS UNDER DEFINED CONTRIBUTION PLANS.—

24 For purposes of this section, employee contributions

25 (and any income allocable thereto) under a defined
948

•HR 2491 RH

1 contribution plan may be treated as a separate con2 tract.’’

3 (b) EFFECTIVE DATE.—The amendment made by

4 subsection (a) shall apply in cases where the annuity start5 ing date is after December 31, 1995.

6 SEC. 14204. REQUIRED DISTRIBUTIONS.

7 (a) IN GENERAL.—Section 401(a)(9)(C) (defining re8 quired beginning date) is amended to read as follows:

9 ‘‘(C) REQUIRED BEGINNING DATE.—For

10 purposes of this paragraph—

11 ‘‘(i) IN GENERAL.—The term ‘re12 quired beginning date’ means April 1 of

13 the calendar year following the later of—

14 ‘‘(I) the calendar year in which

the employee attains age 701 15 ⁄2, or

16 ‘‘(II) the calendar year in which

17 the employee retires.

18 ‘‘(ii) EXCEPTION.—Subclause (II) of

19 clause (i) shall not apply—

20 ‘‘(I) except as provided in section

21 409(d), in the case of an employee

22 who is a 5-percent owner (as defined

23 in section 416) with respect to the

24 plan year ending in the calendar year
949

•HR 2491 RH

1 in which the employee attains age

701 2 ⁄2, or

3 ‘‘(II) for purposes of section 408

4 (a)(6) or (b)(3).

5 ‘‘(iii) ACTUARIAL ADJUSTMENT.—In

6 the case of an employee to whom clause

7 (i)(II) applies who retires in a calendar

8 year after the calendar year in which the

employee attains age 701 9 ⁄2, the employee’s

10 accrued benefit shall be actuarially in11 creased to take into account the period

after age 701 12 ⁄2 in which the employee was

13 not receiving any benefits under the plan.

14 ‘‘(iv) EXCEPTION FOR GOVERN15 MENTAL AND CHURCH PLANS.—Clauses

16 (ii) and (iii) shall not apply in the case of

17 a governmental plan or church plan. For

18 purposes of this clause, the term ‘church

19 plan’ means a plan maintained by a church

20 for church employees, and the term

21 ‘church’ means any church (as defined in

22 section 3121(w)(3)(A)) or qualified church23 controlled organization (as defined in sec24 tion 3121(w)(3)(B)).’’
950

•HR 2491 RH

1 (b) EFFECTIVE DATE.—The amendment made by

2 subsection (a) shall apply to years beginning after Decem3 ber 31, 1995.

4 PART II—INCREASED ACCESS TO PENSION

5 PLANS

6 SEC. 14211. MODIFICATIONS OF SIMPLIFIED EMPLOYEE

7 PENSIONS.

8 (a) INCREASE IN NUMBER OF ALLOWABLE PARTICI9 PANTS FOR SALARY REDUCTION ARRANGEMENTS.—Sec10 tion 408(k)(6)(B) is amended by striking ‘‘25’’ each place

11 it appears in the text and heading thereof and inserting

12 ‘‘100’’.

13 (b) REPEAL OF PARTICIPATION REQUIREMENT.—

14 (1) IN GENERAL.—Section 408(k)(6)(A) is

15 amended by striking clause (ii) and by redesignating

16 clauses (iii) and (iv) as clauses (ii) and (iii), respec17 tively.

18 (2) CONFORMING AMENDMENTS.—Clause (ii) of

19 section 408(k)(6)(C) and clause (ii) of section

20 408(k)(6)(F) are each amended by striking ‘‘sub21 paragraph (A)(iii)’’ and inserting ‘‘subparagraph

22 (A)(ii)’’.

23 (c) ALTERNATIVE TEST.—Clause (ii) of section

24 408(k)(6)(A), as redesignated by subsection (b)(1), is
951

•HR 2491 RH

1 amended by adding at the end the following new flush sen2 tence:

3 ‘‘The requirements of the preceding sen4 tence are met if the employer makes con5 tributions to the simplified employee pen6 sion meeting the requirements of sections

7 401(k)(11) (B) or (C), 401(k)(11)(D), and

8 401(m)(10)(B).’’

9 (d) YEAR FOR COMPUTING NONHIGHLY COM10 PENSATED EMPLOYEE PERCENTAGE.—Clause (ii) of sec11 tion 408(k)(6)(A), as redesignated by subsection (b)(1),

12 is amended—

13 (1) by striking ‘‘such year’’ in subclause (I) and

14 inserting ‘‘the preceding year’’, and

15 (2) by adding at the end the following new

16 flush sentence:

17 ‘‘In the case of the first plan year for

18 which an employer makes contributions to

19 a simplified employee pension, rules similar

20 to the rules of section 401(k)(3)(E) shall

21 apply.’’

22 (e) EFFECTIVE DATE.—The amendments made by

23 this section shall apply to years beginning after December

24 31, 1995.
952

•HR 2491 RH

1 SEC. 14212. STATE AND LOCAL GOVERNMENTS AND TAX-EX2 EMPT ORGANIZATIONS ELIGIBLE UNDER

3 SECTION 401(k).

4 (a) IN GENERAL.—Subparagraph (B) of section

5 401(k)(4) is amended to read as follows:

6 ‘‘(B) ELIGIBILITY OF STATE AND LOCAL

7 GOVERNMENTS AND TAX-EXEMPT ORGANIZA8 TIONS.—Any—

9 ‘‘(i) State or local government or po10 litical subdivision thereof, or any agency or

11 instrumentality thereof, and

12 ‘‘(ii) any organization exempt from

13 tax under this subtitle,

14 may include a qualified cash or deferred ar15 rangement as part of a plan maintained by it

16 unless the entity maintains an eligible deferred

17 compensation plan (as defined in section

18 457(b)). This subparagraph shall not apply to

19 a rural cooperative plan.’’

20 (b) EFFECTIVE DATE.—The amendment made by

21 this section shall apply to plan years beginning after De22 cember 31, 1996, but shall not apply to any cash or de23 ferred arrangement to which clause (i) or (ii) of section

24 1116(f)(2)(B) of the Tax Reform Act of 1986 applies.
953

•HR 2491 RH

1 PART III—NONDISCRIMINATION PROVISIONS

2 SEC. 14221. DEFINITION OF HIGHLY COMPENSATED EM3 PLOYEES.

4 (a) IN GENERAL.—Paragraph (1) of section 414(q)

5 (defining highly compensated employee) is amended to

6 read as follows:

7 ‘‘(1) IN GENERAL.—The term ‘highly com8 pensated employee’ means any employee who—

9 ‘‘(A) was a 5-percent owner at any time

10 during the year or the preceding year, or

11 ‘‘(B) had compensation for the preceding

12 year from the employer in excess of $80,000.

13 The Secretary shall adjust the $80,000 amount

14 under subparagraph (B) at the same time and in the

15 same manner as under section 415(d), except that

16 the base period in applying such section for purposes

17 of this paragraph shall be the calendar quarter end18 ing September 30, 1995.’’

19 (b) CONFORMING AMENDMENTS.—

20 (1)(A) Subsection (q) of section 414 is amended

21 by striking paragraphs (2), (4), (5), (8), and (12)

22 and by redesignating paragraphs (3), (6), (7), (9),

23 (10), and (11) as paragraphs (2) through (7), re24 spectively.

25 (B) Section 129(d)(8)(B), 401(a)(5)(D)(ii),

26 408(k)(2)(C), and 416(i)(1)(D) are each amended
954

•HR 2491 RH

1 by striking ‘‘section 414(q)(7)’’ and inserting ‘‘sec2 tion 414(q)(4)’’.

3 (C) Sections 401(a)(17) and 404(l) are each

4 amended by striking ‘‘section 414(q)(6)’’ and insert5 ing ‘‘section 414(q)(3)’’.

6 (D) Section 416(i)(1)(A) is amended by strik7 ing ‘‘section 414(q)(8)’’ and inserting ‘‘section

8 414(r)(9)’’.

9 (2)(A) Section 414(r) is amended by adding at

10 the end the following new paragraph:

11 ‘‘(9) EXCLUDED EMPLOYEES.—For purposes of

12 paragraph (2)(A), the following employees shall be

13 excluded:

14 ‘‘(A) Employees who have not completed 6

15 months of service.

16 ‘‘(B) Employees who normally work less

than 171 17 ⁄2 hours per week.

18 ‘‘(C) Employees who normally work not

19 more than 6 months during any year.

20 ‘‘(D) Employees who have not attained the

21 age of 21.

22 ‘‘(E) Except to the extent provided in reg23 ulations, employees who are included in a unit

24 of employees covered by an agreement which

25 the Secretary of Labor finds to be a collective
955

•HR 2491 RH

1 bargaining agreement between employee rep2 resentatives and the employer.

3 Except as provided by the Secretary, the employer

4 may elect to apply subparagraph (A), (B), (C), or

5 (D) by substituting a shorter period of service,

6 smaller number of hours or months, or lower age for

7 the period of service, number of hours or months, or

8 age (as the case may be) specified in such subpara9 graph.’’

10 (B) Subparagraph (A) of section 414(r)(2) is

11 amended by striking ‘‘subsection (q)(8)’’ and insert12 ing ‘‘paragraph (9)’’.

13 (3) Section 1114(c)(4) of the Tax Reform Act

14 of 1986 is amended by adding at the end the follow15 ing new sentence: ‘‘Any reference in this paragraph

16 to section 414(q) shall be treated as a reference to

17 such section as in effect before the Tax Simplifica18 tion Act of 1995’’.

19 (c) EFFECTIVE DATE.—The amendments made by

20 this section shall apply to years beginning after December

21 31, 1995.

22 SEC. 14222. REPEAL OF FAMILY AGGREGATION RULES.

23 (a) IN GENERAL.—Paragraph (6) of section 414(q)

24 is hereby repealed.
956

•HR 2491 RH

1 (b) COMPENSATION LIMIT.—Subparagraph (A) of

2 section 401(a)(17) is amended by striking the last sen3 tence.

4 (c) DEDUCTION.—Subsection (l) of section 404 is

5 amended by striking the last sentence.

6 (d) EFFECTIVE DATE.—The amendments made by

7 this section shall apply to years beginning after December

8 31, 1995.

9 SEC. 14223. MODIFICATION OF ADDITIONAL PARTICIPA10 TION REQUIREMENTS.

11 (a) GENERAL RULE.—Section 401(a)(26)(A) (relat12 ing to additional participation requirements) is amended

13 to read as follows:

14 ‘‘(A) IN GENERAL.—In the case of a trust

15 which is a part of a defined benefit plan, such

16 trust shall not constitute a qualified trust under

17 this subsection unless on each day of the plan

18 year such trust benefits at least the lesser of—

19 ‘‘(i) 50 employees of the employer, or

20 ‘‘(ii) the greater of—

21 ‘‘(I) 40 percent of all employees

22 of the employer, or

23 ‘‘(II) 2 employees (or if there is

24 only 1 employee, such employee).’’
957

•HR 2491 RH

1 (b) SEPARATE LINE OF BUSINESS TEST.—Section

2 401(a)(26)(G) (relating to separate line of business) is

3 amended by striking ‘‘paragraph (7)’’ and inserting ‘‘para4 graph (2)(A) or (7)’’.

5 (c) EFFECTIVE DATE.—The amendment made by

6 this section shall apply to years beginning after December

7 31, 1995.

8 SEC. 14224. NONDISCRIMINATION RULES FOR QUALIFIED

9 CASH OR DEFERRED ARRANGEMENTS AND

10 MATCHING CONTRIBUTIONS.

11 (a) ALTERNATIVE METHODS OF SATISFYING SEC12 TION 401(k) NONDISCRIMINATION TESTS.—Section

13 401(k) (relating to cash or deferred arrangements) is

14 amended by adding at the end the following new para15 graph:

16 ‘‘(11) ALTERNATIVE METHODS OF MEETING

17 NONDISCRIMINATION REQUIREMENTS.—

18 ‘‘(A) IN GENERAL.—A cash or deferred ar19 rangement shall be treated as meeting the re20 quirements of paragraph (3)(A)(ii) if such ar21 rangement—

22 ‘‘(i) meets the contribution require23 ments of subparagraph (B) or (C), and

24 ‘‘(ii) meets the notice requirements of

25 subparagraph (D).
958

•HR 2491 RH

1 ‘‘(B) MATCHING CONTRIBUTIONS.—

2 ‘‘(i) IN GENERAL.—The requirements

3 of this subparagraph are met if, under the

4 arrangement, the employer makes match5 ing contributions on behalf of each em6 ployee who is not a highly compensated

7 employee in an amount equal to—

8 ‘‘(I) 100 percent of the elective

9 contributions of the employee to the

10 extent such elective contributions do

11 not exceed 3 percent of the employee’s

12 compensation, and

13 ‘‘(II) 50 percent of the elective

14 contributions of the employee to the

15 extent that such elective contributions

16 exceed 3 percent but do not exceed 5

17 percent of the employee’s compensa18 tion.

19 ‘‘(ii) RATE FOR HIGHLY COM20 PENSATED EMPLOYEES.—The require21 ments of this subparagraph are not met if,

22 under the arrangement, the matching con23 tribution with respect to any elective con24 tribution of a highly compensated employee

25 at any level of compensation is greater
959

•HR 2491 RH

1 than that with respect to an employee who

2 is not a highly compensated employee.

3 ‘‘(iii) ALTERNATIVE PLAN DESIGNS.—

4 If the matching contribution with respect

5 to any elective contribution at any specific

6 level of compensation is not equal to the

7 percentage required under clause (i), an

8 arrangement shall not be treated as failing

9 to meet the requirements of clause (i) if—

10 ‘‘(I) the level of an employer’s

11 matching contribution does not in12 crease as an employee’s elective con13 tributions increase, and

14 ‘‘(II) the aggregate amount of

15 matching contributions with respect to

16 elective contributions not in excess of

17 such level of compensation is at least

18 equal to the amount of matching con19 tributions which would be made if

20 matching contributions were made on

21 the basis of the percentages described

22 in clause (i).

23 ‘‘(C) NONELECTIVE CONTRIBUTIONS.—

24 The requirements of this subparagraph are met

25 if, under the arrangement, the employer is re-
960

•HR 2491 RH

1 quired, without regard to whether the employee

2 makes an elective contribution or employee con3 tribution, to make a contribution to a defined

4 contribution plan on behalf of each employee

5 who is not a highly compensated employee and

6 who is eligible to participate in the arrangement

7 in an amount equal to at least 3 percent of the

8 employee’s compensation.

9 ‘‘(D) NOTICE REQUIREMENT.—An ar10 rangement meets the requirements of this para11 graph if, under the arrangement, each employee

12 eligible to participate is, within a reasonable pe13 riod before any year, given written notice of the

14 employee’s rights and obligations under the ar15 rangement which—

16 ‘‘(i) is sufficiently accurate and com17 prehensive to apprise the employee of such

18 rights and obligations, and

19 ‘‘(ii) is written in a manner calculated

20 to be understood by the average employee

21 eligible to participate.

22 ‘‘(E) OTHER REQUIREMENTS.—

23 ‘‘(i) WITHDRAWAL AND VESTING RE24 STRICTIONS.—An arrangement shall not be

25 treated as meeting the requirements of
961

•HR 2491 RH

1 subparagraph (B) or (C) unless the re2 quirements of subparagraphs (B) and (C)

3 of paragraph (2) are met with respect to

4 all employer contributions (including

5 matching contributions).

6 ‘‘(ii) SOCIAL SECURITY AND SIMILAR

7 CONTRIBUTIONS NOT TAKEN INTO AC8 COUNT.—An arrangement shall not be

9 treated as meeting the requirements of

10 subparagraph (B) or (C) unless such re11 quirements are met without regard to sub12 section (l), and, for purposes of subsection

13 (l), employer contributions under subpara14 graph (B) or (C) shall not be taken into

15 account.

16 ‘‘(F) OTHER PLANS.—An arrangement

17 shall be treated as meeting the requirements

18 under subparagraph (A)(i) if any other plan

19 maintained by the employer meets such require20 ments with respect to employees eligible under

21 the arrangement.’’

22 (b) ALTERNATIVE METHODS OF SATISFYING SEC23 TION 401(m) NONDISCRIMINATION TESTS.—Section

24 401(m) (relating to nondiscrimination test for matching

25 contributions and employee contributions) is amended by
962

•HR 2491 RH

1 redesignating paragraph (10) as paragraph (11) and by

2 adding after paragraph (9) the following new paragraph:

3 ‘‘(10) ALTERNATIVE METHOD OF SATISFYING

4 TESTS.—

5 ‘‘(A) IN GENERAL.—A defined contribution

6 plan shall be treated as meeting the require7 ments of paragraph (2) with respect to match8 ing contributions if the plan—

9 ‘‘(i) meets the contribution require10 ments of subparagraph (B) or (C) of sub11 section (k)(11),

12 ‘‘(ii) meets the notice requirements of

13 subsection (k)(11)(D), and

14 ‘‘(iii) meets the requirements of sub15 paragraph (B).

16 ‘‘(B) LIMITATION ON MATCHING CON17 TRIBUTIONS.—The requirements of this sub18 paragraph are met if—

19 ‘‘(i) matching contributions on behalf

20 of any employee may not be made with re21 spect to an employee’s contributions or

22 elective deferrals in excess of 6 percent of

23 the employee’s compensation,

24 ‘‘(ii) the level of an employer’s match25 ing contribution does not increase as an
963

•HR 2491 RH

1 employee’s contributions or elective defer2 rals increase, and

3 ‘‘(iii) the matching contribution with

4 respect to any highly compensated em5 ployee at a specific level of compensation is

6 not greater than that with respect to an

7 employee who is not a highly compensated

8 employee.’’

9 (c) YEAR FOR COMPUTING NONHIGHLY COM10 PENSATED EMPLOYEE PERCENTAGE.—

11 (1) CASH OR DEFERRED ARRANGEMENTS.—

12 Clause (ii) of section 401(k)(3)(A) is amended—

13 (A) by striking ‘‘such year’’ and inserting

14 ‘‘the plan year’’, and

15 (B) by striking ‘‘for such plan year’’ and

16 inserting ‘‘the preceding plan year’’.

17 (2) MATCHING AND EMPLOYEE CONTRIBU18 TIONS.—Section 401(m)(2)(A) is amended—

19 (A) by inserting ‘‘for such plan year’’ after

20 ‘‘highly compensated employees’’, and

21 (B) by inserting ‘‘for the preceding plan

22 year’’ after ‘‘eligible employees’’ each place it

23 appears in clause (i) and clause (ii).

24 (d) SPECIAL RULE FOR DETERMINING AVERAGE DE25 FERRAL PERCENTAGE FOR FIRST PLAN YEAR, ETC.—
964

•HR 2491 RH

1 (1) Paragraph (3) of section 401(k) is amended

2 by adding at the end the following new subpara3 graph:

4 ‘‘(E) For purposes of this paragraph, in

5 the case of the first plan year of any plan, the

6 amount taken into account as the actual defer7 ral percentage of nonhighly compensated em8 ployees for the preceding plan year shall be—

9 ‘‘(i) 3 percent, or

10 ‘‘(ii) if the employer makes an election

11 under this subclause, the actual deferral

12 percentage of nonhighly compensated em13 ployees determined for such first plan

14 year.’’

15 (2) Paragraph (3) of section 401(m) is amend16 ed by adding at the end the following: ‘‘Rules similar

17 to the rules of subsection (k)(3)(E) shall apply for

18 purposes of this subsection.’’

19 (e) DISTRIBUTION OF EXCESS CONTRIBUTIONS.—

20 (1) Subparagraph (C) of section 401(k)(8) (re21 lating to arrangement not disqualified if excess con22 tributions distributed) is amended by striking ‘‘on

23 the basis of the respective portions of the excess con24 tributions attributable to each of such employees’’

25 and inserting ‘‘on the basis of the amount of con-
965

•HR 2491 RH

1 tributions by, or on behalf of, each of such employ2 ees’’.

3 (2) Subparagraph (C) of section 401(m)(6) (re4 lating to method of distributing excess aggregate

5 contributions) is amended by striking ‘‘on the basis

6 of the respective portions of such amounts attrib7 utable to each of such employees’’ and inserting ‘‘on

8 the basis of the amount of contributions on behalf

9 of, or by, each such employee’’.

10 (f) EFFECTIVE DATE.—The amendments made by

11 this section shall apply to years beginning after December

12 31, 1995.

13 PART IV—MISCELLANEOUS SIMPLIFICATION

14 SEC. 14231. TREATMENT OF LEASED EMPLOYEES.

15 (a) GENERAL RULE.—Subparagraph (C) of section

16 414(n)(2) (defining leased employee) is amended to read

17 as follows:

18 ‘‘(C) such services are performed under

19 significant direction or control by the recipi20 ent.’’

21 (b) EFFECTIVE DATE.—The amendment made by

22 subsection (a) shall apply to years beginning after Decem23 ber 31, 1995, but shall not apply to any relationship deter24 mined under an Internal Revenue Service ruling issued be25 fore the date of the enactment of this Act pursuant to
966

•HR 2491 RH

1 section 414(n)(2)(C) of the Internal Revenue Code of

2 1986 (as in effect on the day before such date) not to

3 involve a leased employee.

4 SEC. 14232. PLANS COVERING SELF-EMPLOYED INDIVID5 UALS.

6 (a) AGGREGATION RULES.—Section 401(d) (relating

7 to additional requirements for qualification of trusts and

8 plans benefiting owner-employees) is amended to read as

9 follows:

10 ‘‘(d) CONTRIBUTION LIMIT ON OWNER-EMPLOY11 EES.—A trust forming part of a pension or profit-sharing

12 plan which provides contributions or benefits for employ13 ees some or all of whom are owner-employees shall con14 stitute a qualified trust under this section only if, in addi15 tion to meeting the requirements of subsection (a), the

16 plan provides that contributions on behalf of any owner17 employee may be made only with respect to the earned

18 income of such owner-employee which is derived from the

19 trade or business with respect to which such plan is

20 established.’’

21 (b) EFFECTIVE DATE.—The amendments made by

22 this section shall apply to years beginning after December

23 31, 1995.
967

•HR 2491 RH

1 SEC. 14233. ELIMINATION OF SPECIAL VESTING RULE FOR

2 MULTIEMPLOYER PLANS.

3 (a) IN GENERAL.—Paragraph (2) of section 411(a)

4 (relating to minimum vesting standards) is amended—

5 (1) by striking ‘‘subparagraph (A), (B), or (C)’’

6 and inserting ‘‘subparagraph (A) or (B)’’; and

7 (2) by striking subparagraph (C).

8 (b) EFFECTIVE DATE.—The amendments made by

9 this section shall apply to plan years beginning on or after

10 the earlier of—

11 (1) the later of—

12 (A) January 1, 1996, or

13 (B) the date on which the last of the col14 lective bargaining agreements pursuant to

15 which the plan is maintained terminates (deter16 mined without regard to any extension thereof

17 after the date of the enactment of this Act), or

18 (2) January 1, 1998.

19 Such amendments shall not apply to any individual who

20 does not have more than 1 hour of service under the plan

21 on or after the 1st day of the 1st plan year to which such

22 amendments apply.
968

•HR 2491 RH

1 SEC. 14234. DISTRIBUTIONS UNDER RURAL COOPERATIVE

2 PLANS.

3 (a) DISTRIBUTIONS AFTER CERTAIN AGE.—Section

4 401(k)(7) is amended by adding at the end the following

5 new subparagraph:

6 ‘‘(C) SPECIAL RULE FOR CERTAIN DIS7 TRIBUTIONS.—A rural cooperative plan which

8 includes a qualified cash or deferred arrange9 ment shall not be treated as violating the re10 quirements of section 401(a) merely by reason

11 of a distribution to a participant after attainment of age 591 12 ⁄2.’’

13 (b) EFFECTIVE DATE.—The amendment made by

14 this section shall apply to distributions after December 31,

15 1995.

16 SEC. 14235. TREATMENT OF GOVERNMENTAL PLANS

17 UNDER SECTION 415.

18 (a) DEFINITION OF COMPENSATION.—Subsection (k)

19 of section 415 (regarding limitations on benefits and con20 tributions under qualified plans) is amended by adding im21 mediately after paragraph (2) the following new para22 graph:

23 ‘‘(3) DEFINITION OF COMPENSATION FOR GOV24 ERNMENTAL PLANS.—For purposes of this section,

25 in the case of a governmental plan (as defined in

26 section 414(d)), the term ‘compensation’ includes, in
969

•HR 2491 RH

1 addition to the amounts described in subsection

2 (c)(3)—

3 ‘‘(A) any elective deferral (as defined in

4 section 402(g)(3)), and

5 ‘‘(B) any amount which is contributed by

6 the employer at the election of the employee

7 and which is not includible in the gross income

8 of an employee under section 125 or 457.’’

9 (b) COMPENSATION LIMIT.—Subsection (b) of sec10 tion 415 is amended by adding immediately after para11 graph (10) the following new paragraph:

12 ‘‘(11) SPECIAL LIMITATION RULE FOR GOVERN13 MENTAL PLANS.—In the case of a governmental

14 plan (as defined in section 414(d)), subparagraph

15 (B) of paragraph (1) shall not apply.’’

16 (c) TREATMENT OF CERTAIN EXCESS BENEFIT

17 PLANS.—

18 (1) IN GENERAL.—Section 415 is amended by

19 adding at the end the following new subsection:

20 ‘‘(m) TREATMENT OF QUALIFIED GOVERNMENTAL

21 EXCESS BENEFIT ARRANGEMENTS.—

22 ‘‘(1) GOVERNMENTAL PLAN NOT AFFECTED.—

23 In determining whether a governmental plan (as de24 fined in section 414(d)) meets the requirements of

25 this section, benefits provided under a qualified gov-
970

•HR 2491 RH

1 ernmental excess benefit arrangement shall not be

2 taken into account. Income accruing to a govern3 mental plan (or to a trust that is maintained solely

4 for the purpose of providing benefits under a quali5 fied governmental excess benefit arrangement) in re6 spect of a qualified governmental excess benefit ar7 rangement shall constitute income derived from the

8 exercise of an essential governmental function upon

9 which such governmental plan (or trust) shall be ex10 empt from tax under section 115.

11 ‘‘(2) TAXATION OF PARTICIPANT.—For pur12 poses of this chapter—

13 ‘‘(A) the taxable year or years for which

14 amounts in respect of a qualified governmental

15 excess benefit arrangement are includible in

16 gross income by a participant, and

17 ‘‘(B) the treatment of such amounts when

18 so includible by the participant,

19 shall be determined as if such qualified govern20 mental excess benefit arrangement were treated as a

21 plan for the deferral of compensation which is main22 tained by a corporation not exempt from tax under

23 this chapter and which does not meet the require24 ments for qualification under section 401.
971

•HR 2491 RH

1 ‘‘(3) QUALIFIED GOVERNMENTAL EXCESS BEN2 EFIT ARRANGEMENT.—For purposes of this sub3 section, the term ‘qualified governmental excess ben4 efit arrangement’ means a portion of a governmental

5 plan if—

6 ‘‘(A) such portion is maintained solely for

7 the purpose of providing to participants in the

8 plan that part of the participant’s annual bene9 fit otherwise payable under the terms of the

10 plan that exceeds the limitations on benefits im11 posed by this section,

12 ‘‘(B) under such portion no election is pro13 vided at any time to the participant (directly or

14 indirectly) to defer compensation, and

15 ‘‘(C) benefits described in subparagraph

16 (A) are not paid from a trust forming a part

17 of such governmental plan unless such trust is

18 maintained solely for the purpose of providing

19 such benefits.’’

20 (2) COORDINATION WITH SECTION 457.—Sub21 section (e) of section 457 is amended by adding at

22 the end the following new paragraph:

23 ‘‘(15) TREATMENT OF QUALIFIED GOVERN24 MENTAL EXCESS BENEFIT ARRANGEMENTS.—Sub25 sections (b)(2) and (c)(1) shall not apply to any
972

•HR 2491 RH

1 qualified governmental excess benefit arrangement

2 (as defined in section 415(m)(3)), and benefits pro3 vided under such an arrangement shall not be taken

4 into account in determining whether any other plan

5 is an eligible deferred compensation plan.’’

6 (3) CONFORMING AMENDMENT.—Paragraph (2)

7 of section 457(f) is amended by striking ‘‘and’’ at

8 the end of subparagraph (C), by striking the period

9 at the end of subparagraph (D) and inserting ‘‘,

10 and’’, and by inserting immediately thereafter the

11 following new subparagraph:

12 ‘‘(E) a qualified governmental excess bene13 fit arrangement described in section 415(m).’’

14 (d) EXEMPTION FOR SURVIVOR AND DISABILITY

15 BENEFITS.—Paragraph (2) of section 415(b) is amended

16 by adding at the end the following new subparagraph:

17 ‘‘(I) EXEMPTION FOR SURVIVOR AND DIS18 ABILITY BENEFITS PROVIDED UNDER GOVERN19 MENTAL PLANS.—Subparagraph (B) of para20 graph (1), subparagraph (C) of this paragraph,

21 and paragraph (5) shall not apply to—

22 ‘‘(i) income received from a govern23 mental plan (as defined in section 414(d))

24 as a pension, annuity, or similar allowance

25 as the result of the recipient becoming dis-
973

•HR 2491 RH

1 abled by reason of personal injuries or

2 sickness, or

3 ‘‘(ii) amounts received from a govern4 mental plan by the beneficiaries, survivors,

5 or the estate of an employee as the result

6 of the death of the employee.’’

7 (e) REVOCATION OF GRANDFATHER ELECTION.—

8 (1) IN GENERAL.—Subparagraph (C) of section

9 415(b)(10) is amended by adding at the end the fol10 lowing new clause:

11 ‘‘(ii) REVOCATION OF ELECTION.—An

12 election under clause (i) may be revoked

13 not later than the last day of the third

14 plan year beginning after the date of the

15 enactment of this clause. The revocation

16 shall apply to all plan years to which the

17 election applied and to all subsequent plan

18 years. Any amount paid by a plan in a tax19 able year ending after the revocation shall

20 be includible in income in such taxable

21 year under the rules of this chapter in ef22 fect for such taxable year, except that, for

23 purposes of applying the limitations im24 posed by this section, any portion of such

25 amount which is attributable to any tax-
974

•HR 2491 RH

1 able year during which the election was in

2 effect shall be treated as received in such

3 taxable year.’’

4 (2) CONFORMING AMENDMENT.—Subparagraph

5 (C) of section 415(b)(10) is amended by striking

6 ‘‘This’’ and inserting:

7 ‘‘(i) IN GENERAL.—This’’.

8 (f) EFFECTIVE DATE.—

9 (1) IN GENERAL.—The amendments made by

10 subsections (a), (b), (c), and (d) shall apply to tax11 able years beginning on or after the date of the en12 actment of this Act. The amendment made by sub13 section (e) shall apply with respect to election rev14 ocations adopted after the date of the enactment of

15 this Act.

16 (2) TREATMENT FOR YEARS BEGINNING BE17 FORE DATE OF ENACTMENT.—In the case of a gov18 ernmental plan (as defined in section 414(d) of the

19 Internal Revenue Code of 1986), such plan shall be

20 treated as satisfying the requirements of section 415

21 of such Code for all taxable years beginning before

22 the date of the enactment of this Act.

23 SEC. 14236. UNIFORM RETIREMENT AGE.

24 (a) DISCRIMINATION TESTING.—Paragraph (5) of

25 section 401(a) (relating to special rules relating to non
975

•HR 2491 RH

1 discrimination requirements) is amended by adding at the

2 end the following new subparagraph:

3 ‘‘(F) SOCIAL SECURITY RETIREMENT

4 AGE.—For purposes of testing for discrimina5 tion under paragraph (4)—

6 ‘‘(i) the social security retirement age

7 (as defined in section 415(b)(8)) shall be

8 treated as a uniform retirement age, and

9 ‘‘(ii) subsidized early retirement bene10 fits and joint and survivor annuities shall

11 not be treated as being unavailable to em12 ployees on the same terms merely because

13 such benefits or annuities are based in

14 whole or in part on an employee’s social

15 security retirement age (as so defined).’’

16 (b) EFFECTIVE DATE.—The amendment made by

17 this section shall apply to years beginning after December

18 31, 1995.

19 SEC. 14237. UNIFORM PENALTY PROVISIONS TO APPLY TO

20 CERTAIN PENSION REPORTING REQUIRE21 MENTS.

22 (a) PENALTIES.—

23 (1) STATEMENTS.—Paragraph (1) of section

24 6724(d) is amended by striking ‘‘and’’ at the end of

25 subparagraph (A), by striking the period at the end
976

•HR 2491 RH

1 of subparagraph (B) and inserting ‘‘, and’’, and by

2 inserting after subparagraph (B) the following new

3 subparagraph:

4 ‘‘(C) any statement of the amount of pay5 ments to another person required to be made to

6 the Secretary under—

7 ‘‘(i) section 408(i) (relating to reports

8 with respect to individual retirement ac9 counts or annuities), or

10 ‘‘(ii) section 6047(d) (relating to re11 ports by employers, plan administrators,

12 etc.).’’

13 (2) REPORTS.—Paragraph (2) of section

14 6724(d) is amended by striking ‘‘or’’ at the end of

15 subparagraph (S), by striking the period at the end

16 of subparagraph (T) and inserting a comma, and by

17 inserting after subparagraph (T) the following new

18 subparagraphs:

19 ‘‘(U) section 408(i) (relating to reports

20 with respect to individual retirement plans) to

21 any person other than the Secretary with re22 spect to the amount of payments made to such

23 person, or

24 ‘‘(V) section 6047(d) (relating to reports

25 by plan administrators) to any person other
977

•HR 2491 RH

1 than the Secretary with respect to the amount

2 of payments made to such person.’’

3 (b) MODIFICATION OF REPORTABLE DESIGNATED

4 DISTRIBUTIONS.—

5 (1) SECTION 408.—Subsection (i) of section 408

6 (relating to individual retirement account reports) is

7 amended by inserting ‘‘aggregating $10 or more in

8 any calendar year’’ after ‘‘distributions’’.

9 (2) SECTION 6047.—Paragraph (1) of section

10 6047(d) (relating to reports by employers, plan ad11 ministrators, etc.) is amended by adding at the end

12 the following new sentence: ‘‘No return or report

13 may be required under the preceding sentence with

14 respect to distributions to any person during any

15 year unless such distributions aggregate $10 or

16 more.’’

17 (c) QUALIFYING ROLLOVER DISTRIBUTIONS.—Sec18 tion 6652(i) is amended—

19 (1) by striking ‘‘the $10’’ and inserting

20 ‘‘$100’’, and

21 (2) by striking ‘‘$5,000’’ and inserting

22 ‘‘$50,000’’.

23 (d) CONFORMING AMENDMENTS.—
978

•HR 2491 RH

1 (1) Paragraph (1) of section 6047(f) is amend2 ed to read as follows:

‘‘(1) For provisions relating to penalties for failures to file returns and reports required under this

section, see sections 6652(e), 6721, and 6722.’’

3 (2) Subsection (e) of section 6652 is amended

4 by adding at the end the following new sentence:

5 ‘‘This subsection shall not apply to any return or

6 statement which is an information return described

7 in section 6724(d)(1)(C)(ii) or a payee statement de8 scribed in section 6724(d)(2)(U).’’

9 (3) Subsection (a) of section 6693 is amended

10 by adding at the end the following new sentence:

11 ‘‘This subsection shall not apply to any report which

12 is an information return described in section

13 6724(d)(1)(C)(i) or a payee statement described in

14 section 6724(d)(2)(T).’’

15 (e) EFFECTIVE DATE.—The amendments made by

16 this section shall apply to returns, reports, and other

17 statements the due date for which (determined without re18 gard to extensions) is after December 31, 1995.

19 SEC. 14238. CONTRIBUTIONS ON BEHALF OF DISABLED EM20 PLOYEES.

21 (a) ALL DISABLED PARTICIPANTS RECEIVING CON22 TRIBUTIONS.—Section 415(c)(3)(C) is amended by adding

23 at the end the following: ‘‘If a defined contribution plan

24 provides for the continuation of contributions on behalf
979

•HR 2491 RH

1 of all participants described in clause (i) for a fixed or

2 determinable period, this subparagraph shall be applied

3 without regard to clauses (ii) and (iii).’’

4 (b) EFFECTIVE DATE.—The amendment made by

5 this section shall apply to years beginning after December

6 31, 1995.

7 SEC. 14239. TREATMENT OF DEFERRED COMPENSATION

8 PLANS OF STATE AND LOCAL GOVERNMENTS

9 AND TAX-EXEMPT ORGANIZATIONS.

10 (a) SPECIAL RULES FOR PLAN DISTRIBUTIONS.—

11 Paragraph (9) of section 457(e) (relating to other defini12 tions and special rules) is amended to read as follows:

13 ‘‘(9) BENEFITS NOT TREATED AS MADE AVAIL14 ABLE BY REASON OF CERTAIN ELECTIONS, ETC.—

15 ‘‘(A) TOTAL AMOUNT PAYABLE IS $3,500

16 OR LESS.—The total amount payable to a par17 ticipant under the plan shall not be treated as

18 made available merely because the participant

19 may elect to receive such amount (or the plan

20 may distribute such amount without the partici21 pant’s consent) if—

22 ‘‘(i) such amount does not exceed

23 $3,500, and

24 ‘‘(ii) such amount may be distributed

25 only if—
980

•HR 2491 RH

1 ‘‘(I) no amount has been deferred

2 under the plan with respect to such

3 participant during the 2-year period

4 ending on the date of the distribution,

5 and

6 ‘‘(II) there has been no prior dis7 tribution under the plan to such par8 ticipant to which this subparagraph

9 applied.

10 A plan shall not be treated as failing to meet

11 the distribution requirements of subsection (d)

12 by reason of a distribution to which this sub13 paragraph applies.

14 ‘‘(B) ELECTION TO DEFER COMMENCE15 MENT OF DISTRIBUTIONS.—The total amount

16 payable to a participant under the plan shall

17 not be treated as made available merely because

18 the participant may elect to defer commence19 ment of distributions under the plan if—

20 ‘‘(i) such election is made after

21 amounts may be available under the plan

22 in accordance with subsection (d)(1)(A)

23 and before commencement of such dis24 tributions, and
981

•HR 2491 RH

1 ‘‘(ii) the participant may make only 1

2 such election.’’

3 (b) COST-OF-LIVING ADJUSTMENT OF MAXIMUM DE4 FERRAL AMOUNT.—Subsection (e) of section 457 is

5 amended by adding at the end the following new para6 graph:

7 ‘‘(14) COST-OF-LIVING ADJUSTMENT OF MAXI8 MUM DEFERRAL AMOUNT.—The Secretary shall ad9 just the $7,500 amount specified in subsections

10 (b)(2) and (c)(1) at the same time and in the same

11 manner as under section 415(d) (determined without

12 regard to paragraph (4)), except that the base pe13 riod in applying such section for purposes of this

14 paragraph shall be the calendar quarter ending Sep15 tember 30, 1994.’’

16 (c) EFFECTIVE DATE.—The amendments made by

17 this section shall apply to taxable years beginning after

18 December 31, 1995.

19 SEC. 14240. TRUST REQUIREMENT FOR DEFERRED COM20 PENSATION PLANS OF STATE AND LOCAL

21 GOVERNMENTS.

22 (a) IN GENERAL.—Section 457 is amended by adding

23 at the end the following new subsection:

24 ‘‘(g) GOVERNMENTAL PLANS MUST MAINTAIN SET

25 ASIDES FOR EXCLUSIVE BENEFIT OF PARTICIPANTS.—
982

•HR 2491 RH

1 ‘‘(1) IN GENERAL.—A plan maintained by an

2 eligible employer described in subsection (e)(1)(A)

3 shall not be treated as an eligible deferred com4 pensation plan unless all assets and income of the

5 plan described in subsection (b)(6) are held in trust

6 for the exclusive benefit of participants and their

7 beneficiaries.

8 ‘‘(2) TAXABILITY OF TRUSTS AND PARTICI9 PANTS.—For purposes of this title—

10 ‘‘(A) a trust described in paragraph (1)

11 shall be treated as an organization exempt from

12 taxation under section 501(a), and

13 ‘‘(B) notwithstanding any other provision

14 of this title, amounts in the trust shall be in15 cludible in the gross income of participants and

16 beneficiaries only to the extent, and at the time,

17 provided in this section.

18 ‘‘(3) CUSTODIAL ACCOUNTS AND CONTRACTS.—

19 For purposes of this subsection, custodial accounts

20 and contracts described in section 401(f) shall be

21 treated as trusts under rules similar to the rules

22 under section 401(f).’’

23 (b) CONFORMING AMENDMENT.—Paragraph (6) of

24 section 457(b) is amended by inserting ‘‘except as pro25 vided in subsection (g),’’ before ‘‘which provides that’’.
983

•HR 2491 RH

1 (c) EFFECTIVE DATES.—

2 (1) IN GENERAL.—Except as provided in para3 graph (2), the amendments made by this section

4 shall apply to assets and income described in section

5 457(b)(6) of the Internal Revenue Code of 1986

6 held by a plan on and after the date of the enact7 ment of this Act.

8 (2) TRANSITION RULE.—In the case of assets

9 and income described in paragraph (1) held by a

10 plan before the 90th day after the date of the enact11 ment of this Act, a trust need not be established by

12 reason of the amendments made by this section be13 fore such 90th day.

14 SEC. 14241. TRANSITION RULE FOR COMPUTING MAXIMUM

15 BENEFITS UNDER SECTION 415 LIMITATIONS.

16 (a) IN GENERAL.—Subparagraph (A) of section

17 767(d)(3) of the Uruguay Round Agreements Act is

18 amended to read as follows:

19 ‘‘(A) EXCEPTION.—A plan that was adopt20 ed and in effect before December 8, 1994, shall

21 not be required to apply the amendments made

22 by subsection (b) with respect to benefits ac23 crued before the earlier of—
984

•HR 2491 RH

1 ‘‘(i) the later of the date a plan

2 amendment applying such amendment is

3 adopted or made effective, or

4 ‘‘(ii) the first day of the first limita5 tion year beginning after December 31,

6 1999.

7 Determinations under section 415(b)(2)(E) of

8 the Internal Revenue Code of 1986 shall be

9 made with respect to such benefits on the basis

10 of such section as in effect on December 7,

11 1994, and the provisions of the plan as in effect

12 on December 7, 1994, but only if such provi13 sions of the plan meet the requirements of such

14 section (as so in effect).’’

15 (b) EFFECTIVE DATE.—The amendment made by

16 this section shall take effect as if included in the provisions

17 of section 767 of the Uruguay Round Agreements Act.

18 (c) TRANSITIONAL RULE.—In the case of a plan that

19 was adopted and in effect before December 8, 1994, if—

20 (1) a plan amendment was adopted or made ef21 fective on or before the date of the enactment of this

22 Act applying the amendments made by section

23 767(b) of the Uruguay Round Agreements Act, and

24 (2) within 1 year after the date of the enact25 ment of this Act, a plan amendment is adopted
985

•HR 2491 RH

1 which repeals the amendment referred to in para2 graph (1),

3 the amendment referred to in paragraph (1) shall not be

4 taken into account in applying section 767(d)(3)(A) of the

5 Uruguay Round Agreements Act, as amended by sub6 section (a).

7 SEC. 14242. MULTIPLE SALARY REDUCTION AGREEMENTS

8 PERMITTED UNDER SECTION 403(b).

9 (a) GENERAL RULE.—For purposes of section 403(b)

10 of the Internal Revenue Code of 1986, the frequency that

11 an employee is permitted to enter into a salary reduction

12 agreement, the salary to which such an agreement may

13 apply, and the ability to revoke such an agreement shall

14 be determined under the rules applicable to cash or de15 ferred elections under section 401(k) of such Code.

16 (b) EFFECTIVE DATE.—Subsection (a) shall apply to

17 taxable years beginning after December 31, 1995.

18 SEC. 14243. WAIVER OF MINIMUM PERIOD FOR JOINT AND

19 SURVIVOR ANNUITY EXPLANATION BEFORE

20 ANNUITY STARTING DATE.

21 (a) GENERAL RULE.—For purposes of section

22 417(a)(3)(A) of the Internal Revenue Code of 1986 (relat23 ing to plan to provide written explanations), the minimum

24 period prescribed by the Secretary of the Treasury be25 tween the date that the explanation referred to in such
986

•HR 2491 RH

1 section is provided and the annuity starting date shall not

2 apply if waived by the participant and, if applicable, the

3 participant’s spouse.

4 (b) EFFECTIVE DATE.—Subsection (a) shall apply to

5 plan years beginning after December 31, 1995.

6 SEC. 14244. REPEAL OF LIMITATION IN CASE OF DEFINED

7 BENEFIT PLAN AND DEFINED CONTRIBUTION

8 PLAN FOR SAME EMPLOYEE.

9 (a) IN GENERAL.—Section 415(e) is repealed.

10 (b) CONFORMING AMENDMENTS.—

11 (1) Subparagraph (B) of section 415(b)(5) is

12 amended by striking ‘‘and subsection (e)’’.

13 (2) Paragraph (1) of section 415(f) is amended

14 by striking ‘‘subsections (b), (c), and (e)’’ and in15 serting ‘‘subsections (b) and (c)’’.

16 (3) Subsection (g) of section 415 is amended by

17 striking ‘‘subsections (e) and (f)’’ in the last sen18 tence and inserting ‘‘subsection (f)’’.

19 (4) Clause (i) of section 415(k)(2)(A) is amend20 ed to read as follows:

21 ‘‘(i) any contribution made directly by

22 an employee under such an arrangement

23 shall not be treated as an annual addition

24 for purposes of subsection (c), and’’.
987

•HR 2491 RH

1 (5) Clause (ii) of section 415(k)(2)(A) is

2 amended by striking ‘‘subsections (c) and (e)’’ and

3 inserting ‘‘subsection (c)’’.

4 (6) Section 416 is amended by striking sub5 section (h).

6 (c) EFFECTIVE DATE.—The amendments made by

7 this section shall apply to limitation years beginning after

8 December 31, 1996.

9 SEC. 14245. DATE FOR ADOPTION OF PLAN AMENDMENTS.

10 If any amendment made by this title requires an

11 amendment to any plan, such plan amendment shall not

12 be required to be made before the first day of the first

13 plan year beginning on or after January 1, 1997, if—

14 (1) during the period after such amendment

15 takes effect and before such first plan year, the plan

16 is operated in accordance with the requirements of

17 such amendment, and

18 (2) such plan amendment applies retroactively

19 to such period.
988

•HR 2491 RH

1 Subtitle C—Treatment of Large

2 Partnerships

3 PART I—GENERAL PROVISIONS

4 SEC. 14301. SIMPLIFIED FLOW-THROUGH FOR LARGE PART5 NERSHIPS.

6 (a) GENERAL RULE.—Subchapter K (relating to

7 partners and partnerships) is amended by adding at the

8 end the following new part:

9 ‘‘PART IV—SPECIAL RULES FOR LARGE

10 PARTNERSHIPS

‘‘Sec. 771. Application of subchapter to large partnerships.

‘‘Sec. 772. Simplified flow-through.

‘‘Sec. 773. Computations at partnership level.

‘‘Sec. 774. Other modifications.

‘‘Sec. 775. Large partnership defined.

‘‘Sec. 776. Special rules for partnerships holding oil and gas properties.

‘‘Sec. 777. Regulations.

11 ‘‘SEC. 771. APPLICATION OF SUBCHAPTER TO LARGE PART12 NERSHIPS.

13 ‘‘The preceding provisions of this subchapter to the

14 extent inconsistent with the provisions of this part shall

15 not apply to a large partnership and its partners.

16 ‘‘SEC. 772. SIMPLIFIED FLOW-THROUGH.

17 ‘‘(a) GENERAL RULE.—In determining the income

18 tax of a partner of a large partnership, such partner shall

19 take into account separately such partner’s distributive

20 share of the partnership’s—
989

•HR 2491 RH

1 ‘‘(1) taxable income or loss from passive loss

2 limitation activities,

3 ‘‘(2) taxable income or loss from other activi4 ties,

5 ‘‘(3) net capital gain (or net capital loss)—

6 ‘‘(A) to the extent allocable to passive loss

7 limitation activities, and

8 ‘‘(B) to the extent allocable to other activi9 ties,

10 ‘‘(4) tax-exempt interest,

11 ‘‘(5) applicable net AMT adjustment separately

12 computed for—

13 ‘‘(A) passive loss limitation activities, and

14 ‘‘(B) other activities,

15 ‘‘(6) general credits,

16 ‘‘(7) low-income housing credit determined

17 under section 42,

18 ‘‘(8) rehabilitation credit determined under sec19 tion 47,

20 ‘‘(9) foreign income taxes,

21 ‘‘(10) the credit allowable under section 29, and

22 ‘‘(11) other items to the extent that the Sec23 retary determines that the separate treatment of

24 such items is appropriate.
990

•HR 2491 RH

1 ‘‘(b) SEPARATE COMPUTATIONS.—In determining

2 the amounts required under subsection (a) to be sepa3 rately taken into account by any partner, this section and

4 section 773 shall be applied separately with respect to

5 such partner by taking into account such partner’s dis6 tributive share of the items of income, gain, loss, deduc7 tion, or credit of the partnership.

8 ‘‘(c) TREATMENT AT PARTNER LEVEL.—

9 ‘‘(1) IN GENERAL.—Except as provided in this

10 subsection, rules similar to the rules of section

11 702(b) shall apply to any partner’s distributive share

12 of the amounts referred to in subsection (a).

13 ‘‘(2) INCOME OR LOSS FROM PASSIVE LOSS LIM14 ITATION ACTIVITIES.—For purposes of this chapter,

15 any partner’s distributive share of any income or

16 loss described in subsection (a)(1) shall be treated as

17 an item of income or loss (as the case may be) from

18 the conduct of a trade or business which is a single

19 passive activity (as defined in section 469). A similar

20 rule shall apply to a partner’s distributive share of

21 amounts referred to in paragraphs (3)(A) and

22 (5)(A) of subsection (a).

23 ‘‘(3) INCOME OR LOSS FROM OTHER ACTIVI24 TIES.—
991

•HR 2491 RH

1 ‘‘(A) IN GENERAL.—For purposes of this

2 chapter, any partner’s distributive share of any

3 income or loss described in subsection (a)(2)

4 shall be treated as an item of income or expense

5 (as the case may be) with respect to property

6 held for investment.

7 ‘‘(B) DEDUCTIONS FOR LOSS NOT SUB8 JECT TO SECTION 67.—The deduction under

9 section 212 for any loss described in subpara10 graph (A) shall not be treated as a miscellane11 ous itemized deduction for purposes of section

12 67.

13 ‘‘(4) TREATMENT OF NET CAPITAL GAIN OR

14 LOSS.—For purposes of this chapter, any partner’s

15 distributive share of any gain or loss described in

16 subsection (a)(3) shall be treated as a long-term

17 capital gain or loss, as the case may be.

18 ‘‘(5) MINIMUM TAX TREATMENT.—In determin19 ing the alternative minimum taxable income of any

20 partner, such partner’s distributive share of any ap21 plicable net AMT adjustment shall be taken into ac22 count in lieu of making the separate adjustments

23 provided in sections 56, 57, and 58 with respect to

24 the items of the partnership. Except as provided in

25 regulations, the applicable net AMT adjustment
992

•HR 2491 RH

1 shall be treated, for purposes of section 53, as an

2 adjustment or item of tax preference not specified in

3 section 53(d)(1)(B)(ii).

4 ‘‘(6) GENERAL CREDITS.—A partner’s distribu5 tive share of the amount referred to in paragraph

6 (6) of subsection (a) shall be taken into account as

7 a current year business credit.

8 ‘‘(d) OPERATING RULES.—For purposes of this sec9 tion—

10 ‘‘(1) PASSIVE LOSS LIMITATION ACTIVITY.—

11 The term ‘passive loss limitation activity’ means—

12 ‘‘(A) any activity which involves the con13 duct of a trade or business, and

14 ‘‘(B) any rental activity.

15 For purposes of the preceding sentence, the term

16 ‘trade or business’ includes any activity treated as a

17 trade or business under paragraph (5) or (6) of sec18 tion 469(c).

19 ‘‘(2) TAX-EXEMPT INTEREST.—The term ‘tax20 exempt interest’ means interest excludable from

21 gross income under section 103.

22 ‘‘(3) APPLICABLE NET AMT ADJUSTMENT.—

23 ‘‘(A) IN GENERAL.—The applicable net

24 AMT adjustment is—
993

•HR 2491 RH

1 ‘‘(i) with respect to taxpayers other

2 than corporations, the net adjustment de3 termined by using the adjustments applica4 ble to individuals, and

5 ‘‘(ii) with respect to corporations, the

6 net adjustment determined by using the

7 adjustments applicable to corporations.

8 ‘‘(B) NET ADJUSTMENT.—The term ‘net

9 adjustment’ means the net adjustment in the

10 items attributable to passive loss activities or

11 other activities (as the case may be) which

12 would result if such items were determined with

13 the adjustments of sections 56, 57, and 58.

14 ‘‘(4) TREATMENT OF CERTAIN SEPARATELY

15 STATED ITEMS.—

16 ‘‘(A) EXCLUSION FOR CERTAIN PUR17 POSES.—In determining the amounts referred

18 to in paragraphs (1) and (2) of subsection (a),

19 any net capital gain or net capital loss (as the

20 case may be), and any item referred to in sub21 section (a)(11), shall be excluded.

22 ‘‘(B) ALLOCATION RULES.—The net cap23 ital gain shall be treated—

24 ‘‘(i) as allocable to passive loss limita25 tion activities to the extent the net capital
994

•HR 2491 RH

1 gain does not exceed the net capital gain

2 determined by only taking into account

3 gains and losses from sales and exchanges

4 of property used in connection with such

5 activities, and

6 ‘‘(ii) as allocable to other activities to

7 the extent such gain exceeds the amount

8 allocated under clause (i).

9 A similar rule shall apply for purposes of allo10 cating any net capital loss.

11 ‘‘(C) NET CAPITAL LOSS.—The term ‘net

12 capital loss’ means the excess of the losses from

13 sales or exchanges of capital assets over the

14 gains from sales or exchange of capital assets.

15 ‘‘(5) GENERAL CREDITS.—The term ‘general

16 credits’ means any credit other than the low-income

17 housing credit, the rehabilitation credit, the foreign

18 tax credit, and the credit allowable under section 29.

19 ‘‘(6) FOREIGN INCOME TAXES.—The term ‘for20 eign income taxes’ means taxes described in section

21 901 which are paid or accrued to foreign countries

22 and to possessions of the United States.

23 ‘‘(e) SPECIAL RULE FOR UNRELATED BUSINESS

24 TAX.—In the case of a partner which is an organization

25 subject to tax under section 511, such partner’s distribu-
995

•HR 2491 RH

1 tive share of any items shall be taken into account sepa2 rately to the extent necessary to comply with the provi3 sions of section 512(c)(1).

4 ‘‘(f) SPECIAL RULES FOR APPLYING PASSIVE LOSS

5 LIMITATIONS.—If any person holds an interest in a large

6 partnership other than as a limited partner—

7 ‘‘(1) paragraph (2) of subsection (c) shall not

8 apply to such partner, and

9 ‘‘(2) such partner’s distributive share of the

10 partnership items allocable to passive loss limitation

11 activities shall be taken into account separately to

12 the extent necessary to comply with the provisions of

13 section 469.

14 The preceding sentence shall not apply to any items alloca15 ble to an interest held as a limited partner.

16 ‘‘SEC. 773. COMPUTATIONS AT PARTNERSHIP LEVEL.

17 ‘‘(a) GENERAL RULE.—

18 ‘‘(1) TAXABLE INCOME.—The taxable income of

19 a large partnership shall be computed in the same

20 manner as in the case of an individual except that—

21 ‘‘(A) the items described in section 772(a)

22 shall be separately stated, and

23 ‘‘(B) the modifications of subsection (b)

24 shall apply.
996

•HR 2491 RH

1 ‘‘(2) ELECTIONS.—All elections affecting the

2 computation of the taxable income of a large part3 nership or the computation of any credit of a large

4 partnership shall be made by the partnership; except

5 that the election under section 901, and any election

6 under section 108, shall be made by each partner

7 separately.

8 ‘‘(3) LIMITATIONS, ETC.—

9 ‘‘(A) IN GENERAL.—Except as provided in

10 subparagraph (B), all limitations and other pro11 visions affecting the computation of the taxable

12 income of a large partnership or the computa13 tion of any credit of a large partnership shall

14 be applied at the partnership level (and not at

15 the partner level).

16 ‘‘(B) CERTAIN LIMITATIONS APPLIED AT

17 PARTNER LEVEL.—The following provisions

18 shall be applied at the partner level (and not at

19 the partnership level):

20 ‘‘(i) Section 68 (relating to overall

21 limitation on itemized deductions).

22 ‘‘(ii) Sections 49 and 465 (relating to

23 at risk limitations).

24 ‘‘(iii) Section 469 (relating to limita25 tion on passive activity losses and credits).
997

•HR 2491 RH

1 ‘‘(iv) Any other provision specified in

2 regulations.

3 ‘‘(4) COORDINATION WITH OTHER PROVI4 SIONS.—Paragraphs (2) and (3) shall apply notwith5 standing any other provision of this chapter other

6 than this part.

7 ‘‘(b) MODIFICATIONS TO DETERMINATION OF TAX8 ABLE INCOME.—In determining the taxable income of a

9 large partnership—

10 ‘‘(1) CERTAIN DEDUCTIONS NOT ALLOWED.—

11 The following deductions shall not be allowed:

12 ‘‘(A) The deduction for personal exemp13 tions provided in section 151.

14 ‘‘(B) The net operating loss deduction pro15 vided in section 172.

16 ‘‘(C) The additional itemized deductions

17 for individuals provided in part VII of sub18 chapter B (other than section 212 thereof).

19 ‘‘(2) CHARITABLE DEDUCTIONS.—In determin20 ing the amount allowable under section 170, the lim21 itation of section 170(b)(2) shall apply.

22 ‘‘(3) COORDINATION WITH SECTION 67.—In lieu

23 of applying section 67, 70 percent of the amount of

24 the miscellaneous itemized deductions shall be dis25 allowed.
998

•HR 2491 RH

1 ‘‘(c) SPECIAL RULES FOR INCOME FROM DISCHARGE

2 OF INDEBTEDNESS.—If a large partnership has income

3 from the discharge of any indebtedness—

4 ‘‘(1) such income shall be excluded in determin5 ing the amounts referred to in section 772(a), and

6 ‘‘(2) in determining the income tax of any part7 ner of such partnership—

8 ‘‘(A) such income shall be treated as an

9 item required to be separately taken into ac10 count under section 772(a), and

11 ‘‘(B) the provisions of section 108 shall be

12 applied without regard to this part.

13 ‘‘SEC. 774. OTHER MODIFICATIONS.

14 ‘‘(a) TREATMENT OF CERTAIN OPTIONAL ADJUST15 MENTS, ETC.—In the case of a large partnership—

16 ‘‘(1) computations under section 773 shall be

17 made without regard to any adjustment under sec18 tion 743(b) or 108(b), but

19 ‘‘(2) a partner’s distributive share of any

20 amount referred to in section 772(a) shall be appro21 priately adjusted to take into account any adjust22 ment under section 743(b) or 108(b) with respect to

23 such partner.

24 ‘‘(b) CREDIT RECAPTURE DETERMINED AT PART25 NERSHIP LEVEL.—
999

•HR 2491 RH

1 ‘‘(1) IN GENERAL.—In the case of a large part2 nership—

3 ‘‘(A) any credit recapture shall be taken

4 into account by the partnership, and

5 ‘‘(B) the amount of such recapture shall be

6 determined as if the credit with respect to

7 which the recapture is made had been fully uti8 lized to reduce tax.

9 ‘‘(2) METHOD OF TAKING RECAPTURE INTO AC10 COUNT.—A large partnership shall take into account

11 a credit recapture by reducing the amount of the ap12 propriate current year credit to the extent thereof,

13 and if such recapture exceeds the amount of such

14 current year credit, the partnership shall be liable to

15 pay such excess.

16 ‘‘(3) DISPOSITIONS NOT TO TRIGGER RECAP17 TURE.—No credit recapture shall be required by rea18 son of any transfer of an interest in a large partner19 ship.

20 ‘‘(4) CREDIT RECAPTURE.—For purposes of

21 this subsection, the term ‘credit recapture’ means

22 any increase in tax under section 42(j) or 50(a).

23 ‘‘(c) PARTNERSHIP NOT TERMINATED BY REASON

24 OF CHANGE IN OWNERSHIP.—Subparagraph (B) of sec25 tion 708(b)(1) shall not apply to a large partnership.
1000

•HR 2491 RH

1 ‘‘(d) PARTNERSHIP ENTITLED TO CERTAIN CRED2 ITS.—The following shall be allowed to a large partnership

3 and shall not be taken into account by the partners of

4 such partnership:

5 ‘‘(1) The credit provided by section 34.

6 ‘‘(2) Any credit or refund under section

7 852(b)(3)(D).

8 ‘‘(e) TREATMENT OF REMIC RESIDUALS.—For pur9 poses of applying section 860E(e)(6) to any large partner10 ship—

11 ‘‘(1) all interests in such partnership shall be

12 treated as held by disqualified organizations,

13 ‘‘(2) in lieu of applying subparagraph (C) of

14 section 860E(e)(6), the amount subject to tax under

15 section 860E(e)(6) shall be excluded from the gross

16 income of such partnership, and

17 ‘‘(3) subparagraph (D) of section 860E(e)(6)

18 shall not apply.

19 ‘‘(f) SPECIAL RULES FOR APPLYING CERTAIN IN20 STALLMENT SALE RULES.—In the case of a large partner21 ship—

22 ‘‘(1) the provisions of sections 453(l)(3) and

23 453A shall be applied at the partnership level, and

24 ‘‘(2) in determining the amount of interest pay25 able under such sections, such partnership shall be
1001

•HR 2491 RH

1 treated as subject to tax under this chapter at the

2 highest rate of tax in effect under section 1 or 11.

3 ‘‘SEC. 775. LARGE PARTNERSHIP DEFINED.

4 ‘‘(a) GENERAL RULE.—For purposes of this part—

5 ‘‘(1) IN GENERAL.—Except as otherwise pro6 vided in this section or section 776, the term ‘large

7 partnership’ means, with respect to any partnership

8 taxable year, any partnership if the number of per9 sons who were partners in such partnership in any

10 preceding partnership taxable year beginning after

11 December 31, 1995, equaled or exceeded 250. To

12 the extent provided in regulations, a partnership

13 shall cease to be treated as a large partnership for

14 any partnership taxable year if in such taxable year

15 fewer than 100 persons were partners in such part16 nership.

17 ‘‘(2) ELECTION FOR PARTNERSHIPS WITH AT

18 LEAST 100 PARTNERS.—If a partnership makes an

19 election under this paragraph, paragraph (1) shall

20 be applied by substituting ‘100’ for ‘250’. Such an

21 election shall apply to the taxable year for which

22 made and all subsequent taxable years unless re23 voked with the consent of the Secretary.

24 ‘‘(b) SPECIAL RULES FOR CERTAIN SERVICE PART25 NERSHIPS.—
1002

•HR 2491 RH

1 ‘‘(1) CERTAIN PARTNERS NOT COUNTED.—For

2 purposes of this section, the term ‘partner’ does not

3 include any individual performing substantial serv4 ices in connection with the activities of the partner5 ship and holding an interest in such partnership, or

6 an individual who formerly performed substantial

7 services in connection with such activities and who

8 held an interest in such partnership at the time the

9 individual performed such services.

10 ‘‘(2) EXCLUSION.—For purposes of this part,

11 the term ‘large partnership’ does not include any

12 partnership if substantially all the partners of such

13 partnership—

14 ‘‘(A) are individuals performing substantial

15 services in connection with the activities of such

16 partnership or are personal service corporations

17 (as defined in section 269A(b)) the owner-em18 ployees (as defined in section 269A(b)) of which

19 perform such substantial services,

20 ‘‘(B) are retired partners who had per21 formed such substantial services, or

22 ‘‘(C) are spouses of partners who are per23 forming (or had previously performed) such

24 substantial services.
1003

•HR 2491 RH

1 ‘‘(3) SPECIAL RULE FOR LOWER TIER PART2 NERSHIPS.—For purposes of this subsection, the ac3 tivities of a partnership shall include the activities of

4 any other partnership in which the partnership owns

5 directly an interest in the capital and profits of at

6 least 80 percent.

7 ‘‘(c) EXCLUSION OF COMMODITY POOLS.—For pur8 poses of this part, the term ‘large partnership’ does not

9 include any partnership the principal activity of which is

10 the buying and selling of commodities (not described in

11 section 1221(1)), or options, futures, or forwards with re12 spect to such commodities.

13 ‘‘(d) SECRETARY MAY RELY ON TREATMENT ON RE14 TURN.—If, on the partnership return of any partnership,

15 such partnership is treated as a large partnership, such

16 treatment shall be binding on such partnership and all

17 partners of such partnership but not on the Secretary.

18 ‘‘SEC. 776. SPECIAL RULES FOR PARTNERSHIPS HOLDING

19 OIL AND GAS PROPERTIES.

20 ‘‘(a) EXCEPTION FOR PARTNERSHIPS HOLDING SIG21 NIFICANT OIL AND GAS PROPERTIES.—

22 ‘‘(1) IN GENERAL.—For purposes of this part,

23 the term ‘large partnership’ shall not include any

24 partnership if the average percentage of assets (by

25 value) held by such partnership during the taxable
1004

•HR 2491 RH

1 year which are oil or gas properties is at least 25

2 percent. For purposes of the preceding sentence, any

3 interest held by a partnership in another partnership

4 shall be disregarded, except that the partnership

5 shall be treated as holding its proportionate share of

6 the assets of such other partnership.

7 ‘‘(2) ELECTION TO WAIVE EXCEPTION.—Any

8 partnership may elect to have paragraph (1) not

9 apply. Such an election shall apply to the partner10 ship taxable year for which made and all subsequent

11 partnership taxable years unless revoked with the

12 consent of the Secretary.

13 ‘‘(b) SPECIAL RULES WHERE PART APPLIES.—

14 ‘‘(1) COMPUTATION OF PERCENTAGE DEPLE15 TION.—In the case of a large partnership, except as

16 provided in paragraph (2)—

17 ‘‘(A) the allowance for depletion under sec18 tion 611 with respect to any partnership oil or

19 gas property shall be computed at the partner20 ship level without regard to any provision of

21 section 613A requiring such allowance to be

22 computed separately by each partner,

23 ‘‘(B) such allowance shall be determined

24 without regard to the provisions of section

25 613A(c) limiting the amount of production for
1005

•HR 2491 RH

1 which percentage depletion is allowable and

2 without regard to paragraph (1) of section

3 613A(d), and

4 ‘‘(C) paragraph (3) of section 705(a) shall

5 not apply.

6 ‘‘(2) TREATMENT OF CERTAIN PARTNERS.—

7 ‘‘(A) IN GENERAL.—In the case of a dis8 qualified person, the treatment under this chap9 ter of such person’s distributive share of any

10 item of income, gain, loss, deduction, or credit

11 attributable to any partnership oil or gas prop12 erty shall be determined without regard to this

13 part. Such person’s distributive share of any

14 such items shall be excluded for purposes of

15 making determinations under sections 772 and

16 773.

17 ‘‘(B) DISQUALIFIED PERSON.—For pur18 poses of subparagraph (A), the term ‘disquali19 fied person’ means, with respect to any partner20 ship taxable year—

21 ‘‘(i) any person referred to in para22 graph (2) or (4) of section 613A(d) for

23 such person’s taxable year in which such

24 partnership taxable year ends, and
1006

•HR 2491 RH

1 ‘‘(ii) any other person if such person’s

2 average daily production of domestic crude

3 oil and natural gas for such person’s tax4 able year in which such partnership tax5 able year ends exceeds 500 barrels.

6 ‘‘(C) AVERAGE DAILY PRODUCTION.—For

7 purposes of subparagraph (B), a person’s aver8 age daily production of domestic crude oil and

9 natural gas for any taxable year shall be com10 puted as provided in section 613A(c)(2)—

11 ‘‘(i) by taking into account all produc12 tion of domestic crude oil and natural gas

13 (including such person’s proportionate

14 share of any production of a partnership),

15 ‘‘(ii) by treating 6,000 cubic feet of

16 natural gas as a barrel of crude oil, and

17 ‘‘(iii) by treating as 1 person all per18 sons treated as 1 taxpayer under section

19 613A(c)(8) or among whom allocations are

20 required under such section.

21 ‘‘SEC. 777. REGULATIONS.

22 ‘‘The Secretary shall prescribe such regulations as

23 may be appropriate to carry out the purposes of this

24 part.’’
1007

•HR 2491 RH

1 (b) CLERICAL AMENDMENT.—The table of parts for

2 subchapter K of chapter 1 is amended by adding at the

3 end the following new item:

‘‘Part IV. Special rules for large partnerships.’’

4 SEC. 14302. SIMPLIFIED AUDIT PROCEDURES FOR LARGE

5 PARTNERSHIPS.

6 (a) GENERAL RULE.—Chapter 63 is amended by

7 adding at the end the following new subchapter:

8 ‘‘Subchapter D—Treatment of Large

9 Partnerships

‘‘Part I. Treatment of partnership items and adjustments.

‘‘Part II. Partnership level adjustments.

‘‘Part III. Definitions and special rules.

10 ‘‘PART I—TREATMENT OF PARTNERSHIP ITEMS

11 AND ADJUSTMENTS

‘‘Sec. 6240. Application of subchapter.

‘‘Sec. 6241. Partner’s return must be consistent with partnership

return.

‘‘Sec. 6242. Procedures for taking partnership adjustments into

account.

12 ‘‘SEC. 6240. APPLICATION OF SUBCHAPTER.

13 ‘‘(a) GENERAL RULE.—This subchapter shall only

14 apply to large partnerships and partners in such partner15 ships.

16 ‘‘(b) COORDINATION WITH OTHER PARTNERSHIP

17 AUDIT PROCEDURES.—

18 ‘‘(1) IN GENERAL.—Subchapter C of this chap19 ter shall not apply to any large partnership other
1008

•HR 2491 RH

1 than in its capacity as a partner in another partner2 ship which is not a large partnership.

3 ‘‘(2) TREATMENT WHERE PARTNER IN OTHER

4 PARTNERSHIP.—If a large partnership is a partner

5 in another partnership which is not a large partner6 ship—

7 ‘‘(A) subchapter C of this chapter shall

8 apply to items of such large partnership which

9 are partnership items with respect to such other

10 partnership, but

11 ‘‘(B) any adjustment under such sub12 chapter C shall be taken into account in the

13 manner provided by section 6242.

14 ‘‘SEC. 6241. PARTNER’S RETURN MUST BE CONSISTENT

15 WITH PARTNERSHIP RETURN.

16 ‘‘(a) GENERAL RULE.—A partner of any large part17 nership shall, on the partner’s return, treat each partner18 ship item attributable to such partnership in a manner

19 which is consistent with the treatment of such partnership

20 item on the partnership return.

21 ‘‘(b) UNDERPAYMENT DUE TO INCONSISTENT

22 TREATMENT ASSESSED AS MATH ERROR.—Any

23 underpayment of tax by a partner by reason of failing to

24 comply with the requirements of subsection (a) shall be

25 assessed and collected in the same manner as if such
1009

•HR 2491 RH

1 underpayment were on account of a mathematical or cleri2 cal error appearing on the partner’s return. Paragraph (2)

3 of section 6213(b) shall not apply to any assessment of

4 an underpayment referred to in the preceding sentence.

5 ‘‘(c) ADJUSTMENTS NOT TO AFFECT PRIOR YEAR

6 OF PARTNERS.—

7 ‘‘(1) IN GENERAL.—Except as provided in para8 graph (2), subsections (a) and (b) shall apply with9 out regard to any adjustment to the partnership

10 item under part II.

11 ‘‘(2) CERTAIN CHANGES IN DISTRIBUTIVE

12 SHARE TAKEN INTO ACCOUNT BY PARTNER.—

13 ‘‘(A) IN GENERAL.—To the extent that

14 any adjustment under part II involves a change

15 under section 704 in a partner’s distributive

16 share of the amount of any partnership item

17 shown on the partnership return, such adjust18 ment shall be taken into account in applying

19 this title to such partner for the partner’s tax20 able year for which such item was required to

21 be taken into account.

22 ‘‘(B) COORDINATION WITH DEFICIENCY

23 PROCEDURES.—

24 ‘‘(i) IN GENERAL.—Subchapter B

25 shall not apply to the assessment or collec-
1010

•HR 2491 RH

1 tion of any underpayment of tax attrib2 utable to an adjustment referred to in sub3 paragraph (A).

4 ‘‘(ii) ADJUSTMENT NOT PRE5 CLUDED.—Notwithstanding any other law

6 or rule of law, nothing in subchapter B (or

7 in any proceeding under subchapter B)

8 shall preclude the assessment or collection

9 of any underpayment of tax (or the allow10 ance of any credit or refund of any over11 payment of tax) attributable to an adjust12 ment referred to in subparagraph (A) and

13 such assessment or collection or allowance

14 (or any notice thereof) shall not preclude

15 any notice, proceeding, or determination

16 under subchapter B.

17 ‘‘(C) PERIOD OF LIMITATIONS.—The pe18 riod for—

19 ‘‘(i) assessing any underpayment of

20 tax, or

21 ‘‘(ii) filing a claim for credit or refund

22 of any overpayment of tax,

23 attributable to an adjustment referred to in

24 subparagraph (A) shall not expire before the

25 close of the period prescribed by section 6248
1011

•HR 2491 RH

1 for making adjustments with respect to the

2 partnership taxable year involved.

3 ‘‘(D) TIERED STRUCTURES.—If the part4 ner referred to in subparagraph (A) is another

5 partnership or an S corporation, the rules of

6 this paragraph shall also apply to persons hold7 ing interests in such partnership or S corpora8 tion (as the case may be); except that, if such

9 partner is a large partnership, the adjustment

10 referred to in subparagraph (A) shall be taken

11 into account in the manner provided by section

12 6242.

13 ‘‘(d) ADDITION TO TAX FOR FAILURE TO COMPLY

14 WITH SECTION.—

‘‘For addition to tax in case of partner’s disregard

of requirements of this section, see part II of subchapter A of chapter 68.

15 ‘‘SEC. 6242. PROCEDURES FOR TAKING PARTNERSHIP AD16 JUSTMENTS INTO ACCOUNT.

17 ‘‘(a) ADJUSTMENTS FLOW THROUGH TO PARTNERS

18 FOR YEAR IN WHICH ADJUSTMENT TAKES EFFECT.—

19 ‘‘(1) IN GENERAL.—If any partnership adjust20 ment with respect to any partnership item takes ef21 fect (within the meaning of subsection (d)(2)) during

22 any partnership taxable year and if an election

23 under paragraph (2) does not apply to such adjust24 ment, such adjustment shall be taken into account
1012

•HR 2491 RH

1 in determining the amount of such item for the part2 nership taxable year in which such adjustment takes

3 effect. In applying this title to any person who is

4 (directly or indirectly) a partner in such partnership

5 during such partnership taxable year, such adjust6 ment shall be treated as an item actually arising

7 during such taxable year.

8 ‘‘(2) PARTNERSHIP LIABLE IN CERTAIN

9 CASES.—If—

10 ‘‘(A) a partnership elects under this para11 graph to not take an adjustment into account

12 under paragraph (1),

13 ‘‘(B) a partnership does not make such an

14 election but in filing its return for any partner15 ship taxable year fails to take fully into account

16 any partnership adjustment as required under

17 paragraph (1), or

18 ‘‘(C) any partnership adjustment involves a

19 reduction in a credit which exceeds the

20 amount of such credit determined for the

21 partnership taxable year in which the adjust22 ment takes effect,

23 the partnership shall pay to the Secretary an

24 amount determined by applying the rules of sub25 section (b)(4) to the adjustments not so taken into
1013

•HR 2491 RH

1 account and any excess referred to in subparagraph

2 (C). A partnership may make an election under sub3 paragraph (A) only if such partnership meets such

4 requirements as the Secretary may prescribe to as5 sure payment of such amount.

6 ‘‘(3) OFFSETTING ADJUSTMENTS TAKEN INTO

7 ACCOUNT.—If a partnership adjustment requires an8 other adjustment in a taxable year after the ad9 justed year and before the partnership taxable year

10 in which such partnership adjustment takes effect,

11 such other adjustment shall be taken into account

12 under this subsection for the partnership taxable

13 year in which such partnership adjustment takes ef14 fect.

15 ‘‘(4) COORDINATION WITH PART II.—Amounts

16 taken into account under this subsection for any

17 partnership taxable year shall continue to be treated

18 as adjustments for the adjusted year for purposes of

19 determining whether such amounts may be read20 justed under part II.

21 ‘‘(b) PARTNERSHIP LIABLE FOR INTEREST AND

22 PENALTIES.—

23 ‘‘(1) IN GENERAL.—If a partnership adjust24 ment takes effect during any partnership taxable

25 year and such adjustment results in an imputed
1014

•HR 2491 RH

1 underpayment for the adjusted year, the partner2 ship—

3 ‘‘(A) shall pay to the Secretary interest

4 computed under paragraph (2), and

5 ‘‘(B) shall be liable for any penalty, addi6 tion to tax, or additional amount as provided in

7 paragraph (3).

8 ‘‘(2) DETERMINATION OF AMOUNT OF INTER9 EST.—The interest computed under this paragraph

10 with respect to any partnership adjustment is the in11 terest which would be determined under chapter

12 67—

13 ‘‘(A) on the imputed underpayment deter14 mined under paragraph (4) with respect to such

15 adjustment,

16 ‘‘(B) for the period beginning on the day

17 after the return due date for the adjusted year

18 and ending on the return due date for the part19 nership taxable year in which such adjustment

20 takes effect (or, if earlier, in the case of any ad21 justment to which subsection (a)(2) applies, the

22 date on which the payment under subsection

23 (a)(2) is made).

24 Proper adjustments in the amount determined under

25 the preceding sentence shall be made for adjust-
1015

•HR 2491 RH

1 ments required for partnership taxable years after

2 the adjusted year and before the year in which the

3 partnership adjustment takes effect by reason of

4 such partnership adjustment.

5 ‘‘(3) PENALTIES.—A partnership shall be liable

6 for any penalty, addition to tax, or additional

7 amount for which it would have been liable if such

8 partnership had been an individual subject to tax

9 under chapter 1 for the adjusted year and the im10 puted underpayment determined under paragraph

11 (4) were an actual underpayment (or understate12 ment) for such year.

13 ‘‘(4) IMPUTED UNDERPAYMENT.—For purposes

14 of this subsection, the imputed underpayment deter15 mined under this paragraph with respect to any

16 partnership adjustment is the underpayment (if any)

17 which would result—

18 ‘‘(A) by netting all adjustments to items of

19 income, gain, loss, or deduction and by treating

20 any net increase in income as an underpayment

21 equal to the amount of such net increase multi22 plied by the highest rate of tax in effect under

23 section 1 or 11 for the adjusted year, and
1016

•HR 2491 RH

1 ‘‘(B) by taking adjustments to credits into

2 account as increases or decreases (whichever is

3 appropriate) in the amount of tax.

4 For purposes of the preceding sentence, any net de5 crease in a loss shall be treated as an increase in in6 come and a similar rule shall apply to a net increase

7 in a loss.

8 ‘‘(c) ADMINISTRATIVE PROVISIONS.—

9 ‘‘(1) IN GENERAL.—Any payment required by

10 subsection (a)(2) or (b)(1)(A)—

11 ‘‘(A) shall be assessed and collected in the

12 same manner as if it were a tax imposed by

13 subtitle C, and

14 ‘‘(B) shall be paid on or before the return

15 due date for the partnership taxable year in

16 which the partnership adjustment takes effect.

17 ‘‘(2) INTEREST.—For purposes of determining

18 interest, any payment required by subsection (a)(2)

19 or (b)(1)(A) shall be treated as an underpayment

20 of tax.

21 ‘‘(3) PENALTIES.—

22 ‘‘(A) IN GENERAL.—In the case of any

23 failure by any partnership to pay on the date

24 prescribed therefor any amount required by

25 subsection (a)(2) or (b)(1)(A), there is hereby
1017

•HR 2491 RH

1 imposed on such partnership a penalty of 10

2 percent of the underpayment. For purposes of

3 the preceding sentence, the term

4 ‘underpayment’ means the excess of any pay5 ment required under this section over the

6 amount (if any) paid on or before the date pre7 scribed therefor.

8 ‘‘(B) ACCURACY-RELATED AND FRAUD

9 PENALTIES MADE APPLICABLE.—For purposes

10 of part II of subchapter A of chapter 68, any

11 payment required by subsection (a)(2) shall be

12 treated as an underpayment of tax.

13 ‘‘(d) DEFINITIONS AND SPECIAL RULES.—For pur14 poses of this section—

15 ‘‘(1) PARTNERSHIP ADJUSTMENT.—The term

16 ‘partnership adjustment’ means any adjustment in

17 the amount of any partnership item of a large part18 nership.

19 ‘‘(2) WHEN ADJUSTMENT TAKES EFFECT.—A

20 partnership adjustment takes effect—

21 ‘‘(A) in the case of an adjustment pursu22 ant to the decision of a court in a proceeding

23 brought under part II, when such decision be24 comes final,
1018

•HR 2491 RH

1 ‘‘(B) in the case of an adjustment pursu2 ant to any administrative adjustment request

3 under section 6251, when such adjustment is

4 allowed by the Secretary, or

5 ‘‘(C) in any other case, when such adjust6 ment is made.

7 ‘‘(3) ADJUSTED YEAR.—The term ‘adjusted

8 year’ means the partnership taxable year to which

9 the item being adjusted relates.

10 ‘‘(4) RETURN DUE DATE.—The term ‘return

11 due date’ means, with respect to any taxable year,

12 the date prescribed for filing the partnership return

13 for such taxable year (determined without regard to

14 extensions).

15 ‘‘(5) ADJUSTMENTS INVOLVING CHANGES IN

16 CHARACTER.—Under regulations, appropriate ad17 justments in the application of this section shall be

18 made for purposes of taking into account partner19 ship adjustments which involve a change in the char20 acter of any item of income, gain, loss, or deduction.

21 ‘‘(e) PAYMENTS NONDEDUCTIBLE.—No deduction

22 shall be allowed under subtitle A for any payment required

23 to be made by a large partnership under this section.

24 ‘‘PART II—PARTNERSHIP LEVEL ADJUSTMENTS

‘‘Subpart A. Adjustments by Secretary.

‘‘Subpart B. Claims for adjustments by partnership.
1019

•HR 2491 RH

1 ‘‘Subpart A—Adjustments by Secretary

‘‘Sec. 6245. Secretarial authority.

‘‘Sec. 6246. Restrictions on partnership adjustments.

‘‘Sec. 6247. Judicial review of partnership adjustment.

‘‘Sec. 6248. Period of limitations for making adjustments.

2 ‘‘SEC. 6245. SECRETARIAL AUTHORITY.

3 ‘‘(a) GENERAL RULE.—The Secretary is authorized

4 and directed to make adjustments at the partnership level

5 in any partnership item to the extent necessary to have

6 such item be treated in the manner required.

7 ‘‘(b) NOTICE OF PARTNERSHIP ADJUSTMENT.—

8 ‘‘(1) IN GENERAL.—If the Secretary determines

9 that a partnership adjustment is required, the Sec10 retary is authorized to send notice of such adjust11 ment to the partnership by certified mail or reg12 istered mail. Such notice shall be sufficient if mailed

13 to the partnership at its last known address even if

14 the partnership has terminated its existence.

15 ‘‘(2) FURTHER NOTICES RESTRICTED.—If the

16 Secretary mails a notice of a partnership adjustment

17 to any partnership for any partnership taxable year

18 and the partnership files a petition under section

19 6247 with respect to such notice, in the absence of

20 a showing of fraud, malfeasance, or misrepresenta21 tion of a material fact, the Secretary shall not mail

22 another such notice to such partnership with respect

23 to such taxable year.
1020

•HR 2491 RH

1 ‘‘(3) AUTHORITY TO RESCIND NOTICE WITH

2 PARTNERSHIP CONSENT.—The Secretary may, with

3 the consent of the partnership, rescind any notice of

4 a partnership adjustment mailed to such partner5 ship. Any notice so rescinded shall not be treated as

6 a notice of a partnership adjustment, for purposes of

7 this section, section 6246, and section 6247, and the

8 taxpayer shall have no right to bring a proceeding

9 under section 6247 with respect to such notice.

10 Nothing in this subsection shall affect any suspen11 sion of the running of any period of limitations dur12 ing any period during which the rescinded notice

13 was outstanding.

14 ‘‘SEC. 6246. RESTRICTIONS ON PARTNERSHIP ADJUST15 MENTS.

16 ‘‘(a) GENERAL RULE.—Except as otherwise provided

17 in this chapter, no adjustment to any partnership item

18 may be made (and no levy or proceeding in any court for

19 the collection of any amount resulting from such adjust20 ment may be made, begun or prosecuted) before—

21 ‘‘(1) the close of the 90th day after the day on

22 which a notice of a partnership adjustment was

23 mailed to the partnership, and
1021

•HR 2491 RH

1 ‘‘(2) if a petition is filed under section 6247

2 with respect to such notice, the decision of the court

3 has become final.

4 ‘‘(b) PREMATURE ACTION MAY BE ENJOINED.—

5 Notwithstanding section 7421(a), any action which vio6 lates subsection (a) may be enjoined in the proper court,

7 including the Tax Court. The Tax Court shall have no ju8 risdiction to enjoin any action under this subsection unless

9 a timely petition has been filed under section 6247 and

10 then only in respect of the adjustments that are the sub11 ject of such petition.

12 ‘‘(c) EXCEPTIONS TO RESTRICTIONS ON ADJUST13 MENTS.—

14 ‘‘(1) ADJUSTMENTS ARISING OUT OF MATH OR

15 CLERICAL ERRORS.—

16 ‘‘(A) IN GENERAL.—If the partnership is

17 notified that, on account of a mathematical or

18 clerical error appearing on the partnership re19 turn, an adjustment to a partnership item is re20 quired, rules similar to the rules of paragraphs

21 (1) and (2) of section 6213(b) shall apply to

22 such adjustment.

23 ‘‘(B) SPECIAL RULE.—If a large partner24 ship is a partner in another large partnership,

25 any adjustment on account of such partner-
1022

•HR 2491 RH

1 ship’s failure to comply with the requirements

2 of section 6241(a) with respect to its interest in

3 such other partnership shall be treated as an

4 adjustment referred to in subparagraph (A), ex5 cept that paragraph (2) of section 6213(b) shall

6 not apply to such adjustment.

7 ‘‘(2) PARTNERSHIP MAY WAIVE RESTRIC8 TIONS.—The partnership shall at any time (whether

9 or not a notice of partnership adjustment has been

10 issued) have the right, by a signed notice in writing

11 filed with the Secretary, to waive the restrictions

12 provided in subsection (a) on the making of any

13 partnership adjustment.

14 ‘‘(d) LIMIT WHERE NO PROCEEDING BEGUN.—If no

15 proceeding under section 6247 is begun with respect to

16 any notice of a partnership adjustment during the 90-day

17 period described in subsection (a), the amount for which

18 the partnership is liable under section 6242 (and any in19 crease in any partner’s liability for tax under chapter 1

20 by reason of any adjustment under section 6242(a)) shall

21 not exceed the amount determined in accordance with such

22 notice.
1023

•HR 2491 RH

1 ‘‘SEC. 6247. JUDICIAL REVIEW OF PARTNERSHIP ADJUST2 MENT.

3 ‘‘(a) GENERAL RULE.—Within 90 days after the date

4 on which a notice of a partnership adjustment is mailed

5 to the partnership with respect to any partnership taxable

6 year, the partnership may file a petition for a readjust7 ment of the partnership items for such taxable year with—

8 ‘‘(1) the Tax Court,

9 ‘‘(2) the district court of the United States for

10 the district in which the partnership’s principal place

11 of business is located, or

12 ‘‘(3) the Claims Court.

13 ‘‘(b) JURISDICTIONAL REQUIREMENT FOR BRINGING

14 ACTION IN DISTRICT COURT OR CLAIMS COURT.—

15 ‘‘(1) IN GENERAL.—A readjustment petition

16 under this section may be filed in a district court of

17 the United States or the Claims Court only if the

18 partnership filing the petition deposits with the Sec19 retary, on or before the date the petition is filed, the

20 amount for which the partnership would be liable

21 under section 6242(b) (as of the date of the filing

22 of the petition) if the partnership items were ad23 justed as provided by the notice of partnership ad24 justment. The court may by order provide that the

25 jurisdictional requirements of this paragraph are

26 satisfied where there has been a good faith attempt
1024

•HR 2491 RH

1 to satisfy such requirement and any shortfall of the

2 amount required to be deposited is timely corrected.

3 ‘‘(2) INTEREST PAYABLE.—Any amount depos4 ited under paragraph (1), while deposited, shall not

5 be treated as a payment of tax for purposes of this

6 title (other than chapter 67).

7 ‘‘(c) SCOPE OF JUDICIAL REVIEW.—A court with

8 which a petition is filed in accordance with this section

9 shall have jurisdiction to determine all partnership items

10 of the partnership for the partnership taxable year to

11 which the notice of partnership adjustment relates and the

12 proper allocation of such items among the partners (and

13 the applicability of any penalty, addition to tax, or addi14 tional amount for which the partnership may be liable

15 under section 6242(b)).

16 ‘‘(d) DETERMINATION OF COURT REVIEWABLE.—

17 Any determination by a court under this section shall have

18 the force and effect of a decision of the Tax Court or a

19 final judgment or decree of the district court or the Claims

20 Court, as the case may be, and shall be reviewable as such.

21 The date of any such determination shall be treated as

22 being the date of the court’s order entering the decision.

23 ‘‘(e) EFFECT OF DECISION DISMISSING ACTION.—If

24 an action brought under this section is dismissed other

25 than by reason of a rescission under section 6245(b)(3),
1025

•HR 2491 RH

1 the decision of the court dismissing the action shall be con2 sidered as its decision that the notice of partnership ad3 justment is correct, and an appropriate order shall be en4 tered in the records of the court.

5 ‘‘SEC. 6248. PERIOD OF LIMITATIONS FOR MAKING ADJUST6 MENTS.

7 ‘‘(a) GENERAL RULE.—Except as otherwise provided

8 in this section, no adjustment under this subpart to any

9 partnership item for any partnership taxable year may be

10 made after the date which is 3 years after the later of—

11 ‘‘(1) the date on which the partnership return

12 for such taxable year was filed, or

13 ‘‘(2) the last day for filing such return for such

14 year (determined without regard to extensions).

15 ‘‘(b) EXTENSION BY AGREEMENT.—The period de16 scribed in subsection (a) (including an extension period

17 under this subsection) may be extended by an agreement

18 entered into by the Secretary and the partnership before

19 the expiration of such period.

20 ‘‘(c) SPECIAL RULE IN CASE OF FRAUD, ETC.—

21 ‘‘(1) FALSE RETURN.—In the case of a false or

22 fraudulent partnership return with intent to evade

23 tax, the adjustment may be made at any time.

24 ‘‘(2) SUBSTANTIAL OMISSION OF INCOME.—If

25 any partnership omits from gross income an amount
1026

•HR 2491 RH

1 properly includible therein which is in excess of 25

2 percent of the amount of gross income stated in its

3 return, subsection (a) shall be applied by substitut4 ing ‘6 years’ for ‘3 years’.

5 ‘‘(3) NO RETURN.—In the case of a failure by

6 a partnership to file a return for any taxable year,

7 the adjustment may be made at any time.

8 ‘‘(4) RETURN FILED BY SECRETARY.—For pur9 poses of this section, a return executed by the Sec10 retary under subsection (b) of section 6020 on be11 half of the partnership shall not be treated as a re12 turn of the partnership.

13 ‘‘(d) SUSPENSION WHEN SECRETARY MAILS NOTICE

14 OF ADJUSTMENT.—If notice of a partnership adjustment

15 with respect to any taxable year is mailed to the partner16 ship, the running of the period specified in subsection (a)

17 (as modified by the other provisions of this section) shall

18 be suspended—

19 ‘‘(1) for the period during which an action may

20 be brought under section 6247 (and, if a petition is

21 filed under section 6247 with respect to such notice,

22 until the decision of the court becomes final), and

23 ‘‘(2) for 1 year thereafter.

24 ‘‘Subpart B—Claims for Adjustments by Partnership

‘‘Sec. 6251. Administrative adjustment requests.

‘‘Sec. 6252. Judicial review where administrative adjustment request is not allowed in full.
1027

•HR 2491 RH

1 ‘‘SEC. 6251. ADMINISTRATIVE ADJUSTMENT REQUESTS.

2 ‘‘(a) GENERAL RULE.—A partnership may file a re3 quest for an administrative adjustment of partnership

4 items for any partnership taxable year at any time which

5 is—

6 ‘‘(1) within 3 years after the later of—

7 ‘‘(A) the date on which the partnership re8 turn for such year is filed, or

9 ‘‘(B) the last day for filing the partnership

10 return for such year (determined without re11 gard to extensions), and

12 ‘‘(2) before the mailing to the partnership of a

13 notice of a partnership adjustment with respect to

14 such taxable year.

15 ‘‘(b) SECRETARIAL ACTION.—If a partnership files

16 an administrative adjustment request under subsection

17 (a), the Secretary may allow any part of the requested

18 adjustments.

19 ‘‘(c) SPECIAL RULE IN CASE OF EXTENSION UNDER

20 SECTION 6248.—If the period described in section

21 6248(a) is extended pursuant to an agreement under sec22 tion 6248(b), the period prescribed by subsection (a)(1)

23 shall not expire before the date 6 months after the expira24 tion of the extension under section 6248(b).
1028

•HR 2491 RH

1 ‘‘SEC. 6252. JUDICIAL REVIEW WHERE ADMINISTRATIVE AD2 JUSTMENT REQUEST IS NOT ALLOWED IN

3 FULL.

4 ‘‘(a) IN GENERAL.—If any part of an administrative

5 adjustment request filed under section 6251 is not allowed

6 by the Secretary, the partnership may file a petition for

7 an adjustment with respect to the partnership items to

8 which such part of the request relates with—

9 ‘‘(1) the Tax Court,

10 ‘‘(2) the district court of the United States for

11 the district in which the principal place of business

12 of the partnership is located, or

13 ‘‘(3) the Claims Court.

14 ‘‘(b) PERIOD FOR FILING PETITION.—A petition may

15 be filed under subsection (a) with respect to partnership

16 items for a partnership taxable year only—

17 ‘‘(1) after the expiration of 6 months from the

18 date of filing of the request under section 6251, and

19 ‘‘(2) before the date which is 2 years after the

20 date of such request.

21 The 2-year period set forth in paragraph (2) shall be ex22 tended for such period as may be agreed upon in writing

23 by the partnership and the Secretary.

24 ‘‘(c) COORDINATION WITH SUBPART A.—

25 ‘‘(1) NOTICE OF PARTNERSHIP ADJUSTMENT

26 BEFORE FILING OF PETITION.—No petition may be
1029

•HR 2491 RH

1 filed under this section after the Secretary mails to

2 the partnership a notice of a partnership adjustment

3 for the partnership taxable year to which the request

4 under section 6251 relates.

5 ‘‘(2) NOTICE OF PARTNERSHIP ADJUSTMENT

6 AFTER FILING BUT BEFORE HEARING OF PETI7 TION.—If the Secretary mails to the partnership a

8 notice of a partnership adjustment for the partner9 ship taxable year to which the request under section

10 6251 relates after the filing of a petition under this

11 subsection but before the hearing of such petition,

12 such petition shall be treated as an action brought

13 under section 6247 with respect to such notice, ex14 cept that subsection (b) of section 6247 shall not

15 apply.

16 ‘‘(3) NOTICE MUST BE BEFORE EXPIRATION OF

17 STATUTE OF LIMITATIONS.—A notice of a partner18 ship adjustment for the partnership taxable year

19 shall be taken into account under paragraphs (1)

20 and (2) only if such notice is mailed before the expi21 ration of the period prescribed by section 6248 for

22 making adjustments to partnership items for such

23 taxable year.

24 ‘‘(d) SCOPE OF JUDICIAL REVIEW.—Except in the

25 case described in paragraph (2) of subsection (c), a court
1030

•HR 2491 RH

1 with which a petition is filed in accordance with this sec2 tion shall have jurisdiction to determine only those part3 nership items to which the part of the request under sec4 tion 6251 not allowed by the Secretary relates and those

5 items with respect to which the Secretary asserts adjust6 ments as offsets to the adjustments requested by the part7 nership.

8 ‘‘(e) DETERMINATION OF COURT REVIEWABLE.—

9 Any determination by a court under this subsection shall

10 have the force and effect of a decision of the Tax Court

11 or a final judgment or decree of the district court or the

12 Claims Court, as the case may be, and shall be reviewable

13 as such. The date of any such determination shall be

14 treated as being the date of the court’s order entering the

15 decision.

16 ‘‘PART III—DEFINITIONS AND SPECIAL RULES

‘‘Sec. 6255. Definitions and special rules.

17 ‘‘SEC. 6255. DEFINITIONS AND SPECIAL RULES.

18 ‘‘(a) DEFINITIONS.—For purposes of this sub19 chapter—

20 ‘‘(1) LARGE PARTNERSHIP.—The term ‘large

21 partnership’ has the meaning given to such term by

22 section 775 without regard to section 776(a).
1031

•HR 2491 RH

1 ‘‘(2) PARTNERSHIP ITEM.—The term ‘partner2 ship item’ has the meaning given to such term by

3 section 6231(a)(3).

4 ‘‘(b) PARTNERS BOUND BY ACTIONS OF PARTNER5 SHIP, ETC.—

6 ‘‘(1) DESIGNATION OF PARTNER.—Each large

7 partnership shall designate (in the manner pre8 scribed by the Secretary) a partner (or other person)

9 who shall have the sole authority to act on behalf of

10 such partnership under this subchapter. In any case

11 in which such a designation is not in effect, the Sec12 retary may select any partner as the partner with

13 such authority.

14 ‘‘(2) BINDING EFFECT.—A large partnership

15 and all partners of such partnership shall be

16 bound—

17 ‘‘(A) by actions taken under this sub18 chapter by the partnership, and

19 ‘‘(B) by any decision in a proceeding

20 brought under this subchapter.

21 ‘‘(c) PARTNERSHIPS HAVING PRINCIPAL PLACE OF

22 BUSINESS OUTSIDE THE UNITED STATES.—For purposes

23 of sections 6247 and 6252, a principal place of business

24 located outside the United States shall be treated as lo25 cated in the District of Columbia.
1032

•HR 2491 RH

1 ‘‘(d) TREATMENT WHERE PARTNERSHIP CEASES TO

2 EXIST.—If a partnership ceases to exist before a partner3 ship adjustment under this subchapter takes effect, such

4 adjustment shall be taken into account by the former part5 ners of such partnership under regulations prescribed by

6 the Secretary.

7 ‘‘(e) DATE DECISION BECOMES FINAL.—For pur8 poses of this subchapter, the principles of section 7481(a)

9 shall be applied in determining the date on which a deci10 sion of a district court or the Claims Court becomes final.

11 ‘‘(f) PARTNERSHIPS IN CASES UNDER TITLE 11 OF

12 THE UNITED STATES CODE.—The running of any period

13 of limitations provided in this subchapter on making a

14 partnership adjustment (or provided by section 6501 or

15 6502 on the assessment or collection of any amount re16 quired to be paid under section 6242) shall, in a case

17 under title 11 of the United States Code, be suspended

18 during the period during which the Secretary is prohibited

19 by reason of such case from making the adjustment (or

20 assessment or collection) and—

21 ‘‘(1) for adjustment or assessment, 60 days

22 thereafter, and

23 ‘‘(2) for collection, 6 months thereafter.
1033

•HR 2491 RH

1 ‘‘(g) REGULATIONS.—The Secretary shall prescribe

2 such regulations as may be necessary to carry out the pro3 visions of this subchapter, including regulations—

4 ‘‘(1) to prevent abuse through manipulation of

5 the provisions of this subchapter, and

6 ‘‘(2) providing that this subchapter shall not

7 apply to any case described in section 6231(c)(1) (or

8 the regulations prescribed thereunder) where the ap9 plication of this subchapter to such a case would

10 interfere with the effective and efficient enforcement

11 of this title.

12 In any case to which this subchapter does not apply by

13 reason of paragraph (2), rules similar to the rules of sec14 tions 6229(f) and 6255(f) shall apply.’’

15 (b) CLERICAL AMENDMENT.—The table of sub16 chapters for chapter 63 is amended by adding at the end

17 the following new item:

‘‘SUBCHAPTER D. Treatment of large partnerships.’’

18 SEC. 14303. DUE DATE FOR FURNISHING INFORMATION TO

19 PARTNERS OF LARGE PARTNERSHIPS.

20 (a) GENERAL RULE.—Subsection (b) of section 6031

21 (relating to copies to partners) is amended by adding at

22 the end the following new sentence: ‘‘In the case of a large

23 partnership (as defined in sections 775 and 776(a)), such

24 information shall be furnished on or before the first March

25 15 following the close of such taxable year.’’
1034

•HR 2491 RH

1 (b) TREATMENT AS INFORMATION RETURN.—Sec2 tion 6724 is amended by adding at the end the following

3 new subsection:

4 ‘‘(e) SPECIAL RULE FOR CERTAIN PARTNERSHIP RE5 TURNS.—If any partnership return under section 6031(a)

6 is required under section 6011(e) to be filed on magnetic

7 media or in other machine-readable form, for purposes of

8 this part, each schedule required to be included with such

9 return with respect to each partner shall be treated as a

10 separate information return.’’

11 SEC. 14304. RETURNS MAY BE REQUIRED ON MAGNETIC

12 MEDIA.

13 Paragraph (2) of section 6011(e) (relating to returns

14 on magnetic media) is amended by adding at the end the

15 following new sentence:

16 ‘‘Notwithstanding the preceding sentence, the Sec17 retary shall require partnerships having more than

18 100 partners to file returns on magnetic media.’’

19 SEC. 14305. TREATMENT OF PARTNERSHIP ITEMS OF INDI20 VIDUAL RETIREMENT ACCOUNTS.

21 Subsection (b) of section 6012 is amended by adding

22 at the end the following new paragraph:

23 ‘‘(6) IRA SHARE OF PARTNERSHIP INCOME.—

24 In the case of a trust which is exempt from taxation

25 under section 408(e), for purposes of this section,
1035

•HR 2491 RH

1 the trust’s distributive share of items of gross in2 come and gain of any partnership to which sub3 chapter C or D of chapter 63 applies shall be treat4 ed as equal to the trust’s distributive share of the

5 taxable income of such partnership.’’

6 SEC. 14306. EFFECTIVE DATE.

7 The amendments made by this part shall apply to

8 partnership taxable years beginning after December 31,

9 1995.

10 PART II—PROVISIONS RELATED TO CERTAIN

11 PARTNERSHIP PROCEEDINGS

12 SEC. 14311. TREATMENT OF PARTNERSHIP ITEMS IN DEFI13 CIENCY PROCEEDINGS.

14 (a) IN GENERAL.—Subchapter C of chapter 63 is

15 amended by adding at the end the following new section:

16 ‘‘SEC. 6234. DECLARATORY JUDGMENT RELATING TO

17 TREATMENT OF ITEMS OTHER THAN PART18 NERSHIP ITEMS WITH RESPECT TO AN

19 OVERSHELTERED RETURN.

20 ‘‘(a) GENERAL RULE.—If—

21 ‘‘(1) a taxpayer files an oversheltered return for

22 a taxable year,

23 ‘‘(2) the Secretary makes a determination with

24 respect to the treatment of items (other than part-
1036

•HR 2491 RH

1 nership items) of such taxpayer for such taxable

2 year, and

3 ‘‘(3) the adjustments resulting from such deter4 mination do not give rise to a deficiency (as defined

5 in section 6211) but would give rise to a deficiency

6 if there were no net loss from partnership items,

7 the Secretary is authorized to send a notice of adjustment

8 reflecting such determination to the taxpayer by certified

9 or registered mail.

10 ‘‘(b) OVERSHELTERED RETURN.—For purposes of

11 this section, the term ‘oversheltered return’ means an in12 come tax return which—

13 ‘‘(1) shows no taxable income for the taxable

14 year, and

15 ‘‘(2) shows a net loss from partnership items.

16 ‘‘(c) JUDICIAL REVIEW IN THE TAX COURT.—Within

17 90 days, or 150 days if the notice is addressed to a person

18 outside the United States, after the day on which the no19 tice of adjustment authorized in subsection (a) is mailed

20 to the taxpayer, the taxpayer may file a petition with the

21 Tax Court for redetermination of the adjustments. Upon

22 the filing of such a petition, the Tax Court shall have ju23 risdiction to make a declaration with respect to all items

24 (other than partnership items and affected items which

25 require partner level determinations as described in sec-
1037

•HR 2491 RH

1 tion 6230(a)(2)(A)(i)) for the taxable year to which the

2 notice of adjustment relates, in accordance with the prin3 ciples of section 6214(a). Any such declaration shall have

4 the force and effect of a decision of the Tax Court and

5 shall be reviewable as such.

6 ‘‘(d) FAILURE TO FILE PETITION.—

7 ‘‘(1) IN GENERAL.—Except as provided in para8 graph (2), if the taxpayer does not file a petition

9 with the Tax Court within the time prescribed in

10 subsection (c), the determination of the Secretary

11 set forth in the notice of adjustment that was mailed

12 to the taxpayer shall be deemed to be correct.

13 ‘‘(2) EXCEPTION.—Paragraph (1) shall not

14 apply after the date that the taxpayer—

15 ‘‘(A) files a petition with the Tax Court

16 within the time prescribed in subsection (c)

17 with respect to a subsequent notice of adjust18 ment relating to the same taxable year, or

19 ‘‘(B) files a claim for refund of an overpay20 ment of tax under section 6511 for the taxable

21 year involved.

22 If a claim for refund is filed by the taxpayer, then

23 solely for purposes of determining (for the taxable

24 year involved) the amount of any computational ad25 justment in connection with a partnership proceed-
1038

•HR 2491 RH

1 ing under this subchapter (other than under this

2 section) or the amount of any deficiency attributable

3 to affected items in a proceeding under section

4 6230(a)(2), the items that are the subject of the no5 tice of adjustment shall be presumed to have been

6 correctly reported on the taxpayer’s return during

7 the pendency of the refund claim (and, if within the

8 time prescribed by section 6532 the taxpayer com9 mences a civil action for refund under section 7422,

10 until the decision in the refund action becomes

11 final).

12 ‘‘(e) LIMITATIONS PERIOD.—

13 ‘‘(1) IN GENERAL.—Any notice to a taxpayer

14 under subsection (a) shall be mailed before the expi15 ration of the period prescribed by section 6501 (re16 lating to the period of limitations on assessment).

17 ‘‘(2) SUSPENSION WHEN SECRETARY MAILS NO18 TICE OF ADJUSTMENT.—If the Secretary mails a no19 tice of adjustment to the taxpayer for a taxable year,

20 the period of limitations on the making of assess21 ments shall be suspended for the period during

22 which the Secretary is prohibited from making the

23 assessment (and, in any event, if a proceeding in re24 spect of the notice of adjustment is placed on the

25 docket of the Tax Court, until the decision of the
1039

•HR 2491 RH

1 Tax Court becomes final), and for 60 days there2 after.

3 ‘‘(3) RESTRICTIONS ON ASSESSMENT.—Except

4 as otherwise provided in section 6851, 6852, or

5 6861, no assessment of a deficiency with respect to

6 any tax imposed by subtitle A attributable to any

7 item (other than a partnership item or any item af8 fected by a partnership item) shall be made—

9 ‘‘(A) until the expiration of the applicable

10 90-day or 150-day period set forth in sub11 section (c) for filing a petition with the Tax

12 Court, or

13 ‘‘(B) if a petition has been filed with the

14 Tax Court, until the decision of the Tax Court

15 has become final.

16 ‘‘(f) FURTHER NOTICES OF ADJUSTMENT RE17 STRICTED.—If the Secretary mails a notice of adjustment

18 to the taxpayer for a taxable year and the taxpayer files

19 a petition with the Tax Court within the time prescribed

20 in subsection (c), the Secretary may not mail another such

21 notice to the taxpayer with respect to the same taxable

22 year in the absence of a showing of fraud, malfeasance,

23 or misrepresentation of a material fact.

24 ‘‘(g) COORDINATION WITH OTHER PROCEEDINGS

25 UNDER THIS SUBCHAPTER.—
1040

•HR 2491 RH

1 ‘‘(1) IN GENERAL.—The treatment of any item

2 that has been determined pursuant to subsection (c)

3 or (d) shall be taken into account in determining the

4 amount of any computational adjustment that is

5 made in connection with a partnership proceeding

6 under this subchapter (other than under this sec7 tion), or the amount of any deficiency attributable to

8 affected items in a proceeding under section

9 6230(a)(2), for the taxable year involved. Notwith10 standing any other law or rule of law pertaining to

11 the period of limitations on the making of assess12 ments, for purposes of the preceding sentence, any

13 adjustment made in accordance with this section

14 shall be taken into account regardless of whether

15 any assessment has been made with respect to such

16 adjustment.

17 ‘‘(2) SPECIAL RULE IN CASE OF COMPUTA18 TIONAL ADJUSTMENT.—In the case of a computa19 tional adjustment that is made in connection with a

20 partnership proceeding under this subchapter (other

21 than under this section), the provisions of paragraph

22 (1) shall apply only if the computational adjustment

23 is made within the period prescribed by section 6229

24 for assessing any tax under subtitle A which is at-
1041

•HR 2491 RH

1 tributable to any partnership item or affected item

2 for the taxable year involved.

3 ‘‘(3) CONVERSION TO DEFICIENCY PROCEED4 ING.—If—

5 ‘‘(A) after the notice referred to in sub6 section (a) is mailed to a taxpayer for a taxable

7 year but before the expiration of the period for

8 filing a petition with the Tax Court under sub9 section (c) (or, if a petition is filed with the Tax

10 Court, before the Tax Court makes a declara11 tion for that taxable year), the treatment of any

12 partnership item for the taxable year is finally

13 determined, or any such item ceases to be a

14 partnership item pursuant to section 6231(b),

15 and

16 ‘‘(B) as a result of that final determination

17 or cessation, a deficiency can be determined

18 with respect to the items that are the subject

19 of the notice of adjustment,

20 the notice of adjustment shall be treated as a notice

21 of deficiency under section 6212 and any petition

22 filed in respect of the notice shall be treated as an

23 action brought under section 6213.
1042

•HR 2491 RH

1 ‘‘(4) FINALLY DETERMINED.—For purposes of

2 this subsection, the treatment of partnership items

3 shall be treated as finally determined if—

4 ‘‘(A) the Secretary enters into a settlement

5 agreement (within the meaning of section 6224)

6 with the taxpayer regarding such items,

7 ‘‘(B) a notice of final partnership adminis8 trative adjustment has been issued and—

9 ‘‘(i) no petition has been filed under

10 section 6226 and the time for doing so has

11 expired, or

12 ‘‘(ii) a petition has been filed under

13 section 6226 and the decision of the court

14 has become final, or

15 ‘‘(C) the period within which any tax at16 tributable to such items may be assessed

17 against the taxpayer has expired.

18 ‘‘(h) SPECIAL RULES IF SECRETARY INCORRECTLY

19 DETERMINES APPLICABLE PROCEDURE.—

20 ‘‘(1) SPECIAL RULE IF SECRETARY ERRO21 NEOUSLY MAILS NOTICE OF ADJUSTMENT.—If the

22 Secretary erroneously determines that subchapter B

23 does not apply to a taxable year of a taxpayer and

24 consistent with that determination timely mails a no25 tice of adjustment to the taxpayer pursuant to sub-
1043

•HR 2491 RH

1 section (a) of this section, the notice of adjustment

2 shall be treated as a notice of deficiency under sec3 tion 6212 and any petition that is filed in respect of

4 the notice shall be treated as an action brought

5 under section 6213.

6 ‘‘(2) SPECIAL RULE IF SECRETARY ERRO7 NEOUSLY MAILS NOTICE OF DEFICIENCY.—If the

8 Secretary erroneously determines that subchapter B

9 applies to a taxable year of a taxpayer and consist10 ent with that determination timely mails a notice of

11 deficiency to the taxpayer pursuant to section 6212,

12 the notice of deficiency shall be treated as a notice

13 of adjustment under subsection (a) and any petition

14 that is filed in respect of the notice shall be treated

15 as an action brought under subsection (c).’’

16 (b) TREATMENT OF PARTNERSHIP ITEMS IN DEFI17 CIENCY PROCEEDINGS.—Section 6211 (defining defi18 ciency) is amended by adding at the end the following new

19 subsection:

20 ‘‘(c) COORDINATION WITH SUBCHAPTER C.—In de21 termining the amount of any deficiency for purposes of

22 this subchapter, adjustments to partnership items shall be

23 made only as provided in subchapter C.’’
1044

•HR 2491 RH

1 (c) CLERICAL AMENDMENT.—The table of sections

2 for subchapter C of chapter 63 is amended by adding at

3 the end the following new item:

‘‘Sec. 6234. Declaratory judgment relating to treatment of items

other than partnership items with respect to an

oversheltered return.’’

4 (d) EFFECTIVE DATE.—The amendments made by

5 this section shall apply to partnership taxable years ending

6 after the date of the enactment of this Act.

7 SEC. 14312. PARTNERSHIP RETURN TO BE DETERMINATIVE

8 OF AUDIT PROCEDURES TO BE FOLLOWED.

9 (a) IN GENERAL.—Section 6231 (relating to defini10 tions and special rules) is amended by adding at the end

11 the following new subsection:

12 ‘‘(g) PARTNERSHIP RETURN TO BE DETERMINATIVE

13 OF WHETHER SUBCHAPTER APPLIES.—

14 ‘‘(1) DETERMINATION THAT SUBCHAPTER AP15 PLIES.—If, on the basis of a partnership return for

16 a taxable year, the Secretary reasonably determines

17 that this subchapter applies to such partnership for

18 such year but such determination is erroneous, then

19 the provisions of this subchapter are hereby ex20 tended to such partnership (and its items) for such

21 taxable year and to partners of such partnership.

22 ‘‘(2) DETERMINATION THAT SUBCHAPTER DOES

23 NOT APPLY.—If, on the basis of a partnership re24 turn for a taxable year, the Secretary reasonably de-
1045

•HR 2491 RH

1 termines that this subchapter does not apply to such

2 partnership for such year but such determination is

3 erroneous, then the provisions of this subchapter

4 shall not apply to such partnership (and its items)

5 for such taxable year or to partners of such partner6 ship.’’

7 (b) EFFECTIVE DATE.—The amendment made by

8 this section shall apply to partnership taxable years ending

9 after the date of the enactment of this Act.

10 SEC. 14313. PROVISIONS RELATING TO STATUTE OF LIMITA11 TIONS.

12 (a) SUSPENSION OF STATUTE WHERE UNTIMELY

13 PETITION FILED.—Paragraph (1) of section 6229(d) (re14 lating to suspension where Secretary makes administrative

15 adjustment) is amended by striking all that follows ‘‘sec16 tion 6226’’ and inserting the following: ‘‘(and, if a petition

17 is filed under section 6226 with respect to such adminis18 trative adjustment, until the decision of the court becomes

19 final), and’’.

20 (b) SUSPENSION OF STATUTE DURING BANKRUPTCY

21 PROCEEDING.—Section 6229 is amended by adding at the

22 end the following new subsection:

23 ‘‘(h) SUSPENSION DURING PENDENCY OF BANK24 RUPTCY PROCEEDING.—If a petition is filed naming a

25 partner as a debtor in a bankruptcy proceeding under title
1046

•HR 2491 RH

1 11 of the United States Code, the running of the period

2 of limitations provided in this section with respect to such

3 partner shall be suspended—

4 ‘‘(1) for the period during which the Secretary

5 is prohibited by reason of such bankruptcy proceed6 ing from making an assessment, and

7 ‘‘(2) for 60 days thereafter.’’

8 (c) TAX MATTERS PARTNER IN BANKRUPTCY.—Sec9 tion 6229(b) is amended by redesignating paragraph (2)

10 as paragraph (3) and by inserting after paragraph (1) the

11 following new paragraph:

12 ‘‘(2) SPECIAL RULE WITH RESPECT TO DEBT13 ORS IN TITLE 11 CASES.—Notwithstanding any other

14 law or rule of law, if an agreement is entered into

15 under paragraph (1)(B) and the agreement is signed

16 by a person who would be the tax matters partner

17 but for the fact that, at the time that the agreement

18 is executed, the person is a debtor in a bankruptcy

19 proceeding under title 11 of the United States Code,

20 such agreement shall be binding on all partners in

21 the partnership unless the Secretary has been noti22 fied of the bankruptcy proceeding in accordance with

23 regulations prescribed by the Secretary.’’

24 (d) EFFECTIVE DATES.—
1047

•HR 2491 RH

1 (1) SUBSECTIONS (a) AND (b).—The amend2 ments made by subsections (a) and (b) shall apply

3 to partnership taxable years with respect to which

4 the period under section 6229 of the Internal Reve5 nue Code of 1986 for assessing tax has not expired

6 on or before the date of the enactment of this Act.

7 (2) SUBSECTION (c).—The amendment made

8 by subsection (c) shall apply to agreements entered

9 into after the date of the enactment of this Act.

10 SEC. 14314. EXPANSION OF SMALL PARTNERSHIP EXCEP11 TION.

12 (a) IN GENERAL.—Clause (i) of section

13 6231(a)(1)(B) (relating to exception for small partner14 ships) is amended to read as follows:

15 ‘‘(i) IN GENERAL.—The term ‘part16 nership’ shall not include any partnership

17 having 10 or fewer partners each of whom

18 is an individual (other than a nonresident

19 alien), a C corporation, or an estate of a

20 deceased partner. For purposes of the pre21 ceding sentence, a husband and wife (and

22 their estates) shall be treated as 1 part23 ner.’’
1048

•HR 2491 RH

1 (b) EFFECTIVE DATE.—The amendment made by

2 this section shall apply to partnership taxable years ending

3 after the date of the enactment of this Act.

4 SEC. 14315. EXCLUSION OF PARTIAL SETTLEMENTS FROM

5 1-YEAR LIMITATION ON ASSESSMENT.

6 (a) IN GENERAL.—Subsection (f) of section 6229 (re7 lating to items becoming nonpartnership items) is amend8 ed—

9 (1) by striking ‘‘(f) ITEMS BECOMING

10 NONPARTNERSHIP ITEMS.—If’’ and inserting the

11 following:

12 ‘‘(f) SPECIAL RULES.—

13 ‘‘(1) ITEMS BECOMING NONPARTNERSHIP

14 ITEMS.—If’’,

15 (2) by moving the text of such subsection 2 ems

16 to the right, and

17 (3) by adding at the end the following new

18 paragraph:

19 ‘‘(2) SPECIAL RULE FOR PARTIAL SETTLEMENT

20 AGREEMENTS.—If a partner enters into a settlement

21 agreement with the Secretary with respect to the

22 treatment of some of the partnership items in dis23 pute for a partnership taxable year but other part24 nership items for such year remain in dispute, the

25 period of limitations for assessing any tax attrib-
1049

•HR 2491 RH

1 utable to the settled items shall be determined as if

2 such agreement had not been entered into.’’

3 (b) EFFECTIVE DATE.—The amendment made by

4 this section shall apply to settlements entered into after

5 the date of the enactment of this Act.

6 SEC. 14316. EXTENSION OF TIME FOR FILING A REQUEST

7 FOR ADMINISTRATIVE ADJUSTMENT.

8 (a) IN GENERAL.—Section 6227 (relating to admin9 istrative adjustment requests) is amended by redesignat10 ing subsections (b) and (c) as subsections (c) and (d), re11 spectively, and by inserting after subsection (a) the follow12 ing new subsection:

13 ‘‘(b) SPECIAL RULE IN CASE OF EXTENSION OF PE14 RIOD OF LIMITATIONS UNDER SECTION 6229.—The pe15 riod prescribed by subsection (a)(1) for filing of a request

16 for an administrative adjustment shall be extended—

17 ‘‘(1) for the period within which an assessment

18 may be made pursuant to an agreement (or any ex19 tension thereof) under section 6229(b), and

20 ‘‘(2) for 6 months thereafter.’’

21 (b) EFFECTIVE DATE.—The amendment made by

22 this section shall take effect as if included in the amend23 ments made by section 402 of the Tax Equity and Fiscal

24 Responsibility Act of 1982.
1050

•HR 2491 RH

1 SEC. 14317. AVAILABILITY OF INNOCENT SPOUSE RELIEF IN

2 CONTEXT OF PARTNERSHIP PROCEEDINGS.

3 (a) IN GENERAL.—Subsection (a) of section 6230 is

4 amended by adding at the end the following new para5 graph:

6 ‘‘(3) SPECIAL RULE IN CASE OF ASSERTION BY

7 PARTNER’S SPOUSE OF INNOCENT SPOUSE RE8 LIEF.—

9 ‘‘(A) Notwithstanding section 6404(b), if

10 the spouse of a partner asserts that section

11 6013(e) applies with respect to a liability that

12 is attributable to any adjustment to a partner13 ship item, then such spouse may file with the

14 Secretary within 60 days after the notice of

15 computational adjustment is mailed to the

16 spouse a request for abatement of the assess17 ment specified in such notice. Upon receipt of

18 such request, the Secretary shall abate the as19 sessment. Any reassessment of the tax with re20 spect to which an abatement is made under this

21 subparagraph shall be subject to the deficiency

22 procedures prescribed by subchapter B. The pe23 riod for making any such reassessment shall

24 not expire before the expiration of 60 days after

25 the date of such abatement.
1051

•HR 2491 RH

1 ‘‘(B) If the spouse files a petition with the

2 Tax Court pursuant to section 6213 with re3 spect to the request for abatement described in

4 subparagraph (A), the Tax Court shall only

5 have jurisdiction pursuant to this section to de6 termine whether the requirements of section

7 6013(e) have been satisfied. For purposes of

8 such determination, the treatment of partner9 ship items under the settlement, the final part10 nership administrative adjustment, or the deci11 sion of the court (whichever is appropriate) that

12 gave rise to the liability in question shall be

13 conclusive.

14 ‘‘(C) Rules similar to the rules contained

15 in subparagraphs (B) and (C) of paragraph (2)

16 shall apply for purposes of this paragraph.’’

17 (b) CLAIMS FOR REFUND.—Subsection (c) of section

18 6230 is amended by adding at the end the following new

19 paragraph:

20 ‘‘(5) RULES FOR SEEKING INNOCENT SPOUSE

21 RELIEF.—

22 ‘‘(A) IN GENERAL.—The spouse of a part23 ner may file a claim for refund on the ground

24 that the Secretary failed to relieve the spouse

25 under section 6013(e) from a liability that is at-
1052

•HR 2491 RH

1 tributable to an adjustment to a partnership

2 item.

3 ‘‘(B) TIME FOR FILING CLAIM.—Any claim

4 under subparagraph (A) shall be filed within 6

5 months after the day on which the Secretary

6 mails to the spouse the notice of computational

7 adjustment referred to in subsection (a)(3)(A).

8 ‘‘(C) SUIT IF CLAIM NOT ALLOWED.—If

9 the claim under subparagraph (B) is not al10 lowed, the spouse may bring suit with respect

11 to the claim within the period specified in para12 graph (3).

13 ‘‘(D) PRIOR DETERMINATIONS ARE BIND14 ING.—For purposes of any claim or suit under

15 this paragraph, the treatment of partnership

16 items under the settlement, the final partner17 ship administrative adjustment, or the decision

18 of the court (whichever is appropriate) that

19 gave rise to the liability in question shall be

20 conclusive.’’

21 (c) TECHNICAL AMENDMENTS.—

22 (1) Paragraph (1) of section 6230(a) is amend23 ed by striking ‘‘paragraph (2)’’ and inserting ‘‘para24 graph (2) or (3)’’.
1053

•HR 2491 RH

1 (2) Subsection (a) of section 6503 is amended

2 by striking ‘‘section 6230(a)(2)(A)’’ and inserting

3 ‘‘paragraph (2)(A) or (3) of section 6230(a)’’.

4 (d) EFFECTIVE DATE.—The amendments made by

5 this section shall take effect as if included in the amend6 ments made by section 402 of the Tax Equity and Fiscal

7 Responsibility Act of 1982.

8 SEC. 14318. DETERMINATION OF PENALTIES AT PARTNER9 SHIP LEVEL.

10 (a) IN GENERAL.—Section 6221 (relating to tax

11 treatment determined at partnership level) is amended by

12 striking ‘‘item’’ and inserting ‘‘item (and the applicability

13 of any penalty, addition to tax, or additional amount which

14 relates to an adjustment to a partnership item)’’.

15 (b) CONFORMING AMENDMENTS.—

16 (1) Subsection (f) of section 6226 is amended—

17 (A) by striking ‘‘relates and’’ and inserting

18 ‘‘relates,’’, and

19 (B) by inserting before the period ‘‘, and

20 the applicability of any penalty, addition to tax,

21 or additional amount which relates to an ad22 justment to a partnership item’’.

23 (2) Clause (i) of section 6230(a)(2)(A) is

24 amended to read as follows:
1054

•HR 2491 RH

1 ‘‘(i) affected items which require part2 ner level determinations (other than pen3 alties, additions to tax, and additional

4 amounts that relate to adjustments to

5 partnership items), or’’.

6 (3)(A) Subparagraph (A) of section 6230(a)(3),

7 as added by section 14317, is amended by inserting

8 ‘‘(including any liability for any penalty, addition to

9 tax, or additional amount relating to such adjust10 ment)’’ after ‘‘partnership item’’.

11 (B) Subparagraph (B) of such section is

12 amended by inserting ‘‘(and the applicability of any

13 penalties, additions to tax, or additional amounts)’’

14 after ‘‘partnership items’’.

15 (C) Subparagraph (A) of section 6230(c)(5), as

16 added by section 14317, is amended by inserting be17 fore the period ‘‘(including any liability for any pen18 alties, additions to tax, or additional amounts relat19 ing to such adjustment)’’.

20 (D) Subparagraph (D) of section 6230(c)(5), as

21 added by section 14317, is amended by inserting

22 ‘‘(and the applicability of any penalties, additions to

23 tax, or additional amounts)’’ after ‘‘partnership

24 items’’.
1055

•HR 2491 RH

1 (4) Paragraph (1) of section 6230(c) is amend2 ed by striking ‘‘or’’ at the end of subparagraph (A),

3 by striking the period at the end of subparagraph

4 (B) and inserting ‘‘, or’’, and by adding at the end

5 the following new subparagraph:

6 ‘‘(C) the Secretary erroneously imposed

7 any penalty, addition to tax, or additional

8 amount which relates to an adjustment to a

9 partnership item.’’

10 (5) So much of subparagraph (A) of section

11 6230(c)(2) as precedes ‘‘shall be filed’’ is amended

12 to read as follows:

13 ‘‘(A) UNDER PARAGRAPH (1) (A) OR (C).—

14 Any claim under subparagraph (A) or (C) of

15 paragraph (1)’’.

16 (6) Paragraph (4) of section 6230(c) is amend17 ed by adding at the end the following: ‘‘In addition,

18 the determination under the final partnership ad19 ministrative adjustment or under the decision of the

20 court (whichever is appropriate) concerning the ap21 plicability of any penalty, addition to tax, or addi22 tional amount which relates to an adjustment to a

23 partnership item shall also be conclusive. Notwith24 standing the preceding sentence, the partner shall be

25 allowed to assert any partner level defenses that may
1056

•HR 2491 RH

1 apply or to challenge the amount of the computa2 tional adjustment.’’

3 (c) EFFECTIVE DATE.—The amendments made by

4 this section shall apply to partnership taxable years ending

5 after the date of the enactment of this Act.

6 SEC. 14319. PROVISIONS RELATING TO COURT JURISDIC7 TION, ETC.

8 (a) TAX COURT JURISDICTION TO ENJOIN PRE9 MATURE ASSESSMENTS OF DEFICIENCIES ATTRIBUTABLE

10 TO PARTNERSHIP ITEMS.—Subsection (b) of section 6225

11 is amended by striking ‘‘the proper court.’’ and inserting

12 ‘‘the proper court, including the Tax Court. The Tax

13 Court shall have no jurisdiction to enjoin any action or

14 proceeding under this subsection unless a timely petition

15 for a readjustment of the partnership items for the taxable

16 year has been filed and then only in respect of the adjust17 ments that are the subject of such petition.’’

18 (b) JURISDICTION TO CONSIDER STATUTE OF LIMI19 TATIONS WITH RESPECT TO PARTNERS.—Paragraph (1)

20 of section 6226(d) is amended by adding at the end the

21 following new sentence:

22 ‘‘Notwithstanding subparagraph (B), any person

23 treated under subsection (c) as a party to an action

24 shall be permitted to participate in such action (or

25 file a readjustment petition under subsection (b) or
1057

•HR 2491 RH

1 paragraph (2) of this subsection) solely for the pur2 pose of asserting that the period of limitations for

3 assessing any tax attributable to partnership items

4 has expired with respect to such person, and the

5 court having jurisdiction of such action shall have

6 jurisdiction to consider such assertion.’’

7 (c) TAX COURT JURISDICTION TO DETERMINE

8 OVERPAYMENTS ATTRIBUTABLE TO AFFECTED ITEMS.—

9 (1) Paragraph (6) of section 6230(d) is amend10 ed by striking ‘‘(or an affected item)’’.

11 (2) Paragraph (3) of section 6512(b) is amend12 ed by adding at the end the following new sentence:

13 ‘‘In the case of a credit or refund relating to an af14 fected item (within the meaning of section

15 6231(a)(5)), the preceding sentence shall be applied

16 by substituting the periods under sections 6229 and

17 6230(d) for the periods under section 6511(b)(2),

18 (c), and (d).’’

19 (d) VENUE ON APPEAL.—

20 (1) Paragraph (1) of section 7482(b) is amend21 ed by striking ‘‘or’’ at the end of subparagraph (D),

22 by striking the period at the end of subparagraph

23 (E) and inserting ‘‘, or’’, and by inserting after sub24 paragraph (E) the following new subparagraph:
1058

•HR 2491 RH

1 ‘‘(F) in the case of a petition under section

2 6234(c)—

3 ‘‘(i) the legal residence of the peti4 tioner if the petitioner is not a corporation,

5 and

6 ‘‘(ii) the place or office applicable

7 under subparagraph (B) if the petitioner is

8 a corporation.’’

9 (2) The last sentence of section 7482(b)(1) is

10 amended by striking ‘‘or 6228(a)’’ and inserting ‘‘,

11 6228(a), or 6234(c)’’.

12 (e) OTHER PROVISIONS.—

13 (1) Subsection (c) of section 7459 is amended

14 by striking ‘‘or section 6228(a)’’ and inserting ‘‘,

15 6228(a), or 6234(c)’’.

16 (2) Subsection (o) of section 6501 is amended

17 by adding at the end the following new paragraph:

18 ‘‘(3) For declaratory judgment relating to treat19 ment of items other than partnership items with re20 spect to an oversheltered return, see section 6234.’’

21 (f) EFFECTIVE DATE.—The amendments made by

22 this section shall apply to partnership taxable years ending

23 after the date of the enactment of this Act.
1059

•HR 2491 RH

1 SEC. 14320. TREATMENT OF PREMATURE PETITIONS FILED

2 BY NOTICE PARTNERS OR 5-PERCENT

3 GROUPS.

4 (a) IN GENERAL.—Subsection (b) of section 6226

5 (relating to judicial review of final partnership administra6 tive adjustments) is amended by redesignating paragraph

7 (5) as paragraph (6) and by inserting after paragraph (4)

8 the following new paragraph:

9 ‘‘(5) TREATMENT OF PREMATURE PETI10 TIONS.—If—

11 ‘‘(A) a petition for a readjustment of part12 nership items for the taxable year involved is

13 filed by a notice partner (or a 5-percent group)

14 during the 90-day period described in sub15 section (a), and

16 ‘‘(B) no action is brought under paragraph

17 (1) during the 60-day period described therein

18 with respect to such taxable year which is not

19 dismissed,

20 such petition shall be treated for purposes of para21 graph (1) as filed on the last day of such 60-day

22 period.’’

23 (b) EFFECTIVE DATE.—The amendment made by

24 this section shall apply to petitions filed after the date of

25 the enactment of this Act.
1060

•HR 2491 RH

1 SEC. 14321. BONDS IN CASE OF APPEALS FROM CERTAIN

2 PROCEEDING.

3 (a) IN GENERAL.—Subsection (b) of section 7485

4 (relating to bonds to stay assessment of collection) is

5 amended—

6 (1) by inserting ‘‘penalties,’’ after ‘‘any inter7 est,’’, and

8 (2) by striking ‘‘aggregate of such deficiencies’’

9 and inserting ‘‘aggregate liability of the parties to

10 the action’’.

11 (b) EFFECTIVE DATE.—The amendment made by

12 this section shall take effect as if included in the amend13 ments made by section 402 of the Tax Equity and Fiscal

14 Responsibility Act of 1982.

15 SEC. 14322. SUSPENSION OF INTEREST WHERE DELAY IN

16 COMPUTATIONAL ADJUSTMENT RESULTING

17 FROM CERTAIN SETTLEMENTS.

18 (a) IN GENERAL.—Subsection (c) of section 6601

19 (relating to interest on underpayment, nonpayment, or ex20 tension of time for payment, of tax) is amended by adding

21 at the end the following new sentence: ‘‘In the case of a

22 settlement under section 6224(c) which results in the con23 version of partnership items to nonpartnership items pur24 suant to section 6231(b)(1)(C), the preceding sentence

25 shall apply to a computational adjustment resulting from

26 such settlement in the same manner as if such adjustment
1061

•HR 2491 RH

1 were a deficiency and such settlement were a waiver re2 ferred to in the preceding sentence.’’

3 (b) EFFECTIVE DATE.—The amendment made by

4 this section shall apply to adjustments with respect to

5 partnership taxable years beginning after the date of the

6 enactment of this Act.

7 SEC. 14323. SPECIAL RULES FOR ADMINISTRATIVE ADJUST8 MENT REQUESTS WITH RESPECT TO BAD

9 DEBTS OR WORTHLESS SECURITIES.

10 (a) GENERAL RULE.—Section 6227 (relating to ad11 ministrative adjustment requests) is amended by adding

12 at the end the following new subsection:

13 ‘‘(e) REQUESTS WITH RESPECT TO BAD DEBTS OR

14 WORTHLESS SECURITIES.—In the case of that portion of

15 any request for an administrative adjustment which re16 lates to the deductibility by the partnership under section

17 166 of a debt as a debt which became worthless, or under

18 section 165(g) of a loss from worthlessness of a security,

19 the period prescribed in subsection (a)(1) shall be 7 years

20 from the last day for filing the partnership return for the

21 year with respect to which such request is made (deter22 mined without regard to extensions).’’

23 (b) EFFECTIVE DATE.—

24 (1) IN GENERAL.—The amendment made by

25 subsection (a) shall take effect as if included in the
1062

•HR 2491 RH

1 amendments made by section 402 of the Tax Equity

2 and Fiscal Responsibility Act of 1982.

3 (2) TREATMENT OF REQUESTS FILED BEFORE

4 DATE OF ENACTMENT.—In the case of that portion

5 of any request (filed before the date of the enact6 ment of this Act) for an administrative adjustment

7 which relates to the deductibility of a debt as a debt

8 which became worthless or the deductibility of a loss

9 from the worthlessness of a security—

10 (A) paragraph (2) of section 6227(a) of

11 the Internal Revenue Code of 1986 shall not

12 apply,

13 (B) the period for filing a petition under

14 section 6228 of the Internal Revenue Code of

15 1986 with respect to such request shall not ex16 pire before the date 6 months after the date of

17 the enactment of this Act, and

18 (C) such a petition may be filed without

19 regard to whether there was a notice of the be20 ginning of an administrative proceeding or a

21 final partnership administrative adjustment.
1063

•HR 2491 RH

1 Subtitle D—Foreign Provisions

2 PART I—MODIFICATIONS TO TREATMENT OF

3 PASSIVE FOREIGN INVESTMENT COMPANIES

4 SEC. 14401. UNITED STATES SHAREHOLDERS OF CON5 TROLLED FOREIGN CORPORATIONS NOT

6 SUBJECT TO PFIC INCLUSION.

7 Section 1296 is amended by adding at the end the

8 following new subsection:

9 ‘‘(e) EXCEPTION FOR UNITED STATES SHAREHOLD10 ERS OF CONTROLLED FOREIGN CORPORATIONS.—

11 ‘‘(1) IN GENERAL.—For purposes of this part,

12 a corporation shall not be treated with respect to a

13 shareholder as a passive foreign investment company

14 during the qualified portion of such shareholder’s

15 holding period with respect to stock in such corpora16 tion.

17 ‘‘(2) QUALIFIED PORTION.—For purposes of

18 this subsection, the term ‘qualified portion’ means

19 the portion of the shareholder’s holding period—

20 ‘‘(A) which is after December 31, 1995,

21 and

22 ‘‘(B) during which the shareholder is a

23 United States shareholder (as defined in section

24 951(b)) of the corporation and the corporation

25 is a controlled foreign corporation.
1064

•HR 2491 RH

1 ‘‘(3) NEW HOLDING PERIOD IF QUALIFIED POR2 TION ENDS.—

3 ‘‘(A) IN GENERAL.—Except as provided in

4 subparagraph (B), if the qualified portion of a

5 shareholder’s holding period with respect to any

6 stock ends after December 31, 1995, solely for

7 purposes of this part, the shareholder’s holding

8 period with respect to such stock shall be treat9 ed as beginning as of the first day following

10 such period.

11 ‘‘(B) EXCEPTION.—Subparagraph (A)

12 shall not apply if such stock was, with respect

13 to such shareholder, stock in a passive foreign

14 investment company at any time before the

15 qualified portion of the shareholder’s holding

16 period with respect to such stock and no elec17 tion under section 1298(b)(1) is made.’’

18 SEC. 14402. ELECTION OF MARK TO MARKET FOR MARKET19 ABLE STOCK IN PASSIVE FOREIGN INVEST20 MENT COMPANY.

21 (a) IN GENERAL.—Part VI of subchapter P of chap22 ter 1 is amended by redesignating subpart C as subpart

23 D, by redesignating sections 1296 and 1297 as sections

24 1297 and 1298, respectively, and by inserting after sub25 part B the following new subpart:
1065

•HR 2491 RH

1 ‘‘Subpart C—Election of Mark to Market For

2 Marketable Stock

‘‘Sec. 1296. Election of mark to market for marketable stock.

3 ‘‘SEC. 1296. ELECTION OF MARK TO MARKET FOR MARKET4 ABLE STOCK.

5 ‘‘(a) GENERAL RULE.—In the case of marketable

6 stock in a passive foreign investment company which is

7 owned (or treated under subsection (g) as owned) by a

8 United States person at the close of any taxable year of

9 such person, at the election of such person—

10 ‘‘(1) If the fair market value of such stock as

11 of the close of such taxable year exceeds its adjusted

12 basis, such United States person shall include in

13 gross income for such taxable year an amount equal

14 to the amount of such excess.

15 ‘‘(2) If the adjusted basis of such stock exceeds

16 the fair market value of such stock as of the close

17 of such taxable year, such United States person

18 shall be allowed a deduction for such taxable year

19 equal to the lesser of—

20 ‘‘(A) the amount of such excess, or

21 ‘‘(B) the unreversed inclusions with respect

22 to such stock.

23 ‘‘(b) BASIS ADJUSTMENTS.—
1066

•HR 2491 RH

1 ‘‘(1) IN GENERAL.—The adjusted basis of stock

2 in a passive foreign investment company—

3 ‘‘(A) shall be increased by the amount in4 cluded in the gross income of the United States

5 person under subsection (a)(1) with respect to

6 such stock, and

7 ‘‘(B) shall be decreased by the amount al8 lowed as a deduction to the United States per9 son under subsection (a)(2) with respect to

10 such stock.

11 ‘‘(2) SPECIAL RULE FOR STOCK CONSTRUC12 TIVELY OWNED.—In the case of stock in a passive

13 foreign investment company which the United States

14 person is treated as owning under subsection (g)—

15 ‘‘(A) the adjustments under paragraph (1)

16 shall apply to such stock in the hands of the

17 person actually holding such stock but only for

18 purposes of determining the subsequent treat19 ment under this chapter of the United States

20 person with respect to such stock, and

21 ‘‘(B) similar adjustments shall be made to

22 the adjusted basis of the property by reason of

23 which the United States person is treated as

24 owning such stock.

25 ‘‘(c) CHARACTER AND SOURCE RULES.—
1067

•HR 2491 RH

1 ‘‘(1) ORDINARY TREATMENT.—

2 ‘‘(A) GAIN.—Any amount included in gross

3 income under subsection (a)(1), and any gain

4 on the sale or other disposition of marketable

5 stock in a passive foreign investment company

6 (with respect to which an election under this

7 section is in effect), shall be treated as ordinary

8 income.

9 ‘‘(B) LOSS.—Any—

10 ‘‘(i) amount allowed as a deduction

11 under subsection (a)(2), and

12 ‘‘(ii) loss on the sale or other disposi13 tion of marketable stock in a passive for14 eign investment company (with respect to

15 which an election under this section is in

16 effect) to the extent that the amount of

17 such loss does not exceed the unreversed

18 inclusions with respect to such stock,

19 shall be treated as an ordinary loss. The

20 amount so treated shall be treated as a deduc21 tion allowable in computing adjusted gross in22 come.

23 ‘‘(2) SOURCE.—The source of any amount in24 cluded in gross income under subsection (a)(1) (or

25 allowed as a deduction under subsection (a)(2)) shall
1068

•HR 2491 RH

1 be determined in the same manner as if such

2 amount were gain or loss (as the case may be) from

3 the sale of stock in the passive foreign investment

4 company.

5 ‘‘(d) UNREVERSED INCLUSIONS.—For purposes of

6 this section, the term ‘unreversed inclusions’ means, with

7 respect to any stock in a passive foreign investment com8 pany, the excess (if any) of—

9 ‘‘(1) the amount included in gross income of

10 the taxpayer under subsection (a)(1) with respect to

11 such stock for prior taxable years, over

12 ‘‘(2) the amount allowed as a deduction under

13 subsection (a)(2) with respect to such stock for prior

14 taxable years.

15 The amount referred to in paragraph (1) shall include any

16 amount which would have been included in gross income

17 under subsection (a)(1) with respect to such stock for any

18 prior taxable year but for section 1291.

19 ‘‘(e) MARKETABLE STOCK.—For purposes of this

20 section—

21 ‘‘(1) IN GENERAL.—The term ‘marketable

22 stock’ means—

23 ‘‘(A) any stock which is regularly traded

24 on—
1069

•HR 2491 RH

1 ‘‘(i) a national securities exchange

2 which is registered with the Securities and

3 Exchange Commission or the national mar4 ket system established pursuant to section

5 11A of the Securities and Exchange Act of

6 1934, or

7 ‘‘(ii) any exchange or other market

8 which the Secretary determines has rules

9 adequate to carry out the purposes of this

10 part,

11 ‘‘(B) to the extent provided in regulations,

12 stock in any foreign corporation which is com13 parable to a regulated investment company and

14 which offers for sale or has outstanding any

15 stock of which it is the issuer and which is re16 deemable at its net asset value, and

17 ‘‘(C) to the extent provided in regulations,

18 any option on stock described in subparagraph

19 (A) or (B).

20 ‘‘(2) SPECIAL RULE FOR REGULATED INVEST21 MENT COMPANIES.—In the case of any regulated in22 vestment company which is offering for sale or has

23 outstanding any stock of which it is the issuer and

24 which is redeemable at its net asset value, all stock

25 in a passive foreign investment company which it
1070

•HR 2491 RH

1 owns directly or indirectly shall be treated as mar2 ketable stock for purposes of this section. Except as

3 provided in regulations, similar treatment as mar4 ketable stock shall apply in the case of any other

5 regulated investment company which publishes net

6 asset valuations at least annually.

7 ‘‘(f) TREATMENT OF CONTROLLED FOREIGN COR8 PORATIONS WHICH ARE SHAREHOLDERS IN PASSIVE

9 FOREIGN INVESTMENT COMPANIES.—In the case of a for10 eign corporation which is a controlled foreign corporation

11 and which owns (or is treated under subsection (g) as own12 ing) stock in a passive foreign investment company—

13 ‘‘(1) this section (other than subsection (c)(2))

14 shall apply to such foreign corporation in the same

15 manner as if such corporation were a United States

16 person, and

17 ‘‘(2) for purposes of subpart F of part III of

18 subchapter N—

19 ‘‘(A) any amount included in gross income

20 under subsection (a)(1) shall be treated as for21 eign personal holding company income de22 scribed in section 954(c)(1)(A), and

23 ‘‘(B) any amount allowed as a deduction

24 under subsection (a)(2) shall be treated as a de-
1071

•HR 2491 RH

1 duction allocable to foreign personal holding

2 company income so described.

3 ‘‘(g) STOCK OWNED THROUGH CERTAIN FOREIGN

4 ENTITIES.—Except as provided in regulations—

5 ‘‘(1) IN GENERAL.—For purposes of this sec6 tion, stock owned, directly or indirectly, by or for a

7 foreign partnership or foreign trust or foreign estate

8 shall be considered as being owned proportionately

9 by its partners or beneficiaries. Stock considered to

10 be owned by a person by reason of the application

11 of the preceding sentence shall, for purposes of ap12 plying such sentence, be treated as actually owned

13 by such person.

14 ‘‘(2) TREATMENT OF CERTAIN DISPOSITIONS.—

15 In any case in which a United States person is

16 treated as owning stock in a passive foreign invest17 ment company by reason of paragraph (1)—

18 ‘‘(A) any disposition by the United States

19 person or by any other person which results in

20 the United States person being treated as no

21 longer owning such stock, and

22 ‘‘(B) any disposition by the person owning

23 such stock,
1072

•HR 2491 RH

1 shall be treated as a disposition by the United

2 States person of the stock in the passive foreign in3 vestment company.

4 ‘‘(h) COORDINATION WITH SECTION 851(b).—For

5 purposes of paragraphs (2) and (3) of section 851(b), any

6 amount included in gross income under subsection (a)

7 shall be treated as a dividend.

8 ‘‘(i) STOCK ACQUIRED FROM A DECEDENT.—In the

9 case of stock of a passive foreign investment company

10 which is acquired by bequest, devise, or inheritance (or

11 by the decedent’s estate) and with respect to which an

12 election under this section was in effect as of the date of

13 the decedent’s death, notwithstanding section 1014, the

14 basis of such stock in the hands of the person so acquiring

15 it shall be the adjusted basis of such stock in the hands

16 of the decedent immediately before his death (or, if lesser,

17 the basis which would have been determined under section

18 1014 without regard to this subsection).

19 ‘‘(j) COORDINATION WITH SECTION 1291 FOR FIRST

20 YEAR OF ELECTION.—

21 ‘‘(1) TAXPAYERS OTHER THAN REGULATED IN22 VESTMENT COMPANIES.—

23 ‘‘(A) IN GENERAL.—If the taxpayer elects

24 the application of this section with respect to

25 any marketable stock in a corporation after the
1073

•HR 2491 RH

1 beginning of the taxpayer’s holding period in

2 such stock, and if the requirements of subpara3 graph (B) are not satisfied, section 1291 shall

4 apply to—

5 ‘‘(i) any distributions with respect to,

6 or disposition of, such stock in the first

7 taxable year of the taxpayer for which such

8 election is made, and

9 ‘‘(ii) any amount which, but for sec10 tion 1291, would have been included in

11 gross income under subsection (a) with re12 spect to such stock for such taxable year in

13 the same manner as if such amount were

14 gain on the disposition of such stock.

15 ‘‘(B) REQUIREMENTS.—The requirements

16 of this subparagraph are met if, with respect to

17 each of such corporation’s taxable years for

18 which such corporation was a passive foreign

19 investment company and which begin after De20 cember 31, 1986, and included any portion of

21 the taxpayer’s holding period in such stock,

22 such corporation was treated as a qualified

23 electing fund under this part with respect to the

24 taxpayer.
1074

•HR 2491 RH

1 ‘‘(2) SPECIAL RULES FOR REGULATED INVEST2 MENT COMPANIES.—

3 ‘‘(A) IN GENERAL.—If a regulated invest4 ment company elects the application of this sec5 tion with respect to any marketable stock in a

6 corporation after the beginning of the tax7 payer’s holding period in such stock, then, with

8 respect to such company’s first taxable year for

9 which such company elects the application of

10 this section with respect to such stock—

11 ‘‘(i) section 1291 shall not apply to

12 such stock with respect to any distribution

13 or disposition during, or amount included

14 in gross income under this section for,

15 such first taxable year, but

16 ‘‘(ii) such regulated investment com17 pany’s tax under this chapter for such first

18 taxable year shall be increased by the ag19 gregate amount of interest which would

20 have been determined under section

21 1291(c)(3) if section 1291 were applied

22 without regard to this subparagraph.

23 Clause (ii) shall not apply if for the preceding

24 taxable year the company elected to mark to
1075

•HR 2491 RH

1 market the stock held by such company as of

2 the last day of such preceding taxable year.

3 ‘‘(B) DISALLOWANCE OF DEDUCTION.—No

4 deduction shall be allowed to any regulated in5 vestment company for the increase in tax under

6 subparagraph (A)(ii).

7 ‘‘(k) ELECTION.—This section shall apply to market8 able stock in a passive foreign investment company which

9 is held by a United States person only if such person elects

10 to apply this section with respect to such stock. Such an

11 election shall apply to the taxable year for which made

12 and all subsequent taxable years unless—

13 ‘‘(1) such stock ceases to be marketable stock,

14 or

15 ‘‘(2) the Secretary consents to the revocation of

16 such election.

17 ‘‘(l) TRANSITION RULE FOR INDIVIDUALS BECOMING

18 SUBJECT TO UNITED STATES TAX.—If any individual be19 comes a United States person in a taxable year beginning

20 after December 31, 1995, solely for purposes of this sec21 tion, the adjusted basis (before adjustments under sub22 section (b)) of any marketable stock in a passive foreign

23 investment company owned by such individual on the first

24 day of such taxable year shall be treated as being the
1076

•HR 2491 RH

1 greater of its fair market value on such first day or its

2 adjusted basis on such first day.’’

3 (b) COORDINATION WITH INTEREST CHARGE,

4 ETC.—

5 (1) Paragraph (1) of section 1291(d) is amend6 ed by adding at the end the following new flush sen7 tence:

8 ‘‘Except as provided in section 1296(j), this section

9 also shall not apply if an election under section

10 1296(k) is in effect for the taxpayer’s taxable year.’’

11 (2) The subsection heading for subsection (d) of

12 section 1291 is amended by striking ‘‘SUBPART B’’

13 and inserting ‘‘SUBPARTS B AND C’’.

14 (3) Subparagraph (A) of section 1291(a)(3) is

15 amended to read as follows:

16 ‘‘(A) HOLDING PERIOD.—The taxpayer’s

17 holding period shall be determined under sec18 tion 1223; except that—

19 ‘‘(i) for purposes of applying this sec20 tion to an excess distribution, such holding

21 period shall be treated as ending on the

22 date of such distribution, and

23 ‘‘(ii) if section 1296 applied to such

24 stock with respect to the taxpayer for any

25 prior taxable year, such holding period
1077

•HR 2491 RH

1 shall be treated as beginning on the first

2 day of the first taxable year beginning

3 after the last taxable year for which sec4 tion 1296 so applied.’’

5 (c) CONFORMING AMENDMENTS.—

6 (1) Sections 532(b)(4) and 542(c)(10) are each

7 amended by striking ‘‘section 1296’’ and inserting

8 ‘‘section 1297’’.

9 (2) Subsection (f) of section 551 is amended by

10 striking ‘‘section 1297(b)(5)’’ and inserting ‘‘section

11 1298(b)(5)’’

12 (3) Subsections (a)(1) and (d) of section 1293

13 are each amended by striking ‘‘section 1297(a)’’ and

14 inserting ‘‘section 1298(a)’’.

15 (4) Paragraph (3) of section 1297(b), as redes16 ignated by subsection (a), is hereby repealed.

17 (5) The table of sections for subpart D of part

18 VI of subchapter P of chapter 1, as redesignated by

19 subsection (a), is amended to read as follows:

‘‘Sec. 1297. Passive foreign investment company.

‘‘Sec. 1298. Special rules.’’

20 (6) The table of subparts for part VI of sub21 chapter P of chapter 1 is amended by striking the

22 last item and inserting the following new items:

‘‘Subpart C. Election of mark to market for marketable stock.

‘‘Subpart D. General provisions.’’
1078

•HR 2491 RH

1 (d) CLARIFICATION OF GAIN RECOGNITION ELEC2 TION.—The last sentence of section 1298(b)(1), as so re3 designated, is amended by inserting ‘‘(determined without

4 regard to the preceding sentence)’’ after ‘‘investment com5 pany’’.

6 SEC. 14403. MODIFICATIONS TO DEFINITION OF PASSIVE

7 INCOME.

8 (a) EXCEPTION FOR SAME COUNTRY INCOME NOT

9 TO APPLY.—Paragraph (1) of section 1297(b) (defining

10 passive income), as redesignated by section 14402, is

11 amended by inserting before the period ‘‘without regard

12 to paragraph (3) thereof’’.

13 (b) PASSIVE INCOME NOT TO INCLUDE FSC IN14 COME.—Paragraph (2) of section 1297(b), as so redesig15 nated, is amended by striking ‘‘or’’ at the end of subpara16 graph (B), by striking the period at the end of subpara17 graph (C) and inserting ‘‘, or’’, and by inserting after sub18 paragraph (C) the following new subparagraph:

19 ‘‘(D) any foreign trade income of a FSC.’’

20 SEC. 14404. EFFECTIVE DATE.

21 The amendments made by this part shall apply to—

22 (1) taxable years of United States persons be23 ginning after December 31, 1995, and
1079

•HR 2491 RH

1 (2) taxable years of foreign corporations ending

2 with or within such taxable years of United States

3 persons.

4 PART II—TREATMENT OF CONTROLLED FOREIGN

5 CORPORATIONS

6 SEC. 14411. GAIN ON CERTAIN STOCK SALES BY CON7 TROLLED FOREIGN CORPORATIONS TREAT8 ED AS DIVIDENDS.

9 (a) GENERAL RULE.—Section 964 (relating to mis10 cellaneous provisions) is amended by adding at the end

11 the following new subsection:

12 ‘‘(e) GAIN ON CERTAIN STOCK SALES BY CON13 TROLLED FOREIGN CORPORATIONS TREATED AS DIVI14 DENDS.—

15 ‘‘(1) IN GENERAL.—If a controlled foreign cor16 poration sells or exchanges stock in any other for17 eign corporation, gain recognized on such sale or ex18 change shall be included in the gross income of such

19 controlled foreign corporation as a dividend to the

20 same extent that it would have been so included

21 under section 1248(a) if such controlled foreign cor22 poration were a United States person. For purposes

23 of determining the amount which would have been so

24 includible, the determination of whether such other

25 foreign corporation was a controlled foreign corpora-
1080

•HR 2491 RH

1 tion shall be made without regard to the preceding

2 sentence.

3 ‘‘(2) SAME COUNTRY EXCEPTION NOT APPLICA4 BLE.—Clause (i) of section 954(c)(3)(A) shall not

5 apply to any amount treated as a dividend by reason

6 of paragraph (1).

7 ‘‘(3) CLARIFICATION OF DEEMED SALES.—For

8 purposes of this subsection, a controlled foreign cor9 poration shall be treated as having sold or ex10 changed any stock if, under any provision of this

11 subtitle, such controlled foreign corporation is treat12 ed as having gain from the sale or exchange of such

13 stock.’’

14 (b) AMENDMENT OF SECTION 904(d).—Clause (i) of

15 section 904(d)(2)(E) is amended by striking ‘‘and except

16 as provided in regulations, the taxpayer was a United

17 States shareholder in such corporation’’.

18 (c) EFFECTIVE DATES.—

19 (1) The amendment made by subsection (a)

20 shall apply to gain recognized on transactions occur21 ring after the date of the enactment of this Act.

22 (2) The amendment made by subsection (b)

23 shall apply to distributions after the date of the en24 actment of this Act.
1081

•HR 2491 RH

1 SEC. 14412. MISCELLANEOUS MODIFICATIONS TO SUBPART

2 F.

3 (a) SECTION 1248 GAIN TAKEN INTO ACCOUNT IN

4 DETERMINING PRO RATA SHARE.—

5 (1) IN GENERAL.—Paragraph (2) of section

6 951(a) (defining pro rata share of subpart F in7 come) is amended by adding at the end the following

8 new sentence: ‘‘For purposes of subparagraph (B),

9 any gain included in the gross income of any person

10 as a dividend under section 1248 shall be treated as

11 a distribution received by such person with respect

12 to the stock involved.’’

13 (2) EFFECTIVE DATE.—The amendment made

14 by paragraph (1) shall apply to dispositions after the

15 date of the enactment of this Act.

16 (b) BASIS ADJUSTMENTS IN STOCK HELD BY FOR17 EIGN CORPORATION.—

18 (1) IN GENERAL.—Section 961 (relating to ad19 justments to basis of stock in controlled foreign cor20 porations and of other property) is amended by add21 ing at the end the following new subsection:

22 ‘‘(c) BASIS ADJUSTMENTS IN STOCK HELD BY FOR23 EIGN CORPORATION.—Under regulations prescribed by

24 the Secretary, if a United States shareholder is treated

25 under section 958(a)(2) as owning any stock in a con26 trolled foreign corporation which is actually owned by an-
1082

•HR 2491 RH

1 other controlled foreign corporation, adjustments similar

2 to the adjustments provided by subsections (a) and (b)

3 shall be made to the basis of such stock in the hands of

4 such other controlled foreign corporation, but only for the

5 purposes of determining the amount included under sec6 tion 951 in the gross income of such United States share7 holder (or any other United States shareholder who ac8 quires from any person any portion of the interest of such

9 United States shareholder by reason of which such share10 holder was treated as owning such stock, but only to the

11 extent of such portion, and subject to such proof of iden12 tity of such interest as the Secretary may prescribe by reg13 ulations).’’

14 (2) EFFECTIVE DATE.—The amendment made

15 by paragraph (1) shall apply for purposes of deter16 mining inclusions for taxable years of United States

17 shareholders beginning after December 31, 1995.

18 (c) DETERMINATION OF PREVIOUSLY TAXED IN19 COME IN SECTION 304 DISTRIBUTIONS, ETC.—

20 (1) IN GENERAL.—Section 959 (relating to ex21 clusion from gross income of previously taxed earn22 ings and profits) is amended by adding at the end

23 the following new subsection:

24 ‘‘(g) ADJUSTMENTS FOR CERTAIN TRANSACTIONS.—

25 If by reason of—
1083

•HR 2491 RH

1 ‘‘(1) a transaction to which section 304 applies,

2 ‘‘(2) the structure of a United States sharehold3 er’s holdings in controlled foreign corporations, or

4 ‘‘(3) other circumstances,

5 there would be a multiple inclusion of any item in income

6 (or an inclusion or exclusion without an appropriate basis

7 adjustment) by reason of this subpart, the Secretary may

8 prescribe regulations providing such modifications in the

9 application of this subpart as may be necessary to elimi10 nate such multiple inclusion or provide such basis adjust11 ment, as the case may be.’’

12 (2) EFFECTIVE DATE.—The amendment made

13 by paragraph (1) shall take effect on the date of the

14 enactment of this Act.

15 (d) CLARIFICATION OF TREATMENT OF BRANCH TAX

16 EXEMPTIONS OR REDUCTIONS.—

17 (1) IN GENERAL.—Subsection (b) of section

18 952 is amended by adding at the end the following

19 new sentence: ‘‘For purposes of this subsection, any

20 exemption (or reduction) with respect to the tax im21 posed by section 884 shall not be taken into ac22 count.’’.

23 (2) EFFECTIVE DATE.—The amendment made

24 by paragraph (1) shall apply to taxable years begin25 ning after December 31, 1986.
1084

•HR 2491 RH

1 SEC. 14413. INDIRECT FOREIGN TAX CREDIT ALLOWED

2 FOR CERTAIN LOWER TIER COMPANIES.

3 (a) SECTION 902 CREDIT.—

4 (1) IN GENERAL.—Subsection (b) of section

5 902 (relating to deemed taxes increased in case of

6 certain 2nd and 3rd tier foreign corporations) is

7 amended to read as follows:

8 ‘‘(b) DEEMED TAXES INCREASED IN CASE OF CER9 TAIN LOWER TIER CORPORATIONS.—

10 ‘‘(1) IN GENERAL.—If—

11 ‘‘(A) any foreign corporation is a member

12 of a qualified group, and

13 ‘‘(B) such foreign corporation owns 10 per14 cent or more of the voting stock of another

15 member of such group from which it receives

16 dividends in any taxable year,

17 such foreign corporation shall be deemed to have

18 paid the same proportion of such other member’s

19 post-1986 foreign income taxes as would be deter20 mined under subsection (a) if such foreign corpora21 tion were a domestic corporation.

22 ‘‘(2) QUALIFIED GROUP.—For purposes of

23 paragraph (1), the term ‘qualified group’ means—

24 ‘‘(A) the foreign corporation described in

25 subsection (a), and

26 ‘‘(B) any other foreign corporation if—
1085

•HR 2491 RH

1 ‘‘(i) the domestic corporation owns at

2 least 5 percent of the voting stock of such

3 other foreign corporation indirectly

4 through a chain of foreign corporations

5 connected through stock ownership of at

6 least 10 percent of their voting stock,

7 ‘‘(ii) the foreign corporation described

8 in subsection (a) is the first tier corpora9 tion in such chain, and

10 ‘‘(iii) such other corporation is not

11 below the sixth tier in such chain.

12 The term ‘qualified group’ shall not include any for13 eign corporation below the third tier in the chain re14 ferred to in clause (i) unless such foreign corpora15 tion is a controlled foreign corporation (as defined in

16 section 957) and the domestic corporation is a Unit17 ed States shareholder (as defined in section 951(b))

18 in such foreign corporation. Paragraph (1) shall

19 apply to those taxes paid by a member of the quali20 fied group below the third tier only with respect to

21 periods during which it was a controlled foreign cor22 poration.’’

23 (2) CONFORMING AMENDMENTS.—

24 (A) Subparagraph (B) of section 902(c)(3)

25 is amended by adding ‘‘or’’ at the end of clause
1086

•HR 2491 RH

1 (i) and by striking clauses (ii) and (iii) and in2 serting the following new clause:

3 ‘‘(ii) the requirements of subsection

4 (b)(2) are met with respect to such foreign

5 corporation.’’

6 (B) Subparagraph (B) of section 902(c)(4)

7 is amended by striking ‘‘3rd foreign corpora8 tion’’ and inserting ‘‘sixth tier foreign corpora9 tion’’.

10 (C) The heading for paragraph (3) of sec11 tion 902(c) is amended by striking ‘‘WHERE DO12 MESTIC CORPORATION ACQUIRES 10 PERCENT

13 OF FOREIGN CORPORATION’’ and inserting

14 ‘‘WHERE FOREIGN CORPORATION FIRST QUALI15 FIES’’.

16 (D) Paragraph (3) of section 902(c) is

17 amended by striking ‘‘ownership’’ each place it

18 appears.

19 (b) SECTION 960 CREDIT.—Paragraph (1) of section

20 960(a) (relating to special rules for foreign tax credits)

21 is amended to read as follows:

22 ‘‘(1) DEEMED PAID CREDIT.—For purposes of

23 subpart A of this part, if there is included under

24 section 951(a) in the gross income of a domestic cor25 poration any amount attributable to earnings and
1087

•HR 2491 RH

1 profits of a foreign corporation which is a member

2 of a qualified group (as defined in section 902(b))

3 with respect to the domestic corporation, then, ex4 cept to the extent provided in regulations, section

5 902 shall be applied as if the amount so included

6 were a dividend paid by such foreign corporation

7 (determined by applying section 902(c) in accord8 ance with section 904(d)(3)(B)).’’

9 (c) EFFECTIVE DATE.—

10 (1) IN GENERAL.—The amendments made by

11 this section shall apply to taxes of foreign corpora12 tions for taxable years of such corporations begin13 ning after the date of enactment of this Act.

14 (2) SPECIAL RULE.—In the case of any chain

15 of foreign corporations described in clauses (i) and

16 (ii) of section 902(b)(2)(B) of the Internal Revenue

17 Code of 1986 (as amended by this section), no liq18 uidation, reorganization, or similar transaction in a

19 taxable year beginning after the date of the enact20 ment of this Act shall have the effect of permitting

21 taxes to be taken into account under section 902 of

22 the Internal Revenue Code of 1986 which could not

23 have been taken into account under such section but

24 for such transaction.
1088

•HR 2491 RH

1 SEC. 14414. REPEAL OF INCLUSION OF CERTAIN EARNINGS

2 INVESTED IN EXCESS PASSIVE ASSETS.

3 (a) IN GENERAL.—

4 (1) REPEAL OF INCLUSION.—Paragraph (1) of

5 section 951(a) (relating to amounts included in

6 gross income of United States shareholders) is

7 amended by striking subparagraph (C), by striking

8 ‘‘; and’’ at the end of subparagraph (B) and insert9 ing a period, and by adding ‘‘and’’ at the end of

10 subparagraph (A).

11 (2) REPEAL OF INCLUSION AMOUNT.—Section

12 956A (relating to earnings invested in excess passive

13 assets) is repealed.

14 (b) CONFORMING AMENDMENTS.—

15 (1) Subparagraph (G) of section 904(d)(3) is

16 amended by striking ‘‘subparagraph (B) or (C) of

17 section 951(a)(1)’’ and inserting ‘‘section

18 951(a)(1)(B)’’.

19 (2) Paragraph (1) of section 956(b) is amended

20 to read as follows:

21 ‘‘(1) APPLICABLE EARNINGS.—For purposes of

22 this section, the term ‘applicable earnings’ means,

23 with respect to any controlled foreign corporation,

24 the sum of—

25 ‘‘(A) the amount (not including a deficit)

26 referred to in section 316(a)(1), and
1089

•HR 2491 RH

1 ‘‘(B) the amount referred to in section

2 316(a)(2),

3 but reduced by distributions made during the tax4 able year.’’

5 (3) Paragraph (3) of section 956(b) is amended

6 to read as follows:

7 ‘‘(3) SPECIAL RULE WHERE CORPORATION

8 CEASES TO BE CONTROLLED FOREIGN CORPORA9 TION.—If any foreign corporation ceases to be a

10 controlled foreign corporation during any taxable

11 year—

12 ‘‘(A) the determination of any United

13 States shareholder’s pro rata share shall be

14 made on the basis of stock owned (within the

15 meaning of section 958(a)) by such shareholder

16 on the last day during the taxable year on

17 which the foreign corporation is a controlled

18 foreign corporation,

19 ‘‘(B) the average referred to in subsection

20 (a)(1)(A) for such taxable year shall be deter21 mined by only taking into account quarters end22 ing on or before such last day, and

23 ‘‘(C) in determining applicable earnings,

24 the amount taken into account by reason of

25 being described in paragraph (2) of section
1090

•HR 2491 RH

1 316(a) shall be the portion of the amount so

2 described which is allocable (on a pro rata

3 basis) to the part of such year during which the

4 corporation is a controlled foreign corporation.’’

5 (4) Subsection (a) of section 959 (relating to

6 exclusion from gross income of previously taxed

7 earnings and profits) is amended by adding ‘‘or’’ at

8 the end of paragraph (1), by striking ‘‘or’’ at the

9 end of paragraph (2), and by striking paragraph (3).

10 (5) Subsection (a) of section 959 is amended by

11 striking ‘‘paragraphs (2) and (3)’’ in the last sen12 tence and inserting ‘‘paragraph (2)’’.

13 (6) Subsection (c) of section 959 is amended by

14 adding at the end the following flush sentence:

15 ‘‘References in this subsection to section 951(a)(1)(C) and

16 subsection (a)(3) shall be treated as references to such

17 provisions as in effect on the day before the date of the

18 enactment of the Tax Simplification Act of 1995.’’

19 (7) Paragraph (1) of section 959(f) is amended

20 to read as follows:

21 ‘‘(1) IN GENERAL.—For purposes of this sec22 tion, amounts that would be included under subpara23 graph (B) of section 951(a)(1) (determined without

24 regard to this section) shall be treated as attrib25 utable first to earnings described in subsection
1091

•HR 2491 RH

1 (c)(2), and then to earnings described in subsection

2 (c)(3).’’

3 (8) Paragraph (2) of section 959(f) is amended

4 by striking ‘‘subparagraphs (B) and (C) of section

5 951(a)(1)’’ and inserting ‘‘section 951(a)(1)(B)’’.

6 (9) Subsection (b) of section 989 is amended by

7 striking ‘‘subparagraph (B) or (C) of section

8 951(a)(1)’’ and inserting ‘‘section 951(a)(1)(B)’’.

9 (10) Paragraph (9) of section 1298(b), as re10 designated by section 14402, is amended by striking

11 ‘‘subparagraph (B) or (C) of section 951(a)(1)’’ and

12 inserting ‘‘section 951(a)(1)(B)’’.

13 (11) Subsections (d)(3)(B) and (e)(2)(B)(ii) of

14 section 1298, as redesignated by section 14402, are

15 each amended by striking ‘‘or section 956A’’.

16 (c) CLERICAL AMENDMENT.—The table of sections

17 for subpart F of part III of subchapter N of chapter 1

18 is amended by striking the item relating to section 956A.

19 (d) EFFECTIVE DATE.—The amendments made by

20 this section shall apply to taxable years of foreign corpora21 tions beginning after September 30, 1995, and to taxable

22 years of United States shareholders within which or with

23 which such taxable years of foreign corporations end.
1092

•HR 2491 RH

1 PART III—OTHER PROVISIONS

2 SEC. 14421. EXCHANGE RATE USED IN TRANSLATING FOR3 EIGN TAXES.

4 (a) ACCRUED TAXES TRANSLATED BY USING AVER5 AGE RATE FOR YEAR TO WHICH TAXES RELATE.—

6 (1) IN GENERAL.—Subsection (a) of section

7 986 (relating to translation of foreign taxes) is

8 amended to read as follows:

9 ‘‘(a) FOREIGN INCOME TAXES.—

10 ‘‘(1) TRANSLATION OF ACCRUED TAXES.—

11 ‘‘(A) IN GENERAL.—For purposes of deter12 mining the amount of the foreign tax credit, in

13 the case of a taxpayer who takes foreign income

14 taxes into account when accrued, the amount of

15 any foreign income taxes (and any adjustment

16 thereto) shall be translated into dollars by using

17 the average exchange rate for the taxable year

18 to which such taxes relate.

19 ‘‘(B) EXCEPTION FOR TAXES NOT PAID

20 WITHIN FOLLOWING 2 YEARS.—

21 ‘‘(i) Subparagraph (A) shall not apply

22 to any foreign income taxes paid after the

23 date 2 years after the close of the taxable

24 year to which such taxes relate.
1093

•HR 2491 RH

1 ‘‘(ii) Subparagraph (A) shall not

2 apply to taxes paid before the beginning of

3 the taxable year to which such taxes relate.

4 ‘‘(C) EXCEPTION FOR INFLATIONARY CUR5 RENCIES.—Subparagraph (A) shall not apply to

6 any foreign income taxes the liability for which

7 is denominated in any currency determined to

8 be an inflationary currency under regulations

9 prescribed by the Secretary.

10 ‘‘(D) CROSS REFERENCE.—

‘‘For adjustments where tax is not paid within 2

years, see section 905(c).

11 ‘‘(2) TRANSLATION OF TAXES TO WHICH PARA12 GRAPH (1) DOES NOT APPLY.—For purposes of de13 termining the amount of the foreign tax credit, in

14 the case of any foreign income taxes to which sub15 paragraph (A) of paragraph (1) does not apply—

16 ‘‘(A) such taxes shall be translated into

17 dollars using the exchange rates as of the time

18 such taxes were paid to the foreign country or

19 possession of the United States, and

20 ‘‘(B) any adjustment to the amount of

21 such taxes shall be translated into dollars

22 using—

23 ‘‘(i) except as provided in clause (ii),

24 the exchange rate as of the time when such
1094

•HR 2491 RH

1 adjustment is paid to the foreign country

2 or possession, or

3 ‘‘(ii) in the case of any refund or cred4 it of foreign income taxes, using the ex5 change rate as of the time of the original

6 payment of such foreign income taxes.

7 ‘‘(3) FOREIGN INCOME TAXES.—For purposes

8 of this subsection, the term ‘foreign income taxes’

9 means any income, war profits, or excess profits

10 taxes paid or accrued to any foreign country or to

11 any possession of the United States.’’

12 (2) ADJUSTMENT WHEN NOT PAID WITHIN 2

13 YEARS AFTER YEAR TO WHICH TAXES RELATE.—

14 Subsection (c) of section 905 is amended to read as

15 follows:

16 ‘‘(c) ADJUSTMENTS TO ACCRUED TAXES.—

17 ‘‘(1) IN GENERAL.—If—

18 ‘‘(A) accrued taxes when paid differ from

19 the amounts claimed as credits by the taxpayer,

20 ‘‘(B) accrued taxes are not paid before the

21 date 2 years after the close of the taxable year

22 to which such taxes relate, or

23 ‘‘(C) any tax paid is refunded in whole or

24 in part,
1095

•HR 2491 RH

1 the taxpayer shall notify the Secretary, who shall re2 determine the amount of the tax for the year or

3 years affected.

4 ‘‘(2) SPECIAL RULE FOR TAXES NOT PAID

5 WITHIN 2 YEARS.—In making the redetermination

6 under paragraph (1), no credit shall be allowed for

7 accrued taxes not paid before the date referred to in

8 subparagraph (B) of paragraph (1). Any such taxes

9 if subsequently paid shall be taken into account for

10 the taxable year in which paid and no redetermina11 tion under this section shall be made on account of

12 such payment.

13 ‘‘(3) ADJUSTMENTS.—The amount of tax due

14 on any redetermination under paragraph (1) (if any)

15 shall be paid by the taxpayer on notice and demand

16 by the Secretary, and the amount of tax overpaid (if

17 any) shall be credited or refunded to the taxpayer in

18 accordance with subchapter B of chapter 66 (section

19 6511 et seq.).

20 ‘‘(4) BOND REQUIREMENTS.—In the case of

21 any tax accrued but not paid, the Secretary, as a

22 condition precedent to the allowance of the credit

23 provided in this subpart, may require the taxpayer

24 to give a bond, with sureties satisfactory to and ap25 proved by the Secretary, in such sum as the Sec-
1096

•HR 2491 RH

1 retary may require, conditioned on the payment by

2 the taxpayer of any amount of tax found due on any

3 such redetermination. Any such bond shall contain

4 such further conditions as the Secretary may re5 quire.

6 ‘‘(5) OTHER SPECIAL RULES.—In any redeter7 mination under paragraph (1) by the Secretary of

8 the amount of tax due from the taxpayer for the

9 year or years affected by a refund, the amount of

10 the taxes refunded for which credit has been allowed

11 under this section shall be reduced by the amount of

12 any tax described in section 901 imposed by the for13 eign country or possession of the United States with

14 respect to such refund; but no credit under this sub15 part, or deduction under section 164, shall be al16 lowed for any taxable year with respect to any such

17 tax imposed on the refund. No interest shall be as18 sessed or collected on any amount of tax due on any

19 redetermination by the Secretary, resulting from a

20 refund to the taxpayer, for any period before the re21 ceipt of such refund, except to the extent interest

22 was paid by the foreign country or possession of the

23 United States on such refund for such period.’’

24 (b) AUTHORITY TO USE AVERAGE RATES.—
1097

•HR 2491 RH

1 (1) IN GENERAL.—Subsection (a) of section

2 986 (as amended by subsection (a)) is amended by

3 redesignating paragraph (3) as paragraph (4) and

4 inserting after paragraph (2) the following new

5 paragraph:

6 ‘‘(3) AUTHORITY TO PERMIT USE OF AVERAGE

7 RATES.—To the extent prescribed in regulations, the

8 average exchange rate for the period (specified in

9 such regulations) during which the taxes or adjust10 ment is paid may be used instead of the exchange

11 rate as of the time of such payment.’’

12 (2) DETERMINATION OF AVERAGE RATES.—

13 Subsection (c) of section 989 is amended by striking

14 ‘‘and’’ at the end of paragraph (4), by striking the

15 period at the end of paragraph (5) and inserting ‘‘,

16 and’’, and by adding at the end the following new

17 paragraph:

18 ‘‘(6) setting forth procedures for determining

19 the average exchange rate for any period.’’

20 (3) CONFORMING AMENDMENTS.—Subsection

21 (b) of section 989 is amended by striking ‘‘weight22 ed’’ each place it appears.

23 (c) EFFECTIVE DATES.—

24 (1) IN GENERAL.—The amendments made by

25 subsections (a)(1) and (b) shall apply to taxes paid
1098

•HR 2491 RH

1 or accrued in taxable years beginning after Decem2 ber 31, 1995.

3 (2) SUBSECTION (a)(2).—The amendment made

4 by subsection (a)(2) shall apply to taxes which relate

5 to taxable years beginning after December 31, 1995.

6 SEC. 14422. ELECTION TO USE SIMPLIFIED SECTION 904

7 LIMITATION FOR ALTERNATIVE MINIMUM

8 TAX.

9 (a) GENERAL RULE.—Subsection (a) of section 59

10 (relating to alternative minimum tax foreign tax credit)

11 is amended by adding at the end the following new para12 graph:

13 ‘‘(3) ELECTION TO USE SIMPLIFIED SECTION

14 904 LIMITATION.—

15 ‘‘(A) IN GENERAL.—In determining the al16 ternative minimum tax foreign tax credit for

17 any taxable year to which an election under this

18 paragraph applies—

19 ‘‘(i) subparagraph (B) of paragraph

20 (1) shall not apply, and

21 ‘‘(ii) the limitation of section 904

22 shall be based on the proportion which—

23 ‘‘(I) the taxpayer’s taxable in24 come (as determined for purposes of

25 the regular tax) from sources without
1099

•HR 2491 RH

1 the United States (but not in excess

2 of the taxpayer’s entire alternative

3 minimum taxable income), bears to

4 ‘‘(II) the taxpayer’s entire alter5 native minimum taxable income for

6 the taxable year.

7 ‘‘(B) ELECTION.—

8 ‘‘(i) IN GENERAL.—An election under

9 this paragraph may be made only for the

10 taxpayer’s first taxable year which begins

11 after December 31, 1995, and for which

12 the taxpayer claims an alternative mini13 mum tax foreign tax credit.

14 ‘‘(ii) ELECTION REVOCABLE ONLY

15 WITH CONSENT.—An election under this

16 paragraph, once made, shall apply to the

17 taxable year for which made and all subse18 quent taxable years unless revoked with

19 the consent of the Secretary.’’

20 (b) EFFECTIVE DATE.—The amendments made by

21 this section shall apply to taxable years beginning after

22 December 31, 1995.
1100

•HR 2491 RH

1 SEC. 14423. MODIFICATION OF SECTION 1491.

2 (a) GENERAL RULE.—So much of chapter 5 (relating

3 to tax on transfers to avoid income tax) as precedes sec4 tion 1492 is amended to read as follows:

5 ‘‘CHAPTER 5—TREATMENT OF TRANSFERS

6 TO AVOID INCOME TAX

‘‘Sec. 1491. Recognition of gain.

‘‘Sec. 1492. Exceptions.

7 ‘‘SEC. 1491. RECOGNITION OF GAIN.

8 ‘‘In the case of any transfer of property by a United

9 States person to a foreign corporation as paid-in surplus

10 or as a contribution to capital, to a foreign estate or trust,

11 or to a foreign partnership, for purposes of this subtitle

12 (other than for purposes of section 679), such transfer

13 shall be treated as a sale or exchange for an amount equal

14 to the fair market value of the property transferred, and

15 the transferor shall recognize as gain the excess of—

16 ‘‘(1) the fair market value of the property so

17 transferred, over

18 ‘‘(2) the adjusted basis (for purposes of deter19 mining gain) of such property in the hands of the

20 transferor.’’

21 (b) CONFORMING AMENDMENTS.—

22 (1) Section 1057 is hereby repealed.

23 (2) Section 1492 is amended to read as follows:
1101

•HR 2491 RH

1 ‘‘SEC. 1492. EXCEPTIONS.

2 ‘‘The provisions of section 1491 shall not apply—

3 ‘‘(1) If the transferee is an organization exempt

4 from income tax under part I of subchapter F of

5 chapter 1 (other than an organization described in

6 section 401(a)),

7 ‘‘(2) To a transfer described in section 367, or

8 ‘‘(3) To any other transfer, to the extent pro9 vided in regulations in accordance with principles

10 similar to the principles of section 367 or otherwise

11 consistent with the purpose of section 1491.’’

12 (3) Section 1494 is hereby repealed.

13 (4) Paragraph (8) of section 6501(c) is amend14 ed by inserting ‘‘or on any transfer by reason of sec15 tion 1491’’ after ‘‘section 367’’.

16 (5) Subsection (a) of section 6038B is amended

17 by striking ‘‘or’’ at the end of paragraph (1), by

18 adding ‘‘or’’ at the end of paragraph (2), and by in19 serting after paragraph (2) the following new para20 graph:

21 ‘‘(3) makes any transfer described in section

22 1491,’’.

23 (6) The table of sections for part IV of sub24 chapter O of chapter 1 is amended by striking the

25 item relating to section 1057.
1102

•HR 2491 RH

1 (7) The table of chapters for subtitle A is

2 amended by striking ‘‘Tax on’’ in the item relating

3 to chapter 5 and inserting ‘‘Treatment of’’.

4 (c) EFFECTIVE DATE.—The amendments made by

5 this section shall apply to transfers after December 31,

6 1995.

7 SEC. 14424. MODIFICATION OF SECTION 367(b).

8 (a) GENERAL RULE.—Paragraph (1) of section

9 367(b) is amended to read as follows:

10 ‘‘(1) IN GENERAL.—In the case of any trans11 action described in section 332, 351, 354, 355, 356,

12 or 361 in which the status of a foreign corporation

13 as a corporation is a general condition for non14 recognition by 1 or more of the parties to the trans15 action, income shall be required to be recognized to

16 the extent provided in regulations prescribed by the

17 Secretary which are necessary or appropriate to pre18 vent the avoidance of Federal income taxes. This

19 subsection shall not apply to a transaction in which

20 the foreign corporation is not treated as a corpora21 tion under subsection (a)(1).’’

22 (b) EFFECTIVE DATE.—The amendment made by

23 subsection (a) shall apply to transfers after December 31,

24 1995.
1103

•HR 2491 RH

1 SEC. 14425. INCREASE IN FILING THRESHOLDS FOR RE2 TURNS AS TO ORGANIZATION OF FOREIGN

3 CORPORATIONS AND ACQUISITIONS OF

4 STOCK IN SUCH CORPORATIONS.

5 (a) IN GENERAL.—Subsection (a) of section 6046

6 (relating to returns as to organization or reorganization

7 of foreign corporations and as to acquisitions of their

8 stock) is amended to read as follows:

9 ‘‘(a) REQUIREMENT OF RETURN.—

10 ‘‘(1) IN GENERAL.—A return complying with

11 the requirements of subsection (b) shall be made

12 by—

13 ‘‘(A) each United States citizen or resident

14 who becomes an officer or director of a foreign

15 corporation if a United States person (as de16 fined in section 7701(a)(30)) meets the stock

17 ownership requirements of paragraph (2) with

18 respect to such corporation,

19 ‘‘(B) each United States person—

20 ‘‘(i) who acquires stock which, when

21 added to any stock owned on the date of

22 such acquisition, meets the stock owner23 ship requirements of paragraph (2) with

24 respect to a foreign corporation, or

25 ‘‘(ii) who acquires stock which, with26 out regard to stock owned on the date of
1104

•HR 2491 RH

1 such acquisition, meets the stock owner2 ship requirements of paragraph (2) with

3 respect to a foreign corporation,

4 ‘‘(C) each person (not described in sub5 paragraph (B)) who is treated as a United

6 States shareholder under section 953(c) with

7 respect to a foreign corporation, and

8 ‘‘(D) each person who becomes a United

9 States person while meeting the stock owner10 ship requirements of paragraph (2) with respect

11 to stock of a foreign corporation.

12 In the case of a foreign corporation with respect to

13 which any person is treated as a United States

14 shareholder under section 953(c), subparagraph (A)

15 shall be treated as including a reference to each

16 United States person who is an officer or director of

17 such corporation.

18 ‘‘(2) STOCK OWNERSHIP REQUIREMENTS.—A

19 person meets the stock ownership requirements of

20 this paragraph with respect to any corporation if

21 such person owns 10 percent or more of—

22 ‘‘(A) the total combined voting power of all

23 classes of stock of such corporation entitled to

24 vote, or
1105

•HR 2491 RH

1 ‘‘(B) the total value of the stock of such

2 corporation.’’

3 (b) EFFECTIVE DATE.—The amendment made by

4 this section shall take effect on January 1, 1996.

5 SEC. 14426. APPLICATION OF UNIFORM CAPITALIZATION

6 RULES TO FOREIGN PERSONS.

7 (a) IN GENERAL.—Section 263A(c) (relating to ex8 ceptions) is amended by adding at the end the following

9 new paragraph:

10 ‘‘(7) FOREIGN PERSONS.—This section shall

11 apply to any taxpayer who is not a United States

12 person only for purposes of—

13 ‘‘(A) tax liability with respect to income

14 which is effectively connected with the conduct

15 of a trade or business in the United States, and

16 ‘‘(B) tax liability of a United States share17 holder (as defined in section 951(b)) with re18 spect to amounts includible in gross income

19 under section 951(a).’’

20 (b) EFFECTIVE DATE.—The amendment made by

21 subsection (a) shall apply to taxable years beginning after

22 December 31, 1995. Section 481 of the Internal Revenue

23 Code of 1986 shall not apply to any change in a method

24 of accounting by reason of such amendment.
1106

•HR 2491 RH

1 SEC. 14427. CERTAIN PRIZES AND AWARDS.

2 (a) IN GENERAL.—Section 863 (relating to special

3 rules for determining source) is amended by adding at the

4 end the following new subsection:

5 ‘‘(f) CERTAIN PRIZES AND AWARDS ASSOCIATED

6 WITH AMATEUR SPORTS COMPETITIONS.—

7 ‘‘(1) IN GENERAL.—A prize or award received

8 by a nonresident alien by reason of participating in

9 an amateur sports competition in the United States

10 shall not be treated as derived from sources within

11 the United States if such alien performs no services

12 for such prize or award.

13 ‘‘(2) AMATEUR SPORTS COMPETITION.—For

14 purposes of paragraph (1), the term ‘amateur sports

15 competition’ means any competition in which the

16 only prizes awarded by the sponsors of the competi17 tion are of nominal value.’’

18 (b) EFFECTIVE DATE.—The amendment made by

19 subsection (a) shall apply to prizes and awards granted

20 after the date of the enactment of this Act.

21 SEC. 14428. TREATMENT FOR ESTATE TAX PURPOSES OF

22 SHORT-TERM OBLIGATIONS HELD BY NON23 RESIDENT ALIENS.

24 (a) IN GENERAL.—Subsection (b) of section 2105 is

25 amended by striking ‘‘and’’ at the end of paragraph (2),

26 by striking the period at the end of paragraph (3) and
1107

•HR 2491 RH

1 inserting ‘‘, and’’, and by inserting after paragraph (3)

2 the following new paragraph:

3 ‘‘(4) obligations which would be original issue

4 discount obligations as defined in section 871(g)(1)

5 but for subparagraph (B)(i) thereof, if any interest

6 thereon (were such interest received by the decedent

7 at the time of his death) would not be effectively

8 connected with the conduct of a trade or business

9 within the United States.’’

10 (b) EFFECTIVE DATE.—The amendment made by

11 this section shall apply to estates of decedents dying after

12 the date of the enactment of this Act.

13 Subtitle E—Other Income Tax

14 Provisions

15 PART I—PROVISIONS RELATING TO S

16 CORPORATIONS

17 SEC. 14501. S CORPORATIONS PERMITTED TO HAVE 75

18 SHAREHOLDERS.

19 Subparagraph (A) of section 1361(b)(1) (defining

20 small business corporation) is amended by striking ‘‘35

21 shareholders’’ and inserting ‘‘75 shareholders’’.

22 SEC. 14502. ELECTING SMALL BUSINESS TRUSTS.

23 (a) GENERAL RULE.—Subparagraph (A) of section

24 1361(c)(2) (relating to certain trusts permitted as share-
1108

•HR 2491 RH

1 holders) is amended by inserting after clause (iv) the fol2 lowing new clause:

3 ‘‘(v) An electing small business trust.’’

4 (b) CURRENT BENEFICIARIES TREATED AS SHARE5 HOLDERS.—Subparagraph (B) of section 1361(c)(2) is

6 amended by adding at the end the following new clause:

7 ‘‘(v) In the case of a trust described

8 in clause (v) of subparagraph (A), each po9 tential current beneficiary of such trust

10 shall be treated as a shareholder; except

11 that, if for any period there is no potential

12 current beneficiary of such trust, such

13 trust shall be treated as the shareholder

14 during such period.’’

15 (c) ELECTING SMALL BUSINESS TRUST DEFINED.—

16 Section 1361 (defining S corporation) is amended by add17 ing at the end the following new subsection:

18 ‘‘(e) ELECTING SMALL BUSINESS TRUST DE19 FINED.—

20 ‘‘(1) ELECTING SMALL BUSINESS TRUST.—For

21 purposes of this section—

22 ‘‘(A) IN GENERAL.—Except as provided in

23 subparagraph (B), the term ‘electing small

24 business trust’ means any trust if—
1109

•HR 2491 RH

1 ‘‘(i) such trust does not have as a

2 beneficiary any person other than (I) an

3 individual, (II) an estate, or (III) an orga4 nization described in paragraph (2), (3),

5 (4), or (5) of section 170(c) which holds a

6 contingent interest and is not a potential

7 current beneficiary,

8 ‘‘(ii) no interest in such trust was ac9 quired by purchase, and

10 ‘‘(iii) an election under this subsection

11 applies to such trust.

12 ‘‘(B) CERTAIN TRUSTS NOT ELIGIBLE.—

13 The term ‘electing small business trust’ shall

14 not include—

15 ‘‘(i) any qualified subchapter S trust

16 (as defined in subsection (d)(3)) if an elec17 tion under subsection (d)(2) applies to any

18 corporation the stock of which is held by

19 such trust, and

20 ‘‘(ii) any trust exempt from tax under

21 this subtitle.

22 ‘‘(C) PURCHASE.—For purposes of sub23 paragraph (A), the term ‘purchase’ means any

24 acquisition if the basis of the property acquired

25 is determined under section 1012.
1110

•HR 2491 RH

1 ‘‘(2) POTENTIAL CURRENT BENEFICIARY.—For

2 purposes of this section, the term ‘potential current

3 beneficiary’ means, with respect to any period, any

4 person who at any time during such period is enti5 tled to, or at the discretion of any person may re6 ceive, a distribution from the principal or income of

7 the trust. If a trust disposes of all of the stock which

8 it holds in an S corporation, then, with respect to

9 such corporation, the term ‘potential current bene10 ficiary’ does not include any person who first met

11 the requirements of the preceding sentence during

12 the 60-day period ending on the date of such dis13 position.

14 ‘‘(3) ELECTION.—An election under this sub15 section shall be made by the trustee. Any such elec16 tion shall apply to the taxable year of the trust for

17 which made and all subsequent taxable years of such

18 trust unless revoked with the consent of the Sec19 retary.

20 ‘‘(4) CROSS REFERENCE.—

‘‘For special treatment of electing small business

trusts, see section 641(d).’’

21 (d) TAXATION OF ELECTING SMALL BUSINESS

22 TRUSTS.—Section 641 (relating to imposition of tax on

23 trusts) is amended by adding at the end the following new

24 subsection:
1111

•HR 2491 RH

1 ‘‘(d) SPECIAL RULES FOR TAXATION OF ELECTING

2 SMALL BUSINESS TRUSTS.—

3 ‘‘(1) IN GENERAL.—For purposes of this chap4 ter—

5 ‘‘(A) the portion of any electing small busi6 ness trust which consists of stock in 1 or more

7 S corporations shall be treated as a separate

8 trust, and

9 ‘‘(B) the amount of the tax imposed by

10 this chapter on such separate trust shall be de11 termined with the modifications of paragraph

12 (2).

13 ‘‘(2) MODIFICATIONS.—For purposes of para14 graph (1), the modifications of this paragraph are

15 the following:

16 ‘‘(A) Except as provided in section 1(h),

17 the amount of the tax imposed by section 1(e)

18 shall be determined by using the highest rate of

19 tax set forth in section 1(e).

20 ‘‘(B) The exemption amount under section

21 55(d) shall be zero.

22 ‘‘(C) The only items of income, loss, deduc23 tion, or credit to be taken into account are the

24 following:
1112

•HR 2491 RH

1 ‘‘(i) The items required to be taken

2 into account under section 1366.

3 ‘‘(ii) Any gain or loss from the dis4 position of stock in an S corporation.

5 ‘‘(iii) To the extent provided in regu6 lations, State or local income taxes or ad7 ministrative expenses to the extent alloca8 ble to items described in clauses (i) and

9 (ii).

10 No deduction or credit shall be allowed for any

11 amount not described in this paragraph, and no

12 item described in this paragraph shall be appor13 tioned to any beneficiary.

14 ‘‘(D) No amount shall be allowed under

15 paragraph (1) or (2) of section 1211(b).

16 ‘‘(3) TREATMENT OF REMAINDER OF TRUST

17 AND DISTRIBUTIONS.—For purposes of determin18 ing—

19 ‘‘(A) the amount of the tax imposed by

20 this chapter on the portion of any electing small

21 business trust not treated as a separate trust

22 under paragraph (1), and

23 ‘‘(B) the distributable net income of the

24 entire trust,
1113

•HR 2491 RH

1 the items referred to in paragraph (2)(C) shall be

2 excluded. Except as provided in the preceding sen3 tence, this subsection shall not affect the taxation of

4 any distribution from the trust.

5 ‘‘(4) TREATMENT OF UNUSED DEDUCTIONS

6 WHERE TERMINATION OF SEPARATE TRUST.—If a

7 portion of an electing small business trust ceases to

8 be treated as a separate trust under paragraph (1),

9 any carryover or excess deduction of the separate

10 trust which is referred to in section 642(h) shall be

11 taken into account by the entire trust.

12 ‘‘(5) ELECTING SMALL BUSINESS TRUST.—For

13 purposes of this subsection, the term ‘electing small

14 business trust’ has the meaning given such term by

15 section 1361(e)(1).’’

16 (e) TECHNICAL AMENDMENT.—Paragraph (1) of sec17 tion 1366(a) is amended by inserting ‘‘, or of a trust or

18 estate which terminates,’’ after ‘‘who dies’’.

19 SEC. 14503. EXPANSION OF POST-DEATH QUALIFICATION

20 FOR CERTAIN TRUSTS.

21 Subparagraph (A) of section 1361(c)(2) (relating to

22 certain trusts permitted as shareholders) is amended—

23 (1) by striking ‘‘60-day period’’ each place it

24 appears in clauses (ii) and (iii) and inserting ‘‘2-year

25 period’’, and
1114

•HR 2491 RH

1 (2) by striking the last sentence in clause (ii).

2 SEC. 14504. FINANCIAL INSTITUTIONS PERMITTED TO

3 HOLD SAFE HARBOR DEBT.

4 Clause (iii) of section 1361(c)(5)(B) (defining

5 straight debt) is amended by striking ‘‘or a trust described

6 in paragraph (2)’’ and inserting ‘‘a trust described in

7 paragraph (2), or a person which is actively and regularly

8 engaged in the business of lending money.’’

9 SEC. 14505. RULES RELATING TO INADVERTENT TERMI10 NATIONS AND INVALID ELECTIONS.

11 (a) GENERAL RULE.—Subsection (f) of section 1362

12 (relating to inadvertent terminations) is amended to read

13 as follows:

14 ‘‘(f) INADVERTENT INVALID ELECTIONS OR TERMI15 NATIONS.—If—

16 ‘‘(1) an election under subsection (a) by any

17 corporation—

18 ‘‘(A) was not effective for the taxable year

19 for which made (determined without regard to

20 subsection (b)(2)) by reason of a failure to meet

21 the requirements of section 1361(b) or to ob22 tain shareholder consents, or

23 ‘‘(B) was terminated under paragraph (2)

24 of subsection (d),
1115

•HR 2491 RH

1 ‘‘(2) the Secretary determines that the cir2 cumstances resulting in such ineffectiveness or ter3 mination were inadvertent,

4 ‘‘(3) no later than a reasonable period of time

5 after discovery of the circumstances resulting in

6 such ineffectiveness or termination, steps were

7 taken—

8 ‘‘(A) so that the corporation is a small

9 business corporation, or

10 ‘‘(B) to acquire the required shareholder

11 consents, and

12 ‘‘(4) the corporation, and each person who was

13 a shareholder in the corporation at any time during

14 the period specified pursuant to this subsection,

15 agrees to make such adjustments (consistent with

16 the treatment of the corporation as an S corpora17 tion) as may be required by the Secretary with re18 spect to such period,

19 then, notwithstanding the circumstances resulting in such

20 ineffectiveness or termination, such corporation shall be

21 treated as an S corporation during the period specified

22 by the Secretary.’’

23 (b) LATE ELECTIONS.—Subsection (b) of section

24 1362 is amended by adding at the end the following new

25 paragraph:
1116

•HR 2491 RH

1 ‘‘(5) AUTHORITY TO TREAT LATE ELECTIONS

2 AS TIMELY.—If—

3 ‘‘(A) an election under subsection (a) is

4 made for any taxable year (determined without

5 regard to paragraph (3)) after the date pre6 scribed by this subsection for making such elec7 tion for such taxable year, and

8 ‘‘(B) the Secretary determines that there

9 was reasonable cause for the failure to timely

10 make such election,

11 the Secretary may treat such election as timely

12 made for such taxable year (and paragraph (3) shall

13 not apply).’’

14 (c) EFFECTIVE DATE.—The amendments made by

15 subsection (a) and (b) shall apply with respect to elections

16 for taxable years beginning after December 31, 1982.

17 SEC. 14506. AGREEMENT TO TERMINATE YEAR.

18 Paragraph (2) of section 1377(a) (relating to pro

19 rata share) is amended to read as follows:

20 ‘‘(2) ELECTION TO TERMINATE YEAR.—

21 ‘‘(A) IN GENERAL.—Under regulations

22 prescribed by the Secretary, if any shareholder

23 terminates the shareholder’s interest in the cor24 poration during the taxable year and all af25 fected shareholders and the corporation agree
1117

•HR 2491 RH

1 to the application of this paragraph, paragraph

2 (1) shall be applied to the affected shareholders

3 as if the taxable year consisted of 2 taxable

4 years the first of which ends on the date of the

5 termination.

6 ‘‘(B) AFFECTED SHAREHOLDERS.—For

7 purposes of subparagraph (A), the term ‘af8 fected shareholders’ means the shareholder

9 whose interest is terminated and all sharehold10 ers to whom such shareholder has transferred

11 shares during the taxable year. If such share12 holder has transferred shares to the corpora13 tion, the term ‘affected shareholders’ shall in14 clude all persons who are shareholders during

15 the taxable year.’’

16 SEC. 14507. EXPANSION OF POST-TERMINATION TRANSI17 TION PERIOD.

18 (a) IN GENERAL.—Paragraph (1) of section 1377(b)

19 (relating to post-termination transition period) is amended

20 by striking ‘‘and’’ at the end of subparagraph (A), by re21 designating subparagraph (B) as subparagraph (C), and

22 by inserting after subparagraph (A) the following new sub23 paragraph:

24 ‘‘(B) the 120-day period beginning on the

25 date of any determination pursuant to an audit
1118

•HR 2491 RH

1 of the taxpayer which follows the termination of

2 the corporation’s election and which adjusts a

3 subchapter S item of income, loss, or deduction

4 of the corporation arising during the S period

5 (as defined in section 1368(e)(2)), and’’.

6 (b) DETERMINATION DEFINED.—Paragraph (2) of

7 section 1377(b) is amended by striking subparagraphs (A)

8 and (B), by redesignating subparagraph (C) as subpara9 graph (B), and by inserting before subparagraph (B) (as

10 so redesignated) the following new subparagraph:

11 ‘‘(A) a determination as defined in section

12 1313(a), or’’.

13 (c) REPEAL OF SPECIAL AUDIT PROVISIONS FOR

14 SUBCHAPTER S ITEMS.—

15 (1) GENERAL RULE.—Subchapter D of chapter

16 63 (relating to tax treatment of subchapter S items)

17 is hereby repealed.

18 (2) CONSISTENT TREATMENT REQUIRED.—Sec19 tion 6037 (relating to return of S corporation) is

20 amended by adding at the end the following new

21 subsection:

22 ‘‘(c) SHAREHOLDER’S RETURN MUST BE CONSIST23 ENT WITH CORPORATE RETURN OR SECRETARY NOTI24 FIED OF INCONSISTENCY.—
1119

•HR 2491 RH

1 ‘‘(1) IN GENERAL.—A shareholder of an S cor2 poration shall, on such shareholder’s return, treat a

3 subchapter S item in a manner which is consistent

4 with the treatment of such item on the corporate re5 turn.

6 ‘‘(2) NOTIFICATION OF INCONSISTENT TREAT7 MENT.—

8 ‘‘(A) IN GENERAL.—In the case of any

9 subchapter S item, if—

10 ‘‘(i)(I) the corporation has filed a re11 turn but the shareholder’s treatment on

12 his return is (or may be) inconsistent with

13 the treatment of the item on the corporate

14 return, or

15 ‘‘(II) the corporation has not filed a

16 return, and

17 ‘‘(ii) the shareholder files with the

18 Secretary a statement identifying the in19 consistency,

20 paragraph (1) shall not apply to such item.

21 ‘‘(B) SHAREHOLDER RECEIVING INCOR22 RECT INFORMATION.—A shareholder shall be

23 treated as having complied with clause (ii) of

24 subparagraph (A) with respect to a subchapter

25 S item if the shareholder—
1120

•HR 2491 RH

1 ‘‘(i) demonstrates to the satisfaction

2 of the Secretary that the treatment of the

3 subchapter S item on the shareholder’s re4 turn is consistent with the treatment of the

5 item on the schedule furnished to the

6 shareholder by the corporation, and

7 ‘‘(ii) elects to have this paragraph

8 apply with respect to that item.

9 ‘‘(3) EFFECT OF FAILURE TO NOTIFY.—In any

10 case—

11 ‘‘(A) described in subparagraph (A)(i)(I)

12 of paragraph (2), and

13 ‘‘(B) in which the shareholder does not

14 comply with subparagraph (A)(ii) of paragraph

15 (2),

16 any adjustment required to make the treatment of

17 the items by such shareholder consistent with the

18 treatment of the items on the corporate return shall

19 be treated as arising out of mathematical or clerical

20 errors and assessed according to section 6213(b)(1).

21 Paragraph (2) of section 6213(b) shall not apply to

22 any assessment referred to in the preceding sen23 tence.

24 ‘‘(4) SUBCHAPTER S ITEM.—For purposes of

25 this subsection, the term ‘subchapter S item’ means
1121

•HR 2491 RH

1 any item of an S corporation to the extent that reg2 ulations prescribed by the Secretary provide that, for

3 purposes of this subtitle, such item is more appro4 priately determined at the corporation level than at

5 the shareholder level.

6 ‘‘(5) ADDITION TO TAX FOR FAILURE TO COM7 PLY WITH SECTION.—

‘‘For addition to tax in the case of a shareholder’s

negligence in connection with, or disregard of, the

requirements of this section, see part II of subchapter A of chapter 68.’’

8 (3) CONFORMING AMENDMENTS.—

9 (A) Section 1366 is amended by striking

10 subsection (g).

11 (B) Subsection (b) of section 6233 is

12 amended to read as follows:

13 ‘‘(b) SIMILAR RULES IN CERTAIN CASES.—If a part14 nership return is filed for any taxable year but it is deter15 mined that there is no entity for such taxable year, to the

16 extent provided in regulations, rules similar to the rules

17 of subsection (a) shall apply.’’

18 (C) The table of subchapters for chapter

19 63 is amended by striking the item relating to

20 subchapter D.
1122

•HR 2491 RH

1 SEC. 14508. S CORPORATIONS PERMITTED TO HOLD SUB2 SIDIARIES.

3 (a) IN GENERAL.—Paragraph (2) of section 1361(b)

4 (defining ineligible corporation) is amended by striking

5 subparagraph (A) and by redesignating subparagraphs

6 (B), (C), (D), and (E) as subparagraphs (A), (B), (C),

7 and (D), respectively.

8 (b) TREATMENT OF CERTAIN WHOLLY OWNED S

9 CORPORATION SUBSIDIARIES.—Section 1361(b) (defining

10 small business corporation) is amended by adding at the

11 end the following new paragraph:

12 ‘‘(3) TREATMENT OF CERTAIN WHOLLY OWNED

13 SUBSIDIARIES.—

14 ‘‘(A) IN GENERAL.—For purposes of this

15 title—

16 ‘‘(i) a corporation which is a qualified

17 subchapter S subsidiary shall not be treat18 ed as a separate corporation, and

19 ‘‘(ii) all assets, liabilities, and items of

20 income, deduction, and credit of a qualified

21 subchapter S subsidiary shall be treated as

22 assets, liabilities, and such items (as the

23 case may be) of the S corporation.

24 ‘‘(B) QUALIFIED SUBCHAPTER S SUBSIDI25 ARY.—For purposes of this paragraph, the term

26 ‘qualified subchapter S subsidiary’ means any
1123

•HR 2491 RH

1 domestic corporation which is not an ineligible

2 corporation (as defined in paragraph (2)), if—

3 ‘‘(i) 100 percent of the stock of such

4 corporation is held by the S corporation,

5 and

6 ‘‘(ii) the S corporation elects to treat

7 such corporation as a qualified subchapter

8 S subsidiary.

9 ‘‘(C) TREATMENT OF TERMINATIONS OF

10 QUALIFIED SUBCHAPTER S SUBSIDIARY STA11 TUS.—For purposes of this title, if any corpora12 tion which was a qualified subchapter S subsidi13 ary ceases to meet the requirements of subpara14 graph (B), such corporation shall be treated as

15 a new corporation acquiring all of its assets

16 (and assuming all of its liabilities) immediately

17 before such cessation from the S corporation in

18 exchange for its stock.’’

19 (c) CERTAIN DIVIDENDS NOT TREATED AS PASSIVE

20 INVESTMENT INCOME.—Paragraph (3) of section 1362(d)

21 is amended by adding at the end the following new sub22 paragraph:

23 ‘‘(F) TREATMENT OF CERTAIN DIVI24 DENDS.—If an S corporation holds stock in a

25 C corporation meeting the requirements of sec-
1124

•HR 2491 RH

1 tion 1504(a)(2), the term ‘passive investment

2 income’ shall not include dividends from such C

3 corporation to the extent such dividends are at4 tributable to the earnings and profits of such C

5 corporation derived from the active conduct of

6 a trade or business.’’

7 (d) CONFORMING AMENDMENTS.—

8 (1) Subsection (c) of section 1361 is amended

9 by striking paragraph (6).

10 (2) Subsection (b) of section 1504 (defining in11 cludible corporation) is amended by adding at the

12 end the following new paragraph:

13 ‘‘(8) An S corporation.’’

14 SEC. 14509. TREATMENT OF DISTRIBUTIONS DURING LOSS

15 YEARS.

16 (a) ADJUSTMENTS FOR DISTRIBUTIONS TAKEN INTO

17 ACCOUNT BEFORE LOSSES.—

18 (1) Subparagraph (A) of section 1366(d)(1)

19 (relating to losses and deductions cannot exceed

20 shareholder’s basis in stock and debt) is amended by

21 striking ‘‘paragraph (1)’’ and inserting ‘‘paragraphs

22 (1) and (2)(A)’’.

23 (2) Subsection (d) of section 1368 (relating to

24 certain adjustments taken into account) is amended

25 by adding at the end the following new sentence:
1125

•HR 2491 RH

1 ‘‘In the case of any distribution made during any taxable

2 year, the adjusted basis of the stock shall be determined

3 with regard to the adjustments provided in paragraph (1)

4 of section 1367(a) for the taxable year.’’

5 (b) ACCUMULATED ADJUSTMENTS ACCOUNT.—Para6 graph (1) of section 1368(e) (relating to accumulated ad7 justments account) is amended by adding at the end the

8 following new subparagraph:

9 ‘‘(C) NET LOSS FOR YEAR DISREGARDED.—

10 ‘‘(i) IN GENERAL.—In applying this section

11 to distributions made during any taxable year,

12 the amount in the accumulated adjustments ac13 count as of the close of such taxable year shall

14 be determined without regard to any net nega15 tive adjustment for such taxable year.

16 ‘‘(ii) NET NEGATIVE ADJUSTMENT.—For

17 purposes of clause (i), the term ‘net negative

18 adjustment’ means, with respect to any taxable

19 year, the excess (if any) of—

20 ‘‘(I) the reductions in the account for

21 the taxable year (other than for distribu22 tions), over

23 ‘‘(II) the increases in such account for

24 such taxable year.’’
1126

•HR 2491 RH

1 (c) CONFORMING AMENDMENTS.—Subparagraph (A)

2 of section 1368(e)(1) is amended—

3 (1) by striking ‘‘as provided in subparagraph

4 (B)’’ and inserting ‘‘as otherwise provided in this

5 paragraph’’, and

6 (2) by striking ‘‘section 1367(b)(2)(A)’’ and in7 serting ‘‘section 1367(a)(2)’’.

8 SEC. 14510. TREATMENT OF S CORPORATIONS UNDER SUB9 CHAPTER C.

10 Subsection (a) of section 1371 (relating to applica11 tion of subchapter C rules) is amended to read as follows:

12 ‘‘(a) APPLICATION OF SUBCHAPTER C RULES.—Ex13 cept as otherwise provided in this title, and except to the

14 extent inconsistent with this subchapter, subchapter C

15 shall apply to an S corporation and its shareholders.’’

16 SEC. 14511. ELIMINATION OF CERTAIN EARNINGS AND

17 PROFITS.

18 (a) IN GENERAL.—If—

19 (1) a corporation was an electing small business

20 corporation under subchapter S of chapter 1 of the

21 Internal Revenue Code of 1986 for any taxable year

22 beginning before January 1, 1983, and

23 (2) such corporation is an S corporation under

24 subchapter S of chapter 1 of such Code for its first

25 taxable year beginning after December 31, 1995,
1127

•HR 2491 RH

1 the amount of such corporation’s accumulated earnings

2 and profits (as of the beginning of such first taxable year)

3 shall be reduced by an amount equal to the portion (if

4 any) of such accumulated earnings and profits which were

5 accumulated in any taxable year beginning before January

6 1, 1983, for which such corporation was an electing small

7 business corporation under such subchapter S.

8 (b) CONFORMING AMENDMENTS.—

9 (1) Paragraph (3) of section 1362(d) is amend10 ed—

11 (A) by striking ‘‘SUBCHAPTER C’’ in the

12 paragraph heading and inserting ‘‘ACCUMU13 LATED’’,

14 (B) by striking ‘‘subchapter C’’ in sub15 paragraph (A)(i)(I) and inserting ‘‘accumu16 lated’’, and

17 (C) by striking subparagraph (B) and re18 designating the following subparagraphs accord19 ingly.

20 (2)(A) Subsection (a) of section 1375 is amend21 ed by striking ‘‘subchapter C’’ in paragraph (1) and

22 inserting ‘‘accumulated’’.

23 (B) Paragraph (3) of section 1375(b) is amend24 ed to read as follows:
1128

•HR 2491 RH

1 ‘‘(3) PASSIVE INVESTMENT INCOME, ETC.—The

2 terms ‘passive investment income’ and ‘gross re3 ceipts’ have the same respective meanings as when

4 used in paragraph (3) of section 1362(d).’’

5 (C) The section heading for section 1375 is

6 amended by striking ‘‘SUBCHAPTER C’’ and insert7 ing ‘‘ACCUMULATED’’.

8 (D) The table of sections for part III of sub9 chapter S of chapter 1 is amended by striking ‘‘sub10 chapter C’’ in the item relating to section 1375 and

11 inserting ‘‘accumulated’’.

12 (3) Clause (i) of section 1042(c)(4)(A) is

13 amended by striking ‘‘section 1362(d)(3)(D)’’ and

14 inserting ‘‘section 1362(d)(3)(C)’’.

15 SEC. 14512. CARRYOVER OF DISALLOWED LOSSES AND DE16 DUCTIONS UNDER AT-RISK RULES ALLOWED.

17 Paragraph (3) of section 1366(d) (relating to carry18 over of disallowed losses and deductions to post-termi19 nation transition period) is amended by adding at the end

20 the following new subparagraph:

21 ‘‘(D) AT-RISK LIMITATIONS.—To the ex22 tent that any increase in adjusted basis de23 scribed in subparagraph (B) would have in24 creased the shareholder’s amount at risk under

25 section 465 if such increase had occurred on
1129

•HR 2491 RH

1 S6201 the day preceding the commencement of the

2 post-termination transition period, rules similar

3 to the rules described in subparagraphs (A)

4 through (C) shall apply to any losses disallowed

5 by reason of section 465(a).’’

6 SEC. 14513. ADJUSTMENTS TO BASIS OF INHERITED S

7 STOCK TO REFLECT CERTAIN ITEMS OF IN8 COME.

9 (a) IN GENERAL.—Subsection (b) of section 1367

10 (relating to adjustments to basis of stock of shareholders,

11 etc.) is amended by adding at the end the following new

12 paragraph:

13 ‘‘(4) ADJUSTMENTS IN CASE OF INHERITED

14 STOCK.—

15 ‘‘(A) IN GENERAL.—If any person acquires

16 stock in an S corporation by reason of the

17 death of a decedent or by bequest, devise, or in18 heritance, section 691 shall be applied with re19 spect to any item of income of the S corpora20 tion in the same manner as if the decedent had

21 held directly his pro rata share of such item.

22 ‘‘(B) ADJUSTMENTS TO BASIS.—The basis

23 determined under section 1014 of any stock in

24 an S corporation shall be reduced by the por25 tion of the value of the stock which is attrib-
1130

•HR 2491 RH

1 utable to items constituting income in respect

2 of the decedent.’’

3 (b) EFFECTIVE DATE.—The amendment made by

4 subsection (a) shall apply in the case of decedents dying

5 after the date of the enactment of this Act.

6 SEC. 14514. S CORPORATIONS ELIGIBLE FOR RULES APPLI7 CABLE TO REAL PROPERTY SUBDIVIDED FOR

8 SALE BY NONCORPORATE TAXPAYERS.

9 (a) IN GENERAL.—Subsection (a) of section 1237

10 (relating to real property subdivided for sale) is amended

11 by striking ‘‘other than a corporation’’ in the material pre12 ceding paragraph (1) and inserting ‘‘other than a C cor13 poration’’.

14 (b) CONFORMING AMENDMENT.—Subparagraph (A)

15 of section 1237(a)(2) is amended by inserting ‘‘an S cor16 poration which included the taxpayer as a shareholder,’’

17 after ‘‘controlled by the taxpayer,’’.

18 SEC. 14515. EFFECTIVE DATE.

19 (a) IN GENERAL.—Except as otherwise provided in

20 this part, the amendments made by this part shall apply

21 to taxable years beginning after December 31, 1995.

22 (b) TREATMENT OF CERTAIN ELECTIONS UNDER

23 PRIOR LAW.—For purposes of section 1362(g) of the In24 ternal Revenue Code of 1986 (relating to election after

25 termination), any termination under section 1362(d) of
1131

•HR 2491 RH

1 such Code in a taxable year beginning before January 1,

2 1996, shall not be taken into account.

3 PART II—PROVISIONS RELATING TO REGULATED

4 INVESTMENT COMPANIES

5 SEC. 14521. REPEAL OF 30-PERCENT GROSS INCOME LIMI6 TATION.

7 (a) GENERAL RULE.—Subsection (b) of section 851

8 (relating to limitations) is amended by striking paragraph

9 (3), by adding ‘‘and’’ at the end of paragraph (2), and

10 by redesignating paragraph (4) as paragraph (3).

11 (b) TECHNICAL AMENDMENTS.—

12 (1) The material following paragraph (3) of sec13 tion 851(b) (as redesignated by subsection (a)) is

14 amended—

15 (A) by striking out ‘‘paragraphs (2) and

16 (3)’’ and inserting ‘‘paragraph (2)’’, and

17 (B) by striking out the last sentence there18 of.

19 (2) Subsection (c) of section 851 is amended by

20 striking ‘‘subsection (b)(4)’’ each place it appears

21 (including the heading) and inserting ‘‘subsection

22 (b)(3)’’.

23 (3) Subsection (d) of section 851 is amended by

24 striking ‘‘subsections (b)(4)’’ and inserting ‘‘sub25 sections (b)(3)’’.
1132

•HR 2491 RH

1 (4) Paragraph (1) of section 851(e) is amended

2 by striking ‘‘subsection (b)(4)’’ and inserting ‘‘sub3 section (b)(3)’’.

4 (5) Paragraph (4) of section 851(e) is amended

5 by striking ‘‘subsections (b)(4)’’ and inserting ‘‘sub6 sections (b)(3)’’.

7 (6) Section 851 is amended by striking sub8 section (g) and redesignating subsection (h) as sub9 section (g).

10 (7) Subsection (g) of section 851 (as redesig11 nated by paragraph (6)) is amended by striking

12 paragraph (3).

13 (8) Section 817(h)(2) is amended—

14 (A) by striking ‘‘851(b)(4)’’ in subpara15 graph (A) and inserting ‘‘851(b)(3)’’, and

16 (B) by striking ‘‘851(b)(4)(A)(i)’’ in sub17 paragraph (B) and inserting ‘‘851(b)(3)(A)(i)’’.

18 (9) Section 1092(f)(2) is amended by striking

19 ‘‘Except for purposes of section 851(b)(3), the’’ and

20 inserting ‘‘The’’.

21 (c) EFFECTIVE DATE.—The amendments made by

22 this section shall apply to taxable years ending after the

23 date of the enactment of this Act.
1133

•HR 2491 RH

1 PART III—PROVISIONS RELATING TO REAL

2 ESTATE INVESTMENT TRUSTS

3 SEC. 14531. CLARIFICATION OF LIMITATION ON MAXIMUM

4 NUMBER OF SHAREHOLDERS.

5 (a) RULES RELATING TO DETERMINATION OF OWN6 ERSHIP.—

7 (1) FAILURE TO ISSUE SHAREHOLDER DEMAND

8 LETTER NOT TO DISQUALIFY REIT.—Section 857(a)

9 (relating to requirements applicable to real estate in10 vestment trusts) is amended by striking paragraph

11 (2) and by redesignating paragraph (3) as para12 graph (2).

13 (2) SHAREHOLDER DEMAND LETTER REQUIRE14 MENT; PENALTY.—Section 857 (relating to taxation

15 of real estate investment trusts and their bene16 ficiaries) is amended by redesignating subsection (f)

17 as subsection (g) and by inserting after subsection

18 (e) the following new subsection:

19 ‘‘(f) REAL ESTATE INVESTMENT TRUSTS TO ASCER20 TAIN OWNERSHIP.—

21 ‘‘(1) IN GENERAL.—Each real estate invest22 ment trust shall each taxable year comply with regu23 lations prescribed by the Secretary for the purposes

24 of ascertaining the actual ownership of the outstand25 ing shares, or certificates of beneficial interest, of

26 such trust.
1134

•HR 2491 RH

1 ‘‘(2) FAILURE TO COMPLY.—

2 ‘‘(A) IN GENERAL.—If a real estate invest3 ment trust fails to comply with the require4 ments of paragraph (1) for a taxable year, such

5 trust shall pay (on notice and demand by the

6 Secretary and in the same manner as tax) a

7 penalty of $25,000.

8 ‘‘(B) INTENTIONAL DISREGARD.—If any

9 failure under paragraph (1) is due to inten10 tional disregard of the requirement under para11 graph (1), the penalty under subparagraph (A)

12 shall be $50,000.

13 ‘‘(C) FAILURE TO COMPLY AFTER NO14 TICE.—The Secretary may require a real estate

15 investment trust to take such actions as the

16 Secretary determines appropriate to ascertain

17 actual ownership if the trust fails to meet the

18 requirements of paragraph (1). If the trust fails

19 to take such actions, the trust shall pay (on no20 tice and demand by the Secretary and in the

21 same manner as tax) an additional penalty

22 equal to the penalty determined under subpara23 graph (A) or (B), whichever is applicable.

24 ‘‘(D) REASONABLE CAUSE.—No penalty

25 shall be imposed under this paragraph with re-
1135

•HR 2491 RH

1 spect to any failure if it is shown that such fail2 ure is due to reasonable cause and not to willful

3 neglect.’’

4 (b) COMPLIANCE WITH CLOSELY HELD PROHIBI5 TION.—

6 (1) IN GENERAL.—Section 856 (defining real

7 estate investment trust) is amended by adding at the

8 end the following new subsection:

9 ‘‘(k) REQUIREMENT THAT ENTITY NOT BE CLOSELY

10 HELD TREATED AS MET IN CERTAIN CASES.—A corpora11 tion, trust, or association—

12 ‘‘(1) which for a taxable year meets the require13 ments of section 857(f)(1), and

14 ‘‘(2) which does not know, or exercising reason15 able diligence would not have known, whether the

16 entity failed to meet the requirement of subsection

17 (a)(6),

18 shall be treated as having met the requirement of sub19 section (a)(6) for the taxable year.’’

20 (2) CONFORMING AMENDMENT.—Paragraph (6)

21 of section 856(a) is amended by inserting ‘‘subject

22 to the provisions of subsection (k),’’ before ‘‘which

23 is not’’.
1136

•HR 2491 RH

1 SEC. 14532. DE MINIMIS RULE FOR TENANT SERVICES IN2 COME.

3 (a) IN GENERAL.—Paragraph (2) of section 856(d)

4 (defining rents from real property) is amended by striking

5 subparagraph (C) and the last sentence and inserting:

6 ‘‘(C) any impermissible tenant service in7 come (as defined in paragraph (7)).’’

8 (b) IMPERMISSIBLE TENANT SERVICE INCOME.—

9 Section 856(d) is amended by adding at the end the fol10 lowing new paragraph:

11 ‘‘(7) IMPERMISSIBLE TENANT SERVICE IN12 COME.—For purposes of paragraph (2)(C)—

13 ‘‘(A) IN GENERAL.—The term ‘impermis14 sible tenant service income’ means, with respect

15 to any real or personal property, any amount

16 received or accrued directly or indirectly by the

17 real estate investment trust for—

18 ‘‘(i) services furnished or rendered by

19 the trust to the tenants of such property,

20 or

21 ‘‘(ii) managing or operating such

22 property.

23 ‘‘(B) DISQUALIFICATION OF ALL AMOUNTS

24 WHERE MORE THAN DE MINIMIS AMOUNT.—If

25 the amount described in subparagraph (A) with

26 respect to a property for any taxable year ex-
1137

•HR 2491 RH

1 ceeds 1 percent of all amounts received or ac2 crued during such taxable year directly or indi3 rectly by the real estate investment trust with

4 respect to such property, the impermissible ten5 ant service income of the trust with respect to

6 the property shall include all such amounts.

7 ‘‘(C) EXCEPTIONS.—For purposes of sub8 paragraph (A)—

9 ‘‘(i) services furnished or rendered, or

10 management or operation provided,

11 through an independent contractor from

12 whom the trust itself does not derive or re13 ceive any income shall not be treated as

14 furnished, rendered, or provided by the

15 trust, and

16 ‘‘(ii) there shall not be taken into ac17 count any amount which would be excluded

18 from unrelated business taxable income

19 under section 512(b)(3) if received by an

20 organization described in section

21 511(a)(2).

22 ‘‘(D) AMOUNT ATTRIBUTABLE TO IMPER23 MISSIBLE SERVICES.—For purposes of subpara24 graph (A), the amount treated as received for

25 any service (or management or operation) shall
1138

•HR 2491 RH

1 not be less than 150 percent of the direct cost

2 of the trust in furnishing or rendering the serv3 ice (or providing the management or operation).

4 ‘‘(E) COORDINATION WITH LIMITA5 TIONS.—For purposes of paragraphs (2) and

6 (3) of subsection (c), amounts described in sub7 paragraph (A) shall be included in the gross in8 come of the corporation, trust, or association.’’

9 SEC. 14533. ATTRIBUTION RULES APPLICABLE TO TENANT

10 OWNERSHIP.

11 Section 856(d)(5) (relating to constructive ownership

12 of stock) is amended by adding at the end the following:

13 ‘‘For purposes of paragraph (2)(B), section 318(a)(3)(A)

14 shall be applied under the preceding sentence in the case

15 of a partnership by taking into account only partners who

16 own (directly or indirectly) 25 percent or more of the cap17 ital interest, or the profits interest, in the partnership.’’

18 SEC. 14534. CREDIT FOR TAX PAID BY REIT ON RETAINED

19 CAPITAL GAINS.

20 (a) GENERAL RULE.—Paragraph (3) of section

21 857(b) (relating to capital gains) is amended by redesig22 nating subparagraph (D) as subparagraph (E) and by in23 serting after subparagraph (C) the following new subpara24 graph:
1139

•HR 2491 RH

1 ‘‘(D) TREATMENT BY SHAREHOLDERS OF

2 UNDISTRIBUTED CAPITAL GAINS.—

3 ‘‘(i) Every shareholder of a real estate

4 investment trust at the close of the trust’s

5 taxable year shall include, in computing his

6 long-term capital gains in his return for

7 his taxable year in which the last day of

8 the trust’s taxable year falls, such amount

9 as the trust shall designate in respect of

10 such shares in a written notice mailed to

11 its shareholders at any time prior to the

12 expiration of 60 days after the close of its

13 taxable year (or mailed to its shareholders

14 or holders of beneficial interests with its

15 annual report for the taxable year), but the

16 amount so includible by any shareholder

17 shall not exceed that part of the amount

18 subjected to tax in subparagraph (A)(ii)

19 which he would have received if all of such

20 amount had been distributed as capital

21 gain dividends by the trust to the holders

22 of such shares at the close of its taxable

23 year.

24 ‘‘(ii) For purposes of this title, every

25 such shareholder shall be deemed to have
1140

•HR 2491 RH

1 paid, for his taxable year under clause (i),

2 the tax imposed by subparagraph (A)(ii)

3 on the amounts required by this subpara4 graph to be included in respect of such

5 shares in computing his long-term capital

6 gains for that year; and such shareholders

7 shall be allowed credit or refund as the

8 case may be, for the tax so deemed to have

9 been paid by him.

10 ‘‘(iii) The adjusted basis of such

11 shares in the hands of the holder shall be

12 increased with respect to the amounts re13 quired by this subparagraph to be included

14 in computing his long-term capital gains,

15 by the difference between the amount of

16 such includible gains and the tax deemed

17 paid by such shareholder in respect of such

18 shares under clause (ii).

19 ‘‘(iv) In the event of such designation,

20 the tax imposed by subparagraph (A)(ii)

21 shall be paid by the real estate investment

22 trust within 30 days after the close of its

23 taxable year.

24 ‘‘(v) The earnings and profits of such

25 real estate investment trust, and the earn-
1141

•HR 2491 RH

1 ings and profits of any such shareholder

2 which is a corporation, shall be appro3 priately adjusted in accordance with regu4 lations prescribed by the Secretary.

5 ‘‘(vi) As used in this subparagraph,

6 the terms ‘shares’ and ‘shareholders’ shall

7 include beneficial interests and holders of

8 beneficial interests, respectively.’’

9 (b) CONFORMING AMENDMENTS.—

10 (1) Clause (i) of section 857(b)(7)(A) is amend11 ed by striking ‘‘subparagraph (B)’’ and inserting

12 ‘‘subparagraph (B) or (D)’’.

13 (2) Clause (iii) of section 852(b)(3)(D) is

14 amended by striking ‘‘by 65 percent’’ and all that

15 follows and inserting ‘‘by the difference between the

16 amount of such includible gains and the tax deemed

17 paid by such shareholder in respect of such shares

18 under clause (ii).’’

19 SEC. 14535. REPEAL OF 30-PERCENT GROSS INCOME RE20 QUIREMENT.

21 (a) GENERAL RULE.—Subsection (c) of section 856

22 (relating to limitations) is amended—

23 (1) by adding ‘‘and’’ at the end of paragraph

24 (3),

25 (2) by striking paragraphs (4) and (8), and
1142

•HR 2491 RH

1 (3) by redesignating paragraphs (5), (6), and

2 (7) as paragraphs (4), (5), and (6), respectively.

3 (b) CONFORMING AMENDMENTS.—

4 (1) Subparagraph (G) of section 856(c)(5), as

5 redesignated by subsection (a), is amended by strik6 ing ‘‘and such agreement shall be treated as a secu7 rity for purposes of paragraph (4)(A)’’.

8 (2) Paragraph (5) of section 857(b) is amended

9 by striking ‘‘section 856(c)(7)’’ and inserting ‘‘sec10 tion 856(c)(6)’’.

11 (3) Subparagraph (C) of section 857(b)(6) is

12 amended by striking ‘‘section 856(c)(6)(B)’’ and in13 serting ‘‘section 856(c)(5)(B)’’.

14 SEC. 14536. MODIFICATION OF EARNINGS AND PROFITS

15 RULES FOR DETERMINING WHETHER REIT

16 HAS EARNINGS AND PROFITS FROM NON17 REIT YEAR.

18 Subsection (d) of section 857 is amended by adding

19 at the end the following new paragraph:

20 ‘‘(3) DISTRIBUTIONS TO MEET REQUIREMENTS

21 OF SUBSECTION (a)(2)(B).—Any distribution which

22 is made in order to comply with the requirements of

23 subsection (a)(2)(B)—

24 ‘‘(A) shall be treated for purposes of this

25 subsection and subsection (a)(2)(B) as made
1143

•HR 2491 RH

1 from the earliest accumulated earnings and

2 profits (other than earnings and profits to

3 which subsection (a)(2)(A) applies) rather than

4 the most recently accumulated earnings and

5 profits, and

6 ‘‘(B) to the extent treated under subpara7 graph (A) as made from accumulated earnings

8 and profits, shall not be treated as a distribu9 tion for purposes of subsection (b)(2)(B).’’

10 SEC. 14537. TREATMENT OF FORECLOSURE PROPERTY.

11 (a) GRACE PERIODS.—

12 (1) INITIAL PERIOD.—Paragraph (2) of section

13 856(e) (relating to special rules for foreclosure prop14 erty) is amended by striking ‘‘on the date which is

15 2 years after the date the trust acquired such prop16 erty’’ and inserting ‘‘as of the close of the 3d taxable

17 year following the taxable year in which the trust ac18 quired such property’’.

19 (2) EXTENSION.—Paragraph (3) of section

20 856(e) is amended—

21 (A) by striking ‘‘or more extensions’’ and

22 inserting ‘‘extension’’, and

23 (B) by striking the last sentence and in24 serting: ‘‘Any such extension shall not extend

25 the grace period beyond the close of the 3d tax-
1144

•HR 2491 RH

1 able year following the last taxable year in the

2 period under paragraph (2).’’

3 (b) REVOCATION OF ELECTION.—Paragraph (5) of

4 section 856(e) is amended by striking the last sentence

5 and inserting: ‘‘A real estate investment trust may revoke

6 any such election for a taxable year by filing the revocation

7 (in the manner provided by the Secretary) on or before

8 the due date (including any extension of time) for filing

9 its return of tax under this chapter for the taxable year.

10 If a trust revokes an election for any property, no election

11 may be made by the trust under this paragraph with re12 spect to the property for any subsequent taxable year.’’

13 (c) CERTAIN ACTIVITIES NOT TO DISQUALIFY PROP14 ERTY.—Paragraph (4) of section 856(e) is amended by

15 adding at the end the following new flush sentence:

16 ‘‘For purposes of subparagraph (C), property shall

17 not be treated as used in a trade or business by rea18 son of any activities of the real estate investment

19 trust with respect to such property to the extent

20 that such activities would not result in amounts re21 ceived or accrued, directly or indirectly, with respect

22 to such property being treated as other than rents

23 from real property.’’
1145

•HR 2491 RH

1 SEC. 14538. PAYMENTS UNDER HEDGING INSTRUMENTS.

2 Section 856(c)(5)(G) (relating to treatment of certain

3 interest rate agreements), as redesignated by section

4 14535, is amended to read as follows:

5 ‘‘(G) TREATMENT OF CERTAIN HEDGING

6 INSTRUMENTS.—Except to the extent provided

7 by regulations, any—

8 ‘‘(i) payment to a real estate invest9 ment trust under an interest rate swap or

10 cap agreement, option, futures contract,

11 forward rate agreement, or any similar fi12 nancial instrument, entered into by the

13 trust in a transaction to reduce the inter14 est rate risks with respect to any indebted15 ness incurred or to be incurred by the

16 trust to acquire or carry real estate assets,

17 and

18 ‘‘(ii) gain from the sale or other dis19 position of any such investment,

20 shall be treated as income qualifying under

21 paragraph (2).’’

22 SEC. 14539. EXCESS NONCASH INCOME.

23 Section 857(e)(2) (relating to determination of

24 amount of excess noncash income) is amended—

25 (1) by striking subparagraph (B),
1146

•HR 2491 RH

1 (2) by striking the period at the end of sub2 paragraph (C) and inserting a comma,

3 (3) by redesignating subparagraph (C) (as

4 amended by paragraph (2)) as subparagraph (B),

5 and

6 (4) by adding at the end the following new sub7 paragraphs:

8 ‘‘(C) the amount (if any) by which—

9 ‘‘(i) the amounts includible in gross

10 income with respect to instruments to

11 which section 860E(a) or 1272 applies, ex12 ceed

13 ‘‘(ii) the amount of money and the

14 fair market value of other property re15 ceived during the taxable year under such

16 instruments, and

17 ‘‘(D) amounts includible in income by rea18 son of cancellation of indebtedness.’’

19 SEC. 14540. PROHIBITED TRANSACTION SAFE HARBOR.

20 Clause (iii) of section 857(b)(6)(C) (relating to cer21 tain sales not to constitute prohibited transactions) is

22 amended by striking ‘‘(other than foreclosure property)’’

23 in subclauses (I) and (II) and inserting ‘‘(other than sales

24 of foreclosure property or sales to which section 1033 ap25 plies)’’.
1147

•HR 2491 RH

1 SEC. 14541. SHARED APPRECIATION MORTGAGES.

2 (a) BANKRUPTCY SAFE HARBOR.—Section 856(j)

3 (relating to treatment of shared appreciation mortgages)

4 is amended by redesignating paragraph (4) as paragraph

5 (5) and by inserting after paragraph (3) the following new

6 paragraph:

7 ‘‘(4) COORDINATION WITH 4-YEAR HOLDING PE8 RIOD.—

9 ‘‘(A) IN GENERAL.—For purposes of sec10 tion 857(b)(6)(C), if a real estate investment

11 trust is treated as having sold secured property

12 under paragraph (3)(A), the trust shall be

13 treated as having held such property for at

14 least 4 years if—

15 ‘‘(i) the secured property is sold or

16 otherwise disposed of pursuant to a case

17 under title 11 of the United States Code,

18 ‘‘(ii) the seller is under the jurisdic19 tion of the court in such case, and

20 ‘‘(iii) the disposition is required by the

21 court or is pursuant to a plan approved by

22 the court.

23 ‘‘(B) EXCEPTION.—Subparagraph (A)

24 shall not apply if—
1148

•HR 2491 RH

1 ‘‘(i) the secured property was acquired

2 by the trust with the intent to evict or

3 foreclose, or

4 ‘‘(ii) the trust knew or had reason to

5 know that default on the obligation de6 scribed in paragraph (5)(A) would occur.’’

7 (b) CLARIFICATION OF DEFINITION OF SHARED AP8 PRECIATION PROVISION.—Clause (ii) of section

9 856(j)(5)(A) is amended by inserting before the period ‘‘or

10 appreciation in value as of any specified date’’.

11 SEC. 14542. WHOLLY OWNED SUBSIDIARIES.

12 Section 856(i)(2) (defining qualified REIT subsidi13 ary) is amended by striking ‘‘at all times during the period

14 such corporation was in existence’’.

15 SEC. 14543. EFFECTIVE DATE.

16 The amendments made by this part shall apply to

17 taxable years beginning after the date of the enactment

18 of this Act.

19 PART IV—ACCOUNTING PROVISIONS

20 SEC. 14551. MODIFICATIONS TO LOOK-BACK METHOD FOR

21 LONG-TERM CONTRACTS.

22 (a) LOOK-BACK METHOD NOT TO APPLY IN CER23 TAIN CASES.—Subsection (b) of section 460 (relating to

24 percentage of completion method) is amended by adding

25 at the end the following new paragraph:
1149

•HR 2491 RH

1 ‘‘(6) ELECTION TO HAVE LOOK-BACK METHOD

2 NOT APPLY IN DE MINIMIS CASES.—

3 ‘‘(A) AMOUNTS TAKEN INTO ACCOUNT

4 AFTER COMPLETION OF CONTRACT.—Para5 graph (1)(B) shall not apply with respect to

6 any taxable year (beginning after the taxable

7 year in which the contract is completed) if—

8 ‘‘(i) the cumulative taxable income (or

9 loss) under the contract as of the close of

10 such taxable year, is within

11 ‘‘(ii) 10 percent of the cumulative

12 look-back taxable income (or loss) under

13 the contract as of the close of the most re14 cent taxable year to which paragraph

15 (1)(B) applied (or would have applied but

16 for subparagraph (B)).

17 ‘‘(B) DE MINIMIS DISCREPANCIES.—Para18 graph (1)(B) shall not apply in any case to

19 which it would otherwise apply if—

20 ‘‘(i) the cumulative taxable income (or

21 loss) under the contract as of the close of

22 each prior contract year, is within

23 ‘‘(ii) 10 percent of the cumulative

24 look-back income (or loss) under the con-
1150

•HR 2491 RH

1 tract as of the close of such prior contract

2 year.

3 ‘‘(C) DEFINITIONS.—For purposes of this

4 paragraph—

5 ‘‘(i) CONTRACT YEAR.—The term

6 ‘contract year’ means any taxable year for

7 which income is taken into account under

8 the contract.

9 ‘‘(ii) LOOK-BACK INCOME OR LOSS.—

10 The look-back income (or loss) is the

11 amount which would be the taxable income

12 (or loss) under the contract if the alloca13 tion method set forth in paragraph (2)(A)

14 were used in determining taxable income.

15 ‘‘(iii) DISCOUNTING NOT APPLICA16 BLE.—The amounts taken into account

17 after the completion of the contract shall

18 be determined without regard to any dis19 counting under the 2nd sentence of para20 graph (2).

21 ‘‘(D) CONTRACTS TO WHICH PARAGRAPH

22 APPLIES.—This paragraph shall only apply if

23 the taxpayer makes an election under this sub24 paragraph. Unless revoked with the consent of

25 the Secretary, such an election shall apply to all
1151

•HR 2491 RH

1 long-term contracts completed during the tax2 able year for which election is made or during

3 any subsequent taxable year.’’

4 (b) MODIFICATION OF INTEREST RATE.—

5 (1) IN GENERAL.—Subparagraph (C) of section

6 460(b)(2) is amended by striking ‘‘the overpayment

7 rate established by section 6621’’ and inserting ‘‘the

8 adjusted overpayment rate (as defined in paragraph

9 (7))’’.

10 (2) ADJUSTED OVERPAYMENT RATE.—Sub11 section (b) of section 460 is amended by adding at

12 the end the following new paragraph:

13 ‘‘(7) ADJUSTED OVERPAYMENT RATE.—

14 ‘‘(A) IN GENERAL.—The adjusted overpay15 ment rate for any interest accrual period is the

16 overpayment rate in effect under section 6621

17 for the calendar quarter in which such interest

18 accrual period begins.

19 ‘‘(B) INTEREST ACCRUAL PERIOD.—For

20 purposes of subparagraph (A), the term ‘inter21 est accrual period’ means the period—

22 ‘‘(i) beginning on the day after the re23 turn due date for any taxable year of the

24 taxpayer, and
1152

•HR 2491 RH

1 ‘‘(ii) ending on the return due date

2 for the following taxable year.

3 For purposes of the preceding sentence, the

4 term ‘return due date’ means the date pre5 scribed for filing the return of the tax imposed

6 by this chapter (determined without regard to

7 extensions).’’

8 (c) EFFECTIVE DATE.—The amendments made by

9 this section shall apply to contracts completed in taxable

10 years ending after the date of the enactment of this Act.

11 SEC. 14552. APPLICATION OF MARK TO MARKET ACCOUNT12 ING METHOD TO TRADERS IN SECURITIES.

13 (a) IN GENERAL.—Section 475 (relating to mark to

14 market accounting method for dealers in securities) is

15 amended by redesignating subsection (e) as subsection (f)

16 and by inserting after subsection (d) the following new

17 subsection:

18 ‘‘(e) AUTHORITY TO EXTEND METHOD TO TRADERS

19 IN SECURITIES.—

20 ‘‘(1) IN GENERAL.—A trader in securities may

21 elect to have the provisions of this section (other

22 than subsection (d)(3)) apply to securities held by

23 the trader. Such election may be made only with the

24 consent of the Secretary.
1153

•HR 2491 RH

1 ‘‘(2) TRADER IN SECURITIES.—For purposes of

2 this subsection, the term ‘trader in securities’ means

3 a taxpayer who is regularly engaged in trading secu4 rities.’’

5 (b) EFFECTIVE DATE.—The amendments made by

6 this section shall apply to taxable years ending on and

7 after December 31, 1995.

8 SEC. 14553. MODIFICATION OF RULING AMOUNTS FOR NU9 CLEAR DECOMMISSIONING COSTS.

10 (a) IN GENERAL.—Section 468A(d) (relating to rul11 ing amount) is amended by adding at the end the following

12 new paragraph:

13 ‘‘(4) NONSUBSTANTIAL MODIFICATIONS.—

14 A taxpayer may modify a schedule of ruling

15 amounts under paragraph (1) without a review

16 under paragraph (3) if such modification does

17 not substantially modify the ruling amount. The

18 taxpayer shall notify the Secretary of any such

19 modification.’’

20 (b) EFFECTIVE DATE.—The amendment made by

21 this section shall apply to modifications after the date of

22 the enactment of this Act.
1154

•HR 2491 RH

1 SEC. 14554. ELECTION OF ALTERNATIVE TAXABLE YEARS

2 BY PARTNERSHIPS AND S CORPORATIONS.

3 (a) REPEAL OF LIMITATION ON WHAT TAXABLE

4 YEAR MAY BE ELECTED.—

5 (1) IN GENERAL.—Section 444(b) (relating to

6 limitations on taxable years which may be elected) is

7 amended by adding at the end the following new

8 paragraph:

9 ‘‘(5) LIMITATIONS NOT TO APPLY TO CERTAIN

10 PARTNERSHIPS AND S CORPORATIONS.—

11 ‘‘(A) IN GENERAL.—In the case of a part12 nership or an S corporation, this subsection

13 shall not apply to an election under subsection

14 (a) for a taxable year beginning after December

15 31, 1996.

16 ‘‘(B) SPECIAL RULE FOR EXISTING ELEC17 TIONS.—

18 ‘‘(i) IN GENERAL.—If a partnership

19 or S corporation has an election in effect

20 for its last taxable year beginning before

21 January 1, 1997, the partnership or S cor22 poration may elect to have this paragraph

23 apply beginning with any taxable year be24 ginning after December 31, 1996. Such an

25 election may be made without the consent

26 of the Secretary and shall not be treated
1155

•HR 2491 RH

1 as a termination of an election for pur2 poses of subsection (d).

3 ‘‘(ii) TREATMENT OF REQUIRED PAY4 MENTS.—A partnership or S corporation

5 making an election under clause (i) may

6 elect to have its net required payment bal7 ance (within the meaning of section

8 7519(e)(4))—

9 ‘‘(I) credited against its first esti10 mated tax payment under section

11 6654A for its first full taxable year

12 for which such section applies, or

13 ‘‘(II) refunded to it at the time

14 provided in section 7519(c)(3).’’

15 (2) EFFECT OF ELECTION.—Paragraph (1) of

16 section 444(c) (relating to effect of election) is

17 amended to read as follows:

18 ‘‘(1) in the case of a partnership or S corpora19 tion, such entity shall—

20 ‘‘(A) make the payments required by sec21 tion 7519, or

22 ‘‘(B) if subsection (b)(5) applies to the

23 election, make the estimated tax payments de24 scribed in section 6654A, and’’.
1156

•HR 2491 RH

1 (b) ESTIMATED TAX FOR PARTNERSHIPS AND S

2 CORPORATIONS MAKING TAXABLE YEAR ELECTIONS.—

3 Part I of subchapter A of chapter 68 (relating to additions

4 to tax and additional amounts) is amended by inserting

5 after section 6654 the following new section:

6 ‘‘SEC. 6654A. FAILURE BY ELECTING PARTNERSHIP OR S

7 CORPORATION TO PAY ESTIMATED TAX.

8 ‘‘(a) PENALTY.—Except as otherwise provided in this

9 section, in the case of a partnership or S corporation with

10 respect to which an election to which section 444(b)(5)

11 applies is in effect (hereafter referred to as ‘the entity’),

12 there is hereby imposed a penalty for each quarter for

13 which there is an underpayment in an amount determined

14 by applying—

15 ‘‘(1) the underpayment rate established under

16 section 6621,

17 ‘‘(2) to the amount of the underpayment,

18 ‘‘(3) for the period of the underpayment.

19 ‘‘(b) AMOUNT OF UNDERPAYMENT; PERIOD OF

20 UNDERPAYMENT.—For purposes of subsection (a)—

21 ‘‘(1) AMOUNT.—The amount of the

22 underpayment shall be the excess of—

23 ‘‘(A) the required installment, over
1157

•HR 2491 RH

1 ‘‘(B) the amount (if any) of the install2 ment paid on or before the due date for the in3 stallment.

4 ‘‘(2) PERIOD OF UNDERPAYMENT.—The period

5 of the underpayment shall run from the due date for

6 the installment to the earlier of—

7 ‘‘(A) the first April 15 more than 3

8 months after the close of the taxable year, or

9 ‘‘(B) with respect to any portion of the

10 underpayment, the date on which such portion

11 is paid.

12 ‘‘(3) ORDER OF CREDITING PAYMENTS.—For

13 purposes of paragraph (2)(B), a payment of esti14 mated tax shall be credited against unpaid required

15 installments in the order in which the installments

16 are required to be paid.

17 ‘‘(c) REQUIRED INSTALLMENTS.—For purposes of

18 this section—

19 ‘‘(1) NUMBER AND DATES.—An entity shall

20 make 4 required installments which shall be due on

21 the 15th day of the 3d, 5th, 8th, and 12th months

22 of the taxable year.

23 ‘‘(2) NO REQUIRED PAYMENTS WHERE ENTI24 TY’S LIABILITY IS LESS THAN $5,000.—An entity

25 shall not be required to make estimated payments
1158

•HR 2491 RH

1 under this section for any taxable year for which

2 (but for this paragraph) its aggregate liability under

3 this section would be less than $5,000.

4 ‘‘(3) AMOUNT.—The amount of each required

5 installment shall be 25 percent of the product of—

6 ‘‘(A) the entity’s applicable income deter7 mined under its applicable method for the quar8 ter for which the installment is being made, and

9 ‘‘(B) the applicable rate.

10 ‘‘(4) APPLICABLE RATE.—

11 ‘‘(A) IN GENERAL.—The term ‘applicable

12 rate’ means 34 percent (39.6 percent in the

13 case of an entity described in subparagraph

14 (B)).

15 ‘‘(B) HIGH AVERAGE INCOME ENTITY.—

16 ‘‘(i) IN GENERAL.—An entity is de17 scribed in this subparagraph if—

18 ‘‘(I) the average applicable in19 come of 2-percent owners of the entity

20 for its base year is $250,000 or more,

21 or

22 ‘‘(II) in the case of a partner23 ship, its applicable income for the

24 base year is $10,000,000 or more.
1159

•HR 2491 RH

1 An entity shall not be treated as so de2 scribed if it has no base year.

3 ‘‘(ii) 2-PERCENT OWNER.—The term

4 ‘2-percent owner’ means—

5 ‘‘(I) in the case of a partnership,

6 any person who owns (or is considered

7 as owning within the meaning of sec8 tion 318) on any day during the base

9 year more than 2 percent of the cap10 ital interests of the partnerships, and

11 ‘‘(II) in the case of an S corpora12 tion, a 2-percent shareholder (as de13 fined in section 1372(b)).

14 ‘‘(5) ADJUSTMENTS UNDER ANNUALIZED IN15 COME METHOD.—An entity using the annualized in16 come method shall adjust its required installment for

17 any quarter to reflect any change in its required in18 stallment for any prior quarter in the taxable year

19 which would have been required if the annualized

20 applicable income for the current quarter had been

21 used for the prior quarter.

22 ‘‘(d) APPLICABLE METHOD.—For purposes of this

23 section—
1160

•HR 2491 RH

1 ‘‘(1) IN GENERAL.—An entity shall determine

2 its applicable income on the basis of the 100-percent

3 method.

4 ‘‘(2) EXCEPTIONS.—

5 ‘‘(A) ELECTIONS.—An entity may deter6 mine its applicable income—

7 ‘‘(i) for all quarters in a taxable year

8 on the basis of the 110-percent method if

9 it elects such method on or before the due

10 date for the first quarterly installment, or

11 ‘‘(ii) for any quarter in a taxable year

12 on the basis of the annualized income

13 method if it elects such method on or be14 fore the due date for the quarterly install15 ment for such quarter.

16 An election under clause (ii) shall apply for the

17 quarter for which made and all subsequent

18 quarters during the taxable year.

19 ‘‘(B) LARGE INCREASE IN INCOME.—If an

20 entity’s applicable income for the taxable year

21 exceeds its applicable income for the base year

22 by more than $750,000, the entity may not use

23 the 110-percent method for the taxable year.

24 ‘‘(3) METHODS.—
1161

•HR 2491 RH

1 ‘‘(A) 100-PERCENT METHOD.—Under the

2 100-percent method, an entity’s applicable in3 come shall be its applicable income for the tax4 able year.

5 ‘‘(B) 110-PERCENT METHOD.—Under the

6 110-percent method, an entity’s applicable in7 come shall be 110 percent of its applicable in8 come for the base year.

9 ‘‘(C) ANNUALIZED INCOME METHOD.—

10 Under the annualized income method, the enti11 ty’s applicable income for purposes of determin12 ing the required installment for any quarter

13 shall be an amount equal to the product of—

14 ‘‘(i) its applicable income for the pe15 riod consisting of the months in the tax16 able year ending before the due date for

17 the quarter, and

18 ‘‘(ii) a percentage equal to 12 divided

19 by the number of such months.

20 ‘‘(e) APPLICABLE INCOME.—

21 ‘‘(1) IN GENERAL.—For purposes of this sec22 tion, the applicable income for any taxable year shall

23 be the net amount (not less than zero) determined—

24 ‘‘(A) by taking into account the entity’s

25 items in the manner and with the exceptions
1162

•HR 2491 RH

1 provided in section 703(a) or 1363(b), as the

2 case may be, and

3 ‘‘(B) by making the further adjustments

4 provided in paragraphs (2), (3), (4), and (5) of

5 this subsection.

6 ‘‘(2) CERTAIN DEDUCTIONS ALLOWED.—In de7 termining applicable income, the following amounts

8 shall be allowed as deductions:

9 ‘‘(A) The deduction allowable under section

10 170 for charitable contributions of the entity.

11 ‘‘(B) The deduction allowable under sec12 tion 901 for taxes described in section 901(c)

13 paid or accrued to foreign countries or posses14 sions of the United States.

15 ‘‘(3) CERTAIN LIMITATIONS DISREGARDED.—

16 For purposes of paragraphs (1) and (2), any limita17 tion on the amount of any item which may be taken

18 into account for purposes of computing the taxable

19 income of a partner or shareholder shall be dis20 regarded.

21 ‘‘(4) GUARANTEED PAYMENTS TO PARTNERS

22 NOT DEDUCTED.—In determining applicable income,

23 a guaranteed payment to a partner shall not be

24 treated as an item of deduction.
1163

•HR 2491 RH

1 ‘‘(5) DISPROPORTIONATE APPLICABLE PAY2 MENTS DURING DEFERRAL PERIOD.—

3 ‘‘(A) DEDUCTION NOT ALLOWED.—In de4 termining applicable income, no deduction shall

5 be allowed for disproportionate deferral period

6 applicable payments.

7 ‘‘(B) DISPROPORTIONATE DEFERRAL PE8 RIOD APPLICABLE PAYMENTS.—For purposes of

9 subparagraph (A), the term ‘disproportionate

10 deferral period applicable payments’ means the

11 excess (if any) of—

12 ‘‘(i) the product of the deferral ratio

13 and the aggregate applicable payments

14 made to owners during the entity’s entire

15 taxable year, over

16 ‘‘(ii) the aggregate applicable pay17 ments made to owners during the deferral

18 period.

19 ‘‘(C) DEFINITIONS.—For purposes of this

20 paragraph—

21 ‘‘(i) the term ‘applicable payments’

22 has the meaning given to such term by sec23 tion 7519(d)(3), except that in the case of

24 an S corporation only payments to 2-per-
1164

•HR 2491 RH

1 cent shareholders (as defined in section

2 1372(b)) shall be taken into account,

3 ‘‘(ii) the term ‘deferral period’ means

4 the months in the period beginning with

5 the first day of the entity’s taxable year

6 and ending on December 31, and

7 ‘‘(iii) the term ‘deferral ratio’ means

8 the ratio which the number of months in

9 the deferral period bears to the total num10 ber of months in the taxable year.

11 ‘‘(6) SPECIAL RULE WHERE C CORPORATION

12 FOR BASE YEAR.—In applying the 110-percent

13 method, if an S corporation was a C corporation for

14 the base year, the S corporation’s applicable income

15 shall be the taxable income of the C corporation for

16 the base year.

17 ‘‘(f) COORDINATION BETWEEN ENTITY AND OWN18 ERS.—

19 ‘‘(1) TREATMENT OF PAYMENTS OF REQUIRED

20 INSTALLMENTS.—

21 ‘‘(A) IN GENERAL.—For purposes of this

22 title, an owner in an entity shall be treated as

23 having paid, for the owner’s first taxable year

24 ending with or after the close of the entity’s

25 taxable year, an amount of tax imposed by sec-
1165

•HR 2491 RH

1 tion 1 equal to the owner’s allocable share of

2 the entity’s payments of required installments

3 under this section (determined without regard

4 to excess payments described in subparagraph

5 (C)(ii)(II) or amounts the entity is treated as

6 paying under paragraph (2)).

7 ‘‘(B) COORDINATION WITH OWNER’S ESTI8 MATED TAX.—For purposes of section 6654, an

9 individual shall be treated as having paid on the

10 due date for the estimated tax installment for

11 each quarter of the individual’s taxable year de12 scribed in subparagraph (A)—

13 ‘‘(i) except as provided in clause (ii),

14 25 percent of the tax deemed paid under

15 subparagraph (A), or

16 ‘‘(ii) if the annualized income method

17 was used by the entity for any quarter of

18 the entity’s taxable year described in sub19 paragraph (A), an amount for the cor20 responding quarter in the individual’s tax21 able year equal to the portion of such tax

22 attributable to the individual’s allocable

23 share of the entity’s applicable income for

24 the entity’s quarter.
1166

•HR 2491 RH

1 In no event shall the aggregate estimated tax

2 payments treated as paid under this subpara3 graph exceed the amount of tax determined

4 under subparagraph (A).

5 ‘‘(C) AMOUNTS DETERMINED ON BASIS OF

6 RETURN.—

7 ‘‘(i) IN GENERAL.—The determination

8 of the amount of tax payments under sub9 paragraph (A) shall be made on the basis

10 of amounts shown on the entity’s return

11 for the taxable year.

12 ‘‘(ii) RECONCILIATION OF DIF13 FERENCES.—If, as of the first April 15

14 more than 3 months after the close of the

15 entity’s taxable year, the aggregate

16 amounts paid as required installments

17 under this section are less or more than

18 the aggregate amounts described in clause

19 (i) shown on the entity’s return of tax for

20 the taxable year, then—

21 ‘‘(I) subject to paragraph (2),

22 there is hereby imposed on the entity

23 under chapter 1 an additional tax

24 equal to the amount of the shortfall,
1167

•HR 2491 RH

1 the due date for which is such April

2 15, or

3 ‘‘(II) the entity shall be treated

4 as having made a payment of tax

5 under chapter 1 on such April 15 in

6 an amount equal to the excess.

7 ‘‘(2) TREATMENT OF PAYMENTS BY OWNERS.—

8 For purposes of subsection (b)(2)(B) and paragraph

9 (1)(C), an entity shall be treated as paying any por10 tion of an underpayment attributable to an owner’s

11 allocable share of applicable income at the time the

12 tax imposed by chapter 1 on the owner with respect

13 to such income is paid.

14 ‘‘(3) ALLOCABLE SHARE.—For purposes of this

15 subsection—

16 ‘‘(A) IN GENERAL.—An owner’s allocable

17 share of an item for a taxable year shall be an

18 amount which bears the same ratio to the

19 amount of such item as the owner’s applicable

20 income for the taxable year bears to the sum of

21 the applicable incomes of all owners. For pur22 poses of this subparagraph, applicable income

23 of an owner shall be determined in the same

24 manner as subsection (e).
1168

•HR 2491 RH

1 ‘‘(B) APPLICATION OTHER THAN ON TAX2 ABLE YEAR BASIS.—If—

3 ‘‘(i) the entity elects the annualized

4 income method for any quarter, subpara5 graph (A) shall be applied on a quarter-by6 quarter basis, or

7 ‘‘(ii) there is an interim closing of the

8 books of an entity under this title, sub9 paragraph (A) shall be applied separately

10 for the periods before and after the clos11 ing.

12 ‘‘(g) SPECIAL RULES FOR SHORT YEAR CREATED BY

13 ELECTION.—

14 ‘‘(1) ADDITIONAL REQUIRED INSTALLMENT.—

15 If, by reason of an election under this section, an en16 tity has a taxable year of less than 12 months, the

17 entity shall make a required installment under this

18 section for such taxable year—

19 ‘‘(A) which shall be in an amount equal to

20 the applicable rate multiplied by the lesser of—

21 ‘‘(i) the entity’s applicable income for

22 such taxable year as determined under

23 subsection (e), or

24 ‘‘(ii) 110 percent of the entity’s appli25 cable income for the base year (as so de-
1169

•HR 2491 RH

1 termined but ratably reduced to reflect the

2 period of such taxable year), and

3 ‘‘(B) the due date for which shall be the

4 last day for which an election under this section

5 could be made for the taxable year.

6 ‘‘(2) TREATMENT OF LOSSES.—Any net operat7 ing loss arising in the taxable year described in

8 paragraph (1) shall be treated as arising one-third

9 in such taxable year and each of the 2 following tax10 able years. This paragraph shall not apply to an en11 tity not in existence before such taxable year unless

12 more than one-half of the equity interests in the en13 tity are held by persons who owned another entity

14 carrying on the same business before such taxable

15 year.

16 ‘‘(h) OTHER DEFINITIONS AND SPECIAL RULES.—

17 For purposes of this section—

18 ‘‘(1) BASE YEAR.—The term ‘base year’ means

19 the most recent preceding taxable year containing 12

20 months.

21 ‘‘(2) EQUITY INTEREST.—The term ‘equity in22 terest’ means—

23 ‘‘(A) in the case of a partnership, the cap24 ital interests, and
1170

•HR 2491 RH

1 ‘‘(B) in the case of an S corporation, the

2 shares of stock in the corporation (whether vot3 ing or nonvoting).

4 ‘‘(3) OWNER.—The term ‘owner’ means a part5 ner in a partnership or a shareholder in an S cor6 poration, whichever is applicable.

7 ‘‘(4) COMMON CONTROL.—

8 ‘‘(A) IN GENERAL.—For purposes of sub9 sections (c)(2), (c)(4)(B), and (d)(2)(B), enti10 ties under common control shall be treated as

11 1 entity.

12 ‘‘(B) COMMON CONTROL.—Entities shall

13 be treated as under common control under sub14 paragraph (A) if they are treated as a single

15 employee under subsection (a) or (b) of section

16 52.

17 ‘‘(5) WAIVER.—No penalty shall be imposed

18 under subsection (a) with respect to any

19 underpayment to the extent the Secretary deter20 mines that by reason of casualty, disaster, or other

21 unusual circumstances the imposition of the penalty

22 would be against equity and good conscience.’’

23 (c) MODIFICATION OF ELECTIONS.—

24 (1) TIME FOR MAKING.—Paragraph (1) of sec25 tion 444(d) is amended by adding at the end the fol-
1171

•HR 2491 RH

1 lowing new sentence: ‘‘Such election may be made at

2 any time on or before the 15th day of the 3d month

3 of the first taxable year of 12 months under the

4 election.’’

5 (2) TERMINATIONS.—Paragraph (2) of section

6 444(d) is amended by striking subparagraph (B)

7 and inserting:

8 ‘‘(B) TERMINATIONS.—

9 ‘‘(i) REVOCATION.—An election under

10 subsection (a) may be terminated by rev11 ocation but only if owners of more than

12 one-half of the equity interests in the en13 tity on the date of the revocation consent

14 to it.

15 ‘‘(ii) ENTITY TERMINATIONS.—In the

16 case of a partnership or S corporation, an

17 election under subsection (a) terminates

18 when the partnership terminates under

19 section 708(b)(1) or the corporation ceases

20 to be an S corporation.

21 ‘‘(C) SUBSEQUENT ELECTIONS.—If an

22 election under subsection (a) has been termi23 nated, no such election may be made with re24 spect to such entity or any successor entity for

25 any taxable year before its 5th taxable year be-
1172

•HR 2491 RH

1 ginning after the 1st taxable year for which the

2 termination was effective, unless the Secretary

3 consents to the election.’’

4 (d) CONFORMING AMENDMENTS.—

5 (1) Section 6665(b) is amended—

6 (A) by inserting ‘‘6654A,’’ after ‘‘6654,’’,

7 and

8 (B) by striking ‘‘6654 or’’ and inserting

9 ‘‘6654, 6654A, or’’.

10 (2) The table of sections for part I of sub11 chapter A of chapter 68 is amended by inserting

12 after the item relating to section 6654 the following

13 new item:

‘‘Sec. 6654A. Failure by electing partnership or S corporation to

pay estimated tax.’’

14 (e) EFFECTIVE DATE.—The amendments made by

15 this section shall apply to taxable years beginning after

16 December 31, 1996.

17 SEC. 14555. SPECIAL RULE FOR CROP INSURANCE PRO18 CEEDS AND DISASTER PAYMENTS.

19 (a) IN GENERAL.—Section 451(d) of the Internal

20 Revenue Code of 1986 (relating to special rule for crop

21 insurance proceeds and disaster payments) is amended to

22 read as follows:

23 ‘‘(d) SPECIAL RULE FOR CROP INSURANCE PRO24 CEEDS AND DISASTER PAYMENTS.—
1173

•HR 2491 RH

1 ‘‘(1) GENERAL RULE.—In the case of any pay2 ment described in paragraph (2), a taxpayer report3 ing on the cash receipts and disbursements method

4 of accounting—

5 ‘‘(A) may elect to treat any such payment

6 received in the taxable year of destruction or

7 damage of crops as having been received in the

8 following taxable year if the taxpayer estab9 lishes that, under the taxpayer’s practice, in10 come from such crops involved would have been

11 reported in a following taxable year, or

12 ‘‘(B) may elect to treat any such payment

13 received in a taxable year following the taxable

14 year of the destruction or damage of crops as

15 having been received in the taxable year of de16 struction or damage, if the taxpayer establishes

17 that, under the taxpayer’s practice, income

18 from such crops involved would have been re19 ported in the taxable year of destruction or

20 damage.

21 ‘‘(2) PAYMENTS DESCRIBED.—For purposes of

22 this subsection, a payment is described in this para23 graph if such payment—

24 ‘‘(A) is insurance proceeds received on ac25 count of destruction or damage to crops, or
1174

•HR 2491 RH

1 ‘‘(B) is disaster assistance received under

2 any Federal law as a result of—

3 ‘‘(i) destruction or damage to crops

4 caused by drought, flood, or other natural

5 disaster, or

6 ‘‘(ii) inability to plant crops because

7 of such a disaster.’’.

8 (b) EFFECTIVE DATE.—The amendment made by

9 subsection (a) applies to payments received after Decem10 ber 31, 1995, as a result of destruction or damage occur11 ring after such date.

12 PART V—TAX-EXEMPT BOND PROVISIONS

13 SEC. 14561. REPEAL OF $100,000 LIMITATION ON UNSPENT

14 PROCEEDS UNDER 1-YEAR EXCEPTION FROM

15 REBATE.

16 Subclause (I) of section 148(f)(4)(B)(ii) (relating to

17 additional period for certain bonds) is amended by striking

18 ‘‘the lesser of 5 percent of the proceeds of the issue or

19 $100,000’’ and inserting ‘‘5 percent of the proceeds of the

20 issue’’.

21 SEC. 14562. EXCEPTION FROM REBATE FOR EARNINGS ON

22 BONA FIDE DEBT SERVICE FUND UNDER

23 CONSTRUCTION BOND RULES.

24 Subparagraph (C) of section 148(f)(4) is amended by

25 adding at the end the following new clause:
1175

•HR 2491 RH

1 ‘‘(xvii) TREATMENT OF BONA FIDE

2 DEBT SERVICE FUNDS.—If the spending

3 requirements of clause (ii) are met with re4 spect to the available construction proceeds

5 of a construction issue, then paragraph (2)

6 shall not apply to earnings on a bona fide

7 debt service fund for such issue.’’

8 SEC. 14563. REPEAL OF DEBT SERVICE-BASED LIMITATION

9 ON INVESTMENT IN CERTAIN NONPURPOSE

10 INVESTMENTS.

11 Subsection (d) of section 148 (relating to special

12 rules for reasonably required reserve or replacement fund)

13 is amended by striking paragraph (3).

14 SEC. 14564. REPEAL OF EXPIRED PROVISIONS.

15 (a) Paragraph (2) of section 148(c) is amended by

16 striking subparagraph (B) and by redesignating subpara17 graphs (C), (D), and (E) as subparagraphs (B), (C), and

18 (D), respectively.

19 (b) Paragraph (4) of section 148(f) is amended by

20 striking subparagraph (E).

21 SEC. 14565. EFFECTIVE DATES.

22 The amendments made by this part shall apply to

23 bonds issued after the date of the enactment of this Act.
1176

•HR 2491 RH

1 PART VI—INSURANCE PROVISIONS

2 SEC. 14571. TREATMENT OF CERTAIN INSURANCE CON3 TRACTS ON RETIRED LIVES.

4 (a) GENERAL RULE.—

5 (1) Paragraph (2) of section 817(d) (defining

6 variable contract) is amended by striking ‘‘or’’ at the

7 end of subparagraph (A), by striking ‘‘and’’ at the

8 end of subparagraph (B) and inserting ‘‘or’’, and by

9 inserting after subparagraph (B) the following new

10 subparagraph:

11 ‘‘(C) provides for funding of insurance on

12 retired lives as described in section 807(c)(6),

13 and’’.

14 (2) Paragraph (3) of section 817(d) is amended

15 by striking ‘‘or’’ at the end of subparagraph (A), by

16 striking the period at the end of subparagraph (B)

17 and inserting ‘‘, or’’, and by inserting after subpara18 graph (B) the following new subparagraph:

19 ‘‘(C) in the case of funds held under a con20 tract described in paragraph (2)(C), the

21 amounts paid in, or the amounts paid out, re22 flect the investment return and the market

23 value of the segregated asset account.’’

24 (b) EFFECTIVE DATE.—The amendments made by

25 this section shall apply to taxable years beginning after

26 December 31, 1995.
1177

•HR 2491 RH

1 SEC. 14572. TREATMENT OF MODIFIED GUARANTEED CON2 TRACTS.

3 (a) GENERAL RULE.—Subpart E of part I of sub4 chapter L of chapter 1 (relating to definitions and special

5 rules) is amended by inserting after section 817 the follow6 ing new section:

7 ‘‘SEC. 817A. SPECIAL RULES FOR MODIFIED GUARANTEED

8 CONTRACTS.

9 ‘‘(a) COMPUTATION OF RESERVES.—In the case of

10 a modified guaranteed contract, clause (ii) of section

11 807(e)(1)(A) shall not apply.

12 ‘‘(b) SEGREGATED ASSETS UNDER MODIFIED GUAR13 ANTEED CONTRACTS MARKED TO MARKET.—

14 ‘‘(1) IN GENERAL.—In the case of any life in15 surance company, for purposes of this subtitle—

16 ‘‘(A) Any gain or loss with respect to a

17 segregated asset shall be treated as ordinary in18 come or loss, as the case may be.

19 ‘‘(B) If any segregated asset is held by

20 such company as of the close of any taxable

21 year—

22 ‘‘(i) such company shall recognize

23 gain or loss as if such asset were sold for

24 its fair market value on the last business

25 day of such taxable year, and
1178

•HR 2491 RH

1 ‘‘(ii) any such gain or loss shall be

2 taken into account for such taxable year.

3 Proper adjustment shall be made in the amount

4 of any gain or loss subsequently realized for

5 gain or loss taken into account under the pre6 ceding sentence. The Secretary may provide by

7 regulations for the application of this subpara8 graph at times other than the times provided in

9 this subparagraph.

10 ‘‘(2) SEGREGATED ASSET.—For purposes of

11 paragraph (1), the term ‘segregated asset’ means

12 any asset held as part of a segregated account re13 ferred to in subsection (d)(1) under a modified guar14 anteed contract.

15 ‘‘(c) SPECIAL RULE IN COMPUTING LIFE INSURANCE

16 RESERVES.—For purposes of applying section

17 816(b)(1)(A) to any modified guaranteed contract, an as18 sumed rate of interest shall include a rate of interest de19 termined, from time to time, with reference to a market

20 rate of interest.

21 ‘‘(d) MODIFIED GUARANTEED CONTRACT DE22 FINED.—For purposes of this section, the term ‘modified

23 guaranteed contract’ means a contract not described in

24 section 817—
1179

•HR 2491 RH

1 ‘‘(1) all or part of the amounts received under

2 which are allocated to an account which, pursuant to

3 State law or regulation, is segregated from the gen4 eral asset accounts of the company and is valued

5 from time to time with reference to market values,

6 ‘‘(2) which—

7 ‘‘(A) provides for the payment of annuities,

8 ‘‘(B) is a life insurance contract, or

9 ‘‘(C) is a pension plan contract which is

10 not a life, accident, or health, property, cas11 ualty, or liability contract,

12 ‘‘(3) for which reserves are valued at market for

13 annual statement purposes, and

14 ‘‘(4) which provides for a net surrender value or

15 a policyholder’s fund (as defined in section

16 807(e)(1)).

17 If only a portion of a contract is not described in section

18 817, such portion shall be treated for purposes of this sec19 tion as a separate contract.

20 ‘‘(e) REGULATIONS.—The Secretary may prescribe

21 regulations—

22 ‘‘(1) to provide for the treatment of market

23 value adjustments under sections 72, 7702, 7702A,

24 and 807(e)(1)(B),
1180

•HR 2491 RH

1 ‘‘(2) to determine the interest rates applicable

2 under sections 807(c)(3), 807(d)(2)(B), and 812

3 with respect to a modified guaranteed contract an4 nually, in a manner appropriate for modified guar5 anteed contracts and, to the extent appropriate for

6 such a contract, to modify or waive the applicability

7 of section 811(d),

8 ‘‘(3) to provide rules to limit ordinary gain or

9 loss treatment to assets constituting reserves for

10 modified guaranteed contracts (and not other assets)

11 of the company,

12 ‘‘(4) to provide appropriate treatment of trans13 fers of assets to and from the segregated account,

14 and

15 ‘‘(5) as may be necessary or appropriate to

16 carry out the purposes of this section.’’

17 (b) CLERICAL AMENDMENT.—The table of sections

18 for subpart E of part I of subchapter L of chapter 1 is

19 amended by inserting after the item relating to section

20 817 the following new item:

‘‘Sec. 817A. Special rules for modified guaranteed contracts.’’

21 (c) EFFECTIVE DATE.—

22 (1) IN GENERAL.—The amendments made by

23 this section shall apply to taxable years beginning

24 after December 31, 1995.
1181

•HR 2491 RH

1 (2) TREATMENT OF NET ADJUSTMENTS.—In

2 the case of any taxpayer required by the amend3 ments made by this section to change its calculation

4 of reserves to take into account market value adjust5 ments and to mark segregated assets to market for

6 any taxable year—

7 (A) such changes shall be treated as a

8 change in method of accounting initiated by the

9 taxpayer,

10 (B) such changes shall be treated as made

11 with the consent of the Secretary, and

12 (C) the adjustments required by reason of

13 section 481 of the Internal Revenue Code of

14 1986 shall be taken into account as ordinary in15 come or loss by the taxpayer for the taxpayer’s

16 first taxable year beginning after December 31,

17 1995.

18 SEC. 14573. MINIMUM TAX TREATMENT OF CERTAIN PROP19 ERTY AND CASUALTY INSURANCE COMPA20 NIES.

21 (a) IN GENERAL.—Clause (i) of section 56(g)(4)(B)

22 (relating to inclusion of items included for purposes of

23 computing earnings and profits) is amended by adding at

24 the end the following new sentence: ‘‘In the case of any

25 insurance company taxable under section 831(b), this
1182

•HR 2491 RH

1 clause shall not apply to any amount not described in sec2 tion 834(b).’’

3 (b) EFFECTIVE DATE.—The amendment made by

4 subsection (a) shall apply to taxable years beginning after

5 December 31, 1995.

6 PART VII—OTHER PROVISIONS

7 SEC. 14581. CLOSING OF PARTNERSHIP TAXABLE YEAR

8 WITH RESPECT TO DECEASED PARTNER, ETC.

9 (a) GENERAL RULE.—Subparagraph (A) of section

10 706(c)(2) (relating to disposition of entire interest) is

11 amended to read as follows:

12 ‘‘(A) DISPOSITION OF ENTIRE INTER13 EST.—The taxable year of a partnership shall

14 close with respect to a partner whose entire in15 terest in the partnership terminates (whether

16 by reason of death, liquidation, or otherwise).’’

17 (b) CLERICAL AMENDMENT.—The paragraph head18 ing for paragraph (2) of section 706(c) is amended to read

19 as follows:

20 ‘‘(2) TREATMENT OF DISPOSITIONS.—’’.

21 (c) EFFECTIVE DATE.—The amendments made by

22 this section shall apply to partnership taxable years begin23 ning after December 31, 1995.
1183

•HR 2491 RH

1 SEC. 14582. CREDIT FOR SOCIAL SECURITY TAXES PAID

2 WITH RESPECT TO EMPLOYEE CASH TIPS.

3 (a) REPORTING REQUIREMENT NOT CONSIDERED.—

4 Subparagraph (A) of section 45B(b)(1) (relating to excess

5 employer social security tax) is amended by inserting

6 ‘‘(without regard to whether such tips are reported under

7 section 6053)’’ after ‘‘section 3121(q)’’.

8 (b) TAXES PAID.—Subsection (d) of section 13443 of

9 the Revenue Reconciliation Act of 1993 is amended by in10 serting ‘‘, with respect to services performed before, on,

11 or after such date’’ after ‘‘1993’’.

12 (c) EFFECTIVE DATE.—The amendments made by

13 this section shall take effect as if included in the amend14 ments made by, and the provisions of, section 13443 of

15 the Revenue Reconciliation Act of 1993.

16 SEC. 14583. DUE DATE FOR FIRST QUARTER ESTIMATED

17 TAX PAYMENTS BY PRIVATE FOUNDATIONS.

18 (a) IN GENERAL.—Paragraph (3) of section 6655(g)

19 is amended by inserting after subparagraph (C) the follow20 ing new subparagraph:

21 ‘‘(D) In the case of any private foundation,

22 subsection (c)(2) shall be applied by substitut23 ing ‘May 15’ for ‘April 15 ’ ’’.

24 (b) EFFECTIVE DATE.—The amendment made by

25 subsection (a) shall apply to taxable years beginning after

26 December 31, 1995.
1184

•HR 2491 RH

1 SEC. 14584. TREATMENT OF DUES PAID TO AGRICULTURAL

2 OR HORTICULTURAL ORGANIZATIONS.

3 (a) GENERAL RULE.—Section 512 (defining unre4 lated business taxable income) is amended by adding at

5 the end thereof the following new subsection:

6 ‘‘(d) TREATMENT OF DUES OF AGRICULTURAL OR

7 HORTICULTURAL ORGANIZATIONS.—

8 ‘‘(1) IN GENERAL.—If—

9 ‘‘(A) an agricultural or horticultural orga10 nization described in section 501(c)(5) requires

11 annual dues to be paid in order to be a member

12 of such organization, and

13 ‘‘(B) the amount of such required annual

14 dues does not exceed $100,

15 in no event shall any portion of such dues be treated

16 as derived by such organization from an unrelated

17 trade or business by reason of any benefits or privi18 leges to which members of such organization are en19 titled.

20 ‘‘(2) INDEXATION OF $100 AMOUNT.—In the

21 case of any taxable year beginning in a calendar

22 year after 1995, the $100 amount in paragraph (1)

23 shall be increased by an amount equal to—

24 ‘‘(A) $100, multiplied by

25 ‘‘(B) the cost-of-living adjustment deter26 mined under section 1(f)(3) for the calendar
1185

•HR 2491 RH

1 year in which the taxable year begins, by sub2 stituting ‘calendar year 1994’ for ‘calendar year

3 1992’ in subparagraph (B) thereof.

4 ‘‘(3) DUES.—For purposes of this subsection,

5 the term ‘dues’ includes any payment required to be

6 made in order to be recognized by the organization

7 as a member of the organization.’’

8 (b) EFFECTIVE DATE.—The amendment made by

9 subsection (a) shall apply to taxable years beginning after

10 December 31, 1994.

11 Subtitle F—Estates and Trusts

12 PART I—INCOME TAX PROVISIONS

13 SEC. 14601. CERTAIN REVOCABLE TRUSTS TREATED AS

14 PART OF ESTATE.

15 (a) IN GENERAL.—Subpart A of part I of subchapter

16 J (relating to estates, trusts, beneficiaries, and decedents)

17 is amended by adding at the end the following new section:

18 ‘‘SEC. 646. CERTAIN REVOCABLE TRUSTS TREATED AS

19 PART OF ESTATE.

20 ‘‘(a) GENERAL RULE.—For purposes of this subtitle,

21 if both the executor of an estate and the trustee of a quali22 fied revocable trust elect the treatment provided in this

23 section, such trust shall be treated and taxed as part of

24 such estate (and not as a separate trust) for all taxable
1186

•HR 2491 RH

1 years of the estate ending after the date of the decedent’s

2 death and before the applicable date.

3 ‘‘(b) DEFINITIONS.—For purposes of subsection

4 (a)—

5 ‘‘(1) QUALIFIED REVOCABLE TRUST.—The

6 term ‘qualified revocable trust’ means any trust all

7 of which was treated under section 676 as owned by

8 the decedent of the estate referred to in subsection

9 (a).

10 ‘‘(2) APPLICABLE DATE.—The term ‘applicable

11 date’ means—

12 ‘‘(A) if no return of tax imposed by chap13 ter 11 is required to be filed, the date which is

14 2 years after the date of the decedent’s death,

15 and

16 ‘‘(B) if such a return is required to be

17 filed, the date which is 6 months after the date

18 of the final determination of the liability for tax

19 imposed by chapter 11.

20 ‘‘(c) ELECTION.—The election under subsection (a)

21 shall be made not later than the time prescribed for filing

22 the return of tax imposed by this chapter for the first tax23 able year of the estate (determined with regard to exten24 sions) and, once made, shall be irrevocable.’’
1187

•HR 2491 RH

1 (b) COMPARABLE TREATMENT UNDER GENERATION2 SKIPPING TAX.—Paragraph (1) of section 2652(b) is

3 amended by adding at the end the following new sentence:

4 ‘‘Such term shall not include any trust during any period

5 the trust is treated as part of an estate under section

6 646.’’

7 (c) CLERICAL AMENDMENT.—The table of sections

8 for such subpart A is amended by adding at the end the

9 following new item:

‘‘Sec. 646. Certain revocable trusts treated as part of estate.’’

10 (d) EFFECTIVE DATE.—The amendments made by

11 this section shall apply with respect to estates of decedents

12 dying after the date of the enactment of this Act.

13 SEC. 14602. DISTRIBUTIONS DURING FIRST 65 DAYS OF TAX14 ABLE YEAR OF ESTATE.

15 (a) IN GENERAL.—Subsection (b) of section 663 (re16 lating to distributions in first 65 days of taxable year) is

17 amended by inserting ‘‘an estate or’’ before ‘‘a trust’’ each

18 place it appears.

19 (b) CONFORMING AMENDMENT.—Paragraph (2) of

20 section 663(b) is amended by striking ‘‘the fiduciary of

21 such trust’’ and inserting ‘‘the executor of such estate or

22 the fiduciary of such trust (as the case may be)’’.

23 (c) EFFECTIVE DATE.—The amendments made by

24 this section shall apply to taxable years beginning after

25 the date of the enactment of this Act.
1188

•HR 2491 RH

1 SEC. 14603. SEPARATE SHARE RULES AVAILABLE TO ES2 TATES.

3 (a) IN GENERAL.—Subsection (c) of section 663 (re4 lating to separate shares treated as separate trusts) is

5 amended—

6 (1) by inserting before the last sentence the fol7 lowing new sentence: ‘‘Rules similar to the rules of

8 the preceding provisions of this subsection shall

9 apply to treat substantially separate and independ10 ent shares of different beneficiaries in an estate hav11 ing more than 1 beneficiary as separate estates.’’,

12 and

13 (2) by inserting ‘‘or estates’’ after ‘‘trusts’’ in

14 the last sentence.

15 (b) CONFORMING AMENDMENT.—The subsection

16 heading of section 663(c) is amended by inserting ‘‘ES17 TATES OR’’ before ‘‘TRUSTS’’.

18 (c) EFFECTIVE DATE.—The amendments made by

19 this section shall apply to estates of decedents dying after

20 the date of the enactment of this Act.

21 SEC. 14604. EXECUTOR OF ESTATE AND BENEFICIARIES

22 TREATED AS RELATED PERSONS FOR DIS23 ALLOWANCE OF LOSSES, ETC.

24 (a) DISALLOWANCE OF LOSSES.—Subsection (b) of

25 section 267 (relating to losses, expenses, and interest with

26 respect to transactions between related taxpayers) is
1189

•HR 2491 RH

1 amended by striking ‘‘or’’ at the end of paragraph (11),

2 by striking the period at the end of paragraph (12) and

3 inserting ‘‘; or’’, and by adding at the end the following

4 new paragraph:

5 ‘‘(13) Except in the case of a sale or exchange

6 in satisfaction of a pecuniary bequest, an executor of

7 an estate and a beneficiary of such estate.’’

8 (b) ORDINARY INCOME FROM GAIN FROM SALE OF

9 DEPRECIABLE PROPERTY.—Subsection (b) of section

10 1239 is amended by striking the period at the end of para11 graph (2) and inserting ‘‘, and’’ and by adding at the end

12 the following new paragraph:

13 ‘‘(3) except in the case of a sale or exchange in

14 satisfaction of a pecuniary bequest, an executor of

15 an estate and a beneficiary of such estate.’’

16 (c) EFFECTIVE DATE.—The amendments made by

17 this section shall apply to taxable years beginning after

18 the date of the enactment of this Act.

19 SEC. 14605. LIMITATION ON TAXABLE YEAR OF ESTATES.

20 (a) IN GENERAL.—Section 645 (relating to taxable

21 year of trusts) is amended to read as follows:

22 ‘‘SEC. 645. TAXABLE YEAR OF ESTATES AND TRUSTS.

23 ‘‘(a) ESTATES.—For purposes of this subtitle, the

24 taxable year of an estate shall be a year ending on October

25 31, November 30, or December 31.
1190

•HR 2491 RH

1 ‘‘(b) TRUSTS.—

2 ‘‘(1) IN GENERAL.—For purposes of this sub3 title, the taxable year of any trust shall be the cal4 endar year.

5 ‘‘(2) EXCEPTION FOR TRUSTS EXEMPT FROM

6 TAX AND CHARITABLE TRUSTS.—Paragraph (1)

7 shall not apply to a trust exempt from taxation

8 under section 501(a) or to a trust described in sec9 tion 4947(a)(1).’’

10 (b) CLERICAL AMENDMENT.—The table of sections

11 for subpart A of part I of subchapter J of chapter 1 is

12 amended by striking the item relating to section 645 and

13 inserting the following new item:

‘‘Sec. 645. Taxable year of estates and trusts.’’

14 (c) EFFECTIVE DATE.—The amendments made by

15 this section shall apply to estates of decedents dying after

16 the date of the enactment of this Act.

17 SEC. 14606. REPEAL OF CERTAIN THROWBACK RULES AP18 PLICABLE TO DOMESTIC TRUSTS.

19 (a) ACCUMULATION DISTRIBUTIONS.—

20 (1) IN GENERAL.—Section 665 is amended by

21 adding at the end the following new subsection:

22 ‘‘(f) ACCUMULATION DISTRIBUTIONS AFTER 1995.—

23 For purposes of this subpart, in the case of a trust other

24 than a foreign trust, any distribution in any taxable year
1191

•HR 2491 RH

1 beginning after December 31, 1995, shall be computed

2 without regard to any undistributed net income.’’

3 (2) CONFORMING AMENDMENT.—Subsection (b)

4 of section 665 is amended by inserting ‘‘except as

5 provided in subsection (f),’’ after ‘‘subpart,’’

6 (b) PROPERTY TRANSFERRED TO TRUSTS.—Sub7 section (e) of section 644 is amended by striking ‘‘or’’ at

8 the end of paragraph (3), by striking the period at the

9 end of paragraph (4) and inserting ‘‘, or ’’, and by adding

10 at the end the following new paragraph:

11 ‘‘(5) in the case of a trust other than a foreign

12 trust, any sale or exchange of property after Decem13 ber 31, 1995.’’

14 (c) EFFECTIVE DATES.—

15 (1) ACCUMULATION DISTRIBUTION.—The

16 amendments made by subsection (a) shall apply to

17 distributions in taxable years beginning after De18 cember 31, 1995.

19 (2) TRANSFERRED PROPERTY.—The amend20 ments made by subsection (b) shall apply to sales or

21 exchanges after December 31, 1995.

22 SEC. 14607. TREATMENT OF FUNERAL TRUSTS.

23 (a) IN GENERAL.—Subpart F of part I of subchapter

24 J of chapter 1 is amended by adding at the end the follow25 ing new section:
1192

•HR 2491 RH

1 ‘‘SEC. 684. TREATMENT OF FUNERAL TRUSTS.

2 ‘‘(a) IN GENERAL.—In the case of a qualified funeral

3 trust—

4 ‘‘(1) subparts B, C, D, and E shall not apply,

5 and

6 ‘‘(2) no deduction shall be allowed by section

7 642(b).

8 ‘‘(b) QUALIFIED FUNERAL TRUST.—For purposes of

9 this subsection, the term ‘qualified funeral trust’ means

10 any trust (other than a foreign trust) if—

11 ‘‘(1) the trust arises as a result of a contract

12 with a person engaged in the trade or business of

13 providing funeral or burial services or property nec14 essary to provide such services,

15 ‘‘(2) the sole purpose of the trust is to hold, in16 vest, and reinvest funds in the trust and to use such

17 funds solely to make payments for such services or

18 property for the benefit of the beneficiaries of the

19 trust,

20 ‘‘(3) the only beneficiaries of such trust are in21 dividuals who have entered into contracts described

22 in paragraph (1) to have such services or property

23 provided at their death,

24 ‘‘(4) the only contributions to the trust are con25 tributions by or for the benefit of such beneficiaries,
1193

•HR 2491 RH

1 ‘‘(5) the trustee elects the application of this

2 subsection, and

3 ‘‘(6) the trust would (but for the election de4 scribed in paragraph (5)) be treated as owned by the

5 beneficiaries under subpart E.

6 ‘‘(c) DOLLAR LIMITATION ON CONTRIBUTIONS.—

7 ‘‘(1) IN GENERAL.—The term ‘qualified funeral

8 trust’ shall not include any trust which accepts con9 tributions by or for the benefit of an individual in

10 excess of $5,000.

11 ‘‘(2) RELATED TRUSTS.—For purposes of para12 graph (1), all trusts having trustees which are relat13 ed persons shall be treated as 1 trust. For purposes

14 of the preceding sentence, persons are related if—

15 ‘‘(A) the relationship between such persons

16 would result in the disallowance of losses under

17 section 267 or 707(b),

18 ‘‘(B) such persons are treated as a single

19 employer under subsection (a) or (b) of section

20 52, or

21 ‘‘(C) the Secretary determines that treat22 ing such persons as related is necessary to pre23 vent avoidance of the purposes of this section.

24 ‘‘(3) INFLATION ADJUSTMENT.—In the case of

25 any contract referred to in subsection (b)(1) which
1194

•HR 2491 RH

1 is entered into during any calendar year after 1996,

2 the dollar amount referred to paragraph (1) shall be

3 increased by an amount equal to—

4 ‘‘(A) such dollar amount, multiplied by

5 ‘‘(B) the cost-of-living adjustment deter6 mined under section 1(f)(3) for such calendar

7 year, by substituting ‘calendar year 1995’ for

8 ‘calendar year 1992’ in subparagraph (B)

9 thereof.

10 If any dollar amount after being increased under the

11 preceding sentence is not a multiple of $100, such

12 dollar amount shall be rounded to the nearest mul13 tiple of $100.

14 ‘‘(d) APPLICATION OF RATE SCHEDULE.—Section

15 1(e) shall be applied to each qualified funeral trust by

16 treating each beneficiary’s interest in each such trust as

17 a separate trust.

18 ‘‘(e) TREATMENT OF AMOUNTS REFUNDED TO BEN19 EFICIARY ON CANCELLATION.—No gain or loss shall be

20 recognized to a beneficiary described in subsection (b)(3)

21 of any qualified funeral trust by reason of any payment

22 from such trust to such beneficiary by reason of cancella23 tion of a contract referred to in subsection (b)(1). If any

24 payment referred to in the preceding sentence consists of

25 property other than money, the basis of such property in
1195

•HR 2491 RH

1 the hands of such beneficiary shall be the same as the

2 trust’s basis in such property immediately before the pay3 ment.

4 ‘‘(f) SIMPLIFIED REPORTING.—The Secretary may

5 prescribe rules for simplified reporting of all trusts having

6 a single trustee.’’

7 (b) CLERICAL AMENDMENT.—The table of sections

8 for subpart F of part I of subchapter J of chapter 1 is

9 amended by adding at the end the following new item:

‘‘Sec. 684. Treatment of funeral trusts.’’

10 (c) EFFECTIVE DATE.—The amendments made by

11 this section shall apply to taxable years beginning after

12 the date of the enactment of this Act.

13 PART II—ESTATE AND GIFT TAX PROVISIONS

14 SEC. 14611. CLARIFICATION OF WAIVER OF CERTAIN

15 RIGHTS OF RECOVERY.

16 (a) AMENDMENT TO SECTION 2207A.—Paragraph

17 (2) of section 2207A(a) (relating to right of recovery in

18 the case of certain marital deduction property) is amended

19 to read as follows:

20 ‘‘(2) DECEDENT MAY OTHERWISE DIRECT.—

21 Paragraph (1) shall not apply with respect to any

22 property to the extent that the decedent in his will

23 (or a revocable trust) specifically indicates an intent

24 to waive any right of recovery under this subchapter

25 with respect to such property.’’
1196

•HR 2491 RH

1 (b) AMENDMENT TO SECTION 2207B.—Paragraph

2 (2) of section 2207B(a) (relating to right of recovery

3 where decedent retained interest) is amended to read as

4 follows:

5 ‘‘(2) DECEDENT MAY OTHERWISE DIRECT.—

6 Paragraph (1) shall not apply with respect to any

7 property to the extent that the decedent in his will

8 (or a revocable trust) specifically indicates an intent

9 to waive any right of recovery under this subchapter

10 with respect to such property.’’

11 (c) EFFECTIVE DATE.—The amendments made by

12 this section shall apply with respect to the estates of dece13 dents dying after the date of the enactment of this Act.

14 SEC. 14612. ADJUSTMENTS FOR GIFTS WITHIN 3 YEARS OF

15 DECEDENT’S DEATH.

16 (a) GENERAL RULE.—Section 2035 is amended to

17 read as follows:

18 ‘‘SEC. 2035. ADJUSTMENTS FOR CERTAIN GIFTS MADE

19 WITHIN 3 YEARS OF DECEDENT’S DEATH.

20 ‘‘(a) INCLUSION OF CERTAIN PROPERTY IN GROSS

21 ESTATE.—If—

22 ‘‘(1) the decedent made a transfer (by trust or

23 otherwise) of an interest in any property, or relin24 quished a power with respect to any property, during
1197

•HR 2491 RH

1 the 3-year period ending on the date of the dece2 dent’s death, and

3 ‘‘(2) the value of such property (or an interest

4 therein) would have been included in the decedent’s

5 gross estate under section 2036, 2037, 2038, or

6 2042 if such transferred interest or relinquished

7 power had been retained by the decedent on the date

8 of his death,

9 the value of the gross estate shall include the value of any

10 property (or interest therein) which would have been so

11 included.

12 ‘‘(b) INCLUSION OF GIFT TAX ON GIFTS MADE DUR13 ING 3 YEARS BEFORE DECEDENT’S DEATH.—The

14 amount of the gross estate (determined without regard to

15 this subsection) shall be increased by the amount of any

16 tax paid under chapter 12 by the decedent or his estate

17 on any gift made by the decedent or his spouse during

18 the 3-year period ending on the date of the decedent’s

19 death.

20 ‘‘(c) OTHER RULES RELATING TO TRANSFERS

21 WITHIN 3 YEARS OF DEATH.—

22 ‘‘(1) IN GENERAL.—For purposes of—

23 ‘‘(A) section 303(b) (relating to distribu24 tions in redemption of stock to pay death

25 taxes),
1198

•HR 2491 RH

1 ‘‘(B) section 2032A (relating to special

2 valuation of certain farms, etc., real property),

3 and

4 ‘‘(C) subchapter C of chapter 64 (relating

5 to lien for taxes),

6 the value of the gross estate shall include the value

7 of all property to the extent of any interest therein

8 of which the decedent has at any time made a trans9 fer, by trust or otherwise, during the 3-year period

10 ending on the date of the decedent’s death.

11 ‘‘(2) COORDINATION WITH SECTION 6166.—An

12 estate shall be treated as meeting the 35 percent of

13 adjusted gross estate requirement of section

14 6166(a)(1) only if the estate meets such requirement

15 both with and without the application of paragraph

16 (1).

17 ‘‘(3) MARITAL AND SMALL TRANSFERS.—Para18 graph (1) shall not apply to any transfer (other than

19 a transfer with respect to a life insurance policy)

20 made during a calendar year to any donee if the de21 cedent was not required by section 6019 (other than

22 by reason of section 6019(2)) to file any gift tax re23 turn for such year with respect to transfers to such

24 donee.
1199

•HR 2491 RH

1 ‘‘(d) EXCEPTION.—Subsection (a) shall not apply to

2 any bona fide sale for an adequate and full consideration

3 in money or money’s worth.

4 ‘‘(e) TREATMENT OF CERTAIN TRANSFERS FROM

5 REVOCABLE TRUSTS.—For purposes of this section and

6 section 2038, any transfer from any portion of a trust dur7 ing any period that such portion was treated under section

8 676 as owned by the decedent shall be treated as a trans9 fer made directly by the decedent.’’

10 (b) CLERICAL AMENDMENT.—The table of sections

11 for part III of subchapter A of chapter 11 is amended

12 by striking ‘‘gifts’’ in the item relating to section 2035

13 and inserting ‘‘certain gifts’’.

14 (c) EFFECTIVE DATE.—The amendments made by

15 this section shall apply to the estates of decedents dying

16 after the date of the enactment of this Act.

17 SEC. 14613. CLARIFICATION OF QUALIFIED TERMINABLE

18 INTEREST RULES.

19 (a) GENERAL RULE.—

20 (1) ESTATE TAX.—Subparagraph (B) of section

21 2056(b)(7) (defining qualified terminable interest

22 property) is amended by adding at the end the fol23 lowing new clause:

24 ‘‘(vi) TREATMENT OF CERTAIN IN25 COME DISTRIBUTIONS.—An income inter-
1200

•HR 2491 RH

1 est shall not fail to qualify as a qualified

2 income interest for life solely because in3 come for the period after the last distribu4 tion date and on or before the date of the

5 surviving spouse’s death is not required to

6 be distributed to the surviving spouse or to

7 the estate of the surviving spouse.’’

8 (2) GIFT TAX.—Paragraph (3) of section

9 2523(f) is amended by striking ‘‘and (iv)’’ and in10 serting ‘‘(iv), and (vi)’’.

11 (b) CLARIFICATION OF SUBSEQUENT INCLUSIONS.—

12 Section 2044 is amended by adding at the end the follow13 ing new subsection:

14 ‘‘(d) CLARIFICATION OF INCLUSION OF CERTAIN IN15 COME.—The amount included in the gross estate under

16 subsection (a) shall include the amount of any income

17 from the property to which this section applies for the pe18 riod after the last distribution date and on or before the

19 date of the decedent’s death if such income is not other20 wise included in the decedent’s gross estate.’’

21 (c) EFFECTIVE DATE.—

22 (1) IN GENERAL.—The amendments made by

23 this section shall apply with respect to the estates of

24 decedents dying, and gifts made, after the date of

25 the enactment of this Act.
1201

•HR 2491 RH

1 (2) APPLICATION OF SECTION 2044 TO TRANS2 FERS BEFORE DATE OF ENACTMENT.—In the case

3 of the estate of any decedent dying after the date of

4 the enactment of this Act, if there was a transfer of

5 property on or before such date—

6 (A) such property shall not be included in

7 the gross estate of the decedent under section

8 2044 of the Internal Revenue Code of 1986 if

9 no prior marital deduction was allowed with re10 spect to such a transfer of such property to the

11 decedent, but

12 (B) such property shall be so included if

13 such a deduction was allowed.

14 SEC. 14614. TRANSITIONAL RULE UNDER SECTION 2056A.

15 (a) GENERAL RULE.—In the case of any trust cre16 ated under an instrument executed before the date of the

17 enactment of the Revenue Reconciliation Act of 1990,

18 such trust shall be treated as meeting the requirements

19 of paragraph (1) of section 2056A(a) of the Internal Reve20 nue Code of 1986 if the trust instrument requires that

21 all trustees of the trust be individual citizens of the United

22 States or domestic corporations.

23 (b) EFFECTIVE DATE.—The provisions of subsection

24 (a) shall take effect as if included in the provisions of sec25 tion 11702(g) of the Revenue Reconciliation Act of 1990.
1202

•HR 2491 RH

1 SEC. 14615. OPPORTUNITY TO CORRECT CERTAIN FAIL2 URES UNDER SECTION 2032A.

3 (a) GENERAL RULE.—Paragraph (3) of section

4 2032A(d) (relating to modification of election and agree5 ment to be permitted) is amended to read as follows:

6 ‘‘(3) MODIFICATION OF ELECTION AND AGREE7 MENT TO BE PERMITTED.—The Secretary shall pre8 scribe procedures which provide that in any case in

9 which the executor makes an election under para10 graph (1) (and submits the agreement referred to in

11 paragraph (2)) within the time prescribed therefor,

12 but—

13 ‘‘(A) the notice of election, as filed, does

14 not contain all required information, or

15 ‘‘(B) signatures of 1 or more persons re16 quired to enter into the agreement described in

17 paragraph (2) are not included on the agree18 ment as filed, or the agreement does not con19 tain all required information,

20 the executor will have a reasonable period of time

21 (not exceeding 90 days) after notification of such

22 failures to provide such information or signatures.’’

23 (b) EFFECTIVE DATE.—The amendment made by

24 subsection (a) shall apply to the estates of decedents dying

25 after the date of the enactment of this Act.
1203

•HR 2491 RH

1 SEC. 14616. UNIFIED CREDIT OF DECEDENT INCREASED BY

2 UNIFIED CREDIT OF SPOUSE USED ON SPLIT

3 GIFT INCLUDED IN DECEDENT’S GROSS ES4 TATE.

5 (a) IN GENERAL.—Section 2010 (relating to unified

6 credit against estate tax) is amended by adding at the end

7 the following new subsection:

8 ‘‘(d) TREATMENT OF UNIFIED CREDIT USED BY

9 SPOUSE ON SPLIT-GIFT INCLUDED IN DECEDENT’S

10 GROSS ESTATE.—If—

11 ‘‘(1) the decedent was the donor of any gift

12 one-half of which was considered under section 2513

13 as made by the decedent’s spouse, and

14 ‘‘(2) the amount of such gift is includible in the

15 gross estate of the decedent by reason of section

16 2035, 2036, 2037, or 2038,

17 the amount of the credit allowable by subsection (a) to

18 the estate of the decedent shall be increased by the amount

19 of the unified credit allowed against the tax imposed by

20 section 2501 on the amount of such gift considered under

21 section 2513 as made by such spouse.’’

22 (b) EFFECTIVE DATE.—The amendment made by

23 subsection (a) shall apply to gifts made after the date of

24 the enactment of this Act.
1204

•HR 2491 RH

1 SEC. 14617. REFORMATION OF DEFECTIVE BEQUESTS, ETC.

2 TO SPOUSE OF DECEDENT.

3 (a) IN GENERAL.—Subsection (b) of section 2056

4 (relating to bequests, etc., to surviving spouse) is amended

5 by adding at the end the following new paragraph:

6 ‘‘(11) REFORMATIONS PERMITTED.—

7 ‘‘(A) IN GENERAL.—In the case of any in8 terest in property with respect to which a de9 duction would be allowable under subsection (a)

10 but for a provision of this subsection, if—

11 ‘‘(i) the surviving spouse is entitled to

12 all of the income from the property for life,

13 ‘‘(ii) no person other than such spouse

14 is entitled to any distribution of such prop15 erty during such spouse’s life, and

16 ‘‘(iii) there is a change of a governing

17 instrument (by reformation, amendment,

18 construction, or otherwise) as of the appli19 cable date which results in the satisfaction

20 of the requirements of such provision as of

21 the date of the decedent’s death,

22 the determination of whether such deduction is

23 allowable shall be made as of the applicable

24 date.

25 ‘‘(B) SPECIAL RULE WHERE TIMELY COM26 MENCEMENT OF REFORMATION.—Clauses (i)
1205

•HR 2491 RH

1 and (ii) of subparagraph (A) shall not apply to

2 any interest if, not later than the date described

3 in subparagraph (C)(i), a judicial proceeding is

4 commenced to change such interest into an in5 terest which satisfies the requirements of the

6 provision by reason of which (but for this para7 graph) a deduction would not be allowable

8 under subsection (a) for such interest.

9 ‘‘(C) APPLICABLE DATE.—For purposes of

10 subparagraph (A), the term ‘applicable date’

11 means—

12 ‘‘(i) the last date (including exten13 sions) for filing the return of tax imposed

14 by this chapter, or

15 ‘‘(ii) if a judicial proceeding is com16 menced to comply with such provision, the

17 time when the changes pursuant to such

18 proceeding are made.

19 ‘‘(D) SPECIAL RULE.—If the change re20 ferred to in subparagraph (A)(iii) is to qualify

21 the passage of the interest under paragraph

22 (7), subparagraph (A) shall apply only if the

23 election under subparagraph (B) thereof is

24 made.
1206

•HR 2491 RH

1 ‘‘(E) STATUTE OF LIMITATIONS.—If a ju2 dicial proceeding described in subparagraph

3 (C)(ii) is commenced with respect to any inter4 est, the period for assessing any deficiency of

5 tax attributable to such interest shall not expire

6 before the date 1 year after the date on which

7 the Secretary is notified that such provision has

8 been complied with or that such proceeding has

9 been terminated.’’

10 (b) COMPARABLE RULE FOR GIFT TAX.—Section

11 2523 (relating to gift to spouse) is amended by adding

12 at the end the following new subsection:

13 ‘‘(j) REFORMATIONS PERMITTED.—Rules similar to

14 the rules of section 2056(b)(11) shall apply for purposes

15 of this section.’’

16 (c) EFFECTIVE DATE.—The amendments made by

17 this section shall apply to estates of decedents dying, and

18 gifts made, after the date of the enactment of this Act.

19 SEC. 14618. GIFTS MAY NOT BE REVALUED FOR ESTATE TAX

20 PURPOSES AFTER EXPIRATION OF STATUTE

21 OF LIMITATIONS.

22 (a) IN GENERAL.—Section 2001 (relating to imposi23 tion and rate of estate tax) is amended by adding at the

24 end the following new subsection:

25 ‘‘(f) VALUATION OF GIFTS.—If—
1207

•HR 2491 RH

1 ‘‘(1) the time has expired within which a tax

2 may be assessed under chapter 12 (or under cor3 responding provisions of prior laws) on the transfer

4 of property by gift made during a preceding cal5 endar period (as defined in section 2502(b)), and

6 ‘‘(2) the value of such gift is shown on the re7 turn for such preceding calendar period or is dis8 closed in such return, or in a statement attached to

9 the return, in a manner adequate to apprise the Sec10 retary of the nature of such gift,

11 the value of such gift shall, for purposes of computing the

12 tax under this chapter, be the value of such gift as finally

13 determined for purposes of chapter 12.’’

14 (b) MODIFICATION OF APPLICATION OF STATUTE OF

15 LIMITATIONS.—Paragraph (9) of section 6501(c) is

16 amended to read as follows:

17 ‘‘(9) GIFT TAX ON CERTAIN GIFTS NOT SHOWN

18 ON RETURN.—If any gift of property the value of

19 which (or any increase in taxable gifts required

20 under section 2701(d)) is required to be shown on

21 a return of tax imposed by chapter 12 (without re22 gard to section 2503(b)), and is not shown on such

23 return, any tax imposed by chapter 12 on such gift

24 may be assessed, or a proceeding in court for the

25 collection of such tax may be begun without assess-
1208

•HR 2491 RH

1 ment, at any time. The preceding sentence shall not

2 apply to any item which is disclosed in such return,

3 or in a statement attached to the return, in a man4 ner adequate to apprise the Secretary of the nature

5 of such item. The value of any item which is so dis6 closed may not be redetermined by the Secretary

7 after the expiration of the period under subsection

8 (a).’’

9 (c) DECLARATORY JUDGMENT PROCEDURE FOR DE10 TERMINING VALUE OF GIFT.—

11 (1) IN GENERAL.—Part IV of subchapter C of

12 chapter 76 is amended by inserting after section

13 7476 the following new section:

14 ‘‘SEC. 7477. DECLARATORY JUDGMENTS RELATING TO

15 VALUE OF CERTAIN GIFTS.

16 ‘‘(a) CREATION OF REMEDY.—In a case of an actual

17 controversy involving a determination by the Secretary of

18 the value of any gift shown on the return of tax imposed

19 by chapter 12 or disclosed on such return or in any state20 ment attached to such return, upon the filing of an appro21 priate pleading, the Tax Court may make a declaration

22 of the value of such gift. Any such declaration shall have

23 the force and effect of a decision of the Tax Court and

24 shall be reviewable as such.

25 ‘‘(b) LIMITATIONS.—
1209

•HR 2491 RH

1 ‘‘(1) PETITIONER.—A pleading may be filed

2 under this section only by the donor.

3 ‘‘(2) EXHAUSTION OF ADMINISTRATIVE REM4 EDIES.—The court shall not issue a declaratory

5 judgment or decree under this section in any pro6 ceeding unless it determines that the petitioner has

7 exhausted all available administrative remedies with8 in the Internal Revenue Service.

9 ‘‘(3) TIME FOR BRINGING ACTION.—If the Sec10 retary sends by certified or registered mail notice of

11 his determination as described in subsection (a) to

12 the petitioner, no proceeding may be initiated under

13 this section unless the pleading is filed before the

14 91st day after the date of such mailing.’’

15 (2) CLERICAL AMENDMENT.—The table of sec16 tions for such part IV is amended by inserting after

17 the item relating to section 7476 the following new

18 item:

‘‘Sec. 7477. Declaratory judgments relating to value of certain

gifts.’’

19 (d) CONFORMING AMENDMENT.—Subsection (c) of

20 section 2504 is amended by striking ‘‘, and if a tax under

21 this chapter or under corresponding provisions of prior

22 laws has been assessed or paid for such preceding calendar

23 period’’.

24 (e) EFFECTIVE DATES.—
1210

•HR 2491 RH

1 (1) IN GENERAL.—The amendments made by

2 subsections (a) and (c) shall apply to gifts made

3 after the date of the enactment of this Act.

4 (2) SUBSECTION (b).—The amendment made by

5 subsection (b) shall apply to gifts made in calendar

6 years ending after the date of the enactment of this

7 Act.

8 SEC. 14619. CLARIFICATIONS RELATING TO DISCLAIMERS.

9 (a) PARTIAL TRANSFER-TYPE DISCLAIMERS PER10 MITTED.—Paragraph (3) of section 2518(c) (relating to

11 certain transfers treated as disclaimers) is amended by in12 serting ‘‘(or an undivided portion of such interest)’’ after

13 ‘‘entire interest in the property’’.

14 (b) RETENTION OF INTEREST BY DECEDENT’S

15 SPOUSE PERMITTED IN TRANSFER-TYPE DISCLAIM16 ERS.—Paragraph (3) of section 2518(c) is amended by

17 adding at the end the following new flush sentence:

18 ‘‘For purposes of the preceding sentence, a written

19 transfer by the spouse of the decedent of property

20 to a trust shall not fail to be treated as a transfer

21 of such spouse’s interest in such property by reason

22 of such spouse having an interest in such trust.’’

23 (c) DISCLAIMERS ARE EFFECTIVE FOR INCOME TAX

24 PURPOSES.—Subsection (a) of section 2518 is amended
1211

•HR 2491 RH

1 by inserting ‘‘and subtitle A’’ after ‘‘this subtitle’’ each

2 place it appears.

3 (d) EFFECTIVE DATE.—The amendments made by

4 this section shall apply to transfers creating an interest

5 in the person disclaiming, and disclaimers, made after the

6 date of the enactment of this Act.

7 SEC. 14620. CLARIFICATION OF TREATMENT OF SURVIVOR

8 ANNUITIES UNDER QUALIFIED TERMINABLE

9 INTEREST RULES.

10 (a) IN GENERAL.—Subparagraph (C) of section

11 2056(b)(7) is amended by inserting ‘‘(or, in the case of

12 an interest in an annuity arising under the community

13 property laws of a State, included in the gross estate of

14 the decedent under section 2033)’’ after ‘‘section 2039’’.

15 (b) EFFECTIVE DATE.—The amendment made by

16 this section shall apply to estates of decedents dying after

17 the date of the enactment of this Act.

18 SEC. 14621. TREATMENT UNDER QUALIFIED DOMESTIC

19 TRUST RULES OF FORMS OF OWNERSHIP

20 WHICH ARE NOT TRUSTS.

21 (a) IN GENERAL.—Subsection (c) of section 2056A

22 (defining qualified domestic trust) is amended by adding

23 at the end the following new paragraph:

24 ‘‘(3) TRUST.—To the extent provided in regula25 tions prescribed by the Secretary, the term ‘trust’
1212

•HR 2491 RH

1 includes other arrangements which have substan2 tially the same effect as a trust.’’

3 (b) EFFECTIVE DATE.—The amendment made by

4 this section shall apply to estates of decedents dying after

5 the date of the enactment of this Act.

6 SEC. 14622. AUTHORITY TO WAIVE REQUIREMENT OF UNIT7 ED STATES TRUSTEE FOR QUALIFIED DOMES8 TIC TRUSTS.

9 (a) IN GENERAL.—Subparagraph (A) of section

10 2056A(a)(1) is amended by inserting ‘‘except as provided

11 in regulations prescribed by the Secretary,’’ before ‘‘re12 quires’’.

13 (b) EFFECTIVE DATE.—The amendment made by

14 this section shall apply to estates of decedents dying after

15 the date of the enactment of this Act.

16 PART III—GENERATION-SKIPPING TAX

17 PROVISIONS

18 SEC. 14631. SEVERING OF TRUSTS HOLDING PROPERTY

19 HAVING AN INCLUSION RATIO OF GREATER

20 THAN ZERO.

21 (a) IN GENERAL.—Subsection (a) of section 2642

22 (relating to inclusion ratio) is amended by adding at the

23 end the following new paragraph:
1213

•HR 2491 RH

1 ‘‘(3) SEVERING OF TRUSTS HOLDING PROPERTY

2 HAVING AN INCLUSION RATIO OF GREATER THAN

3 ZERO.—

4 ‘‘(A) IN GENERAL.—If a trust holding

5 property having an inclusion ratio of greater

6 than zero is severed in a qualified severance, at

7 the election of the trustee of such trust, the

8 trusts resulting from such severance shall be

9 treated as separate trusts for purposes of this

10 chapter.

11 ‘‘(B) QUALIFIED SEVERANCE.—For pur12 poses of subparagraph (A), the term ‘qualified

13 severance’ means the creation of 2 trusts from

14 a single trust if each property held by the single

15 trust was divided between the 2 created trusts

16 such that one trust received an interest in each

17 such property equal to the applicable fraction of

18 the single trust. Such term includes any other

19 severance permitted under regulations pre20 scribed by the Secretary.

21 ‘‘(C) ELECTION.—The election under this

22 paragraph shall be made at the time prescribed

23 by the Secretary. Such an election, once made,

24 shall be irrevocable.’’
1214

•HR 2491 RH

1 (b) EFFECTIVE DATE.—The amendment made by

2 subsection (a) shall apply to severances after the date of

3 the enactment of this Act.

4 SEC. 14632. CLARIFICATION OF WHO IS TRANSFEROR

5 WHERE SUBSEQUENT GIFT BY REASON OF

6 POWER OF APPOINTMENT.

7 (a) IN GENERAL.—Paragraph (1) of section 2652(a)

8 (defining transferor) is amended by adding at the end the

9 following new sentence: ‘‘A transferor described in sub10 paragraph (A) shall not be treated as the transferor of

11 any property if another individual is treated as the trans12 feror of such property under subparagraph (B) by reason

13 of the exercise, release, or lapse of a general power of ap14 pointment with respect to such property.’’

15 (b) EFFECTIVE DATE.—The amendment made by

16 subsection (a) shall apply to the exercise, release, or lapse

17 of a general power of appointment after the date of the

18 enactment of this Act.

19 SEC. 14633. TAXABLE TERMINATION NOT TO INCLUDE DI20 RECT SKIPS.

21 (a) IN GENERAL.—Paragraph (1) of section 2612(a)

22 (defining taxable termination) is amended by adding at

23 the end the following new flush sentence:

24 ‘‘Such term shall not include a direct skip.’’
1215

•HR 2491 RH

1 (b) EFFECTIVE DATE.—The amendment made by

2 subsection (a) shall apply to generation-skipping transfers

3 (as defined in section 2611 of the Internal Revenue Code

4 of 1986) after the date of the enactment of this Act.

5 SEC. 14634. EXPANSION OF EXCEPTION FROM GENERA6 TION-SKIPPING TRANSFER TAX FOR TRANS7 FERS TO INDIVIDUALS WITH DECEASED PAR8 ENTS.

9 (a) IN GENERAL.—Section 2651 (relating to genera10 tion assignment) is amended by redesignating subsection

11 (e) as subsection (f), and by inserting after subsection (d)

12 the following new subsection:

13 ‘‘(e) SPECIAL RULE FOR PERSONS WITH A DE14 CEASED PARENT.—

15 ‘‘(1) IN GENERAL.—For purposes of determin16 ing whether any transfer is a generation-skipping

17 transfer, if—

18 ‘‘(A) an individual is a descendant of a

19 parent of the transferor (or the transferor’s

20 spouse or former spouse), and

21 ‘‘(B) such individual’s parent who is a lin22 eal descendant of the parent of the transferor

23 (or the transferor’s spouse or former spouse) is

24 dead at the time the transfer (from which an

25 interest of such individual is established or de-
1216

•HR 2491 RH

1 rived) is subject to a tax imposed by chapter 11

2 or 12 upon the transferor (and if there shall be

3 more than 1 such time, then at the earliest

4 such time),

5 such individual shall be treated as if such individual

6 were a member of the generation which is 1 genera7 tion below the lower of the transferor’s generation or

8 the generation assignment of the youngest living an9 cestor of such individual who is also a descendant of

10 the parent of the transferor (or the transferor’s

11 spouse or former spouse), and the generation assign12 ment of any descendant of such individual shall be

13 adjusted accordingly.

14 ‘‘(2) LIMITED APPLICATION OF SUBSECTION TO

15 COLLATERAL HEIRS.—This subsection shall not

16 apply with respect to a transfer to any individual

17 who is not a lineal descendant of the transferor (or

18 the transferor’s spouse or former spouse) if, at the

19 time of the transfer, such transferor has any living

20 lineal descendant.’’

21 (b) CONFORMING AMENDMENTS.—

22 (1) Section 2612(c) (defining direct skip) is

23 amended by striking paragraph (2) and by redesig24 nating paragraph (3) as paragraph (2).
1217

•HR 2491 RH

1 (2) Section 2612(c)(2) (as so redesignated) is

2 amended by striking ‘‘section 2651(e)(2)’’ and in3 serting ‘‘section 2651(f)(2)’’.

4 (c) EFFECTIVE DATE.—The amendments made by

5 this section shall apply to terminations, distributions, and

6 transfers occurring after the date of the enactment of this

7 Act.

8 Subtitle G—Excise Tax

9 Simplification

10 PART I—PROVISIONS RELATED TO DISTILLED

11 SPIRITS, WINES, AND BEER

12 SEC. 14701. CREDIT OR REFUND FOR IMPORTED BOTTLED

13 DISTILLED SPIRITS RETURNED TO DIS14 TILLED SPIRITS PLANT.

15 (a) IN GENERAL.—Paragraph (1) of section 5008(c)

16 (relating to distilled spirits returned to bonded premises)

17 is amended by striking ‘‘withdrawn from bonded premises

18 on payment or determination of tax’’ and inserting ‘‘on

19 which tax has been determined or paid’’.

20 (b) EFFECTIVE DATE.—The amendment made by

21 subsection (a) shall take effect at the beginning of the first

22 calendar quarter beginning more than 180 days after the

23 date of the enactment of this Act.
1218

•HR 2491 RH

1 SEC. 14702. AUTHORITY TO CANCEL OR CREDIT EXPORT

2 BONDS WITHOUT SUBMISSION OF RECORDS.

3 (a) IN GENERAL.—Subsection (c) of section 5175

4 (relating to export bonds) is amended by striking ‘‘on the

5 submission of’’ and all that follows and inserting ‘‘if there

6 is such proof of exportation as the Secretary may by regu7 lations require.’’

8 (b) EFFECTIVE DATE.—The amendment made by

9 subsection (a) shall take effect at the beginning of the first

10 calendar quarter beginning more than 180 days after the

11 date of the enactment of this Act.

12 SEC. 14703. REPEAL OF REQUIRED MAINTENANCE OF

13 RECORDS ON PREMISES OF DISTILLED SPIR14 ITS PLANT.

15 (a) IN GENERAL.—Subsection (c) of section 5207

16 (relating to records and reports) is amended by striking

17 ‘‘shall be kept on the premises where the operations cov18 ered by the record are carried on and’’.

19 (b) EFFECTIVE DATE.—The amendment made by

20 subsection (a) shall take effect at the beginning of the first

21 calendar quarter beginning more than 180 days after the

22 date of the enactment of this Act.
1219

•HR 2491 RH

1 SEC. 14704. FERMENTED MATERIAL FROM ANY BREWERY

2 MAY BE RECEIVED AT A DISTILLED SPIRITS

3 PLANT.

4 (a) IN GENERAL.—Paragraph (2) of section 5222(b)

5 (relating to production, receipt, removal, and use of distill6 ing materials) is amended to read as follows:

7 ‘‘(2) beer conveyed without payment of tax

8 from brewery premises, beer which has been lawfully

9 removed from brewery premises upon determination

10 of tax, or’’.

11 (b) CLARIFICATION OF AUTHORITY TO PERMIT RE12 MOVAL OF BEER WITHOUT PAYMENT OF TAX FOR USE

13 AS DISTILLING MATERIAL.—Section 5053 (relating to ex14 emptions) is amended by redesignating subsection (f) as

15 subsection (i) and by inserting after subsection (e) the fol16 lowing new subsection:

17 ‘‘(f) REMOVAL FOR USE AS DISTILLING MATE18 RIAL.—Subject to such regulations as the Secretary may

19 prescribe, beer may be removed from a brewery without

20 payment of tax to any distilled spirits plant for use as

21 distilling material.’’

22 (c) CLARIFICATION OF REFUND AND CREDIT OF

23 TAX.—Section 5056 (relating to refund and credit of tax,

24 or relief from liability) is amended—
1220

•HR 2491 RH

1 (1) by redesignating subsection (c) as sub2 section (d) and by inserting after subsection (b) the

3 following new subsection:

4 ‘‘(c) BEER RECEIVED AT A DISTILLED SPIRITS

5 PLANT.—Any tax paid by any brewer on beer produced

6 in the United States may be refunded or credited to the

7 brewer, without interest, or if the tax has not been paid,

8 the brewer may be relieved of liability therefor, under reg9 ulations as the Secretary may prescribe, if such beer is

10 received on the bonded premises of a distilled spirits plant

11 pursuant to the provisions of section 5222(b)(2), for use

12 in the production of distilled spirits.’’, and

13 (2) by striking ‘‘or rendering unmerchantable’’

14 in subsection (d) (as so redesignated) and inserting

15 ‘‘rendering unmerchantable, or receipt on the bond16 ed premises of a distilled spirits plant’’.

17 (d) EFFECTIVE DATE.—The amendments made by

18 this section shall take effect at the beginning of the first

19 calendar quarter beginning more than 180 days after the

20 date of the enactment of this Act.

21 SEC. 14705. REPEAL OF REQUIREMENT FOR WHOLESALE

22 DEALERS IN LIQUORS TO POST SIGN.

23 (a) IN GENERAL.—Section 5115 (relating to sign re24 quired on premises) is hereby repealed.

25 (b) CONFORMING AMENDMENTS.—
1221

•HR 2491 RH

1 (1) Subsection (a) of section 5681 is amended

2 by striking ‘‘, and every wholesale dealer in liquors,’’

3 and by striking ‘‘section 5115(a) or’’.

4 (2) Subsection (c) of section 5681 is amend5 ed—

6 (A) by striking ‘‘or wholesale liquor estab7 lishment, on which no sign required by section

8 5115(a) or’’ and inserting ‘‘on which no sign

9 required by’’, and

10 (B) by striking ‘‘or wholesale liquor estab11 lishment, or who’’ and inserting ‘‘or who’’.

12 (3) The table of sections for subpart D of part

13 II of subchapter A of chapter 51 is amended by

14 striking the item relating to section 5115.

15 (c) EFFECTIVE DATE.—The amendments made by

16 this section shall take effect on the date of the enactment

17 of this Act.

18 SEC. 14706. REFUND OF TAX ON WINE RETURNED TO BOND

19 NOT LIMITED TO UNMERCHANTABLE WINE.

20 (a) IN GENERAL.—Subsection (a) of section 5044

21 (relating to refund of tax on unmerchantable wine) is

22 amended by striking ‘‘as unmerchantable’’.

23 (b) CONFORMING AMENDMENTS.—

24 (1) Section 5361 is amended by striking

25 ‘‘unmerchantable’’.
1222

•HR 2491 RH

1 (2) The section heading for section 5044 is

2 amended by striking ‘‘UNMERCHANTABLE’’.

3 (3) The item relating to section 5044 in the

4 table of sections for subpart C of part I of sub5 chapter A of chapter 51 is amended by striking

6 ‘‘unmerchantable’’.

7 (c) EFFECTIVE DATE.—The amendments made by

8 this section shall take effect at the beginning of the first

9 calendar quarter beginning more than 180 days after the

10 date of the enactment of this Act.

11 SEC. 14707. USE OF ADDITIONAL AMELIORATING MATERIAL

12 IN CERTAIN WINES.

13 (a) IN GENERAL.—Subparagraph (D) of section

14 5384(b)(2) (relating to ameliorated fruit and berry wines)

15 is amended by striking ‘‘loganberries, currants, or goose16 berries,’’ and inserting ‘‘any fruit or berry with a natural

17 fixed acid of 20 parts per thousand or more (before any

18 correction of such fruit or berry)’’.

19 (b) EFFECTIVE DATE.—The amendment made by

20 this section shall take effect at the beginning of the first

21 calendar quarter beginning more than 180 days after the

22 date of the enactment of this Act.
1223

•HR 2491 RH

1 SEC. 14708. DOMESTICALLY PRODUCED BEER MAY BE

2 WITHDRAWN FREE OF TAX FOR USE OF FOR3 EIGN EMBASSIES, LEGATIONS, ETC.

4 (a) IN GENERAL.—Section 5053 (relating to exemp5 tions) is amended by inserting after subsection (f) the fol6 lowing new subsection:

7 ‘‘(g) REMOVALS FOR USE OF FOREIGN EMBASSIES,

8 LEGATIONS, ETC.—

9 ‘‘(1) IN GENERAL.—Subject to such regulations

10 as the Secretary may prescribe—

11 ‘‘(A) beer may be withdrawn from the

12 brewery without payment of tax for transfer to

13 any customs bonded warehouse for entry pend14 ing withdrawal therefrom as provided in sub15 paragraph (B), and

16 ‘‘(B) beer entered into any customs bonded

17 warehouse under subparagraph (A) may be

18 withdrawn for consumption in the United

19 States by, and for the official and family use of,

20 such foreign governments, organizations, and

21 individuals as are entitled to withdraw imported

22 beer from such warehouses free of tax.

23 Beer transferred to any customs bonded warehouse

24 under subparagraph (A) shall be entered, stored,

25 and accounted for in such warehouse under such

26 regulations and bonds as the Secretary may pre-
1224

•HR 2491 RH

1 scribe, and may be withdrawn therefrom by such

2 governments, organizations, and individuals free of

3 tax under the same conditions and procedures as im4 ported beer.

5 ‘‘(2) OTHER RULES TO APPLY.—Rules similar

6 to the rules of paragraphs (2) and (3) of section

7 5362(e) of such section shall apply for purposes of

8 this subsection.’’

9 (b) EFFECTIVE DATE.—The amendment made by

10 subsection (a) shall take effect at the beginning of the first

11 calendar quarter beginning more than 180 days after the

12 date of the enactment of this Act.

13 SEC. 14709. BEER MAY BE WITHDRAWN FREE OF TAX FOR

14 DESTRUCTION.

15 (a) IN GENERAL.—Section 5053 is amended by in16 serting after subsection (g) the following new subsection:

17 ‘‘(h) REMOVALS FOR DESTRUCTION.—Subject to

18 such regulations as the Secretary may prescribe, beer may

19 be removed from the brewery without payment of tax for

20 destruction.’’

21 (b) EFFECTIVE DATE.—The amendment made by

22 subsection (a) shall take effect at the beginning of the first

23 calendar quarter beginning more than 180 days after the

24 date of the enactment of this Act.
1225

•HR 2491 RH

1 SEC. 14710. AUTHORITY TO ALLOW DRAWBACK ON EX2 PORTED BEER WITHOUT SUBMISSION OF

3 RECORDS.

4 (a) IN GENERAL.—The first sentence of section 5055

5 (relating to drawback of tax on beer) is amended by strik6 ing ‘‘found to have been paid’’ and all that follows and

7 inserting ‘‘paid on such beer if there is such proof of ex8 portation as the Secretary may by regulations require.’’

9 (b) EFFECTIVE DATE.—The amendment made by

10 subsection (a) shall take effect at the beginning of the first

11 calendar quarter beginning more than 180 days after the

12 date of the enactment of this Act.

13 SEC. 14711. TRANSFER TO BREWERY OF BEER IMPORTED

14 IN BULK WITHOUT PAYMENT OF TAX.

15 (a) IN GENERAL.—Part II of subchapter G of chap16 ter 51 is amended by adding at the end the following new

17 section:

18 ‘‘SEC. 5418. BEER IMPORTED IN BULK.

19 ‘‘Beer imported or brought into the United States in

20 bulk containers may, under such regulations as the Sec21 retary may prescribe, be withdrawn from customs custody

22 and transferred in such bulk containers to the premises

23 of a brewery without payment of the internal revenue tax

24 imposed on such beer. The proprietor of a brewery to

25 which such beer is transferred shall become liable for the

26 tax on the beer withdrawn from customs custody under
1226

•HR 2491 RH

1 this section upon release of the beer from customs custody,

2 and the importer, or the person bringing such beer into

3 the United States, shall thereupon be relieved of the liabil4 ity for such tax.’’

5 (b) CLERICAL AMENDMENT.—The table of sections

6 for such part II is amended by adding at the end the fol7 lowing new item:

‘‘Sec. 5418. Beer imported in bulk.’’

8 (c) EFFECTIVE DATE.—The amendments made by

9 this section shall take effect at the beginning of the first

10 calendar quarter beginning more than 180 days after the

11 date of the enactment of this Act.

12 PART II—CONSOLIDATION OF TAXES ON

13 AVIATION GASOLINE

14 SEC. 14721. CONSOLIDATION OF TAXES ON AVIATION GASO15 LINE.

16 (a) IN GENERAL.—Subparagraph (A) of section

17 4081(a)(2) (relating to imposition of tax on gasoline and

18 diesel fuel) is amended by redesignating clause (ii) as

19 clause (iii) and by striking clause (i) and inserting the fol20 lowing:

21 ‘‘(i) in the case of gasoline other than

22 aviation gasoline, 18.3 cents per gallon,

23 ‘‘(ii) in the case of aviation gasoline,

24 19.3 cents per gallon, and’’.
1227

•HR 2491 RH

1 (b) TERMINATION.—Subsection (d) of section 4081

2 is amended by redesignating paragraph (2) as paragraph

3 (3) and by inserting after paragraph (1) the following new

4 paragraph:

5 ‘‘(2) AVIATION GASOLINE.—On and after Janu6 ary 1, 1996, the rate specified in subsection

7 (a)(2)(A)(ii) shall be 4.3 cents per gallon.’’

8 (c) REPEAL OF RETAIL LEVEL TAX.—

9 (1) Subsection (c) of section 4041 is amended

10 by striking paragraphs (2) and (3) and by redesig11 nating paragraphs (4) and (5) as paragraphs (2)

12 and (3), respectively.

13 (2) Paragraph (3) of section 4041(c), as redes14 ignated by paragraph (1), is amended by striking

15 ‘‘paragraphs (1) and (2)’’ and inserting ‘‘paragraph

16 (1)’’.

17 (d) CONFORMING AMENDMENTS.—

18 (1) Paragraph (1) of section 4041(k) is amend19 ed by adding ‘‘and’’ at the end of subparagraph (A),

20 by striking ‘‘, and’’ at the end of subparagraph (B)

21 and inserting a period, and by striking subparagraph

22 (C).

23 (2) Paragraph (1) of section 4081(d) is amend24 ed by striking ‘‘each rate of tax specified in sub25 section (a)(2)(A)’’ and inserting ‘‘the rates of tax
1228

•HR 2491 RH

1 specified in clauses (i) and (iii) of subsection

2 (a)(2)(A)’’.

3 (3) Sections 6421(f)(2)(A) and 9502(f)(1)(A)

4 are each amended by striking ‘‘section 4041(c)(4)’’

5 and inserting ‘‘section 4041(c)(2)’’.

6 (4) Paragraph (2) of section 9502(b) is amend7 ed by striking ‘‘14 cents’’ and inserting ‘‘15 cents’’.

8 (e) EFFECTIVE DATE.—The amendments made by

9 this section shall take effect on January 1, 1996.

10 (f) FLOOR STOCKS TAX.—

11 (1) IMPOSITION OF TAX.—In the case of avia12 tion gasoline on which tax was imposed under sec13 tion 4081 of the Internal Revenue Code of 1986 be14 fore January 1, 1996, and which is held on such

15 date by any person, there is hereby imposed a floor

16 stocks tax of 1 cent per gallon of such gasoline.

17 (2) LIABILITY FOR TAX AND METHOD OF PAY18 MENT.—

19 (A) LIABILITY FOR TAX.—A person hold20 ing aviation gasoline on January 1, 1996, to

21 which the tax imposed by paragraph (1) applies

22 shall be liable for such tax.

23 (B) METHOD OF PAYMENT.—The tax im24 posed by paragraph (1) shall be paid in such

25 manner as the Secretary shall prescribe.
1229

•HR 2491 RH

1 (C) TIME FOR PAYMENT.—The tax im2 posed by paragraph (1) shall be paid on or be3 fore June 30, 1996.

4 (3) DEFINITIONS.—For purposes of this sub5 section:

6 (A) HELD BY A PERSON.—Gasoline shall

7 be considered as ‘‘held by a person’’ if title

8 thereto has passed to such person (whether or

9 not delivery to the person has been made).

10 (B) SECRETARY.—The term ‘‘Secretary’’

11 means the Secretary of the Treasury or his del12 egate.

13 (4) EXCEPTION FOR EXEMPT USES.—The tax

14 imposed by paragraph (1) shall not apply to gasoline

15 held by any person exclusively for any use to the ex16 tent a credit or refund of the tax imposed by section

17 4081 of such Code is allowable for such use.

18 (5) EXCEPTION FOR FUEL HELD IN AIRCRAFT

19 TANK.—No tax shall be imposed by paragraph (1)

20 on aviation gasoline held in the tank of an aircraft.

21 (6) EXCEPTION FOR CERTAIN AMOUNTS OF

22 FUEL.—

23 (A) IN GENERAL.—No tax shall be im24 posed by paragraph (1) on aviation gasoline

25 held on January 1, 1996, by any person if the
1230

•HR 2491 RH

1 aggregate amount of aviation gasoline held by

2 such person on such date does not exceed 6,000

3 gallons. The preceding sentence shall apply only

4 if such person submits to the Secretary (at the

5 time and in the manner required by the Sec6 retary) such information as the Secretary shall

7 require for purposes of this paragraph.

8 (B) EXEMPT FUEL.—For purposes of sub9 paragraph (A), there shall not be taken into ac10 count fuel held by any person which is exempt

11 from the tax imposed by paragraph (1) by rea12 son of paragraph (4) or (5).

13 (C) CONTROLLED GROUPS.—

14 (i) CORPORATIONS.—In the case of a

15 controlled group, the 6,000 gallon amount

16 in subparagraph (A) shall be apportioned

17 among the component members of such

18 group in such manner as the Secretary

19 shall by regulations prescribe. For pur20 poses of the preceding sentence, the term

21 ‘‘controlled group’’ has the meaning given

22 to such term by subsection (a) of section

23 1563 of such Code; except that for such

24 purposes the phrase ‘‘more than 50 per25 cent’’ shall be substituted for the phrase
1231

•HR 2491 RH

1 ‘‘at least 80 percent’’ each place it appears

2 in such subsection.

3 (ii) NONINCORPORATED PERSONS

4 UNDER COMMON CONTROL.—Under regula5 tions prescribed by the Secretary, prin6 ciples similar to the principles of clause (i)

7 shall apply to a group under common con8 trol where 1 or more of the members is not

9 a corporation.

10 (7) OTHER LAWS APPLICABLE.—All provisions

11 of law, including penalties, applicable with respect to

12 the taxes imposed by section 4081 of such Code

13 shall, insofar as applicable and not inconsistent with

14 the provisions of this subsection, apply with respect

15 to the floor stock taxes imposed by paragraph (1) to

16 the same extent as if such taxes were imposed by

17 such section 4081.

18 PART III—OTHER EXCISE TAX PROVISIONS

19 SEC. 14731. AUTHORITY TO GRANT EXEMPTIONS FROM

20 REGISTRATION REQUIREMENTS.

21 (a) IN GENERAL.—The first sentence of section 4222

22 (relating to registration) is amended to read as follows:

23 ‘‘Except as provided in subsection (b), section 4221 shall

24 not apply with respect to the sale of any article by or to
1232

•HR 2491 RH

1 any person who is required by the Secretary to be reg2 istered under this section and who is not so registered.’’

3 (b) EFFECTIVE DATE.—The amendment made by

4 subsection (a) shall apply to sales after the 180th day

5 after the date of the enactment of this Act.

6 SEC. 14732. CERTAIN COMBINATIONS NOT TREATED AS

7 MANUFACTURE UNDER RETAIL SALES TAX

8 ON HEAVY TRUCKS.

9 (a) IN GENERAL.—Paragraph (2) of section 4052(c)

10 (relating to certain combinations not treated as manufac11 ture) is amended by striking ‘‘or wood or metal floor’’ and

12 inserting ‘‘wood or metal floor, or a power take-off and

13 dump body’’.

14 (b) REMOVAL OF FIFTH WHEEL.—Paragraph (1) of

15 section 4052(c) is amended by inserting before the period

16 ‘‘or the removal of any coupling device (including any fifth

17 wheel)’’.

18 (c) EFFECTIVE DATE.—The amendments made by

19 this section shall take effect on the date of the enactment

20 of this Act.

21 SEC. 14733. EXEMPTION FROM DIESEL FUEL DYEING RE22 QUIREMENTS WITH RESPECT TO CERTAIN

23 STATES.

24 (a) IN GENERAL.—Section 4082 (relating to exemp25 tions for diesel fuel) is amended by redesignating sub-
1233

•HR 2491 RH

1 sections (c) and (d) as subsections (d) and (e), respec2 tively, and by inserting after subsection (b) the following

3 new subsection:

4 ‘‘(c) EXCEPTION TO DYEING REQUIREMENTS.—

5 Paragraph (2) of subsection (a) shall not apply with re6 spect to any diesel fuel—

7 ‘‘(1) removed, entered, or sold in a State for ul8 timate sale or use in an area of such State which

9 is exempted from the fuel dyeing requirements under

10 subsection (i) of section 211 of the Clean Air Act (as

11 in effect on the date of the enactment of this sub12 section) by the Administrator of the Environmental

13 Protection Agency under paragraph (4) of such sub14 section, and

15 ‘‘(2) the use of which is certified pursuant to

16 regulations issued by the Secretary.’’

17 (b) EFFECTIVE DATE.—The amendments made by

18 this section shall take effect on the first day of the first

19 calendar quarter beginning after the date of the enactment

20 of this Act.

21 SEC. 14734. REPEAL OF EXPIRED PROVISIONS.

22 (a) PIGGY-BACK TRAILERS.—Section 4051 is amend23 ed by striking subsection (d) and by redesignating sub24 section (e) as subsection (d).

25 (b) DEEP SEABED MINING.—
1234

•HR 2491 RH

1 (1) Subchapter F of chapter 36 (relating to tax

2 on removal of hard mineral resources from deep sea3 bed) is hereby repealed.

4 (2) The table of subchapters for chapter 36 is

5 amended by striking the item relating to subchapter

6 F.

7 Subtitle H—Administrative

8 Provisions

9 PART I—GENERAL PROVISIONS

10 SEC. 14801. REPEAL OF AUTHORITY TO DISCLOSE WHETH11 ER PROSPECTIVE JUROR HAS BEEN AU12 DITED.

13 (a) IN GENERAL.—Subsection (h) of section 6103

14 (relating to disclosure to certain Federal officers and em15 ployees for purposes of tax administration, etc.) is amend16 ed by striking paragraph (5) and by redesignating para17 graph (6) as paragraph (5).

18 (b) CONFORMING AMENDMENT.—Paragraph (4) of

19 section 6103(p) is amended by striking ‘‘(h)(6)’’ each

20 place it appears and inserting ‘‘(h)(5)’’.

21 (c) EFFECTIVE DATE.—The amendments made by

22 this section shall apply to judicial proceedings pending on,

23 or commenced after, the date of the enactment of this Act.
1235

•HR 2491 RH

1 SEC. 14802. CLARIFICATION OF STATUTE OF LIMITATIONS.

2 (a) IN GENERAL.—Subsection (a) of section 6501

3 (relating to limitations on assessment and collection) is

4 amended by adding at the end the following new sentence:

5 ‘‘For purposes of this chapter, the term ‘return’ means

6 the return required to be filed by the taxpayer (and does

7 not include a return of any person from whom the tax8 payer has received an item of income, gain, loss, deduc9 tion, or credit).’’

10 (b) EFFECTIVE DATE.—The amendment made by

11 this section shall apply to taxable years beginning after

12 the date of the enactment of this Act.

13 SEC. 14803. CERTAIN NOTICES DISREGARDED UNDER PRO14 VISION INCREASING INTEREST RATE ON

15 LARGE CORPORATE UNDERPAYMENTS.

16 (a) GENERAL RULE.—Subparagraph (B) of section

17 6621(c)(2) (defining applicable date) is amended by add18 ing at the end the following new clause:

19 ‘‘(iii) EXCEPTION FOR LETTERS OR

20 NOTICES INVOLVING SMALL AMOUNTS.—

21 For purposes of this paragraph, any letter

22 or notice shall be disregarded if the

23 amount of the deficiency or proposed defi24 ciency (or the assessment or proposed as25 sessment) set forth in such letter or notice

26 is not greater than $100,000 (determined
1236

•HR 2491 RH

1 by not taking into account any interest,

2 penalties, or additions to tax).’’

3 (b) EFFECTIVE DATE.—The amendment made by

4 subsection (a) shall apply for purposes of determining in5 terest for periods after December 31, 1995.

6 SEC. 14804. CLARIFICATION OF AUTHORITY TO WITHHOLD

7 PUERTO RICO INCOME TAXES FROM SALA8 RIES OF FEDERAL EMPLOYEES.

9 (a) IN GENERAL.—Subsection (c) of section 5517 of

10 title 5, United States Code, is amended by striking ‘‘or

11 territory or possession’’ and inserting ‘‘, territory, posses12 sion, or commonwealth’’.

13 (b) EFFECTIVE DATE.—The amendment made by

14 subsection (a) shall take effect on the date of the enact15 ment of this Act.

16 PART II—TAX COURT PROCEDURES

17 SEC. 14811. OVERPAYMENT DETERMINATIONS OF TAX

18 COURT.

19 (a) APPEAL OF ORDER.—Paragraph (2) of section

20 6512(b) (relating to jurisdiction to enforce) is amended

21 by adding at the end the following new sentence: ‘‘An

22 order of the Tax Court disposing of a motion under this

23 paragraph shall be reviewable in the same manner as a

24 decision of the Tax Court, but only with respect to the

25 matters determined in such order.’’
1237

•HR 2491 RH

1 (b) DENIAL OF JURISDICTION REGARDING CERTAIN

2 CREDITS AND REDUCTIONS.—Subsection (b) of section

3 6512 (relating to overpayment determined by Tax Court)

4 is amended by adding at the end the following new

5 paragraph:

6 ‘‘(4) DENIAL OF JURISDICTION REGARDING

7 CERTAIN CREDITS AND REDUCTIONS.—The Tax

8 Court shall have no jurisdiction under this sub9 section to restrain or review any credit or reduction

10 made by the Secretary under section 6402.’’

11 (c) EFFECTIVE DATE.—The amendments made by

12 this section shall take effect on the date of the enactment

13 of this Act.

14 SEC. 14812. AWARDING OF ADMINISTRATIVE COSTS.

15 (a) RIGHT TO APPEAL TAX COURT DECISION.—Sub16 section (f) of section 7430 (relating to right of appeal)

17 is amended by adding at the end the following new

18 paragraph:

19 ‘‘(3) APPEAL OF TAX COURT DECISION.—An

20 order of the Tax Court disposing of a petition under

21 paragraph (2) shall be reviewable in the same man22 ner as a decision of the Tax Court, but only with re23 spect to the matters determined in such order.’’

24 (b) PERIOD FOR APPLYING TO IRS FOR COSTS.—

25 Subsection (b) of section 7430 (relating to limitations) is
1238

•HR 2491 RH

1 amended by adding at the end the following new

2 paragraph:

3 ‘‘(5) PERIOD FOR APPLYING TO IRS FOR AD4 MINISTRATIVE COSTS.—An award may be made

5 under subsection (a) by the Internal Revenue Serv6 ice for reasonable administrative costs only if the

7 prevailing party files an application with the Inter8 nal Revenue Service for such costs before the 91st

9 day after the date on which the final decision of the

10 Internal Revenue Service as to the determination of

11 the tax, interest, or penalty is mailed to such party.’’

12 (c) PERIOD FOR PETITIONING OF TAX COURT FOR

13 REVIEW OF DENIAL OF COSTS.—Paragraph (2) of section

14 7430(f) (relating to right of appeal) is amended—

15 (1) by striking ‘‘appeal to’’ and inserting ‘‘the

16 filing of a petition for review with’’, and

17 (2) by adding at the end the following new sen18 tence: ‘‘If the Secretary sends by certified or reg19 istered mail a notice of such decision to the peti20 tioner, no proceeding in the Tax Court may be initi21 ated under this paragraph unless such petition is

22 filed before the 91st day after the date of such

23 mailing.’’
1239

•HR 2491 RH

1 (d) EFFECTIVE DATE.—The amendments made by

2 this section shall apply to civil actions or proceedings com3 menced after the date of the enactment of this Act.

4 SEC. 14813. REDETERMINATION OF INTEREST PURSUANT

5 TO MOTION.

6 (a) IN GENERAL.—Paragraph (3) of section 7481(c)

7 (relating to jurisdiction over interest determinations) is

8 amended by striking ‘‘petition’’ and inserting ‘‘motion’’.

9 (b) EFFECTIVE DATE.—The amendment made by

10 this section shall take effect on the date of the enactment

11 of this Act.

12 SEC. 14814. APPLICATION OF NET WORTH REQUIREMENT

13 FOR AWARDS OF LITIGATION COSTS.

14 (a) IN GENERAL.—Paragraph (4) of section 7430(c)

15 (defining prevailing party) is amended by adding at the

16 end the following new subparagraph:

17 ‘‘(C) SPECIAL RULES FOR APPLYING NET

18 WORTH REQUIREMENT.—In applying the re19 quirements of section 2412(d)(2)(B) of title 28,

20 United States Code, for purposes of subpara21 graph (A)(iii) of this paragraph—

22 ‘‘(i) the net worth limitation in clause

23 (i) of such section shall apply to—
1240

•HR 2491 RH

1 ‘‘(I) an estate but shall be deter2 mined as of the date of the decedent’s

3 death, and

4 ‘‘(II) a trust but shall be deter5 mined as of the last day of the taxable

6 year involved in the proceeding, and

7 ‘‘(ii) individuals filing a joint return

8 shall be treated as 1 individual for pur9 poses of clause (i) of such section, except

10 in the case of a spouse relieved of liability

11 under section 6013(e).’’

12 (b) EFFECTIVE DATE.—The amendment made by

13 this section shall apply to proceedings commenced after

14 the date of the enactment of this Act.

15 PART III—AUTHORITY FOR CERTAIN

16 COOPERATIVE AGREEMENTS

17 SEC. 14821. COOPERATIVE AGREEMENTS WITH STATE TAX

18 AUTHORITIES.

19 (a) GENERAL RULE.—Chapter 77 (relating to mis20 cellaneous provisions) is amended by adding at the end

21 the following new section:

22 ‘‘SEC. 7524. COOPERATIVE AGREEMENTS WITH STATE TAX

23 AUTHORITIES.

24 ‘‘(a) AUTHORIZATION OF AGREEMENTS.—The Sec25 retary is hereby authorized to enter into cooperative agree-
1241

•HR 2491 RH

1 ments with State tax authorities for purposes of enhancing

2 joint tax administration. Such agreements may provide

3 for—

4 ‘‘(1) joint filing of Federal and State income

5 tax returns,

6 ‘‘(2) single processing of such returns,

7 ‘‘(3) joint collection of taxes (other than Fed8 eral income taxes), and

9 ‘‘(4) such other provisions as may enhance joint

10 tax administration.

11 ‘‘(b) SERVICES ON REIMBURSABLE BASIS.—Any

12 agreement under subsection (a) may require reimburse13 ment for services provided by either party to the agree14 ment.

15 ‘‘(c) AVAILABILITY OF FUNDS.—Any funds appro16 priated for purposes of the administration of this title

17 shall be available for purposes of carrying out the Sec18 retary’s responsibility under an agreement entered into

19 under subsection (a). Any reimbursement received pursu20 ant to such an agreement shall be credited to the amount

21 so appropriated.

22 ‘‘(d) STATE TAX AUTHORITY.—For purposes of this

23 section, the term ‘State tax authority’ means agency,

24 body, or commission referred to in section 6103(d)(1).’’
1242

•HR 2491 RH

1 (b) CLERICAL AMENDMENT.—The table of sections

2 for chapter 77 is amended by adding at the end the follow3 ing new item:

‘‘Sec. 7524. Cooperative agreements with State tax authorities.’’

4 TITLE XV—MEDICARE

[Text to be supplied.]

5 TITLE XVI—TRANSFORMATION

6 OF THE MEDICAID PROGRAM

7 SEC. 16000. SHORT TITLE.

8 This title may be cited as the ‘‘Medicaid Trans9 formation Act of 1995’’.

10 SEC. 16001. TRANSFORMATION OF MEDICAID PROGRAM.

11 The Social Security Act is amended by adding at the

12 end the following new title:

13 ‘‘TITLE XXI—MEDIGRANT PROGRAM FOR LOW14 INCOME INDIVIDUALS AND FAMILIES

‘‘TABLE OF CONTENTS OF TITLE

‘‘Sec. 2100. Purpose; State MediGrant plans.

‘‘PART A—OBJECTIVES, GOALS, AND PERFORMANCE UNDER STATE PLANS

‘‘Sec. 2101. Description of strategic objectives and performance goals.

‘‘Sec. 2102. Annual reports.

‘‘Sec. 2103. Periodic, independent evaluations.

‘‘Sec. 2104. Description of process for MediGrant plan development.

‘‘Sec. 2105. Consultation in MediGrant plan development.

‘‘Sec. 2106. MediGrant Task Force.

‘‘PART B—ELIGIBILITY, BENEFITS, AND SET-ASIDES

‘‘Sec. 2111. General description of eligibility and benefits.

‘‘Sec. 2112. Set-asides of funds for population groups.

‘‘Sec. 2113. Premiums and cost-sharing.

‘‘Sec. 2114. Description of process for developing capitation payment rates.

‘‘Sec. 2115. Construction.
1243

•HR 2491 RH

‘‘Sec. 2116. Limitations on causes of action.

‘‘PART C—PAYMENTS TO STATES

‘‘Sec. 2121. Allotment of funds among States.

‘‘Sec. 2122. Payments to States.

‘‘Sec. 2123. Limitation on use of funds; disallowance.

‘‘PART D—PROGRAM INTEGRITY AND QUALITY

‘‘Sec. 2131. Use of audits to achieve fiscal integrity.

‘‘Sec. 2132. Fraud prevention program.

‘‘Sec. 2133. Information concerning sanctions taken by State licensing authorities against health care practitioners and providers.

‘‘Sec. 2134. State MediGrant fraud control units.

‘‘Sec. 2135. Recoveries from third parties and others.

‘‘Sec. 2136. Assignment of rights of payment.

‘‘Sec. 2137. Quality assurance standards for nursing facilities.

‘‘Sec. 2138. Other provisions promoting program integrity.

‘‘PART E—ESTABLISHMENT AND AMENDMENT OF STATE MEDIGRANT PLANS

‘‘Sec. 2151. Submittal and approval of MediGrant plans.

‘‘Sec. 2152. Submittal and approval of plan amendments.

‘‘Sec. 2153. Process for State withdrawal from program.

‘‘Sec. 2154. Sanctions for substantial noncompliance.

‘‘Sec. 2155. Secretarial authority.

‘‘PART F—GENERAL PROVISIONS

‘‘Sec. 2171. Definitions.

‘‘Sec. 2172. Treatment of territories.

‘‘Sec. 2173. Description of treatment of Indian Health Service facilities.

‘‘Sec. 2174. Application of certain general provisions.

‘‘Sec. 2175. MediGrant master drug rebate agreements.

1 ‘‘SEC. 2100. PURPOSE; STATE MEDIGRANT PLANS.

2 ‘‘(a) PURPOSE.—The purpose of this title is to pro3 vide block grants to States to enable them to provide medi4 cal assistance to low-income individuals and families in a

5 more effective, efficient, and responsive manner.

6 ‘‘(b) STATE PLAN REQUIRED.—A State is not eligible

7 for payment under section 2122 of this title unless the

8 State has submitted to the Secretary under part E a plan

9 (in this title referred to as a ‘MediGrant plan’) that—
1244

•HR 2491 RH

1 ‘‘(1) sets forth how the State intends to use the

2 funds provided under this title to provide medical as3 sistance to needy individuals and families consistent

4 with the provisions of this title, and

5 ‘‘(2) is approved under such part.

6 ‘‘(c) CONTINUED APPROVAL.—An approved

7 MediGrant plan shall continue in effect unless and until—

8 ‘‘(1) the State amends the plan under section

9 2152,

10 ‘‘(2) the State terminates participation under

11 this title under section 2153, or

12 ‘‘(3) the Secretary finds substantial noncompli13 ance of the plan with the requirements of this title

14 under section 2154.

15 ‘‘(d) STATE ENTITLEMENT.—This title constitutes

16 budget authority in advance of appropriations Acts, and

17 represents the obligation of the Federal Government to

18 provide for the payment to States of amounts provided

19 under part C.

20 ‘‘PART A—OBJECTIVES, GOALS, AND PERFORMANCE

21 UNDER STATE PLANS

22 ‘‘SEC. 2101. DESCRIPTION OF STRATEGIC OBJECTIVES AND

23 PERFORMANCE GOALS.

24 ‘‘(a) DESCRIPTION.—A MediGrant plan shall include

25 a description of the strategic objectives and performance
1245

•HR 2491 RH

1 goals the State has established for providing health care

2 services to low-income populations under this title, includ3 ing a general description of the manner in which the plan

4 is designed to meet these objectives and goals.

5 ‘‘(b) CERTAIN OBJECTIVES AND GOALS RE6 QUIRED.—A MediGrant plan shall include strategic objec7 tives and performance goals relating to rates of childhood

8 immunizations and reductions in infant mortality and

9 morbidity.

10 ‘‘(c) CONSIDERATIONS.—In specifying these objec11 tives and goals the State may consider factors such as the

12 following:

13 ‘‘(1) The State’s priorities with respect to such

14 areas as providing assistance to low-income popu15 lations.

16 ‘‘(2) The State’s priorities with respect to the

17 general public health and the health status of indi18 viduals eligible for assistance under the MediGrant

19 plan.

20 ‘‘(3) The State’s financial resources, the par21 ticular economic conditions in the State, and relative

22 adequacy of the health care infrastructure in dif23 ferent regions of the State.

24 ‘‘(d) PERFORMANCE MEASURES.—To the extent

25 practicable—
1246

•HR 2491 RH

1 ‘‘(1) one or more performance goals shall be es2 tablished by the State for each strategic objective

3 identified in the MediGrant plan; and

4 ‘‘(2) the MediGrant plan shall describe, how

5 program performance will be—

6 ‘‘(A) measured through objective, inde7 pendently verifiable means, and

8 ‘‘(B) compared against performance goals,

9 in order to determine the State’s performance

10 under this title.

11 ‘‘(e) PERIOD COVERED.—

12 ‘‘(1) STRATEGIC OBJECTIVES.—The strategic

13 objectives shall cover a period of not less than 5

14 years and shall be updated and revised at least every

15 3 years.

16 ‘‘(2) PERFORMANCE GOALS.—The performance

17 goals shall be established for dates that are not more

18 than 3 years apart.

19 ‘‘SEC. 2102. ANNUAL REPORTS.

20 ‘‘(a) IN GENERAL.—In the case of a State with a

21 MediGrant plan that is in effect for part or all of a fiscal

22 year, no later than March 31 following such fiscal year

23 (or March 31, 1998, in the case of fiscal year 1996) the

24 State shall prepare and submit to the Secretary and the
1247

•HR 2491 RH

1 Congress a report on program activities and performance

2 under this title for such fiscal year.

3 ‘‘(b) CONTENTS.—Each annual report under this sec4 tion for a fiscal year shall include the following:

5 ‘‘(1) EXPENDITURE AND BENEFICIARY SUM6 MARY.—

7 ‘‘(A) INITIAL SUMMARY.—For the report

8 for fiscal year 1997 (and, if applicable, fiscal

9 year 1996), a summary of all expenditures

10 under the MediGrant plan during the fiscal

11 year (and during any portions of fiscal year

12 1996 during which the MediGrant plan was in

13 effect under this title) as follows:

14 ‘‘(i) Aggregate medical assistance ex15 penditures, disaggregated to the extent re16 quired to determine compliance with the

17 set-aside requirements of subsections (a)

18 through (c) section 2112 and to compute

19 the case mix index under section

20 2121(d)(3).

21 ‘‘(ii) For each general category of eli22 gible individuals (specified in subsection

23 (c)(1), aggregate medical assistance ex24 penditures and the total and average num-
1248

•HR 2491 RH

1 ber of eligible individuals under the

2 MediGrant plan.

3 ‘‘(iii) By each general category of eli4 gible individuals, total expenditures for

5 each of the categories of health care items

6 and services (specified in subsection (c)(2))

7 which are covered under the MediGrant

8 plan and provided on a fee-for-service

9 basis.

10 ‘‘(iv) By each general category of eli11 gible individuals, total expenditures for

12 payments to capitated health care organi13 zations (as defined in section 2114(c)(1)).

14 ‘‘(v) Total administrative expendi15 tures.

16 ‘‘(B) SUBSEQUENT SUMMARIES.—For re17 ports for each succeeding fiscal year, a sum18 mary of—

19 ‘‘(i) all expenditures under the

20 MediGrant plan consistent with the report21 ing format specified by the MediGrant

22 Task Force under section 2106(d)(1), and

23 ‘‘(ii) the total and average number of

24 eligible individuals under the MediGrant
1249

•HR 2491 RH

1 plan for each general category of eligible

2 individuals..

3 ‘‘(2) UTILIZATION SUMMARY.—

4 ‘‘(A) INITIAL SUMMARY.—For the report

5 for fiscal year 1997 (and, if applicable, fiscal

6 year 1996), summary statistics on the utiliza7 tion of health care services under the

8 MediGrant plan during the year (and during

9 any portions of fiscal year 1996 during which

10 the MediGrant plan was in effect under this

11 title) as follows:

12 ‘‘(i) For each general category of eli13 gible individuals and for each of the cat14 egories of health care items and services

15 which are covered under the MediGrant

16 plan and provided on a fee-for-service

17 basis, the number and percentage of per18 sons who received such a type of service or

19 item during the period covered by the re20 port.

21 ‘‘(ii) Summary of health care utiliza22 tion data reported to the State by

23 capitated health care organizations.

24 ‘‘(B) SUBSEQUENT SUMMARIES.—For re25 ports for each succeeding fiscal year, summary
1250

•HR 2491 RH

1 statistics on the utilization of health care serv2 ices under the MediGrant plan consistent with

3 the reporting format specified by the

4 MediGrant Task Force under section

5 2106(d)(1).

6 ‘‘(3) ACHIEVEMENT OF PERFORMANCE

7 GOALS.—With respect to each performance goal es8 tablished under section 2101 and applicable to the

9 year involved—

10 ‘‘(A) a brief description of the goal;

11 ‘‘(B) data on the actual performance with

12 respect to the goal;

13 ‘‘(C) a review of the extent to which the

14 goal was achieved, based on such data; and

15 ‘‘(D) where a performance goal has not

16 been met—

17 ‘‘(i) why the goal was not met, and

18 ‘‘(ii) actions to be taken in response

19 to such performance (including adjust20 ments in performance goals or program ac21 tivities for subsequent years).

22 ‘‘(4) PROGRAM EVALUATIONS.—A summary of

23 the findings of evaluations under section 2103 com24 pleted during the fiscal year covered by the report.
1251

•HR 2491 RH

1 ‘‘(5) FRAUD AND ABUSE AND QUALITY CON2 TROL ACTIVITIES.—A general description of the

3 State’s activities under part D to detect and deter

4 fraud and abuse and to assure quality of services

5 provided under the program.

6 ‘‘(6) PLAN ADMINISTRATION.—

7 ‘‘(A) A description of the administrative

8 roles and responsibilities of entities in the State

9 responsible for administration of this title.

10 ‘‘(B) Organizational charts for each entity

11 in the State primarily responsible for activities

12 under this title.

13 ‘‘(C) A brief description of each interstate

14 compact (if any) the State has entered into

15 with other States with respect to activities

16 under this title.

17 ‘‘(D) General citations to the State stat18 utes and administrative rules governing the

19 State’s activities under this title.

20 ‘‘(7) INPATIENT HOSPITAL PAYMENTS.—With

21 respect to inpatient hospital services provided under

22 the MediGrant plan on a fee-for-service basis, a de23 scription of the average amount paid per discharge

24 in the fiscal year compared either to the average

25 charge for such services or to the State’s estimate
1252

•HR 2491 RH

1 of the average amount paid per discharge by com2 mercial health insurers in the State.

3 ‘‘(c) DEFINITIONS.—In this section:

4 ‘‘(1) Each of the following is a general category

5 of eligible individuals:

6 ‘‘(A) Children.

7 ‘‘(B) Blind or disabled adults under 65

8 years of age.

9 ‘‘(C) Persons 65 years of age or older.

10 ‘‘(D) Other adults.

11 ‘‘(2) The health care items and services de12 scribed in each subparagraph of section 2171(a)(1)

13 shall be considered a separate category of health

14 care items and services.

15 ‘‘SEC. 2103. PERIODIC, INDEPENDENT EVALUATIONS.

16 ‘‘(a) IN GENERAL.—During fiscal year 1998 and

17 every third fiscal year thereafter, each State shall provide

18 for an evaluation of the operation of its MediGrant plan

19 under this title.

20 ‘‘(b) INDEPENDENT.—Each such evaluation with re21 spect to an activity under the MediGrant plan shall be con22 ducted by an entity that is neither responsible under State

23 law for the submission of the State plan (or part thereof)

24 nor responsible for administering (or supervising the ad25 ministration of) the activity. If consistent with the pre-
1253

•HR 2491 RH

1 vious sentence, such an entity may be a college or univer2 sity, a State agency, a legislative branch agency in a State,

3 or an independent contractor.

4 ‘‘(c) RESEARCH DESIGN.—Each such evaluation

5 shall be conducted in accordance with a research design

6 that is based on generally accepted models of survey de7 sign and sampling and statistical analysis.

8 ‘‘SEC. 2104. DESCRIPTION OF PROCESS FOR MEDIGRANT

9 PLAN DEVELOPMENT.

10 ‘‘Each MediGrant plan shall include a description of

11 the process under which the plan shall be developed and

12 implemented in the State (consistent with section 2105).

13 ‘‘SEC. 2105. CONSULTATION IN MEDIGRANT PLAN DEVELOP14 MENT.

15 ‘‘(a) PUBLIC NOTICE PROCESS.—

16 ‘‘(1) IN GENERAL.—Before submitting a

17 MediGrant plan or a plan amendment described in

18 paragraph (3) to the Secretary under part E, a

19 State shall provide—

20 ‘‘(A) public notice respecting the submittal

21 of the proposed plan or amendment, including

22 a general description of the plan or amendment;

23 ‘‘(B) a means for the public to inspect or

24 obtain a copy (at reasonable charge) of the pro25 posed plan or amendment; and
1254

•HR 2491 RH

1 ‘‘(C) an opportunity for submittal and con2 sideration of public comments on the proposed

3 plan or amendment.

4 The previous sentence shall not apply to a revision

5 of a MediGrant plan (or revision of an amendment

6 to a plan) made by a State under section 2154(c)(1)

7 or to a plan amendment withdrawal described in sec8 tion 2152(c)(4).

9 ‘‘(2) CONTENTS OF NOTICE.—A notice under

10 paragraph (1)(A) for a proposed plan or amendment

11 shall include a description of—

12 ‘‘(A) the general purpose of the proposed

13 plan or amendment (including applicable effec14 tive dates),

15 ‘‘(B) where the public may inspect the pro16 posed plan or amendment,

17 ‘‘(C) how the public may obtain a copy of

18 the proposed plan or amendment and the appli19 cable charge (if any) for the copy, and

20 ‘‘(D) how the public may submit comments

21 on the proposed plan or amendment, including

22 any deadlines applicable to consideration of

23 such comments.

24 ‘‘(3) AMENDMENTS DESCRIBED.—An amend25 ment to a MediGrant plan described in this para-
1255

•HR 2491 RH

1 graph is an amendment which makes a material and

2 substantial change in eligibility under the MediGrant

3 plan or the benefits provided under the plan.

4 ‘‘(4) PUBLICATION.—Notices under this sub5 section may be published (as selected by the State)

6 in one or more daily newspapers of general circula7 tion in the State or in any publication used by the

8 State to publish State statutes or rules.

9 ‘‘(5) COMPARABLE PROCESS.—A separate no10 tice, or notices, shall not be required under this sub11 section for a State if notice of the MediGrant plan

12 or an amendment to the plan will be provided under

13 a process specified in State law that is substantially

14 equivalent to the notice process specified in this sub15 section.

16 ‘‘(b) ADVISORY COMMITTEE.—

17 ‘‘(1) IN GENERAL.—Each State with a

18 MediGrant plan shall establish and maintain an ad19 visory committee.

20 ‘‘(2) CONSULTATION.—The State shall periodi21 cally consult with the advisory committee in the de22 velopment, revision, and monitoring the performance

23 of the MediGrant plan, including—
1256

•HR 2491 RH

1 ‘‘(A) the development of strategic objec2 tives and performance goals under section

3 2101,

4 ‘‘(B) the annual report under section

5 2102, and

6 ‘‘(C) the research design under section

7 2103(c).

8 ‘‘(3) GEOGRAPHIC DIVERSITY.—The composi9 tion of the advisory committee shall be chosen in a

10 manner that assures some representation on the ad11 visory committee of the different general geographic

12 regions of the State. Nothing in the previous sen13 tence shall be construed as requiring proportional

14 representation of geographic areas in a State.

15 ‘‘(4) CONSTRUCTION.—Nothing in this title

16 shall be construed as preventing a State from estab17 lishing more than one advisory committee, including

18 specialized advisory committees that represent the

19 interests of specific population groups, provider

20 groups, or geographic areas.

21 ‘‘SEC. 2106. MEDIGRANT TASK FORCE.

22 ‘‘(a) IN GENERAL.—The Secretary shall provide for

23 the establishment of a MediGrant Task Force (in this sec24 tion referred to as the ‘Task Force’).
1257

•HR 2491 RH

1 ‘‘(b) COMPOSITION.—The Task Force shall consist of

2 6 members appointed by the chair of the National Gov3 ernors Association and 6 members appointed by the vice

4 chair of the National Governors Association.

5 ‘‘(c) ADVISORY GROUP FOR TASK FORCE.—The Sec6 retary shall provide for the establishment of an advisory

7 group to assist the Task Force in carrying out its duties

8 under this section, consisting of one representative ap9 pointed by each of the following associations:

10 ‘‘(1) National Committee for Quality Assur11 ance.

12 ‘‘(2) Joint Commission for the Accreditation of

13 Healthcare Organizations.

14 ‘‘(3) Group Health Association of America.

15 ‘‘(4) American Managed Care and Review Asso16 ciation.

17 ‘‘(5) Association of State and Territorial Health

18 Officers.

19 ‘‘(6) American Medical Association.

20 ‘‘(7) American Hospital Association.

21 ‘‘(8) American Dental Association.

22 ‘‘(9) American College of Gerontology.

23 ‘‘(10) American Health Care Association.

24 ‘‘(11) An association identified by the Secretary

25 as representing the interests of disabled individuals.
1258

•HR 2491 RH

1 ‘‘(12) An association identified by the Secretary

2 as representing the interests of children.

3 ‘‘(13) An association identified by the Secretary

4 as representing the interests of the elderly.

5 ‘‘(14) An association identified by the Secretary

6 as representing the interests of mentally ill individ7 uals.

8 Any reference in this subsection to a particular group shall

9 be deemed a reference to any successor to such group.

10 ‘‘(d) DUTIES.—

11 ‘‘(1) FORMAT FOR EXPENDITURE AND UTILIZA12 TION SUMMARIES.—The Task Force shall specify, by

13 not later than December 31, 1996, the format of ex14 penditure summaries and utilization summaries re15 quired under section 2102. Such format may provide

16 for the reporting of different information from that

17 required under section 2102(a), but shall include the

18 reporting of at least the information described in

19 section 2102(b)(1)(A)(i).

20 ‘‘(2) MODELS AND SUGGESTIONS.—The Task

21 Force shall study and report to Congress and the

22 States, by not later than April 1, 1997, rec23 ommendations on the following:

24 ‘‘(A) Recommended models for strategic

25 objectives and performance goals for consider-
1259

•HR 2491 RH

1 ation by States in the development of such ob2 jectives and goals under section 2102, including

3 alternative models for each of the objectives and

4 goals described in section 2101(b).

5 ‘‘(B) For each suggested model for a stra6 tegic objective or performance goal suggested

7 methodologies for States to consider in measur8 ing and verifying the objective or goal.

9 ‘‘(C) An assessment of the potential useful10 ness to States of quality assurance safeguards,

11 utilization data sets, and accreditation pro12 grams that are used or under development in

13 the private sector.

14 ‘‘(D) Recommended designs and evaluation

15 methodologies for consideration by States in

16 providing for independent evaluations under

17 section 2103.

18 ‘‘(3) CONSTRUCTION.—Nothing in this sub19 section shall be construed as requiring a State to

20 adopt any of the strategic objectives or performance

21 goals suggested under paragraph (2).

22 ‘‘(e) ADMINISTRATIVE ASSISTANCE.—Administrative

23 support for the Task Force shall be provided by the Agen24 cy for Health Care Policy and Research (or, in the absence

25 of such Agency, the Secretary).
1260

•HR 2491 RH

1 ‘‘PART B—ELIGIBILITY, BENEFITS, AND SET-ASIDES

2 ‘‘SEC. 2111. GENERAL DESCRIPTION OF ELIGIBILITY AND

3 BENEFITS.

4 ‘‘(a) IN GENERAL.—Each MediGrant plan shall in5 clude a description (consistent with this title) of the fol6 lowing:

7 ‘‘(1) ELIGIBLE POPULATION.—The population

8 eligible for medical assistance under the plan, in9 cluding—

10 ‘‘(A) any limitations on categories of such

11 individuals;

12 ‘‘(B) any limitations as to the duration of

13 eligibility;

14 ‘‘(C) any eligibility standards relating to

15 age, income (including any standards relating

16 to spenddowns), residency, resources, disability

17 status, immigration status, or employment sta18 tus of individuals;

19 ‘‘(D) methods of establishing (and continu20 ing) eligibility and enrollment (including the

21 methodology for computing family income);

22 ‘‘(E) the eligibility standards in the plan

23 that protect the income and resources of a mar24 ried individual who is living in the community

25 and whose spouse is residing in an institution
1261

•HR 2491 RH

1 in order to prevent the impoverishment of the

2 community spouse; and

3 ‘‘(F) any other standards relating to eligi4 bility for medical assistance under the plan.

5 ‘‘(2) SCOPE OF ASSISTANCE.—The amount, du6 ration, and scope of health care services and items

7 covered under the plan, including differences among

8 different eligible population groups.

9 ‘‘(3) DELIVERY METHOD.—The State’s ap10 proach to delivery of medical assistance, including a

11 general description of—

12 ‘‘(A) the use (or intended use) of vouchers,

13 fee-for-service, or managed care arrangements

14 (such as capitated health care plans, case man15 agement, and case coordination), and

16 ‘‘(B) utilization control systems.

17 ‘‘(4) FEE-FOR-SERVICE BENEFITS.—To the ex18 tent that medical assistance is furnished on a fee19 for-service basis—

20 ‘‘(A) how the State determines the quali21 fications of health care providers eligible to pro22 vide such assistance, and

23 ‘‘(B) how the State determines rates of re24 imbursement for providing such assistance.
1262

•HR 2491 RH

1 ‘‘(5) COST-SHARING.—Beneficiary cost-sharing

2 (if any), including variations in such cost-sharing by

3 population group or type of service and financial re4 sponsibilities of parents of recipients under 21 years

5 of age and the spouses of recipients.

6 ‘‘(6) UTILIZATION INCENTIVES.—Incentives or

7 requirements (if any) to encourage the appropriate

8 utilization of services.

9 ‘‘(7) TREATMENT OF HEALTH CENTERS.—

10 ‘‘(A) IN GENERAL.—In the case of a State

11 in which one or more health centers is located,

12 the MediGrant plan shall include a description

13 of—

14 ‘‘(i) what provision (if any) has been

15 made for payment for items and services

16 furnished by health centers, and

17 ‘‘(ii) the manner in which medical as18 sistance for low-income eligible individuals

19 who received health care services at health

20 centers on or before the date of the enact21 ment of this title may be provided, as de22 termined by the State in consultation with

23 the health centers in the State.
1263

•HR 2491 RH

1 ‘‘(B) HEALTH CENTER DEFINED.—For

2 purposes of subparagraph (A), the term ‘health

3 center’ means an entity that—

4 ‘‘(i) is receiving a grant under section

5 329, 330, 340, or 340A of the Public

6 Health Service Act; or

7 ‘‘(ii) based on the recommendation of

8 the Health Resources and Services Admin9 istration within the Public Health Service,

10 was determined by the Secretary to meet

11 the requirements to receive such a grant.

12 ‘‘(8) SUPPORT FOR CERTAIN HOSPITALS.—

13 ‘‘(A) IN GENERAL.—With respect to hos14 pitals described in subparagraph (B) located in

15 the State, the MediGrant plan shall includes a

16 description—

17 ‘‘(i) of the extent to which provisions

18 have been made for expenditures for items

19 and services furnished by such hospitals

20 and covered under the plan, and

21 ‘‘(ii) for individuals who (I) are en22 rolled for benefits for covered services

23 under the MediGrant plan and (II) were

24 previously receiving benefits for such serv25 ices under the medicaid program by or
1264

•HR 2491 RH

1 through such hospitals, where or how they

2 will receive benefits for such services under

3 the MediGrant plan if the MediGrant plan

4 does not permit such individuals to obtain

5 benefits for those services by or through

6 such hospitals.

7 ‘‘(B) HOSPITALS DESCRIBED.—For pur8 poses of subparagraph (A), a hospital described

9 in this subparagraph is a subsection (d) hos10 pital (as defined in section 1886(d)(1)(B)) that

11 is described in clauses (i) and (ii) of section

12 340B(a)(4)(L) of the Public Health Service

13 Act.

14 ‘‘(b) IMMUNIZATIONS FOR CHILDREN.—The

15 MediGrant plan shall provide medical assistance for im16 munizations for children eligible for any medical assist17 ance under the MediGrant plan, in accordance with a

18 schedule for immunizations established by the Health De19 partment of the State in consultation with the individuals

20 and entities in the State responsible for the administration

21 of the plan.

22 ‘‘(c) EQUAL PAYMENT RATES FOR RURAL PROVID23 ERS.—A State with a MediGrant plan shall establish pay24 ment rates for all services of rural providers that are com25 parable to the payment rates established for like services
1265

•HR 2491 RH

1 of such type of providers not in rural areas; except that

2 a State may provide for incentive payments to attract and

3 retain providers to medically underserved areas.

4 ‘‘(d) PREEXISTING CONDITION EXCLUSIONS.—Not5 withstanding any other provision of this title—

6 ‘‘(1) a MediGrant plan may not deny or exclude

7 coverage of any item or service for an eligible indi8 vidual for benefits under the MediGrant plan for

9 such item or service on the basis of a preexisting

10 condition; and

11 ‘‘(2) if a State contracts or makes other ar12 rangements (through the eligible individual or

13 through another entity) with a capitated health care

14 organization, insurer, or other entity, for the provi15 sion of items or services to eligible individuals under

16 the MediGrant plan and the State permits such or17 ganization, insurer, or other entity to exclude cov18 erage of a covered item or service on the basis of a

19 preexisting condition, the State shall provide,

20 through its MediGrant plan, for such coverage

21 (through direct payment or otherwise) for any such

22 covered item or service denied or excluded on the

23 basis of a preexisting condition.
1266

•HR 2491 RH

1 ‘‘SEC. 2112. SET-ASIDES OF FUNDS FOR POPULATION

2 GROUPS.

3 ‘‘(a) FOR TARGETED LOW-INCOME FAMILIES.—

4 ‘‘(1) IN GENERAL.—Subject to subsection (e), a

5 MediGrant plan shall provide that the amount of

6 funds expended under the plan for medical assist7 ance for targeted low-income families (as defined in

8 paragraph (3)) for a fiscal year shall be not less

9 than the minimum low-income-family percentage

10 specified in paragraph (2) of the total funds ex11 pended under the plan for all medical assistance for

12 the fiscal year.

13 ‘‘(2) MINIMUM LOW-INCOME-FAMILY PERCENT14 AGE.—The minimum low-income-family percentage

15 specified in this paragraph for a State is equal to 85

16 percent of the average percentage of the expendi17 tures under title XIX for medical assistance in the

18 State during Federal fiscal years 1992 through 1994

19 which were attributable to expenditures for medical

20 assistance for mandated benefits (as defined in sub21 section (h)) furnished to individuals—

22 ‘‘(A) who (at the time of furnishing the as23 sistance) were under 65 years of age,

24 ‘‘(B) whose coverage (at such time) under

25 a State plan under title XIX was required

26 under Federal law, and
1267

•HR 2491 RH

1 ‘‘(C) whose eligibility for such coverage (at

2 such time) was not on a basis directly related

3 to disability status (including being blind).

4 ‘‘(3) TARGETED LOW-INCOME FAMILY DE5 FINED.—In this subsection, the term ‘targeted low6 income family’ means a family (which may be an in7 dividual)—

8 ‘‘(A) which includes a child or a pregnant

9 woman, and

10 ‘‘(B) the income of which does not exceed

11 185 percent of the poverty line applicable to a

12 family of the size involved.

13 ‘‘(b) FOR LOW-INCOME ELDERLY.—

14 ‘‘(1) SET-ASIDES.—Subject to subsection (e)—

15 ‘‘(A) GENERAL SET-ASIDE.—A MediGrant

16 plan shall provide that the amount of funds ex17 pended under the plan for medical assistance

18 for eligible low-income individuals 65 years of

19 age or older for a fiscal year shall be not less

20 than the minimum low-income-elderly percent21 age specified in paragraph (2)(A) of the total

22 funds expended under the plan for all medical

23 assistance for the fiscal year.

24 ‘‘(B) SET-ASIDE FOR MEDICARE PREMIUM

25 ASSISTANCE.—A MediGrant plan shall provide
1268

•HR 2491 RH

1 that the amount of funds expended under the

2 plan for medical assistance for medicare cost3 sharing described in section 2171(c)(1) for a

4 fiscal year shall be not less than the minimum

5 medicare premium assistance percentage speci6 fied in paragraph (2)(B) of the total funds ex7 pended under the plan for all medical assistance

8 for the fiscal year.

9 ‘‘(2) MINIMUM PERCENTAGES.—

10 ‘‘(A) FOR GENERAL SET-ASIDE.—The min11 imum low-income-elderly percentage specified in

12 this subparagraph for a State is equal to 85

13 percent of the average percentage of the ex14 penditures under title XIX for medical assist15 ance in the State during Federal fiscal years

16 1992 through 1994 which was attributable to

17 expenditures for medical assistance for man18 dated benefits furnished to individuals—

19 ‘‘(i) whose eligibility for such assist20 ance was based on their being 65 years of

21 age or older; and

22 ‘‘(ii)(I) whose coverage (at such time)

23 under a State plan under title XIX was re24 quired under Federal law, or (II) who (at
1269

•HR 2491 RH

1 such time) were residents of a nursing fa2 cility.

3 ‘‘(B) FOR SET-ASIDE FOR MEDICARE PRE4 MIUM ASSISTANCE.—The minimum medicare

5 premium assistance percentage specified in this

6 subparagraph for a State is equal to 85 percent

7 of the average percentage of the expenditures

8 under title XIX for medical assistance in the

9 State during Federal fiscal years 1992 through

10 1994 which was attributable to expenditures for

11 medical assistance for medicare premiums de12 scribed in section 1905(p)(3)(A) for individuals

13 whose coverage (at such time) for such assist14 ance for such premiums under a State plan

15 under title XIX was required under Federal

16 law.

17 ‘‘(c) FOR LOW-INCOME DISABLED PERSONS.—

18 ‘‘(1) IN GENERAL.—Subject to subsection (e), a

19 MediGrant plan shall provide that the percentage of

20 funds expended under the plan for medical assist21 ance for eligible low-income individuals who are

22 under 65 years of age and are eligible for such as23 sistance on the basis of a disability (including being

24 blind) for a fiscal year is not less than the minimum

25 low-income-disabled percentage specified in para-
1270

•HR 2491 RH

1 graph (2) of the total funds expended under the plan

2 for medical assistance for the fiscal year.

3 ‘‘(2) MINIMUM LOW-INCOME-DISABLED PER4 CENTAGE.—The minimum low-income-disabled per5 centage specified in this paragraph for a State is

6 equal to 85 percent of the average percentage of the

7 expenditures under title XIX for medical assistance

8 in the State during Federal fiscal years 1992

9 through 1994 which was attributable to expenditures

10 for medical assistance for mandated benefits fur11 nished to individuals—

12 ‘‘(A) whose coverage (at such time) under

13 a State plan under title XIX was required

14 under Federal law, and

15 ‘‘(B) whose coverage (at such time) was on

16 a basis directly related to disability status (in17 cluding being blind).

18 ‘‘(d) USE OF RESIDUAL FUNDS.—

19 ‘‘(1) IN GENERAL.—Subject to limitations on

20 payment under section 2123, any funds not required

21 to be expended under the set-asides under the pre22 vious subsections may be expended under the

23 MediGrant plan for any of the following:

24 ‘‘(A) ADDITIONAL MEDICAL ASSISTANCE.—

25 Medical assistance for eligible low-income indi-
1271

•HR 2491 RH

1 viduals (as defined in section 2171(b)), in addi2 tion to any medical assistance made available

3 under a previous subsection.

4 ‘‘(B) MEDICALLY-RELATED SERVICES.—

5 Payment for medically-related services (as de6 fined in paragraph (2)).

7 ‘‘(C) ADMINISTRATION.—Payment for the

8 administration of the MediGrant plan.

9 ‘‘(2) MEDICALLY-RELATED SERVICES DE10 FINED.—In this title, the term ‘medically-related

11 services’ means services reasonably related to, or in

12 direct support of, the State’s attainment of one or

13 more of the strategic objectives and performance

14 goals established under section 2101, but does not

15 include items and services included on the list under

16 section 2171(a)(1) (relating to the definition of med17 ical assistance).

18 ‘‘(e) EXCEPTIONS TO MINIMUM SET-ASIDES.—

19 ‘‘(1) ALTERNATIVE MINIMUM SET-ASIDES.—

20 ‘‘(A) IN GENERAL.—A State may provide

21 in its MediGrant plan (through an amendment

22 to the plan) for a lower dollar amount of ex23 penditures than the minimum amounts specified

24 in any (or all) of paragraphs (2) of subsections
1272

•HR 2491 RH

1 (a), (b), and (c) if State determines (and cer2 tifies to the Secretary) that—

3 ‘‘(i) the health care needs of the low4 income populations described in paragraph

5 (1) of the respective subsection who are eli6 gible for medical assistance under the plan

7 during the previous fiscal year (or medi8 care premium assistance needs described in

9 subsection (b)(1)(B)) can be reasonably

10 met without the expenditure of the

11 amounts otherwise required to be ex12 pended, and

13 ‘‘(ii) the performance goals estab14 lished under section 2101 relating to the

15 respective population can reasonably be

16 met with such lower amount of funds ex17 pended.

18 ‘‘(B) PERIOD OF APPLICATION.—The de19 termination and certification under subpara20 graph (A) shall be made for such period as a

21 State may request, but may not be made for a

22 period of more than 3 consecutive Federal fiscal

23 years (beginning with the first fiscal year for

24 which the lower amount is sought). A new de25 termination and certification must be made
1273

•HR 2491 RH

1 under such paragraph for any subsequent pe2 riod.

3 ‘‘(C) NO EXCEPTION PERMITTED BEFORE

4 FISCAL YEAR 1998.—This paragraph may not

5 apply with respect to a State for a fiscal year

6 before fiscal year 1998.

7 ‘‘(2) INDEPENDENT CERTIFICATION OF COMPLI8 ANCE WITH GOALS.—

9 ‘‘(A) IN GENERAL.—For purposes of sec10 tion 2151(c), a MediGrant plan shall not be

11 considered to be in substantial violation of the

12 requirements of this section if the amount of

13 actual State expenditures specified in any (or

14 all) of paragraphs (1) of subsections (a), (b),

15 and (c) is lower than the minimum amounts

16 specified in any (or all) of paragraphs (2) of

17 subsections (a), (b), and (c) if an independent

18 actuary determines and certifies to the State

19 that the MediGrant plan is reasonably designed

20 to result in a level of expenditures which is con21 sistent with the requirements of such sub22 sections.

23 ‘‘(B) LIMIT ON VARIATION.—Subpara24 graph (A) shall not apply in the case of a

25 MediGrant plan for which the actual State ex-
1274

•HR 2491 RH

1 penditures described in any (or all) of para2 graphs (1) of subsections (a), (b), and (c) are

3 less than 95 percent of the expenditures which

4 would be made if the amount of State expendi5 tures specified in any (or all) of such para6 graphs was equal to the applicable minimum

7 amount specified in any (or all) of paragraphs

8 (2) of subsections (a), (b), and (c).

9 ‘‘(3) TREATMENT OF STATES WITH NO OP10 TIONAL BENEFITS.—In the case of a State for which

11 all expenditures under title XIX for medical assist12 ance in the State during Federal fiscal years 1992

13 through 1994 were expenditures for medical assist14 ance for mandated benefits, ‘75 percent’ shall be

15 substituted for ‘85 percent’ each place it appears in

16 paragraphs (2) of subsections (a), (b), and (c).

17 ‘‘(f) COMPUTATIONS.—

18 ‘‘(1) MINIMUM PERCENTAGES.—States shall

19 calculate the minimum percentages under sub20 sections (a)(2), (b)(2), and (c)(2) in a reasonable

21 manner consistent with reports submitted to the

22 Secretary for the fiscal years involved.

23 ‘‘(2) EXCLUSION OF PAYMENTS FOR CERTAIN

24 ALIENS.—For purposes of this section, medical as25 sistance attributable to the exception provided under
1275

•HR 2491 RH

1 section 1903(v)(2) shall not be considered to be ex2 penditures for medical assistance.

3 ‘‘(g) BENEFITS INCLUDED FOR PURPOSES OF COM4 PUTING SET ASIDES.—In this section, the term ‘man5 dated benefits’—

6 ‘‘(1) means medical assistance for items and

7 services described in section 1905(a) to the extent

8 such assistance with respect to such items and serv9 ices was required to be provided under title XIX,

10 ‘‘(2) includes medical assistance for medicare

11 cost-sharing only to the extent such assistance was

12 required to be provided under section

13 1902(a)(10)(E), and

14 ‘‘(3) does not include medical assistance attrib15 utable to disproportionate share payment adjust16 ments described in section 1923.

17 ‘‘SEC. 2113. PREMIUMS AND COST-SHARING.

18 ‘‘(a) IN GENERAL.—Subject to subsection (b), if any

19 charges are imposed under the MediGrant plan for cost20 sharing (as defined in subsection (d)), such cost-sharing

21 shall be pursuant to a public cost-sharing schedule.

22 ‘‘(b) LIMITATION ON PREMIUM AND CERTAIN COST23 SHARING FOR LOW-INCOME FAMILIES INCLUDING CHIL24 DREN OR PREGNANT WOMEN.—
1276

•HR 2491 RH

1 ‘‘(1) IN GENERAL.—In the case of a family de2 scribed in paragraph (2)—

3 ‘‘(A) the plan shall not impose any pre4 mium, and

5 ‘‘(B) the plan shall not (except as provided

6 in subsection (c)(1)) impose any cost-sharing

7 with respect to primary and preventive care

8 services (as defined by the State) covered under

9 the MediGrant plan for children or pregnant

10 women unless such cost-sharing is nominal in

11 nature.

12 ‘‘(2) FAMILY DESCRIBED.—A family described

13 in this paragraph is a family (which may be an indi14 vidual) which—

15 ‘‘(A) includes a child or a pregnant

16 woman,

17 ‘‘(B) is made eligible for medical assistance

18 under the MediGrant plan, and

19 ‘‘(C) the income of which does not exceed

20 100 percent of the poverty line applicable to a

21 family of the size involved.

22 ‘‘(c) CERTAIN COST-SHARING PERMITTED.—Nothing

23 in this section shall be construed as preventing a

24 MediGrant plan (consistent with subsection (b))—
1277

•HR 2491 RH

1 ‘‘(1) from imposing cost-sharing to discourage

2 the inappropriate use of emergency medical services

3 (delivered through a hospital emergency room, a

4 medical transportation provider, or otherwise);

5 ‘‘(2) from imposing premiums and cost-sharing

6 differentially in order to encourage the use of pri7 mary and preventive care and discourage unneces8 sary or less economical care;

9 ‘‘(3) from scaling cost-sharing in a manner that

10 reflects economic factors, employment status, and

11 family size;

12 ‘‘(4) from scaling cost-sharing based on the

13 availability to the individual or family of other

14 health insurance coverage; or

15 ‘‘(5) from scaling cost-sharing based on partici16 pation in employment training program, drug or al17 cohol abuse treatment, counseling programs, or

18 other programs promoting personal responsibility.

19 ‘‘(d) COST-SHARING DEFINED.—In this section, the

20 term ‘cost-sharing’ includes copayments, deductibles, coin21 surance, and other charges for the provision of health care

22 services.
1278

•HR 2491 RH

1 ‘‘SEC. 2114. DESCRIPTION OF PROCESS FOR DEVELOPING

2 CAPITATION PAYMENT RATES.

3 ‘‘(a) IN GENERAL.—If a State contracts (or intends

4 to contract) with a capitated health care organization (as

5 defined in subsection (c)(1)) under which the State makes

6 a capitation payment (as defined in subsection (c)(2)) to

7 the organization for providing or arranging for the provi8 sion of medical assistance under the MediGrant plan for

9 a group of services (including at least inpatient hospital

10 services and physicians’ services), the plan shall include

11 a description of the following:

12 ‘‘(1) USE OF ACTUARIAL SCIENCE.—The extent

13 and manner in which the State uses actuarial

14 science—

15 ‘‘(A) to analyze and project health care ex16 penditures and utilization for individuals en17 rolled (or to be enrolled) in such an organiza18 tion under the MediGrant plan, and

19 ‘‘(B) to develop capitation payment rates,

20 including a brief description of the general

21 methodologies used by actuaries.

22 ‘‘(2) QUALIFICATIONS OF ORGANIZATIONS.—

23 The general qualifications (including any accredita24 tion, State licensure or certification, or provider net25 work standards) required by the State for participa-
1279

•HR 2491 RH

1 tion of capitated health care organizations under the

2 MediGrant plan.

3 ‘‘(3) DISSEMINATION PROCESS.—The process

4 used by the State under subsection (b) and other5 wise to disseminate, before entering into contracts

6 with capitated health care organizations, actuarial

7 information to such organizations on the historical

8 fee-for-service costs (or, if not available, other recent

9 financial data associated with providing covered

10 services) and utilization associated with individuals

11 described in paragraph (1)(A).

12 ‘‘(b) PUBLIC NOTICE AND COMMENT.—Under the

13 MediGrant plan the State shall provide a process for pro14 viding, before the beginning of each contract year—

15 ‘‘(1) public notice of—

16 ‘‘(A) the amounts of the capitation pay17 ments (if any) made under the plan for the con18 tract year preceding the public notice, and

19 ‘‘(B)(i) the information described under

20 subsection (a)(1) with respect to capitation pay21 ments for the contract year involved or (ii) the

22 amounts of the capitation payments the State

23 expects to make for the contract year involved,
1280

•HR 2491 RH

1 unless such information is designated as proprietary

2 and not subject to public disclosure under State law;

3 and

4 ‘‘(2) an opportunity for receiving public com5 ment on the amounts and information for which no6 tice is provided under paragraph (1).

7 ‘‘(c) DEFINITIONS.—In this title:

8 ‘‘(1) CAPITATED HEALTH CARE ORGANIZA9 TION.—The term ‘capitated health care organiza10 tion’ means a health maintenance organization or

11 any other entity (including a health insuring organi12 zation, managed care organization, prepaid health

13 plan, integrated service network, or similar entity)

14 which under State law is permitted to accept capita15 tion payments for providing (or arranging for the

16 provision of) a group of items and services including

17 at least inpatient hospital services and physicians’

18 services.

19 ‘‘(2) CAPITATION PAYMENT.—The term ‘capita20 tion payment’ means, with respect to payment, pay21 ment on a prepaid capitation basis or any other risk

22 basis to an entity for the entity’s provision (or ar23 ranging for the provision) of a group of items and

24 services (including at least inpatient hospital services

25 and physicians’ services).
1281

•HR 2491 RH

1 ‘‘SEC. 2115. CONSTRUCTION.

2 ‘‘(a) NO FEDERAL ENTITLEMENT.—Nothing in this

3 title (including section 2112) shall be construed as creat4 ing an entitlement under Federal law in any individual

5 or category of individuals for medical assistance under a

6 MediGrant plan.

7 ‘‘(b) STATE FLEXIBILITY IN BENEFITS, PROVIDER

8 PAYMENTS, GEOGRAPHICAL COVERAGE AREA, AND SE9 LECTION OF PROVIDERS.—Nothing in this title (other

10 than section 2111(b)) shall be construed as requiring a

11 State—

12 ‘‘(1) to provide medical assistance for any par13 ticular items or services;

14 ‘‘(2) subject to section 2111(c), to provide for

15 any payments with respect to any specific health

16 care providers or any level of payments for any serv17 ices;

18 ‘‘(3) to provide for the same medical assistance

19 in all geographical areas or political subdivisions of

20 the State;

21 ‘‘(4) to provide that the medical assistance

22 made available to any individual eligible for medical

23 assistance must not be less in amount, duration, or

24 scope than the medical assistance made available to

25 any other such individual; or
1282

•HR 2491 RH

1 ‘‘(5) to provide that any individual eligible for

2 medical assistance with respect to an item or service

3 may choose to obtain such assistance from any insti4 tution, agency, or person qualified to provide the

5 item or service.

6 ‘‘(c) STATE FLEXIBILITY WITH RESPECT TO MAN7 AGED CARE.—Nothing in this title shall be construed—

8 ‘‘(1) to limit a State’s ability to contract with,

9 on a capitated basis or otherwise, health care plans

10 or individual health care providers for the provision

11 or arrangement of medical assistance;

12 ‘‘(2) to limit a State’s ability to contract with

13 health care plans or other entities for case manage14 ment services or for coordination of medical assist15 ance; or

16 ‘‘(3) to restrict a State from establishing capi17 tation rates on the basis of competition among

18 health care plans or negotiations between the State

19 and one or more health care plans.

20 ‘‘SEC. 2116. LIMITATIONS ON CAUSES OF ACTION.

21 ‘‘(a) IN GENERAL.—Notwithstanding any other pro22 vision of this Act (including section 1130A), no person (in23 cluding an applicant, beneficiary, provider, or health plan)

24 shall have a cause of action under Federal law against

25 a State in relation to a State’s compliance (or failure to
1283

•HR 2491 RH

1 comply) with the provisions of this title or of a MediGrant

2 plan.

3 ‘‘(b) NO EFFECT ON STATE LAW.—Nothing in sub4 section (a) may be construed as affecting any actions

5 brought under State law.

6 ‘‘PART C—PAYMENTS TO STATES

7 ‘‘SEC. 2121. ALLOTMENT OF FUNDS AMONG STATES.

8 ‘‘(a) ALLOTMENTS.—

9 ‘‘(1) COMPUTATION.—The Secretary shall pro10 vide for the computation of State obligation and out11 lay allotments in accordance with this section for

12 each fiscal year beginning with fiscal year 1996.

13 ‘‘(2) LIMITATION ON OBLIGATIONS.—

14 ‘‘(A) IN GENERAL.—Subject to subpara15 graph (B), the Secretary shall not enter into

16 obligations with any State under this title for a

17 fiscal year in excess of the obligation allotment

18 for that State for the fiscal year under para19 graph (4). The sum of such obligation allot20 ments for all States in any fiscal year (exclud21 ing amounts carried over under subparagraph

22 (B) and excluding changes in allotments ef23 fected under paragraph (4)(D)) shall not exceed

24 the aggregate limit on new obligation authority

25 specified in paragraph (3) for that fiscal year.
1284

•HR 2491 RH

1 ‘‘(B) ADJUSTMENTS.—

2 ‘‘(i) CARRYOVER OF ALLOTMENT PER3 MITTED.—If the amount of obligations en4 tered into under this part with a State for

5 quarters in a fiscal year is less than the

6 amount of the obligation allotment under

7 this section to the State for the fiscal year,

8 the amount of the difference shall be added

9 to the amount of the State obligation allot10 ment otherwise provided under this section

11 for the succeeding fiscal year.

12 ‘‘(ii) REDUCTION FOR POST-ENACT13 MENT NEW OBLIGATIONS UNDER TITLE

14 XIX IN FISCAL YEAR 1996.—The amount of

15 the obligation allotment otherwise provided

16 under this section for fiscal year 1996 for

17 a State shall be reduced by the amount of

18 the obligations entered into with respect to

19 the State under section 1903(a) after the

20 date of the enactment of this Act.

21 ‘‘(3) AGGREGATE LIMIT ON NEW OBLIGATION

22 AUTHORITY.—

23 ‘‘(A) IN GENERAL.—For purposes of this

24 subsection, subject to subparagraph (C), the

25 ‘aggregate limit on new obligation authority’,
1285

•HR 2491 RH

1 for a fiscal year, is the pool amount under sub2 section (b) for the fiscal year, divided by the

3 payout adjustment factor (described in subpara4 graph (B)) for the fiscal year.

5 ‘‘(B) PAYOUT ADJUSTMENT FACTOR.—For

6 purposes of this subsection, the ‘payout adjust7 ment factor’—

8 ‘‘(i) for fiscal year 1996 is .950,

9 ‘‘(ii) for fiscal year 1997 is .986, and

10 ‘‘(iii) for a subsequent fiscal year is

11 .998.

12 ‘‘(C) TRANSITIONAL ADJUSTMENT FOR

13 PRE-ENACTMENT-OBLIGATION OUTLAYS.—In

14 order to account for pre-enactment-obligation

15 outlays described in paragraph (4)(C)(iv), in

16 determining the aggregate limit on new obliga17 tion authority under subparagraph (A) for fis18 cal year 1996, the pool amount for such fiscal

19 year is equal to—

20 ‘‘(i) the pool amount for such year,

21 reduced by

22 ‘‘(ii) $24.624 billion.

23 ‘‘(4) OBLIGATION ALLOTMENTS.—

24 ‘‘(A) GENERAL RULE FOR 50 STATES AND

25 THE DISTRICT OF COLUMBIA.—Except as pro-
1286

•HR 2491 RH

1 vided in this paragraph, the ‘obligation allot2 ment’ for any of the 50 States or the District

3 of Columbia for a fiscal year (beginning with

4 fiscal year 1997) is an amount that bears the

5 same ratio to the outlay allotment under sub6 section (c)(2) for such State or District (not

7 taking into account any adjustment due to an

8 election under paragraph (4)) for the fiscal year

9 as the ratio of—

10 ‘‘(i) the aggregate limit on new obliga11 tion authority (less the total of the obliga12 tion allotments under subparagraph (B))

13 for the fiscal year, to

14 ‘‘(ii) the pool amount (less the sum of

15 the outlay allotments for the territories)

16 for such fiscal year.

17 ‘‘(B) TERRITORIES.—The obligation allot18 ment for each of the Commonwealths and terri19 tories for a fiscal year is the outlay allotment

20 for such Commonwealth or territory (as deter21 mined under subsection (c)(5)) for the fiscal

22 year divided by the payout adjustment factor

23 for the fiscal year (as defined in paragraph

24 (3)(B)).
1287

•HR 2491 RH

1 ‘‘(C) TRANSITIONAL RULE FOR FISCAL

2 YEAR 1996.—

3 ‘‘(i) IN GENERAL.—The obligation

4 amount for fiscal year 1996 for any State

5 (including the District, a Commonwealth,

6 or territory) is determined according to the

7 formula: A=(B-C)/D, where—

8 ‘‘(I) ‘A’ is the obligation amount

9 for such State;

10 ‘‘(II) ‘B’ is the outlay allotment

11 of such State for fiscal year 1996, as

12 determined under subsection (c);

13 ‘‘(III) ‘C’ is the amount of the

14 pre-enactment-obligation outlays (as

15 established for such State under

16 clause (ii)); and

17 ‘‘(IV) ‘D’ is the payout adjust18 ment factor for such fiscal year (as

19 defined in paragraph (3)(B)).

20 ‘‘(ii) PRE-ENACTMENT-OBLIGATION

21 OUTLAY AMOUNTS.—Within 30 days after

22 the date of the enactment of this title, the

23 Secretary shall estimate (based on the best

24 data available) and publish in the Federal

25 Register the amount of the pre-enactment-
1288

•HR 2491 RH

1 obligation outlays (as defined in clause

2 (iv)) for each State (including the District,

3 Commonwealths, and territories). The total

4 of such amounts shall equal the dollar

5 amount specified in paragraph (3)(C)(ii).

6 ‘‘(iii) AGREEMENT.—The submission

7 of a MediGrant plan by a State under this

8 title is deemed to constitute the State’s ac9 ceptance of the obligation allotment limita10 tions under this subsection (including the

11 formula for computing the amount of such

12 obligation allotment).

13 ‘‘(iv) PRE-ENACTMENT-OBLIGATION

14 OUTLAYS DEFINED.—In this subsection,

15 the term ‘pre-enactment-obligation outlays’

16 means, for a State, the outlays of the Fed17 eral Government that result from obliga18 tions that have been incurred under title

19 XIX with respect to the State before the

20 date of the enactment of this title, but for

21 which payments to States have not been

22 made as of such date of enactment.

23 ‘‘(D) ADJUSTMENT TO REFLECT ADOPTION

24 OF ALTERNATIVE GROWTH FORMULA.—Any

25 State that has elected an alternative growth
1289

•HR 2491 RH

1 formula under subsection (c)(4) which increases

2 or decreases the dollar amount of an outlay al3 lotment for a fiscal year is deemed to have in4 creased or decreased, respectively, its obligation

5 amount for such fiscal year by the amount of

6 such increase or decrease.

7 ‘‘(b) POOL OF AVAILABLE FUNDS.—

8 ‘‘(1) IN GENERAL.—For purposes of this sec9 tion, the ‘pool amount’ under this subsection for—

10 ‘‘(A) fiscal year 1996 is $95.673 billion;

11 ‘‘(B) fiscal year 1997 is $102.135 billion;

12 ‘‘(C) fiscal year 1998 is $106.221 billion;

13 ‘‘(D) fiscal year 1999 is $110.469 billion;

14 ‘‘(E) fiscal year 2000 is $114.888 billion;

15 ‘‘(F) fiscal year 2001 is $119.483 billion;

16 ‘‘(G) fiscal year 2002 is $124.263 billion;

17 and

18 ‘‘(H) each subsequent fiscal year is the

19 pool amount under this paragraph for the pre20 vious fiscal year increased by the lesser of 4

21 percent or the annual percentage increase in

22 the consumer price index for all urban consum23 ers (U.S. city average) for the 12-month period

24 ending in June before the beginning of that

25 subsequent fiscal year.
1290

•HR 2491 RH

1 ‘‘(2) NATIONAL MEDIGRANT GROWTH PERCENT2 AGE.—For purposes of this section for a fiscal year

3 (beginning with fiscal year 1997), the ‘national

4 MediGrant growth percentage’ is the percentage by

5 which—

6 ‘‘(A) the pool amount under paragraph (1)

7 for the fiscal year, exceeds

8 ‘‘(B) such pool amount for the previous

9 fiscal year.

10 ‘‘(c) STATE OUTLAY ALLOTMENTS.—

11 ‘‘(1) FISCAL YEAR 1996.—

12 ‘‘(A) IN GENERAL.—For each of the 50

13 States and the District of Columbia, the

14 amount of the State outlay allotment under this

15 subsection for fiscal year 1996 is, subject to

16 paragraph (4), equal to—

17 ‘‘(i) the total amount of Federal ex18 penditures made to the State under title

19 XIX for the 4 quarters in fiscal year 1994,

20 increased by

21 ‘‘(ii) the percentage by which (I)

22 $95,529,490,500 (which represents the

23 total amount of outlay allotments for such

24 States and District for fiscal year 1996),

25 exceeds (II) $83,213,431,458 (which rep-
1291

•HR 2491 RH

1 resents Federal medicaid expenditures for

2 such States and District for fiscal year

3 1994).

4 ‘‘(B) COMPUTATION OF EXPENDITURES.—

5 The amount of Federal expenditures described

6 in subparagraph (A)(i) shall be computed, using

7 data reported on the HCFA Form 64 as of

8 September 1, 1995, based on—

9 ‘‘(i) the amount reported on line 11,

10 or

11 ‘‘(ii) on the amount reported on line 6

12 multiplied by the ratio of (I) the sum of

13 the amounts so reported on line 11 of such

14 Form for fiscal year 1994 for the 50

15 States and the District of Columbia, to

16 (II) the sum of the amounts so reported on

17 line 6 of such Form for fiscal year 1994

18 for such States and District,

19 whichever is greater.

20 ‘‘(C) LIMITATION ON ADJUSTMENT.—The

21 amount computed under subparagraph (B)

22 shall not be subject to adjustment (based on

23 any subsequent disallowances or otherwise).

24 ‘‘(2) COMPUTATION OF STATE OUTLAY ALLOT25 MENTS.—
1292

•HR 2491 RH

1 ‘‘(A) IN GENERAL.—Subject to the suc2 ceeding provisions of this subsection, the

3 amount of the State outlay allotment under this

4 subsection for one of the 50 States and the Dis5 trict of Columbia for a fiscal year (beginning

6 with fiscal year 1997) is equal to the product

7 of—

8 ‘‘(i) the needs-based amount deter9 mined under subparagraph (B) for the

10 State for the fiscal year, and

11 ‘‘(ii) the scalar factor described in

12 subparagraph (C) for the fiscal year.

13 ‘‘(B) NEEDS-BASED AMOUNT.—The needs14 based amount under this subparagraph for a

15 State for a fiscal year is equal to the product

16 of—

17 ‘‘(i) the State’s aggregate expenditure

18 need for the fiscal year (as determined

19 under subsection (d)), and

20 ‘‘(ii) the State’s old Federal medical

21 assistance percentage (as defined in section

22 2122(d)) for the previous fiscal year (or, in

23 the case of fiscal year 1997, the Federal

24 medical assistance percentage determined
1293

•HR 2491 RH

1 under section 1905(b) for fiscal year

2 1996).

3 ‘‘(C) SCALAR FACTOR.—The scalar factor

4 under this subparagraph for a fiscal year is

5 such proportion so that, when it is applied

6 under subparagraph (A)(ii) for the fiscal year

7 (taking into account the floors and ceilings

8 under paragraph (3)), the total of the outlay al9 lotments under this subsection for all the 50

10 States and the District of Columbia for the fis11 cal year (not taking into account any increase

12 in an outlay allotment for a fiscal year attrib13 utable to the election of an alternative growth

14 formula under paragraph (4)) is equal to the

15 amount by which (i) the pool amount for the

16 fiscal year (as determined under subsection

17 (b)), exceeds (ii) the sum of the outlay allot18 ments provided under paragraph (5) for the

19 Commonwealths and territories for the fiscal

20 year.

21 ‘‘(3) FLOORS AND CEILINGS.—

22 ‘‘(A) FLOORS.—In no case shall the

23 amount of the State outlay allotment under

24 paragraph (2) for a fiscal year be less than the

25 following:
1294

•HR 2491 RH

1 ‘‘(i) FLOOR BASED ON PREVIOUS

2 YEAR’S OUTLAY ALLOTMENT.—102 percent

3 of the amount of the State outlay allot4 ment under this subsection for the pre5 vious fiscal year.

6 ‘‘(ii) FLOOR BASED ON OUTLAY AL7 LOTMENT GROWTH RATE IN FIRST

8 YEAR.—Beginning with fiscal year 1998,

9 in the case of a State for which the outlay

10 allotment under this subsection for fiscal

11 year 1997 exceeded its outlay allotment

12 under this subsection for the previous fis13 cal year by—

14 ‘‘(I) more than 125 percent of

15 the national MediGrant growth per16 centage for fiscal year 1997, 104 per17 cent of the amount of the State outlay

18 allotment under this subsection for

19 the previous fiscal year; or

20 ‘‘(II) less than 125 percent (but

21 more than 75 percent) of the national

22 MediGrant growth percentage for fis23 cal year 1997, 103 percent of the

24 amount of the State outlay allotment
1295

•HR 2491 RH

1 under this subsection for the previous

2 fiscal year.

3 ‘‘(B) CEILING.—

4 ‘‘(i) IN GENERAL.—Subject to clause

5 (ii), in no case shall the amount of the

6 State outlay allotment under paragraph

7 (2) for a fiscal year be greater than the

8 product of—

9 ‘‘(I) the State outlay allotment

10 under this subsection for the State for

11 the preceding fiscal year, and

12 ‘‘(II) 133 percent of the national

13 MediGrant growth percentage (as de14 termined under subsection (b)(2)) for

15 the fiscal year involved.

16 ‘‘(ii) SPECIAL RULE.—For a fiscal

17 year after fiscal year 1997, in the case of

18 a State (among the 50 States and the Dis19 trict of Columbia) that is one of the 10

20 States with the lowest Federal MediGrant

21 spending per resident-in-poverty rates (as

22 determined under clause (iii)) for the fiscal

23 year, the reference in clause (i)(II) to ‘133

24 percent’ is deemed a reference to ‘150 per25 cent’.
1296

•HR 2491 RH

1 ‘‘(iii) DETERMINATION OF FEDERAL

2 MEDIGRANT SPENDING PER RESIDENT-IN3 POVERTY RATE.—For purposes of clause

4 (ii), the ‘Federal MediGrant spending per

5 resident-in-poverty rate’ for a State for a

6 fiscal year is equal to—

7 ‘‘(I) the State’s outlay allotment

8 under this subsection for the previous

9 fiscal year (determined without regard

10 to paragraph (4)), divided by

11 ‘‘(II) the average annual number

12 of residents of the State in poverty

13 (as defined in subsection (d)(2)) with

14 respect to the fiscal year.

15 ‘‘(4) ELECTION OF ALTERNATIVE GROWTH

16 FORMULA.—

17 ‘‘(A) ELECTION.—In order to reduce vari18 ations in increases in outlay allotments over

19 time, any of the 50 States or the District of Co20 lumbia may elect (by notice provided to the Sec21 retary by not later than April 1, 1996) to adopt

22 an alternative growth rate formula under this

23 paragraph for the determination of the State’s

24 outlay allotment in fiscal year 1996 and for the
1297

•HR 2491 RH

1 increase in the amount of such allotment in

2 subsequent fiscal years.

3 ‘‘(B) FORMULA.—The alternative growth

4 formula under this paragraph may be any for5 mula under which a portion of the State outlay

6 allotment for fiscal year 1996 under paragraph

7 (1) is deferred and applied to increase the

8 amount of its outlay allotment for one or more

9 subsequent fiscal years, so long as the total

10 amount of such increases for all such subse11 quent fiscal years does not exceed the amount

12 of the outlay allotment deferred from fiscal year

13 1996.

14 ‘‘(5) COMMONWEALTHS AND TERRITORIES.—

15 The outlay allotment for each of the Commonwealths

16 and territories for a fiscal year is the maximum

17 amount that could have been certified under section

18 1108(c) with respect to the Commonwealth or terri19 tory for the fiscal year with respect to title XIX, if

20 the national MediGrant growth percentage (as deter21 mined under subsection (b)(2)) for the fiscal year

22 had been substituted (beginning with fiscal year

23 1997) for the percentage increase referred to in sec24 tion 1108(c)(1)(B).
1298

•HR 2491 RH

1 ‘‘(d) STATE AGGREGATE EXPENDITURE NEED DE2 TERMINED.—

3 ‘‘(1) IN GENERAL.—For purposes of subsection

4 (c), the ‘State aggregate expenditure need’ for a

5 State for a fiscal year is equal to the product of the

6 following 4 factors:

7 ‘‘(A) RESIDENTS IN POVERTY.—The aver8 age annual number of residents in poverty of

9 the State with respect to the fiscal year (as de10 termined under paragraph (2)).

11 ‘‘(B) CASE MIX INDEX.—The average of

12 the case mix indexes for the State (as deter13 mined under paragraph (3)) for the 3 most re14 cent fiscal years for which data are available,

15 but in no case less than .9 or greater than 1.15.

16 ‘‘(C) INPUT COST INDEX.—The average of

17 the input cost indexes for the State (as deter18 mined under paragraph (4)) for the 3 most re19 cent fiscal years for which data are available.

20 ‘‘(D) NATIONAL AVERAGE SPENDING PER

21 RESIDENT IN POVERTY.—The national average

22 spending per resident in poverty (as determined

23 under paragraph (5)).

24 ‘‘(2) RESIDENTS IN POVERTY.—In this sec25 tion—
1299

•HR 2491 RH

1 ‘‘(A) IN GENERAL.—The term ‘average an2 nual number of residents in poverty’ means,

3 with respect to a State and a fiscal year, the

4 average annual number of residents in poverty

5 (as defined in subparagraph (B)) in the State

6 (based on data made generally available by the

7 Bureau of the Census from the Current Popu8 lation Survey) for the most recent 3-calendar9 year period (ending before the fiscal year) for

10 which such data are available.

11 ‘‘(B) RESIDENT IN POVERTY DEFINED.—

12 The term ‘resident in poverty’ means an indi13 vidual whose family income does not exceed the

14 poverty threshold (as such terms are defined by

15 the Office of Management and Budget and are

16 generally interpreted and applied by the Bureau

17 of the Census for the year involved).

18 ‘‘(3) CASE MIX INDEX.—

19 ‘‘(A) IN GENERAL.—In this subsection, the

20 ‘case mix index’ for a State for a fiscal year is

21 equal to—

22 ‘‘(i) the sum of—

23 ‘‘(I) the projected per recipient

24 expenditures with respect to elderly

25 individuals in the State for the fiscal
1300

•HR 2491 RH

1 year (determined under subparagraph

2 (B)),

3 ‘‘(II) the projected per recipient

4 expenditures with respect to the blind

5 and disabled individuals in the State

6 for the fiscal year (determined under

7 subparagraph (C)), and

8 ‘‘(III) the projected per recipient

9 expenditures with respect to other in10 dividuals in the State (determined

11 under subparagraph (D));

12 divided by—

13 ‘‘(ii) the national average spending

14 per recipient determined under subpara15 graph (E) for the fiscal year involved.

16 ‘‘(B) PROJECTED PER RECIPIENT EXPEND17 ITURES FOR THE ELDERLY.—For purposes of

18 subparagraph (A)(I)(i), the ‘projected per recip19 ient expenditures with respect to elderly individ20 uals’ in a State for a fiscal year is equal to the

21 product of—

22 ‘‘(i) the national average per recipient

23 expenditures under this title in the 50

24 States and the District of Columbia for the

25 most recent fiscal year for which data are
1301

•HR 2491 RH

1 available for individuals who are 65 years

2 of age or older, and

3 ‘‘(ii) the proportion, of all individuals

4 who received medical assistance under this

5 title in the State in the most recent fiscal

6 year referred to in clause (i), that were in7 dividuals described in such clause.

8 ‘‘(C) PROJECTED PER RECIPIENT EXPEND9 ITURES FOR THE BLIND AND DISABLED.—For

10 purposes of subparagraph (A)(i)(II), the ‘pro11 jected per recipient expenditures with respect to

12 blind and disabled individuals’ in a State for a

13 fiscal year is equal to the product of—

14 ‘‘(i) the national average per recipient

15 expenditures under this title in the 50

16 States and the District of Columbia for the

17 most recent fiscal year for which data are

18 available for individuals who are eligible

19 for medical assistance because they are

20 blind or disabled and under 65 years of

21 age, and

22 ‘‘(ii) the proportion, of all individuals

23 who received medical assistance under this

24 title in the State in the most recent fiscal
1302

•HR 2491 RH

1 year referred to in clause (i), that were in2 dividuals described in such clause.

3 ‘‘(D) PROJECTED PER RECIPIENT EX4 PENDITURES FOR OTHER INDIVIDUALS.—For

5 purposes of subparagraph (A)(i)(III), the ‘pro6 jected per recipient expenditures with respect to

7 other individuals’ in a State for a fiscal year is

8 equal to the product of—

9 ‘‘(i) the national average per recipient

10 expenditures under this title in the 50

11 States and the District of Columbia for the

12 most recent fiscal year for which data are

13 available for individuals who are not de14 scribed in subparagraph (B)(i) or (C)(i),

15 and

16 ‘‘(ii) the proportion, of all individuals

17 who received medical assistance under this

18 title in the State in the most recent fiscal

19 year referred to in clause (i), that were in20 dividuals described in such clause.

21 ‘‘(E) NATIONAL AVERAGE SPENDING PER

22 RECIPIENT.—For purposes of this paragraph,

23 the ‘national average expenditures per recipient’

24 for a fiscal year is equal to the sum of—
1303

•HR 2491 RH

1 ‘‘(i) the product of (I) the national av2 erage described in subparagraph (B)(i),

3 and (II) the proportion, of all individuals

4 who received medical assistance under this

5 title in any of the 50 States or the District

6 of Columbia in the fiscal year referred to

7 in such subparagraph, who are described

8 in such subparagraph;

9 ‘‘(ii) the product of (I) the national

10 average described in subparagraph (C)(i),

11 and (II) the proportion, of all individuals

12 who received medical assistance under this

13 title in any of the 50 States or the District

14 of Columbia in the fiscal year referred to

15 in such subparagraph, who are described

16 in such subparagraph; and

17 ‘‘(iii) the product of (I) the national

18 average described in subparagraph (D)(i),

19 and (II) the proportion, of all individuals

20 who received medical assistance under this

21 title in any of the 50 States or the District

22 of Columbia in the fiscal year referred to

23 in such subparagraph, who are described

24 in such subparagraph.
1304

•HR 2491 RH

1 ‘‘(F) DETERMINATION OF NATIONAL AVER2 AGES AND PROPORTIONS.—

3 ‘‘(i) IN GENERAL.—The national aver4 ages per recipient and the proportions re5 ferred to in clauses (i) and (ii), respec6 tively, of subparagraphs (B), (C), and (D)

7 and subparagraph (E) shall be determined

8 by the Secretary using the most recent

9 data available.

10 ‘‘(ii) USE OF MEDICAID DATA.—If for

11 a fiscal year there is inadequate data to

12 compute such averages and proportions

13 based on expenditures and numbers of in14 dividuals receiving medical assistance

15 under this title, the Secretary may com16 pute such averages based on expenditures

17 and numbers of such individuals under

18 title XIX for the most recent fiscal year

19 for which data are available and, for this

20 purpose—

21 ‘‘(I) any reference in subpara22 graph (B)(i) to ‘individuals 65 years

23 of age or older’ is deemed a reference

24 to ‘individuals whose eligibility for
1305

•HR 2491 RH

1 medical assistance is based on being

2 65 years of age or older’,

3 ‘‘(II) the reference in subpara4 graph (C)(i) to ‘and under 65 years of

5 age’ shall be considered to be deleted,

6 and

7 ‘‘(III) individuals whose basis for

8 eligibility for medical assistance was

9 reported as unknown shall not be

10 counted as individuals under subpara11 graph (D)(i).

12 ‘‘(4) INPUT COST INDEX.—

13 ‘‘(A) IN GENERAL.—In this section, the

14 ‘input cost index’ for a State for a fiscal year

15 is the sum of—

16 ‘‘(i) 0.15, and

17 ‘‘(ii) 0.85 multiplied by the ratio of

18 (I) the annual average wages for hospital

19 employees in the State for the fiscal year

20 (as determined under subparagraph (B)),

21 to (II) the annual average wages for hos22 pital employees in the 50 States and the

23 District of Columbia for such year (as de24 termined under such subparagraph).
1306

•HR 2491 RH

1 ‘‘(B) DETERMINATION OF ANNUAL AVER2 AGE WAGES OF HOSPITAL EMPLOYEES.—The

3 Secretary shall provide for the determination of

4 annual average wages for hospital employees in

5 a State and, collectively, in the 50 States and

6 the District of Columbia for a fiscal year based

7 on the area wage index applicable to hospitals

8 under 1886(d)(2)(E) (or, if such index no

9 longer exists, a comparable index of hospital

10 wages) for discharges occurring during the fis11 cal year involved.

12 ‘‘(5) NATIONAL AVERAGE SPENDING PER RESI13 DENT IN POVERTY.—For purposes of this sub14 section, the ‘national average spending per resident

15 in poverty’—

16 ‘‘(A) for fiscal year 1997 is equal to—

17 ‘‘(i) the sum (for each of the 50

18 States and the District of Columbia) of the

19 total of the Federal and State expenditures

20 under title XIX for calendar quarters in

21 fiscal year 1994, increased by the percent22 age specified in subsection (c)(1)(A)(ii), di23 vided by

24 ‘‘(ii) the sum of the number of resi25 dents in poverty (as defined in paragraph
1307

•HR 2491 RH

1 (2)(A)) for all of the 50 States and the

2 District of Columbia for fiscal year 1994;

3 ‘‘(B) for a succeeding fiscal year is equal

4 to the national average spending per resident in

5 poverty under this paragraph for the preceding

6 fiscal year increased by the national MediGrant

7 growth percentage (as defined in subsection

8 (b)(2)) for the fiscal year involved.

9 ‘‘(e) PUBLICATION OF OBLIGATION AND OUTLAY AL10 LOTMENTS.—

11 ‘‘(1) NOTICE OF PRELIMINARY ALLOTMENTS.—

12 Not later than April 1 before the beginning of each

13 fiscal year (beginning with fiscal year 1997), the

14 Secretary shall initially compute, after consultation

15 with the Comptroller General, and publish in the

16 Federal Register notice of the proposed obligation

17 and outlay allotments for each State under this sec18 tion (not taking into account subsection (a)(2)(B))

19 for the fiscal year. The Secretary shall include in the

20 notice a description of the methodology and data

21 used in deriving such allotments for the year.

22 ‘‘(2) REVIEW BY GAO.—The Comptroller Gen23 eral shall submit to Congress by not later than May

24 15 of each such fiscal year, a report analyzing such
1308

•HR 2491 RH

1 allotments and the extent to which they comply with

2 the precise requirements of this section.

3 ‘‘(3) NOTICE OF FINAL ALLOTMENTS.—Not

4 later than July 1 before the beginning of each such

5 fiscal year, the Secretary, taking into consideration

6 the analysis contained in the report of the Comptrol7 ler General under paragraph (2), shall compute and

8 publish in the Federal Register notice of the final al9 lotments under this section (both taking into ac10 count and not taking into account subsection

11 (a)(2)(B)) for the fiscal year. The Secretary shall in12 clude in the notice a description of any changes in

13 such allotments from the initial allotments published

14 under paragraph (1) for the fiscal year and the rea15 sons for such changes. Once published under this

16 paragraph, the Secretary is not authorized to change

17 such allotments.

18 ‘‘(4) GAO REPORT ON FINAL ALLOTMENTS.—

19 The Comptroller General shall submit to Congress

20 by not later than August 1 of each such fiscal year,

21 a report analyzing the final allotments under para22 graph (3) and the extent to which they comply with

23 the precise requirements of this section.
1309

•HR 2491 RH

1 ‘‘SEC. 2122. PAYMENTS TO STATES.

2 ‘‘(a) AMOUNT OF PAYMENT.—From the allotment of

3 a State under section 2121 for a fiscal year, subject to

4 the succeeding provisions of this title, the Secretary shall

5 pay to each State which has a MediGrant plan approved

6 under part E, for each quarter in the fiscal year—

7 ‘‘(1) an amount equal to the applicable Federal

8 medical assistance percentage (as defined in sub9 section (c)) of the total amount expended during

10 such quarter as medical assistance under the plan;

11 plus

12 ‘‘(2) an amount equal to the applicable Federal

13 medical assistance percentage of the total amount

14 expended during such quarter for medically-related

15 services (as defined in section 2112(e)(2)); plus

16 ‘‘(3) subject to section 2123(c)—

17 ‘‘(A) an amount equal to 90 percent of the

18 amounts expended during such quarter for the

19 design, development, and installation of infor20 mation systems and for providing incentives to

21 promote the enforcement of medical support or22 ders, plus

23 ‘‘(B) an amount equal to 75 percent of the

24 amounts expended during such quarter for

25 medical personnel, administrative support of

26 medical personnel, operation and maintenance
1310

•HR 2491 RH

1 of information systems, modification of infor2 mation systems, quality assurance activities,

3 utilization review, medical and peer review,

4 anti-fraud activities, independent evaluations,

5 coordination of benefits, and meeting reporting

6 requirements under this title, plus

7 ‘‘(C) an amount equal to 50 percent of so

8 much of the remainder of the amounts ex9 pended during such quarter as are expended by

10 the State in the administration of the State

11 plan.

12 ‘‘(b) PAYMENT PROCESS.—

13 ‘‘(1) QUARTERLY ESTIMATES.—Prior to the be14 ginning of each quarter, the Secretary shall estimate

15 the amount to which a State will be entitled under

16 subsection (a) for such quarter, such estimates to be

17 based on (A) a report filed by the State containing

18 its estimate of the total sum to be expended in such

19 quarter in accordance with the provisions of such

20 subsections, and stating the amount appropriated or

21 made available by the State and its political subdivi22 sions for such expenditures in such quarter, and if

23 such amount is less than the State’s proportionate

24 share of the total sum of such estimated expendi25 tures, the source or sources from which the dif-
1311

•HR 2491 RH

1 ference is expected to be derived, and (B) such other

2 investigation as the Secretary may find necessary.

3 ‘‘(2) PAYMENT.—

4 ‘‘(A) IN GENERAL.—The Secretary shall

5 then pay to the State, in such installments as

6 the Secretary may determine and in accordance

7 with section 6503(a) of title 31, United States

8 Code, the amount so estimated, reduced or in9 creased to the extent of any overpayment or

10 underpayment which the Secretary determines

11 was made under this section (or section 1903)

12 to such State for any prior quarter and with re13 spect to which adjustment has not already been

14 made under this subsection (or under section

15 1903(d)).

16 ‘‘(B) TREATMENT AS OVERPAYMENTS.—

17 Expenditures for which payments were made to

18 the State under subsection (a) shall be treated

19 as an overpayment to the extent that the State

20 or local agency administering such plan has

21 been reimbursed for such expenditures by a

22 third party pursuant to the provisions of its

23 plan in compliance with section 2135.

24 ‘‘(C) RECOVERY OF OVERPAYMENTS.—For

25 purposes of this subsection, when an overpay-
1312

•HR 2491 RH

1 ment is discovered, which was made by a State

2 to a person or other entity, the State shall have

3 a period of 60 days in which to recover or at4 tempt to recover such overpayment before ad5 justment is made in the Federal payment to

6 such State on account of such overpayment.

7 Except as otherwise provided in subparagraph

8 (D), the adjustment in the Federal payment

9 shall be made at the end of the 60 days, wheth10 er or not recovery was made.

11 ‘‘(D) NO ADJUSTMENT FOR

12 UNCOLLECTABLES.—In any case where the

13 State is unable to recover a debt which rep14 resents an overpayment (or any portion thereof)

15 made to a person or other entity on account of

16 such debt having been discharged in bankruptcy

17 or otherwise being uncollectable, no adjustment

18 shall be made in the Federal payment to such

19 State on account of such overpayment (or por20 tion thereof).

21 ‘‘(3) FEDERAL SHARE OF RECOVERIES.—The

22 pro rata share to which the United States is equi23 tably entitled, as determined by the Secretary, of the

24 net amount recovered during any quarter by the

25 State or any political subdivision thereof with re-
1313

•HR 2491 RH

1 spect to medical assistance furnished under the

2 State plan shall be considered an overpayment to be

3 adjusted under this subsection.

4 ‘‘(4) TIMING OF OBLIGATION OF FUNDS.—

5 Upon the making of any estimate by the Secretary

6 under this subsection, any appropriations available

7 for payments under this section shall be deemed ob8 ligated.

9 ‘‘(5) DISALLOWANCES.—In any case in which

10 the Secretary estimates that there has been an over11 payment under this section to a State on the basis

12 of a claim by such State that has been disallowed by

13 the Secretary under section 1116(d), and such State

14 disputes such disallowance, the amount of the Fed15 eral payment in controversy shall, at the option of

16 the State, be retained by such State or recovered by

17 the Secretary pending a final determination with re18 spect to such payment amount. If such final deter19 mination is to the effect that any amount was prop20 erly disallowed, and the State chose to retain pay21 ment of the amount in controversy, the Secretary

22 shall offset, from any subsequent payments made to

23 such State under this title, an amount equal to the

24 proper amount of the disallowance plus interest on

25 such amount disallowed for the period beginning on
1314

•HR 2491 RH

1 the date such amount was disallowed and ending on

2 the date of such final determination at a rate (deter3 mined by the Secretary) based on the average of the

4 bond equivalent of the weekly 90-day treasury bill

5 auction rates during such period.

6 ‘‘(c) APPLICABLE FEDERAL MEDICAL ASSISTANCE

7 PERCENTAGE DEFINED.—In this section, except as pro8 vided in subsection (f), the term ‘applicable Federal medi9 cal assistance percentage’ means, with respect to one of

10 the 50 States or the District of Columbia, at the State’s

11 or District’s option—

12 ‘‘(1) the old Federal medical assistance percent13 age (as determined in subsection (d)), or

14 ‘‘(2) the new Federal medical assistance per15 centage (as determined under subsection (e)) or, if

16 less, the old Federal medical assistance percentage

17 plus 10 percentage points.

18 ‘‘(d) OLD FEDERAL MEDICAL ASSISTANCE PER19 CENTAGE.—

20 ‘‘(1) IN GENERAL.—Except as provided in para21 graph (2) and subsection (f), the term ‘old Federal

22 medical assistance percentage’ for any State is 100

23 percent less the State percentage; and the State per24 centage is that percentage which bears the same

25 ratio to 45 percent as the square of the per capita
1315

•HR 2491 RH

1 income of such State bears to the square of the per

2 capita income of the continental United States (in3 cluding Alaska) and Hawaii.

4 ‘‘(2) LIMITATION ON RANGE.—In no case shall

5 the old Federal medical assistance percentage be less

6 than 50 percent or more than 83 percent.

7 ‘‘(3) PROMULGATION.—The old Federal medical

8 assistance percentage for any State shall be deter9 mined and promulgated in accordance with the pro10 visions of section 1101(a)(8)(B).

11 ‘‘(e) NEW FEDERAL MEDICAL ASSISTANCE PER12 CENTAGE DEFINED.—

13 ‘‘(1) IN GENERAL.—

14 ‘‘(A) TERM DEFINED.—Except as provided

15 in paragraph (3) and subsection (f), the term

16 ‘new Federal medical assistance percentage’

17 means, for each of the 50 States and the Dis18 trict of Columbia, 100 percent reduced by the

19 product 0.39 and the ratio of—

20 ‘‘(i)(I) for each of the 50 States, the

21 total taxable resources (TTR) ratio of the

22 State specified in subparagraph (B), or

23 ‘‘(II) for the District of Columbia, the

24 per capita income ratio specified in sub25 paragraph (C),
1316

•HR 2491 RH

1 to—

2 ‘‘(ii) the aggregate expenditure need

3 ratio of the State or District, as described

4 in subparagraph (D).

5 ‘‘(B) TOTAL TAXABLE RESOURCES (TTR)

6 RATIO.—For purposes of subparagraph

7 (A)(i)(I), the total taxable resources (TTR)

8 ratio for each of the 50 States is—

9 ‘‘(i) an amount equal to the most re10 cent 3-year average of the total taxable re11 sources (TTR) of the State, as determined

12 by the Secretary of the Treasury, divided

13 by

14 ‘‘(ii) an amount equal to the sum of

15 the 3-year averages determined under

16 clause (i) for each of the 50 States.

17 ‘‘(C) PER CAPITA INCOME RATIO.—For

18 purposes of subparagraph (A)(i)(II), the per

19 capita income ratio of the District of Columbia

20 is—

21 ‘‘(i) an amount equal to the most re22 cent 3-year average of the total personal

23 income of the District of Columbia, as de24 termined in accordance with the provisions

25 of section 1101(a)(8)(B), divided by
1317

•HR 2491 RH

1 ‘‘(ii) an amount equal to the total per2 sonal income of the continental United

3 States (including Alaska) and Hawaii, as

4 determined under section 1101(a)(8)(B).

5 ‘‘(D) AGGREGATE EXPENDITURE NEED

6 RATIO.—For purposes of subparagraph (A),

7 with respect to each of the 50 States and the

8 District of Columbia for a fiscal year, the ag9 gregate expenditure need ratio is—

10 ‘‘(i) the State aggregate expenditure

11 need (as defined in section 2121(d)) for

12 the State for the fiscal year, divided by

13 ‘‘(ii) the such of such State aggregate

14 expenditure needs for the 50 States and

15 the District of Columbia for the fiscal year.

16 ‘‘(2) LIMITATION ON RANGE.—Except as pro17 vided in subsection (f), the new Federal medical as18 sistance percentage shall in no case be less than 40

19 percent or greater than 83 percent.

20 ‘‘(3) PROMULGATION.—The new Federal medi21 cal assistance percentage for any State shall be pro22 mulgated in a timely manner consistent with the

23 promulgation of the old Federal medical assistance

24 percentage under section 1101(a)(8)(B).

25 ‘‘(f) SPECIAL RULES.—For purposes of this title—
1318

•HR 2491 RH

1 ‘‘(1) COMMONWEALTHS AND TERRITORIES.—In

2 the case of Puerto Rico, the Virgin Islands, Guam,

3 the Northern Mariana Islands, and American

4 Samoa, the old and new Federal medical assistance

5 percentages are 50 percent.

6 ‘‘(2) INDIAN HEALTH SERVICE FACILITIES.—

7 ‘‘(A) IN GENERAL.—The old and new Fed8 eral medical assistance percentages shall be 100

9 percent with respect to the amounts expended

10 as medical assistance for services which are re11 ceived through a facility described in subpara12 graph (B) of an Indian tribe or tribal organiza13 tion or through an Indian Health Service facil14 ity whether operated by the Indian Health

15 Service or by an Indian tribe or tribal organiza16 tion (as defined in section 4 of the Indian

17 Health Care Improvement Act).

18 ‘‘(B) FACILITY DESCRIBED.—For purposes

19 of subparagraph (A), a facility described in this

20 subparagraph is a facility of an Indian tribe

21 if—

22 ‘‘(i) the facility is located in a State

23 which, as of the date of the enactment of

24 this title, was not operating its State plan
1319

•HR 2491 RH

1 under title XIX pursuant to a Statewide

2 waiver approved under section 1115,

3 ‘‘(ii) the facility is not an Indian

4 Health Service facility,

5 ‘‘(iii) the tribe owns at least 2 such

6 facilities, and

7 ‘‘(iv) the tribe has at least 50,000

8 members (as of the date of the enactment

9 of this title).

10 ‘‘(3) NO STATE MATCHING REQUIRED FOR CER11 TAIN EXPENDITURES.—In applying subsection (a)(1)

12 with respect to medical assistance provided to unlaw13 ful aliens pursuant to the exception specified in sec14 tion 2123(e)(2), payment shall be made for the

15 amount of such assistance without regard to any

16 need for a State match.

17 ‘‘SEC. 2123. LIMITATION ON USE OF FUNDS; DISALLOW18 ANCE.

19 ‘‘(a) IN GENERAL.—Funds provided to a State under

20 this title shall only be used to carry out the purposes of

21 this title.

22 ‘‘(b) DISALLOWANCES FOR EXCLUDED PROVID23 ERS.—
1320

•HR 2491 RH

1 ‘‘(1) IN GENERAL.—Payment shall not be made

2 to a State under this part for expenditures for items

3 and services furnished—

4 ‘‘(A) by a provider who was excluded from

5 participation under title V, XVIII, or XX or

6 under this title pursuant to section 1128,

7 1128A, 1156, or 1842(j)(2), or

8 ‘‘(B) under the medical direction or on the

9 prescription of a physician who was so excluded,

10 if the provider of the services knew or had rea11 son to know of the exclusion.

12 ‘‘(2) EXCEPTION FOR EMERGENCY SERVICES.—

13 Paragraph (1) shall not apply to emergency items or

14 services, not including hospital emergency room serv15 ices.

16 ‘‘(c) LIMITATIONS.—

17 ‘‘(1) IN GENERAL.—No Federal financial assist18 ance is available for expenditures under the

19 MediGrant plan for—

20 ‘‘(A) medically-related services for a quar21 ter to the extent such expenditures exceed 5

22 percent of the total expenditures under the plan

23 for the quarter; or

24 ‘‘(B) total administrative expenses (other

25 than expenses described in paragraph (2) dur-
1321

•HR 2491 RH

1 ing the first 8 quarters in which the plan is in

2 effect under this title) for quarters in a fiscal

3 year to the extent such expenditures exceed the

4 sum of $20,000,000 plus 10 percent of the total

5 expenditures under the plan for the year.

6 ‘‘(2) ADMINISTRATIVE EXPENSES NOT SUBJECT

7 TO LIMITATION.—The administrative expenses re8 ferred to in this paragraph are expenditures under

9 the MediGrant plan for the following activities:

10 ‘‘(A) Quality assurance.

11 ‘‘(B) The development and operation of the

12 certification program for nursing facilities and

13 intermediate care facilities for the mentally re14 tarded under section 2137(a)(2).

15 ‘‘(C) Utilization review activities, including

16 medical activities and activities of peer review

17 organizations.

18 ‘‘(D) Inspection and oversight of providers

19 and capitated health care organizations.

20 ‘‘(E) Anti-fraud activities.

21 ‘‘(F) Independent evaluations.

22 ‘‘(G) Activities required to meet reporting

23 requirements under this title.

24 ‘‘(d) TREATMENT OF THIRD PARTY LIABILITY.—No

25 payment shall be made to a State under this part for ex-
1322

•HR 2491 RH

1 penditures for medical assistance provided for an individ2 ual under its MediGrant plan to the extent that a private

3 insurer (as defined by the Secretary by regulation and in4 cluding a group health plan (as defined in section 607(1)

5 of the Employee Retirement Income Security Act of

6 1974), a service benefit plan, and a health maintenance

7 organization) would have been obligated to provide such

8 assistance but for a provision of its insurance contract

9 which has the effect of limiting or excluding such obliga10 tion because the individual is eligible for or is provided

11 medical assistance under the plan.

12 ‘‘(e) LIMITATION ON PAYMENTS TO EMERGENCY

13 SERVICES FOR NONLAWFUL ALIENS.—

14 ‘‘(1) IN GENERAL.—Notwithstanding the pre15 ceding provisions of this section, except as provided

16 in paragraph (2), no payment may be made to a

17 State under this part for medical assistance fur18 nished to an alien who is not lawfully admitted for

19 permanent residence or otherwise permanently resid20 ing in the United States under color of law.

21 ‘‘(2) EXCEPTION FOR EMERGENCY SERVICES.—

22 Payment may be made under this section for care

23 and services that are furnished to an alien described

24 in paragraph (1) only if—
1323

•HR 2491 RH

1 ‘‘(A) such care and services are necessary

2 for the treatment of an emergency medical con3 dition of the alien,

4 ‘‘(B) such alien otherwise meets the eligi5 bility requirements for medical assistance under

6 the MediGrant plan (other than a requirement

7 of the receipt of aid or assistance under title

8 IV, supplemental security income benefits under

9 title XVI, or a State supplementary payment),

10 and

11 ‘‘(C) such care and services are not related

12 to an organ transplant procedure.

13 ‘‘(3) EMERGENCY MEDICAL CONDITION DE14 FINED.—For purposes of this subsection, the term

15 ‘emergency medical condition’ means a medical con16 dition (including emergency labor and delivery)

17 manifesting itself by acute symptoms of sufficient

18 severity (including severe pain) such that the ab19 sence of immediate medical attention could reason20 ably be expected to result in—

21 ‘‘(A) placing the patient’s health in serious

22 jeopardy,

23 ‘‘(B) serious impairment to bodily func24 tions, or
1324

•HR 2491 RH

1 ‘‘(C) serious dysfunction of any bodily

2 organ or part.

3 ‘‘(f) LIMITATION ON PAYMENT FOR CERTAIN OUT4 PATIENT PRESCRIPTION DRUGS.—

5 ‘‘(1) IN GENERAL.—No payment may be made

6 to a State under this part for medical assistance for

7 covered outpatient drugs (as defined in section

8 2175(i)(2)) of a manufacturer provided under the

9 MediGrant plan unless the manufacturer (as defined

10 in section 2175(i)(4)) of the drug—

11 ‘‘(A) has entered into a MediGrant master

12 rebate agreement with the Secretary under sec13 tion 2175; and

14 ‘‘(B) is complying with the provisions of

15 section 8126 of title 38, United States Code, in16 cluding the requirement of entering into a mas17 ter agreement with the Secretary of Veterans

18 Affairs under such section.

19 ‘‘(2) CONSTRUCTION.—Nothing in this sub20 section shall be construed as requiring a State to

21 participate in the MediGrant master rebate agree22 ment under section 2175.

23 ‘‘(3) EFFECT OF SUBSEQUENT AMEND24 MENTS.—For purposes of paragraph (1)(B), in de25 termining whether a manufacturer is in compliance
1325

•HR 2491 RH

1 with the requirements of section 8126 of title 38,

2 United States Code—

3 ‘‘(A) the Secretary shall not take into ac4 count any amendments to such section that are

5 enacted after the enactment of title VI of the

6 Veterans Health Care Act of 1992; and

7 ‘‘(B) a manufacturer is deemed to meet

8 such requirements if the manufacturer estab9 lishes to the satisfaction of the Secretary that

10 the manufacturer would comply (and has of11 fered to comply) with the provisions of section

12 8126 of title 38, United States Code (as in ef13 fect immediately after the enactment of the

14 Veterans Health Care Act of 1992) and would

15 have entered into an agreement under such sec16 tion (as such section was in effect at such

17 time), but for a legislative change in such sec18 tion after the date of the enactment of the Vet19 erans Health Care Act of 1992.

20 ‘‘(g) LIMITATION ON PAYMENT FOR ABORTIONS.—

21 ‘‘(1) IN GENERAL.—Payment shall not be made

22 to a State under this part for any amount expended

23 under the MediGrant plan to pay for any abortion

24 or to assist in the purchase, in whole or in part, of
1326

•HR 2491 RH

1 health benefit coverage that includes coverage of

2 abortion.

3 ‘‘(2) EXCEPTION.—Paragraph (1) shall not

4 apply to an abortion—

5 ‘‘(A) if the pregnancy is the result of an

6 act of rape or incest, or

7 ‘‘(B) in the case where a woman suffers

8 from a physical disorder, illness, or injury that

9 would, as certified by a physician, place the

10 woman in danger of death unless an abortion is

11 performed.

12 ‘‘(h) LIMITATION ON PAYMENT FOR ASSISTING

13 DEATHS.—Payment shall not be made to a State under

14 this part for amounts expended under the MediGrant plan

15 to pay for, or to assist in the purchase, in whole or in

16 part, of health benefit coverage that includes payment for

17 any drug, biological product, or service which was fur18 nished for the purpose of causing, or assisting in causing,

19 the death, suicide, euthanasia, or mercy killing of a per20 son.

21 ‘‘PART D—PROGRAM INTEGRITY AND QUALITY

22 ‘‘SEC. 2131. USE OF AUDITS TO ACHIEVE FISCAL INTEGRITY.

23 ‘‘(a) FINANCIAL AUDITS OF PROGRAM.—

24 ‘‘(1) IN GENERAL.—Each MediGrant plan shall

25 provide for an annual audit of the State’s expendi-
1327

•HR 2491 RH

1 tures from amounts received under this title, in com2 pliance with chapter 75 of title 31, United States

3 Code.

4 ‘‘(2) VERIFICATION AUDITS.—If, after consulta5 tion with the State and the Comptroller General and

6 after a fair hearing, the Secretary determines that

7 a State’s audit under paragraph (1) was performed

8 in substantial violation of chapter 75 of title 31,

9 United States Code, the Secretary may—

10 ‘‘(A) require that the State provide for a

11 verification audit in compliance with such chap12 ter, or

13 ‘‘(B) conduct such a verification audit.

14 ‘‘(3) AVAILABILITY OF AUDIT REPORTS.—With15 in 30 days after completion of each audit or verifica16 tion audit under this subsection, the State shall—

17 ‘‘(A) provide the Secretary with a copy of

18 the audit report, including the State’s response

19 to any recommendations of the auditor, and

20 ‘‘(B) make the audit report available for

21 public inspection in the same manner as pro22 posed MediGrant plan amendments are made

23 available under section 2105.

24 ‘‘(b) FISCAL CONTROLS.—
1328

•HR 2491 RH

1 ‘‘(1) IN GENERAL.—With respect to the ac2 counting and expenditure of funds under this title,

3 each State shall adopt and maintain such fiscal con4 trols, accounting procedures, and data processing

5 safeguards as the State deems reasonably necessary

6 to assure the fiscal integrity of the State’s activities

7 under this title.

8 ‘‘(2) CONSISTENCY WITH GENERALLY ACCEPT9 ED ACCOUNTING PRINCIPLES.—Such controls and

10 procedures shall be generally consistent with gen11 erally accepted accounting principles as recognized

12 by the Governmental Accounting Standards Board

13 or the Comptroller General.

14 ‘‘(c) AUDITS OF PROVIDERS.—Each MediGrant plan

15 shall provide that the records of any entity providing items

16 or services for which payment may be made under the plan

17 may be audited as necessary to ensure that proper pay18 ments are made under the plan.

19 ‘‘SEC. 2132. FRAUD PREVENTION PROGRAM.

20 ‘‘(a) ESTABLISHMENT.—Each MediGrant plan shall

21 provide for the establishment and maintenance of an effec22 tive program for the detection and prevention of fraud and

23 abuse by beneficiaries, providers, and others in connection

24 with the operation of the program.
1329

•HR 2491 RH

1 ‘‘(b) PROGRAM REQUIREMENTS.—The program es2 tablished pursuant to subsection (a) shall include at least

3 the following requirements:

4 ‘‘(1) DISCLOSURE OF INFORMATION.—Any dis5 closing entity (as defined in section 1124(a)) receiv6 ing payments under the MediGrant plan shall com7 ply with the requirements of section 1124.

8 ‘‘(2) SUPPLY OF INFORMATION.—An entity

9 (other than an individual practitioner or a group of

10 practitioners) that furnishes, or arranges for the fur11 nishing of, an item or service under the MediGrant

12 plan shall supply upon request specifically addressed

13 to the entity by the Secretary or the State agency

14 the information described in section 1128(b)(9).

15 ‘‘(3) EXCLUSION.—

16 ‘‘(A) IN GENERAL.—The MediGrant plan

17 shall exclude any specified individual or entity

18 from participation in the plan for the period

19 specified by the Secretary when required by the

20 Secretary to do so pursuant to section 1128 or

21 section 1128A, and provide that no payment

22 may be made under the plan with respect to

23 any item or service furnished by such individual

24 or entity during such period.
1330

•HR 2491 RH

1 ‘‘(B) AUTHORITY.—In addition to any

2 other authority, a State may exclude any indi3 vidual or entity for purposes of participating

4 under the MediGrant plan for any reason for

5 which the Secretary could exclude the individual

6 or entity from participation in a program under

7 title XVIII or under section 1128, 1128A, or

8 1866(b)(2).

9 ‘‘(4) NOTICE.—The MediGrant plan shall pro10 vide that whenever a provider of services or any

11 other person is terminated, suspended, or otherwise

12 sanctioned or prohibited from participating under

13 the plan, the State agency responsible for admin14 istering the plan shall promptly notify the Secretary

15 and, in the case of a physician, the State medical li16 censing board of such action.

17 ‘‘(5) ACCESS TO INFORMATION.—The

18 MediGrant plan shall provide that the State will pro19 vide information and access to certain information

20 respecting sanctions taken against health care prac21 titioners and providers by State licensing authorities

22 in accordance with section 2133.
1331

•HR 2491 RH

1 ‘‘SEC. 2133. INFORMATION CONCERNING SANCTIONS TAKEN

2 BY STATE LICENSING AUTHORITIES AGAINST

3 HEALTH CARE PRACTITIONERS AND PROVID4 ERS.

5 ‘‘(a) INFORMATION REPORTING REQUIREMENT.—

6 The requirement referred to in section 2132(b)(5) is that

7 the State must provide for the following:

8 ‘‘(1) INFORMATION REPORTING SYSTEM.—The

9 State must have in effect a system of reporting the

10 following information with respect to formal proceed11 ings (as defined by the Secretary in regulations)

12 concluded against a health care practitioner or entity

13 by any authority of the State (or of a political sub14 division thereof) responsible for the licensing of

15 health care practitioners (or any peer review organi16 zation or private accreditation entity reviewing the

17 services provided by health care practitioners) or en18 tities:

19 ‘‘(A) Any adverse action taken by such li20 censing authority as a result of the proceeding,

21 including any revocation or suspension of a li22 cense (and the length of any such suspension),

23 reprimand, censure, or probation.

24 ‘‘(B) Any dismissal or closure of the pro25 ceedings by reason of the practitioner or entity
1332

•HR 2491 RH

1 surrendering the license or leaving the State or

2 jurisdiction.

3 ‘‘(C) Any other loss of the license of the

4 practitioner or entity, whether by operation of

5 law, voluntary surrender, or otherwise.

6 ‘‘(D) Any negative action or finding by

7 such authority, organization, or entity regard8 ing the practitioner or entity.

9 ‘‘(2) ACCESS TO DOCUMENTS.—The State must

10 provide the Secretary (or an entity designated by the

11 Secretary) with access to such documents of the au12 thority described in paragraph (1) as may be nec13 essary for the Secretary to determine the facts and

14 circumstances concerning the actions and determina15 tions described in such paragraph for the purpose of

16 carrying out this Act.

17 ‘‘(b) FORM OF INFORMATION.—The information de18 scribed in subsection (a)(1) shall be provided to the Sec19 retary (or to an appropriate private or public agency,

20 under suitable arrangements made by the Secretary with

21 respect to receipt, storage, protection of confidentiality,

22 and dissemination of information) in such a form and

23 manner as the Secretary determines to be appropriate in

24 order to provide for activities of the Secretary under this
1333

•HR 2491 RH

1 Act and in order to provide, directly or through suitable

2 arrangements made by the Secretary, information—

3 ‘‘(1) to agencies administering Federal health

4 care programs, including private entities administer5 ing such programs under contract,

6 ‘‘(2) to licensing authorities described in sub7 section (a)(1),

8 ‘‘(3) to State agencies administering or super9 vising the administration of State health care pro10 grams (as defined in section 1128(h)),

11 ‘‘(4) to utilization and quality control peer re12 view organizations described in part B of title XI

13 and to appropriate entities with contracts under sec14 tion 1154(a)(4)(C) with respect to eligible organiza15 tions reviewed under the contracts,

16 ‘‘(5) to State MediGrant fraud control units (as

17 defined in section 2134),

18 ‘‘(6) to hospitals and other health care entities

19 (as defined in section 431 of the Health Care Qual20 ity Improvement Act of 1986), with respect to physi21 cians or other licensed health care practitioners that

22 have entered (or may be entering) into an employ23 ment or affiliation relationship with, or have applied

24 for clinical privileges or appointments to the medical

25 staff of, such hospitals or other health care entities
1334

•HR 2491 RH

1 (and such information shall be deemed to be dis2 closed pursuant to section 427 of, and be subject to

3 the provisions of, that Act),

4 ‘‘(7) to the Attorney General and such other

5 law enforcement officials as the Secretary deems ap6 propriate, and

7 ‘‘(8) upon request, to the Comptroller General,

8 in order for such authorities to determine the fitness

9 of individuals to provide health care services, to pro10 tect the health and safety of individuals receiving

11 health care through such programs, and to protect

12 the fiscal integrity of such programs.

13 ‘‘(c) CONFIDENTIALITY OF INFORMATION PRO14 VIDED.—The Secretary shall provide for suitable safe15 guards for the confidentiality of the information furnished

16 under subsection (a). Nothing in this subsection shall pre17 vent the disclosure of such information by a party which

18 is otherwise authorized, under applicable State law, to

19 make such disclosure.

20 ‘‘(d) APPROPRIATE COORDINATION.—The Secretary

21 shall provide for the maximum appropriate coordination

22 in the implementation of subsection (a) of this section and

23 section 422 of the Health Care Quality Improvement Act

24 of 1986.
1335

•HR 2491 RH

1 ‘‘SEC. 2134. STATE MEDIGRANT FRAUD CONTROL UNITS.

2 ‘‘(a) IN GENERAL.—Each MediGrant plan shall pro3 vide for a State MediGrant fraud control unit described

4 in subsection (b) that effectively carries out the functions

5 and requirements described in such subsection, unless the

6 State demonstrates to the satisfaction of the Secretary

7 that the effective operation of such a unit in the State

8 would not be cost-effective because minimal fraud exists

9 in connection with the provision of covered services to eli10 gible individuals under the plan, and that beneficiaries

11 under the plan will be protected from abuse and neglect

12 in connection with the provision of medical assistance

13 under the plan without the existence of such a unit

14 ‘‘(b) UNITS DESCRIBED.—For purposes of this sub15 section, the term ‘State MediGrant fraud control unit’

16 means a single identifiable entity of the State government

17 which meets the following requirements:

18 ‘‘(1) ORGANIZATION.—The entity—

19 ‘‘(A) is a unit of the office of the State At20 torney General or of another department of

21 State government which possesses statewide au22 thority to prosecute individuals for criminal vio23 lations;

24 ‘‘(B) is in a State the constitution of which

25 does not provide for the criminal prosecution of
1336

•HR 2491 RH

1 individuals by a statewide authority and has

2 formal procedures that—

3 ‘‘(i) assure its referral of suspected

4 criminal violations relating to the program

5 under this title to the appropriate author6 ity or authorities in the State for prosecu7 tion, and

8 ‘‘(ii) assure its assistance of, and co9 ordination with, such authority or authori10 ties in such prosecutions; or

11 ‘‘(C) has a formal working relationship

12 with the office of the State Attorney General

13 and has formal procedures (including proce14 dures for its referral of suspected criminal vio15 lations to such office) which provide effective

16 coordination of activities between the entity and

17 such office with respect to the detection, inves18 tigation, and prosecution of suspected criminal

19 violations relating to the program under this

20 title.

21 ‘‘(2) INDEPENDENCE.—The entity is separate

22 and distinct from any State agency that has prin23 cipal responsibilities for administering or supervising

24 the administration of the MediGrant plan.
1337

•HR 2491 RH

1 ‘‘(3) FUNCTION.—The entity’s function is con2 ducting a statewide program for the investigation

3 and prosecution of violations of all applicable State

4 laws regarding any and all aspects of fraud in con5 nection with any aspect of the provision of medical

6 assistance and the activities of providers of such as7 sistance under the MediGrant plan.

8 ‘‘(4) REVIEW OF COMPLAINTS.—The entity has

9 procedures for reviewing complaints of the abuse

10 and neglect of patients of health care facilities which

11 receive payments under the MediGrant plan under

12 this title, and, where appropriate, for acting upon

13 such complaints under the criminal laws of the State

14 or for referring them to other State agencies for ac15 tion.

16 ‘‘(5) OVERPAYMENTS.—The entity provides for

17 the collection, or referral for collection to a single

18 State agency, of overpayments that are made under

19 the MediGrant plan to health care providers and

20 that are discovered by the entity in carrying out its

21 activities.

22 ‘‘(6) PERSONNEL.—The entity employs such

23 auditors, attorneys, investigators, and other nec24 essary personnel and is organized in such a manner
1338

•HR 2491 RH

1 as is necessary to promote the effective and efficient

2 conduct of the entity’s activities.

3 ‘‘SEC. 2135. RECOVERIES FROM THIRD PARTIES AND OTH4 ERS.

5 ‘‘(a) THIRD PARTY LIABILITY.—Each MediGrant

6 plan shall provide for reasonable steps—

7 ‘‘(1) to ascertain the legal liability of third par8 ties to pay for care and services available under the

9 plan, including the collection of sufficient informa10 tion to enable States to pursue claims against third

11 parties; and

12 ‘‘(2) to seek reimbursement for medical assist13 ance provided to the extent legal liability is estab14 lished where the amount expected to be recovered ex15 ceeds the costs of the recovery.

16 ‘‘(b) BENEFICIARY PROTECTION.—

17 ‘‘(1) IN GENERAL.—Each MediGrant plan shall

18 provide that in the case of a person furnishing serv19 ices under the plan for which a third party may be

20 liable for payment—

21 ‘‘(A) the person may not seek to collect

22 from the individual (or financially responsible

23 relative) payment of an amount for the service

24 more than could be collected under the plan in

25 the absence of such third party liability, and
1339

•HR 2491 RH

1 ‘‘(B) may not refuse to furnish services to

2 such an individual because of a third party’s

3 potential liability for payment for the service.

4 ‘‘(2) PENALTY.—A MediGrant plan may pro5 vide for a reduction of any payment amount other6 wise due with respect to a person who furnishes

7 services under the plan in an amount equal to up to

8 three times the amount of any payment sought to be

9 collected by that person in violation of paragraph

10 (1)(A).

11 ‘‘(c) GENERAL LIABILITY.—The State shall prohibit

12 any health insurer (including a group health plan as de13 fined in section 607 of the Employee Retirement Income

14 Security Act of 1974, a service benefit plan, or a health

15 maintenance organization), in enrolling an individual or

16 in making any payments for benefits to the individual or

17 on the individual’s behalf, from taking into account that

18 the individual is eligible for or is provided medical assist19 ance under a MediGrant plan for any State.

20 ‘‘(d) ACQUISITION OF RIGHTS OF BENEFICIARIES.—

21 To the extent that payment has been made under a

22 MediGrant plan in any case where a third party has a

23 legal liability to make payment for such assistance, the

24 State shall have in effect laws under which, to the extent

25 that payment has been made under the plan for health
1340

•HR 2491 RH

1 care items or services furnished to an individual, the State

2 is considered to have acquired the rights of such individual

3 to payment by any other party for such health care items

4 or services.

5 ‘‘(e) ASSIGNMENT OF MEDICAL SUPPORT RIGHTS.—

6 The MediGrant plan shall provide for mandatory assign7 ment of rights of payment for medical support and other

8 medical care owed to recipients in accordance with section

9 2136.

10 ‘‘(f) REQUIRED LAWS RELATING TO MEDICAL CHILD

11 SUPPORT.—

12 ‘‘(1) IN GENERAL.— Each State with a

13 MediGrant plan shall have in effect the following

14 laws:

15 ‘‘(A) A law that prohibits an insurer from

16 denying enrollment of a child under the health

17 coverage of the child’s parent on the ground

18 that—

19 ‘‘(i) the child was born out of wedlock,

20 ‘‘(ii) the child is not claimed as a de21 pendent on the parent’s Federal income

22 tax return, or

23 ‘‘(iii) the child does not reside with

24 the parent or in the insurer’s service area.
1341

•HR 2491 RH

1 ‘‘(B) In any case in which a parent is re2 quired by a court or administrative order to

3 provide health coverage for a child and the par4 ent is eligible for family health coverage

5 through an insurer, a law that requires such in6 surer—

7 ‘‘(i) to permit such parent to enroll

8 under such family coverage any such child

9 who is otherwise eligible for such coverage

10 (without regard to any enrollment season

11 restrictions);

12 ‘‘(ii) if such a parent is enrolled but

13 fails to make application to obtain cov14 erage of such child, to enroll such child

15 under such family coverage upon applica16 tion by the child’s other parent or by the

17 State agency administering the program

18 under this title or part D of title IV; and

19 ‘‘(iii) not to disenroll (or eliminate

20 coverage of) such a child unless the insurer

21 is provided satisfactory written evidence

22 that—

23 ‘‘(I) such court or administrative

24 order is no longer in effect, or
1342

•HR 2491 RH

1 ‘‘(II) the child is or will be en2 rolled in comparable health coverage

3 through another insurer which will

4 take effect not later than the effective

5 date of such disenrollment.

6 ‘‘(C) In any case in which a parent is re7 quired by a court or administrative order to

8 provide health coverage for a child and the par9 ent is eligible for family health coverage

10 through an employer doing business in the

11 State, a law that requires such employer—

12 ‘‘(i) to permit such parent to enroll

13 under such family coverage any such child

14 who is otherwise eligible for such coverage

15 (without regard to any enrollment season

16 restrictions);

17 ‘‘(ii) if such a parent is enrolled but

18 fails to make application to obtain cov19 erage of such child, to enroll such child

20 under such family coverage upon applica21 tion by the child’s other parent or by the

22 State agency administering the program

23 under this title or part D of title IV; and

24 ‘‘(iii) not to disenroll (or eliminate

25 coverage of) any such child unless—
1343

•HR 2491 RH

1 ‘‘(I) the employer is provided sat2 isfactory written evidence that such

3 court or administrative order is no

4 longer in effect, or the child is or will

5 be enrolled in comparable health cov6 erage which will take effect not later

7 than the effective date of such

8 disenrollment, or

9 ‘‘(II) the employer has eliminated

10 family health coverage for all of its

11 employees; and

12 ‘‘(iv) to withhold from such employ13 ee’s compensation the employee’s share (if

14 any) of premiums for health coverage (ex15 cept that the amount so withheld may not

16 exceed the maximum amount permitted to

17 be withheld under section 303(b) of the

18 Consumer Credit Protection Act), and to

19 pay such share of premiums to the insurer,

20 except that the Secretary may provide by

21 regulation for appropriate circumstances

22 under which an employer may withhold

23 less than such employee’s share of such

24 premiums.
1344

•HR 2491 RH

1 ‘‘(D) A law that prohibits an insurer from

2 imposing requirements on a State agency,

3 which has been assigned the rights of an indi4 vidual eligible for medical assistance under this

5 title and covered for health benefits from the

6 insurer, that are different from requirements

7 applicable to an agent or assignee of any other

8 individual so covered.

9 ‘‘(E) A law that requires an insurer, in

10 any case in which a child has health coverage

11 through the insurer of a noncustodial parent—

12 ‘‘(i) to provide such information to the

13 custodial parent as may be necessary for

14 the child to obtain benefits through such

15 coverage;

16 ‘‘(ii) to permit the custodial parent

17 (or provider, with the custodial parent’s

18 approval) to submit claims for covered

19 services without the approval of the

20 noncustodial parent; and

21 ‘‘(iii) to make payment on claims sub22 mitted in accordance with clause (ii) di23 rectly to such custodial parent, the pro24 vider, or the State agency.
1345

•HR 2491 RH

1 ‘‘(F) A law that permits the State agency

2 under this title to garnish the wages, salary, or

3 other employment income of, and requires with4 holding amounts from State tax refunds to, any

5 person who—

6 ‘‘(i) is required by court or adminis7 trative order to provide coverage of the

8 costs of health services to a child who is el9 igible for medical assistance under this

10 title,

11 ‘‘(ii) has received payment from a

12 third party for the costs of such services to

13 such child, but

14 ‘‘(iii) has not used such payments to

15 reimburse, as appropriate, either the other

16 parent or guardian of such child or the

17 provider of such services,

18 to the extent necessary to reimburse the State

19 agency for expenditures for such costs under its

20 plan under this title, but any claims for current

21 or past-due child support shall take priority

22 over any such claims for the costs of such serv23 ices.

24 ‘‘(2) DEFINITION.—For purposes of this sub25 section, the term ‘insurer’ includes a group health
1346

•HR 2491 RH

1 plan, as defined in section 607(1) of the Employee

2 Retirement Income Security Act of 1974, a health

3 maintenance organization, and an entity offering a

4 service benefit plan.

5 ‘‘(g) ESTATE RECOVERIES AND LIENS PER6 MITTED.—A State may take such actions as it considers

7 appropriate to adjust or recover from the individual or the

8 individual’s estate any amounts paid as medical assistance

9 to or on behalf of the individual under the MediGrant

10 plan, including through the imposition of liens against the

11 property or estate of the individual.

12 ‘‘SEC. 2136. ASSIGNMENT OF RIGHTS OF PAYMENT.

13 ‘‘(a) IN GENERAL.—For the purpose of assisting in

14 the collection of medical support payments and other pay15 ments for medical care owed to recipients of medical as16 sistance under the MediGrant plan, each MediGrant plan

17 shall—

18 ‘‘(1) provide that, as a condition of eligibility

19 for medical assistance under the plan to an individ20 ual who has the legal capacity to execute an assign21 ment for himself, the individual is required—

22 ‘‘(A) to assign the State any rights, of the

23 individual or of any other person who is eligible

24 for medical assistance under the plan and on

25 whose behalf the individual has the legal au-
1347

•HR 2491 RH

1 thority to execute an assignment of such rights,

2 to support (specified as support for the purpose

3 of medical care by a court or administrative

4 order) and to payment for medical care from

5 any third party,

6 ‘‘(B) to cooperate with the State (i) in es7 tablishing the paternity of such person (referred

8 to in subparagraph (A)) if the person is a child

9 born out of wedlock, and (ii) in obtaining sup10 port and payments (described in subparagraph

11 (A)) for himself and for such person, unless (in

12 either case) the individual is pregnant woman

13 or the individual is found to have good cause

14 for refusing to cooperate as determined by the

15 State, and

16 ‘‘(C) to cooperate with the State in identi17 fying, and providing information to assist the

18 State in pursuing, any third party who may be

19 liable to pay for care and services available

20 under the plan, unless such individual has good

21 cause for refusing to cooperate as determined

22 by the State; and

23 ‘‘(2) provide for entering into cooperative ar24 rangements (including financial arrangements), with

25 any appropriate agency of any State (including, with
1348

•HR 2491 RH

1 respect to the enforcement and collection of rights of

2 payment for medical care by or through a parent,

3 with a State’s agency established or designated

4 under section 454(3)) and with appropriate courts

5 and law enforcement officials, to assist the agency or

6 agencies administering the plan with respect to—

7 ‘‘(A) the enforcement and collection of

8 rights to support or payment assigned under

9 this section, and

10 ‘‘(B) any other matters of common con11 cern.

12 ‘‘(b) USE OF AMOUNTS COLLECTED.—Such part of

13 any amount collected by the State under an assignment

14 made under the provisions of this section shall be retained

15 by the State as is necessary to reimburse it for medical

16 assistance payments made on behalf of an individual with

17 respect to whom such assignment was executed (with ap18 propriate reimbursement of the Federal Government to

19 the extent of its participation in the financing of such

20 medical assistance), and the remainder of such amount

21 collected shall be paid to such individual.

22 ‘‘SEC. 2137. QUALITY ASSURANCE STANDARDS FOR NURS23 ING FACILITIES.

24 ‘‘(a) STANDARDS FOR AND CERTIFICATION OF CER25 TAIN FACILITIES.—
1349

•HR 2491 RH

1 ‘‘(1) STANDARDS FOR FACILITIES.—

2 ‘‘(A) IN GENERAL.—Each MediGrant plan

3 shall provide for the establishment and mainte4 nance of standards consistent with the contents

5 described in subparagraph (B) for nursing fa6 cilities which furnish services under the plan.

7 ‘‘(B) CONTENTS OF STANDARDS.—The

8 standards established for facilities under this

9 paragraph shall contain provisions relating to

10 the following items:

11 ‘‘(i) The treatment of resident medical

12 records.

13 ‘‘(ii) Policies, procedures, and bylaws

14 for operation.

15 ‘‘(iii) Quality assurance systems.

16 ‘‘(iv) Resident assessment procedures,

17 including care planning and outcome eval18 uation.

19 ‘‘(v) The assurance of a safe and ade20 quate physical plant for the facility.

21 ‘‘(vi) Qualifications for staff sufficient

22 to provide adequate care, as defined by the

23 State.

24 ‘‘(vii) Utilization review.
1350

•HR 2491 RH

1 ‘‘(viii) The protection and enforce2 ment of resident rights described in sub3 paragraph (C).

4 ‘‘(C) RESIDENT RIGHTS DESCRIBED.—The

5 resident rights described in this subparagraph

6 are the rights of residents to the following:

7 ‘‘(i) To exercise the individual’s rights

8 as a resident of the facility and as a citizen

9 or resident of the United States.

10 ‘‘(ii) To receive notice of rights and

11 services.

12 ‘‘(iii) To be protected against the mis13 use of resident funds.

14 ‘‘(iv) To be provided privacy and con15 fidentiality.

16 ‘‘(v) To voice grievances.

17 ‘‘(vi) To examine the results of State

18 certification program inspections.

19 ‘‘(vii) To refuse to perform services

20 for the facility.

21 ‘‘(viii) To be provided privacy in com22 munications and to receive mail.

23 ‘‘(ix) To have the facility provide im24 mediate access to any resident by any rep25 resentative of the certification program,
1351

•HR 2491 RH

1 the resident’s individual physician, the

2 State long term care ombudsman, and any

3 person the resident has designated as a

4 visitor.

5 ‘‘(x) To retain and use personal prop6 erty.

7 ‘‘(xi) To be free from abuse, including

8 verbal, sexual, physical and mental abuse,

9 corporal punishment, and involuntary se10 clusion.

11 ‘‘(xii) To be provided with prior writ12 ten notice of a pending transfer or dis13 charge.

14 ‘‘(D) PROCESS FOR ESTABLISHMENT.—

15 The standards established by the State for fa16 cilities under this paragraph shall be promul17 gated either through the State’s legislative, reg18 ulatory, or other process, and may only take ef19 fect after the State has provided the public with

20 notice and an opportunity for comment.

21 ‘‘(2) CERTIFICATION PROGRAM.—

22 ‘‘(A) IN GENERAL.—Each MediGrant plan

23 shall provide for the establishment and oper24 ation of a program consistent with the require25 ments of subparagraph (B) for the certification
1352

•HR 2491 RH

1 of nursing facilities which meet the standards

2 established under paragraph (1) and the decer3 tification of facilities which fail to meet such

4 standards.

5 ‘‘(B) REQUIREMENTS FOR PROGRAM.—In

6 addition to any other requirements the State

7 may impose, in establishing and operating the

8 certification program under subparagraph (A),

9 the State shall ensure the following:

10 ‘‘(i) The State shall ensure public ac11 cess (as defined by the State) to the cer12 tification program’s evaluations of partici13 pating facilities, including compliance

14 records and enforcement actions and other

15 reports by the State regarding the owner16 ship, compliance histories, and services

17 provided by certified facilities.

18 ‘‘(ii) Not less often than every 4

19 years, the State shall audit its expendi20 tures under the program, through an en21 tity designated by the State which is not

22 affiliated with the program, as designated

23 by the State.

24 ‘‘(b) INTERMEDIATE SANCTION AUTHORITY.—
1353

•HR 2491 RH

1 ‘‘(1) AUTHORITY.—In addition to any other au2 thority under State law, where a State determines

3 that a nursing facility which is certified for partici4 pation under the MediGrant plan no longer substan5 tially meets the requirements for such a facility

6 under this title and further determines that the fa7 cility’s deficiencies—

8 ‘‘(A) immediately jeopardize the health and

9 safety of its residents, the State shall at least

10 provide for the termination of the facility’s cer11 tification for participation under the plan, or

12 ‘‘(B) do not immediately jeopardize the

13 health and safety of its residents, the State

14 may, in lieu of providing for terminating the fa15 cility’s certification for participation under the

16 plan, provide lesser sanctions including one that

17 provides that no payment will be made under

18 the plan with respect to any individual admitted

19 to such facility after a date specified by the

20 State.

21 ‘‘(2) NOTICE.—The State shall not make such

22 a decision with respect to a facility until the facility

23 has had a reasonable opportunity, following the ini24 tial determination that it no longer substantially

25 meets the requirements for such a facility under the
1354

•HR 2491 RH

1 plan, to correct its deficiencies, and, following this

2 period, has been given reasonable notice and oppor3 tunity for a hearing.

4 ‘‘(3) EFFECTIVENESS.—The State’s decision to

5 deny payment may be made effective only after such

6 notice to the public and to the facility as may be

7 provided for by the State, and its effectiveness shall

8 terminate (A) when the State finds that the facility

9 is in substantial compliance (or is making good faith

10 efforts to achieve substantial compliance) with the

11 requirements for such a facility under this title, or

12 (B) in the case described in paragraph (1)(B), with

13 the end of the eleventh month following the month

14 such decision is made effective, whichever occurs

15 first. If a facility to which clause (B) of the previous

16 sentence applies still fails to substantially meet the

17 provisions of the respective section on the date speci18 fied in such clause, the State shall terminate such

19 facility’s certification for participation under the

20 MediGrant plan effective with the first day of the

21 first month following the month specified in such

22 clause.
1355

•HR 2491 RH

1 ‘‘SEC. 2138. OTHER PROVISIONS PROMOTING PROGRAM IN2 TEGRITY.

3 ‘‘(a) PUBLIC ACCESS TO SURVEY RESULTS.—Each

4 MediGrant plan shall provide that upon completion of a

5 survey of any health care facility or organization by a

6 State agency to carry out the plan, the agency shall make

7 public in readily available form and place the pertinent

8 findings of the survey relating to the compliance of the

9 facility or organization with requirements of law.

10 ‘‘(b) RECORD KEEPING.—Each MediGrant plan shall

11 provide for agreements with persons or institutions provid12 ing services under the plan under which the person or in13 stitution agrees—

14 ‘‘(1) to keep such records (including ledgers,

15 books, and original evidence of costs) as are nec16 essary to fully disclose the extent of the services pro17 vided to individuals receiving assistance under the

18 plan; and

19 ‘‘(2) to furnish the State agency with such in20 formation regarding any payments claimed by such

21 person or institution for providing services under the

22 plan, as the State agency may from time to time re23 quest.
1356

•HR 2491 RH

1 ‘‘PART E—ESTABLISHMENT AND AMENDMENT OF

2 MEDIGRANT PLANS

3 ‘‘SEC. 2151. SUBMITTAL AND APPROVAL OF MEDIGRANT

4 PLANS.

5 ‘‘(a) SUBMITTAL.—As a condition of receiving fund6 ing under part C, each State shall submit to the Secretary

7 a MediGrant plan that meets the applicable requirements

8 of this title.

9 ‘‘(b) APPROVAL.—Except as the Secretary may pro10 vide under section 2154, a MediGrant plan submitted

11 under subsection (a)—

12 ‘‘(1) shall be approved for purposes of this title,

13 and

14 ‘‘(2) shall be effective beginning with a calendar

15 quarter that is specified in the plan, but in no case

16 earlier than the first calendar quarter that begins at

17 least 60 days after the date the plan is submitted.

18 ‘‘(c) APPROVAL OF LEGISLATURE FOR SUBMIT19 TAL.—In the case of a State which has a State allotment

20 under section 2121(c)(1) for fiscal year 1996 of more than

21 $10 billion, the State may not submit a MediGrant plan

22 under this section unless the State legislature, by law, has

23 specifically authorized such submittal.
1357

•HR 2491 RH

1 ‘‘SEC. 2152. SUBMITTAL AND APPROVAL OF PLAN AMEND2 MENTS.

3 ‘‘(a) SUBMITTAL OF AMENDMENTS.—A State may

4 amend, in whole or in part, its MediGrant plan at any

5 time through transmittal of a plan amendment under this

6 section.

7 ‘‘(b) APPROVAL.—Except as the Secretary may pro8 vide under section 2154, an amendment to a MediGrant

9 plan submitted under subsection (a)—

10 ‘‘(1) shall be approved for purposes of this title,

11 and

12 ‘‘(2) shall be effective as provided in subsection

13 (c).

14 ‘‘(c) EFFECTIVE DATES FOR AMENDMENTS.—

15 ‘‘(1) IN GENERAL.—Subject to the succeeding

16 provisions of this subsection, an amendment to

17 MediGrant plan shall take effect on one or more ef18 fective dates specified in the amendment.

19 ‘‘(2) AMENDMENTS RELATING TO ELIGIBILITY

20 OR BENEFITS.—Except as provided in paragraph

21 (4)—

22 ‘‘(A) NOTICE REQUIREMENT.—Any plan

23 amendment that eliminates or restricts eligi24 bility or benefits under the plan may not take

25 effect unless the State certifies that it has pro26 vided prior or contemporaneous public notice of
1358

•HR 2491 RH

1 the change, in a form and manner provided

2 under applicable State law.

3 ‘‘(B) TIMELY TRANSMITTAL.—Any plan

4 amendment that eliminates or restricts eligi5 bility or benefits under the plan shall not be ef6 fective for longer than a 60 day period unless

7 the amendment has been transmitted to the

8 Secretary before the end of such period.

9 ‘‘(3) OTHER AMENDMENTS.—Subject to para10 graph (4), any plan amendment that is not described

11 in paragraph (2) becomes effective in a State fiscal

12 year may not remain in effect after the end of such

13 fiscal year (or, if later, the end of the 90-day period

14 on which it becomes effective) unless the amendment

15 has been transmitted to the Secretary.

16 ‘‘(4) EXCEPTION.—The requirements of para17 graphs (2) and (3) shall not apply to a plan amend18 ment that is submitted on a timely basis pursuant

19 to a court order or an order of the Secretary.

20 ‘‘SEC. 2153. PROCESS FOR STATE WITHDRAWAL FROM PRO21 GRAM.

22 ‘‘(a) IN GENERAL.—A State may rescind its

23 MediGrant plan and discontinue participation in the pro24 gram under this title at any time after providing—
1359

•HR 2491 RH

1 ‘‘(1) the public with 90 days prior notice in a

2 publication in one or more daily newspapers of gen3 eral circulation in the State or in any publication

4 used by the State to publish State statutes or rules,

5 and

6 ‘‘(2) the Secretary with 90 days prior written

7 notice.

8 ‘‘(b) EFFECTIVE DATE.—Such discontinuation shall

9 not apply to payments under part C for expenditures made

10 for items and services furnished under the MediGrant plan

11 before the effective date of the discontinuation.

12 ‘‘(c) PRORATION OF ALLOTMENTS.—In the case of

13 any withdrawal under this section other than at the end

14 of a Federal fiscal year, notwithstanding any provision of

15 section 2121 to the contrary, the Secretary shall provide

16 for such appropriate proration of the application of allot17 ments under section 2121 as is appropriate.

18 ‘‘SEC. 2154. SANCTIONS FOR SUBSTANTIAL NONCOMPLI19 ANCE.

20 ‘‘(a) PROMPT REVIEW OF PLAN SUBMITTALS.—The

21 Secretary shall promptly review MediGrant plans and plan

22 amendments submitted under this part to determine if

23 they substantially comply with the requirements of this

24 title.
1360

•HR 2491 RH

1 ‘‘(b) DETERMINATIONS OF SUBSTANTIAL NON2 COMPLIANCE.—

3 ‘‘(1) AT TIME OF PLAN OR AMENDMENT SUB4 MITTAL.—

5 ‘‘(A) IN GENERAL.—If the Secretary, dur6 ing the 30-day period beginning on the date of

7 submittal of a MediGrant plan or plan amend8 ment—

9 ‘‘(i) determines that the plan or

10 amendment substantially violates (within

11 the meaning of subsection (c)) a require12 ment of this title, and

13 ‘‘(ii) provides written notice of such

14 determination to the State,

15 the Secretary shall issue an order specifying

16 that the plan or amendment, insofar as it is in

17 substantial violation of such a requirement,

18 shall not be effective, except as provided in sub19 section (c), beginning at the end of a period of

20 not less than 30 days, or 120 days in the case

21 of the initial submission of the MediGrant plan)

22 specified in the order beginning on the date of

23 the notice of the determination.

24 ‘‘(B) EXTENSION OF TIME PERIODS.—The

25 time periods specified in subparagraph (A) may
1361

•HR 2491 RH

1 be extended by written agreement of the Sec2 retary and the State involved.

3 ‘‘(2) VIOLATIONS IN ADMINISTRATION OF

4 PLAN.—

5 ‘‘(A) IN GENERAL.—If the Secretary deter6 mines, after reasonable notice and opportunity

7 for a hearing for the State, that in the adminis8 tration of a MediGrant plan there is a substan9 tial violation of a requirement of this title, the

10 Secretary shall provide the State with written

11 notice of the determination and with an order

12 to remedy such violation. Such an order shall

13 become effective prospectively, as specified in

14 the order, after the date of receipt of such writ15 ten notice. Such an order may include the with16 holding of funds, consistent with subsection (f),

17 for parts of the MediGrant plan affected by

18 such violation, until the Secretary is satisfied

19 that the violation has been corrected.

20 ‘‘(B) EFFECTIVENESS.—If the Secretary

21 issues an order under paragraph (1), the order

22 shall become effective, except as provided in

23 subsection (c), beginning at the end of a period

24 (of not less than 30 days) specified in the order
1362

•HR 2491 RH

1 beginning on the date of the notice of the deter2 mination to the State.

3 ‘‘(C) TIMELINESS OF DETERMINATIONS

4 RELATING TO REPORT-BASED COMPLIANCE.—

5 The Secretary shall make determinations under

6 this paragraph respecting violations relating to

7 information contained in an annual report

8 under section 2102, an independent evaluation

9 under section 2103, or an audit report under

10 section 2131 not later than 30 days after the

11 date of transmittal of the report or evaluation

12 to the Secretary.

13 ‘‘(3) CONSULTATION WITH STATE.—Before

14 making a determination adverse to a State under

15 this section, the Secretary shall (within any time pe16 riods provided under this section)—

17 ‘‘(A) reasonably consult with the State in18 volved,

19 ‘‘(B) offer the State a reasonable oppor20 tunity to clarify the submission and submit fur21 ther information to substantiate compliance

22 with the requirements of this title, and

23 ‘‘(C) reasonably consider any such clari24 fications and information submitted.
1363

•HR 2491 RH

1 ‘‘(4) JUSTIFICATION OF ANY INCONSISTENCIES

2 IN DETERMINATIONS.—If the Secretary makes a de3 termination under this section that is, in whole or in

4 part, inconsistent with any previous determination

5 issued by the Secretary under this title, the Sec6 retary shall include in the determination a detailed

7 explanation and justification for any such difference.

8 ‘‘(5) SUBSTANTIAL VIOLATION DEFINED.—For

9 purposes of this title, a MediGrant plan (or amend10 ment to such a plan) or the administration of the

11 MediGrant plan is considered to ‘substantially vio12 late’ a requirement of this title if a provision of the

13 plan or amendment (or an omission from the plan

14 or amendment) or the administration of the plan—

15 ‘‘(A) is material and substantial in nature

16 and effect, and

17 ‘‘(B) is inconsistent with an express re18 quirement of this title.

19 A failure to meet a strategic objective or perform20 ance goal (as described in section 2101) shall not be

21 considered to substantially violate a requirement of

22 this title.

23 ‘‘(c) STATE RESPONSE TO ORDERS.—

24 ‘‘(1) STATE RESPONSE BY REVISING PLAN.—
1364

•HR 2491 RH

1 ‘‘(A) IN GENERAL.—Insofar as an order

2 under subsection (b)(1) relates to a substantial

3 violation by a MediGrant plan or plan amend4 ment, a State may respond (before the date the

5 order becomes effective) to such an order by

6 submitting a written revision of the plan or

7 plan amendment to substantially comply with

8 the requirements of this part.

9 ‘‘(B) REVIEW OF REVISION.—In the case

10 of submission of such a revision, the Secretary

11 shall promptly review the submission and shall

12 withhold any action on the order during the pe13 riod of such review.

14 ‘‘(C) SECRETARIAL RESPONSE.—The revi15 sion shall be considered to have corrected the

16 deficiency (and the order rescinded insofar as it

17 relates to such deficiency) unless the Secretary

18 determines and notifies the State in writing,

19 within 15 days after the date the Secretary re20 ceives the revision, that the plan or amendment,

21 as proposed to be revised, still substantially vio22 lates a requirement of this title. In such case

23 the State may respond by seeking reconsider24 ation or a hearing under paragraph (2).
1365

•HR 2491 RH

1 ‘‘(D) REVISION RETROACTIVE.—If the re2 vision provides for substantial compliance, the

3 revision may be treated, at the option of the

4 State, as being effective either as of the effec5 tive date of the provision to which it relates or

6 such later date as the State and Secretary may

7 agree.

8 ‘‘(2) STATE RESPONSE BY SEEKING RECONSID9 ERATION OR AN ADMINISTRATIVE HEARING.—A

10 State may respond to an order under subsection (b)

11 by filing a request with the Secretary for—

12 ‘‘(A) a reconsideration of the determina13 tion, pursuant to subsection (d)(1), or

14 ‘‘(B) a review of the determination through

15 an administrative hearing, pursuant to sub16 section (d)(2).

17 In such case, the order shall not take effect before

18 the completion of the reconsideration or hearing.

19 ‘‘(3) STATE RESPONSE BY CORRECTIVE ACTION

20 PLAN.—

21 ‘‘(A) IN GENERAL.—In the case of an

22 order described in subsection (b)(2) that relates

23 to a substantial violation in the administration

24 of the MediGrant plan, a State may respond to

25 such an order by submitting a corrective action
1366

•HR 2491 RH

1 plan with the Secretary to correct deficiencies

2 in the administration of the plan which are the

3 subject of the order.

4 ‘‘(B) REVIEW OF CORRECTIVE ACTION

5 PLAN.—In such case, the Secretary shall with6 hold any action on the order for a period (not

7 to exceed 30 days) during which the Secretary

8 reviews the corrective action plan.

9 ‘‘(C) SECRETARIAL RESPONSE.—The cor10 rective action plan shall be considered to have

11 corrected the deficiency (and the order re12 scinded insofar as it relates to such deficiency)

13 unless the Secretary determines and notifies the

14 State in writing, within 15 days after the date

15 the Secretary receives the corrective action

16 plan, that the State’s administration of the

17 MediGrant plan, as proposed to be corrected in

18 the plan, will still substantially violate a re19 quirement of this title. In such case the State

20 may respond by seeking reconsideration or a

21 hearing under paragraph (2).

22 ‘‘(4) STATE RESPONSE BY WITHDRAWAL OF

23 PLAN AMENDMENT; FAILURE TO RESPOND.—Insofar

24 as an order relates to a substantial violation in a

25 plan amendment submitted, a State may respond to
1367

•HR 2491 RH

1 such an order by withdrawing the plan amendment

2 and the MediGrant plan shall be treated as though

3 the amendment had not been made.

4 ‘‘(d) ADMINISTRATIVE REVIEW AND HEARING.—

5 ‘‘(1) RECONSIDERATION.—Within 30 days after

6 the date of receipt of a request under subsection

7 (b)(2)(A), the Secretary shall notify the State of the

8 time and place at which a hearing will be held for

9 the purpose of reconsidering the Secretary’s deter10 mination. The hearing shall be held not less than 20

11 days nor more than 60 days after the date notice of

12 the hearing is furnished to the State, unless the Sec13 retary and the State agree in writing to holding the

14 hearing at another time. The Secretary shall affirm,

15 modify, or reverse the original determination within

16 60 days of the conclusion of the hearing.

17 ‘‘(2) ADMINISTRATIVE HEARING.—Within 30

18 days after the date of receipt of a request under

19 subsection (b)(2)(B), an administrative law judge

20 shall schedule a hearing for the purpose of reviewing

21 the Secretary’s determination. The hearing shall be

22 held not less than 20 days nor more than 60 days

23 after the date notice of the hearing is furnished to

24 the State, unless the Secretary and the State agree

25 in writing to holding the hearing at another time.
1368

•HR 2491 RH

1 The administrative law judge shall affirm, modify, or

2 reverse the determination within 60 days of the con3 clusion of the hearing.

4 ‘‘(e) JUDICIAL REVIEW.—

5 ‘‘(1) IN GENERAL.—A State which is dissatis6 fied with a final determination made by the Sec7 retary under subsection (d)(1) or a final determina8 tion of an administrative law judge under subsection

9 (d)(2) may, within 60 days after it has been notified

10 of such determination, file with the United States

11 court of appeals for the circuit in which the State

12 is located a petition for review of such determina13 tion. A copy of the petition shall be forthwith trans14 mitted by the clerk of the court to the Secretary

15 and, in the case of a determination under subsection

16 (d)(2), to the administrative law judge involved. The

17 Secretary (or judge involved) thereupon shall file in

18 the court the record of the proceedings on which the

19 final determination was based, as provided in section

20 2112 of title 28, United States Code.

21 ‘‘(2) STANDARD FOR REVIEW.—The findings of

22 fact by the Secretary or administrative law judge, if

23 supported by substantial evidence, shall be conclu24 sive, but the court, for good cause shown, may re25 mand the case to the Secretary or judge to take fur-
1369

•HR 2491 RH

1 ther evidence, and the Secretary or judge may there2 upon make new or modified findings of fact and may

3 modify a previous determination, and shall certify to

4 the court the transcript and record of the further

5 proceedings. Such new or modified findings of fact

6 shall likewise be conclusive if supported by substan7 tial evidence.

8 ‘‘(3) JURISDICTION OF APPELLATE COURT.—

9 The court shall have jurisdiction to affirm the action

10 of the Secretary or judge or to set it aside, in whole

11 or in part. The judgment of the court shall be sub12 ject to review by the Supreme Court of the United

13 States upon certiorari or certification as provided in

14 section 1254 of title 28, United States Code.

15 ‘‘(f) WITHHOLDING OF FUNDS.—

16 ‘‘(1) IN GENERAL.—Any order under this sec17 tion relating to the withholding of funds shall be ef18 fective not earlier than the effective date of the

19 order and shall only relate to the portions of a

20 MediGrant plan or administration thereof which sub21 stantially violate a requirement of this title. In the

22 case of a failure to meet a set-aside requirement

23 under section 2112, any withholding shall only apply

24 to the extent of such failure.
1370

•HR 2491 RH

1 ‘‘(2) SUSPENSION OF WITHHOLDING.—The Sec2 retary may suspend withholding of funds under

3 paragraph (1) during the period reconsideration or

4 administrative and judicial review is pending under

5 subsection (d) or (e).

6 ‘‘(3) RESTORATION OF FUNDS.—Any funds

7 withheld under this subsection under an order shall

8 be immediately restored to a State—

9 ‘‘(A) to the extent and at the time the

10 order is—

11 ‘‘(i) modified or withdrawn by the

12 Secretary upon reconsideration,

13 ‘‘(ii) modified or reversed by an ad14 ministrative law judge, or

15 ‘‘(iii) set aside (in whole or in part) by

16 an appellate court; or

17 ‘‘(B) when the Secretary determines that

18 the deficiency which was the basis for the order

19 is corrected;

20 ‘‘(C) when the Secretary determines that

21 violation which was the basis for the order is

22 resolved or the amendment which was the basis

23 for the order is withdrawn; or

24 ‘‘(D) at any time upon the initiative of the

25 Secretary.
1371

•HR 2491 RH

1 ‘‘SEC. 2155. SECRETARIAL AUTHORITY.

2 ‘‘(a) NEGOTIATED AGREEMENT AND DISPUTE RESO3 LUTION.—

4 ‘‘(1) NEGOTIATIONS.—Nothing in this part

5 shall be construed as preventing the Secretary and

6 a State from at any time negotiating a satisfactory

7 resolution to any dispute concerning the approval of

8 a MediGrant plan (or amendments to a MediGrant

9 plan) or the compliance of a MediGrant plan (in10 cluding its administration) with requirements of this

11 title.

12 ‘‘(2) COOPERATION.—The Secretary shall act in

13 a cooperative manner with the States in carrying out

14 this title. In the event of a dispute between a State

15 and the Secretary, the Secretary shall, whenever

16 practicable, engage in informal dispute resolution ac17 tivities in lieu of formal enforcement or sanctions

18 under section 2154.

19 ‘‘(b) LIMITATIONS ON DELEGATION OF DECISION20 MAKING AUTHORITY.—The Secretary may not delegate

21 (other than to the Administrator of the Health Care Fi22 nancing Administration) the authority to make determina23 tions or reconsiderations respecting the approval of

24 MediGrant plans (or amendments to such plans) or the

25 compliance of a MediGrant plan (including its administra26 tion) with requirements of this title. Such Administrator
1372

•HR 2491 RH

1 may not further delegate such authority to any individual,

2 including any regional official of such Administration.

3 ‘‘(c) REQUIRING FORMAL RULEMAKING FOR

4 CHANGES IN SECRETARIAL ADMINISTRATION.—The Sec5 retary shall carry out the administration of the program

6 under this title only through a prospective formal rule7 making process, including issuing notices of proposed rule

8 making, publishing proposed rules or modifications to

9 rules in the Federal Register, and soliciting public com10 ment.

11 ‘‘PART F—GENERAL PROVISIONS

12 ‘‘SEC. 2171. DEFINITIONS.

13 ‘‘(a) MEDICAL ASSISTANCE.—

14 ‘‘(1) IN GENERAL.—For purposes of this title,

15 except as provided in paragraph (2), the term ‘medi16 cal assistance’ means payment of part or all the cost

17 of any of the following for eligible low-income indi18 viduals (as defined in subsection (b)) as specified

19 under the MediGrant plan:

20 ‘‘(A) Inpatient hospital services.

21 ‘‘(B) Outpatient hospital services.

22 ‘‘(C) Physician services.

23 ‘‘(D) Surgical services.

24 ‘‘(E) Clinic services and other ambulatory

25 health care services.
1373

•HR 2491 RH

1 ‘‘(F) Nursing facility services.

2 ‘‘(G) Intermediate care facility services for

3 the mentally retarded.

4 ‘‘(H) Prescription drugs and biologicals.

5 ‘‘(I) Over-the-counter medications.

6 ‘‘(J) Laboratory and radiological services.

7 ‘‘(K) Family planning services and sup8 plies.

9 ‘‘(L) Inpatient mental health services, in10 cluding services furnished in a State-operated

11 mental hospital and including residential or

12 other 24-hour therapeutically planned struc13 tured services in the case of a child.

14 ‘‘(M) Outpatient mental health services, in15 cluding services furnished in a State-operated

16 mental hospital and including community-based

17 services in the case of a child.

18 ‘‘(N) Durable medical equipment and other

19 medically-related or remedial devices (such as

20 prosthetic devices, implants, eyeglasses, hearing

21 aids, dental devices, and adaptive devices).

22 ‘‘(O) Disposable medical supplies.

23 ‘‘(P) Home and community-based health

24 care services and related supportive services

25 (such as home health nursing services, home
1374

•HR 2491 RH

1 health aide services, personal care, assistance

2 with activities of daily living, chore services, day

3 care services, respite care services, and training

4 for family members).

5 ‘‘(Q) Community supported living arrange6 ments.

7 ‘‘(R) Nursing care services (such as private

8 duty nursing care, nurse midwife services, res9 piratory care services, pediatric nurse services,

10 and advanced practice nurse services) in a

11 home, school, or other setting.

12 ‘‘(S) Dental services.

13 ‘‘(T) Inpatient substance abuse treatment

14 services and residential substance abuse treat15 ment services.

16 ‘‘(U) Outpatient substance abuse treat17 ment services.

18 ‘‘(V) Case management services.

19 ‘‘(W) Care coordination services.

20 ‘‘(X) Physical therapy, occupational ther21 apy, and services for individuals with speech,

22 hearing, and language disorders.

23 ‘‘(Y) Hospice care.

24 ‘‘(Z) Any other medical, diagnostic, screen25 ing, preventive, restorative, remedial, thera-
1375

•HR 2491 RH

1 peutic, or rehabilitative services (whether in a

2 facility, home, school, or other setting) if recog3 nized by State law and if the service is—

4 ‘‘(i) prescribed by or furnished by a

5 physician or other licensed or registered

6 practitioner within the scope of practice as

7 defined by State law,

8 ‘‘(ii) performed under the general su9 pervision or at the direction of a physician,

10 or

11 ‘‘(iii) furnished by a health care facil12 ity that is operated by a State or local gov13 ernment or is licensed under State law and

14 operating within the scope of the license.

15 ‘‘(AA) Premiums for private health care

16 insurance coverage, including private long-term

17 care insurance coverage.

18 ‘‘(BB) Medical transportation.

19 ‘‘(CC) Medicare cost-sharing (as defined in

20 subsection (c)).

21 ‘‘(DD) Enabling services (such as trans22 portation, translation, and outreach services)

23 designed to increase the accessibility of primary

24 and preventive health care services for eligible

25 low-income individuals.
1376

•HR 2491 RH

1 ‘‘(EE) Any other health care services or

2 items specified by the Secretary.

3 ‘‘(2) EXCLUSION OF CERTAIN PAYMENTS.—

4 Such term does not include the payment with re5 spect to care or services for—

6 ‘‘(A) any individual who is an inmate of a

7 public institution (except as a patient in a State

8 psychiatric hospital); and

9 ‘‘(B) any individual who is not an eligible

10 low-income individual.

11 ‘‘(b) ELIGIBLE LOW-INCOME INDIVIDUAL.—The

12 term ‘eligible low-income individual’ means an individual

13 who has been determined eligible by the State for medical

14 assistance under the MediGrant plan and whose family in15 come (as determined under the plan) does not exceed a

16 percentage (specified in the MediGrant plan and not to

17 exceed 300 percent) of the poverty line for a family of

18 the size involved. In determining the amount of income

19 under the previous sentence, a State may exclude costs

20 incurred for medical care or other types of remedial care

21 recognized by the State.

22 ‘‘(c) MEDICARE COST-SHARING.—For purposes of

23 this title, the term ‘medicare cost-sharing’ means any of

24 the following:

25 ‘‘(1)(A) Premiums under section 1839.
1377

•HR 2491 RH

1 ‘‘(B) Premiums under section 1818 or 1818A.

2 ‘‘(2) Coinsurance under title XVIII (including

3 coinsurance described in section 1813).

4 ‘‘(3) Deductibles established under title XVIII

5 (including those described in section 1813 and sec6 tion 1833(b)).

7 ‘‘(4) The difference between the amount that is

8 paid under section 1833(a) and the amount that

9 would be paid under such section if any reference to

10 ‘80 percent’ therein were deemed a reference to ‘100

11 percent’.

12 ‘‘(5) Premiums for enrollment of an individual

13 with an eligible organization under section 1876 or

14 with a MedicarePlus organization under part C of

15 title XVIII.

16 ‘‘(d) ADDITIONAL DEFINITIONS.—For purposes of

17 this title:

18 ‘‘(1) CHILD.—The term ‘child’ means an indi19 vidual under 19 years of age.

20 ‘‘(2) POVERTY LINE DEFINED.—The term ‘pov21 erty line’ means the income official poverty line (as

22 defined by the Office of Management and Budget

23 and revised annually in accordance with section

24 673(2) of the Omnibus Budget Reconciliation Act of

25 1981).
1378

•HR 2491 RH

1 ‘‘(3) PREGNANT WOMAN.—The term ‘pregnant

2 woman’ includes a woman during the 60-day period

3 beginning on the last day of the pregnancy.

4 ‘‘SEC. 2172. TREATMENT OF TERRITORIES.

5 ‘‘Notwithstanding any other requirement of this title,

6 the Secretary may waive or modify any requirement of this

7 title with respect to the medical assistance program a

8 State other than the 50 States and the District of Colum9 bia, other than a waiver of—

10 ‘‘(1) the applicable Federal medical assistance

11 percentage,

12 ‘‘(2) the limitation on total payments in a fiscal

13 year to the amount of the allotment under section

14 2121(c), or

15 ‘‘(3) the requirement that payment may be

16 made for medical assistance only with respect to

17 amounts expended by the State for care and services

18 described in paragraph (1) of section 2171(a) and

19 medically-related services (as defined in section

20 2112(e)(2)).

21 ‘‘SEC. 2173. DESCRIPTION OF TREATMENT OF INDIAN

22 HEALTH SERVICE FACILITIES.

23 ‘‘In the case of a State in which one or more facilities

24 of the Indian Health Service are located, the MediGrant

25 plan shall include a description of—
1379

•HR 2491 RH

1 ‘‘(1) what provision (if any) has been made for

2 payment for items and services furnished by such fa3 cilities, and

4 ‘‘(2) the manner in which medical assistance for

5 low-income eligible individuals who are Indians will

6 be provided, as determined by the State in consulta7 tion with the appropriate Indian tribes and tribal or8 ganizations.

9 ‘‘SEC. 2174. APPLICATION OF CERTAIN GENERAL PROVI10 SIONS.

11 ‘‘The following sections in part A of title XI shall

12 apply to States under this title in the same manner as

13 they applied to a State under title XIX:

14 ‘‘(1) Section 1101(a)(1) (relating to definition

15 of State).

16 ‘‘(2) Section 1116 (relating to administrative

17 and judicial review), but only insofar as consistent

18 with the provisions of part C.

19 ‘‘(3) Section 1124 (relating to disclosure of

20 ownership and related information).

21 ‘‘(4) Section 1126 (relating to disclosure of in22 formation about certain convicted individuals).

23 ‘‘(5) Section 1132 (relating to periods within

24 which claims must be filed).
1380

•HR 2491 RH

1 ‘‘SEC. 2175. MEDIGRANT MASTER DRUG REBATE AGREE2 MENTS.

3 ‘‘(a) REQUIREMENT FOR MANUFACTURER TO ENTER

4 INTO AGREEMENT.—

5 ‘‘(1) IN GENERAL.—Pursuant to section

6 2123(f), in order for payment to be made to a State

7 under part C for medical assistance for covered out8 patient drugs of a manufacturer, the manufacturer

9 shall enter into and have in effect an MediGrant

10 master rebate agreement described in subsection (b)

11 with the Secretary on behalf of States electing to

12 participate in the agreement.

13 ‘‘(2) STATE PARTICIPATION IN MASTER AGREE14 MENT OPTIONAL.—Nothing in this section shall be

15 construed to—

16 ‘‘(A) require a State to participate in an

17 MediGrant master rebate agreement under this

18 section; or

19 ‘‘(B) prohibit a State from entering into

20 an agreement with a manufacturer of covered

21 outpatient drugs (under such terms as the

22 State and manufacturer may agree upon) re23 garding the amount of payment for such drugs

24 under the MediGrant plan.

25 ‘‘(3) COVERAGE OF DRUGS NOT COVERED

26 UNDER REBATE AGREEMENTS.—Nothing in this sec-
1381

•HR 2491 RH

1 tion shall be construed to prohibit a State in its dis2 cretion from providing coverage under its MediGrant

3 plan of a covered outpatient drug for which no re4 bate agreement is in effect under this section.

5 ‘‘(4) EFFECT ON EXISTING AGREEMENTS.—If a

6 State has a rebate agreement in effect with a manu7 facturer on the date of the enactment of this section

8 which provides for a minimum aggregate rebate

9 equal to or greater than the minimum aggregate re10 bate which would otherwise be paid under the

11 MediGrant master agreement under this section, at

12 the option of the State—

13 ‘‘(A) such agreement shall be considered to

14 meet the requirements of the MediGrant master

15 rebate agreement; and

16 ‘‘(B) the State shall be considered to have

17 elected to participate in the MediGrant master

18 rebate agreement.

19 ‘‘(b) TERMS OF REBATE AGREEMENT.—

20 ‘‘(1) PERIODIC REBATES.—The MediGrant

21 master rebate agreement under this section shall re22 quire the manufacturer to provide, to the MediGrant

23 plan of each State participating in the agreement, a

24 rebate for a rebate period in an amount specified in

25 subsection (c) for covered outpatient drugs of the
1382

•HR 2491 RH

1 manufacturer dispensed after the effective date of

2 the agreement, for which payment was made under

3 the plan for such period. Such rebate shall be paid

4 by the manufacturer not later than 30 days after the

5 date of receipt of the information described in para6 graph (2) for the period involved.

7 ‘‘(2) STATE PROVISION OF INFORMATION.—

8 ‘‘(A) STATE RESPONSIBILITY.—Each State

9 participating in the MediGrant master rebate

10 agreement shall report to each manufacturer

11 not later than 60 days after the end of each re12 bate period and in a form consistent with a

13 standard reporting format established by the

14 Secretary, information on the total number of

15 units of each dosage form and strength and

16 package size of each covered outpatient drug,

17 for which payment was made under the

18 MediGrant plan for the period, and shall

19 promptly transmit a copy of such report to the

20 Secretary.

21 ‘‘(B) AUDITS.—A manufacturer may audit

22 the information provided (or required to be pro23 vided) under subparagraph (A). Adjustments to

24 rebates shall be made to the extent that infor-
1383

•HR 2491 RH

1 mation indicates that utilization was greater or

2 less than the amount previously specified.

3 ‘‘(3) MANUFACTURER PROVISION OF PRICE IN4 FORMATION.—

5 ‘‘(A) IN GENERAL.—Each manufacturer

6 which is subject to the MediGrant master re7 bate agreement under this section shall report

8 to the Secretary—

9 ‘‘(i) not later than 30 days after the

10 last day of each rebate period under the

11 agreement (beginning on or after January

12 1, 1991), on the average manufacturer

13 price (as defined in subsection (i)(1)) and,

14 for single source drugs and innovator mul15 tiple source drugs, the manufacturer’s best

16 price (as defined in subsection (c)(1)(C))

17 for each covered outpatient drug for the

18 rebate period under the agreement, and

19 ‘‘(ii) not later than 30 days after the

20 date of entering into an agreement under

21 this section, on the average manufacturer

22 price (as defined in subsection (i)(1)) as of

23 October 1, 1990, for each of the manufac24 turer’s covered outpatient drugs.
1384

•HR 2491 RH

1 ‘‘(B) VERIFICATION SURVEYS OF AVERAGE

2 MANUFACTURER PRICE.—The Secretary may

3 survey wholesalers and manufacturers that di4 rectly distribute their covered outpatient drugs,

5 when necessary, to verify manufacturer prices

6 reported under subparagraph (A). The Sec7 retary may impose a civil monetary penalty in

8 an amount not to exceed $10,000 on a whole9 saler, manufacturer, or direct seller, if the

10 wholesaler, manufacturer, or direct seller of a

11 covered outpatient drug refuses a request for

12 information by the Secretary in connection with

13 a survey under this subparagraph. The provi14 sions of section 1128A (other than subsections

15 (a) (with respect to amounts of penalties or ad16 ditional assessments) and (b)) shall apply to a

17 civil money penalty under this subparagraph in

18 the same manner as such provisions apply to a

19 penalty or proceeding under section 1128A(a).

20 ‘‘(C) PENALTIES.—

21 ‘‘(i) FAILURE TO PROVIDE TIMELY IN22 FORMATION.—In the case of a manufac23 turer which is subject to the MediGrant

24 master rebate agreement that fails to pro25 vide information required under subpara-
1385

•HR 2491 RH

1 graph (A) on a timely basis, the amount of

2 the penalty shall be $10,000 for each day

3 in which such information has not been

4 provided and such amount shall be paid to

5 the Treasury. If such information is not

6 reported within 90 days of the deadline im7 posed, the agreement shall be suspended

8 for services furnished after the end of such

9 90-day period and until the date such in10 formation is reported (but in no case shall

11 such suspension be for a period of less

12 than 30 days).

13 ‘‘(ii) FALSE INFORMATION.—Any

14 manufacturer which is subject to the

15 MediGrant master rebate agreement, or a

16 wholesaler or direct seller, that knowingly

17 provides false information under subpara18 graph (A) or (B) is subject to a civil

19 money penalty in an amount not to exceed

20 $100,000 for each item of false informa21 tion. Any such civil money penalty shall be

22 in addition to other penalties as may be

23 prescribed by law. The provisions of sec24 tion 1128A (other than subsections (a) and

25 (b)) shall apply to a civil money penalty
1386

•HR 2491 RH

1 under this subparagraph in the same man2 ner as such provisions apply to a penalty

3 or proceeding under section 1128A(a).

4 ‘‘(D) CONFIDENTIALITY OF INFORMA5 TION.—Notwithstanding any other provision of

6 law, information disclosed by manufacturers or

7 wholesalers under this paragraph or under an

8 agreement with the Secretary of Veterans Af9 fairs described in section 2123(f) is confidential

10 and shall not be disclosed by the Secretary or

11 the Secretary of Veterans Affairs or a State

12 agency (or contractor therewith) in a form

13 which discloses the identity of a specific manu14 facturer or wholesaler or the prices charged for

15 drugs by such manufacturer or wholesaler, ex16 cept—

17 ‘‘(i) as the Secretary determines to be

18 necessary to carry out this section,

19 ‘‘(ii) to permit the Comptroller Gen20 eral to review the information provided,

21 and

22 ‘‘(iii) to permit the Director of the

23 Congressional Budget Office to review the

24 information provided.

25 ‘‘(4) LENGTH OF AGREEMENT.—
1387

•HR 2491 RH

1 ‘‘(A) IN GENERAL.—The MediGrant mas2 ter rebate agreement under this section shall be

3 effective for an initial period of not less than 1

4 year and shall be automatically renewed for a

5 period of not less than one year unless termi6 nated under subparagraph (B).

7 ‘‘(B) TERMINATION.—

8 ‘‘(i) BY THE SECRETARY.—The Sec9 retary may provide for termination of the

10 MediGrant master rebate agreement with

11 respect to a manufacturer for violation of

12 the requirements of the agreement or other

13 good cause shown. Such termination shall

14 not be effective earlier than 60 days after

15 the date of notice of such termination. The

16 Secretary shall provide, upon request, a

17 manufacturer with a hearing concerning

18 such a termination, but such hearing shall

19 not delay the effective date of the termi20 nation. Failure of a State to provide any

21 advance notice of such a termination as re22 quired by regulation shall not affect the

23 State’s right to terminate coverage of the

24 drugs affected by such termination as of

25 the effective date of such termination.
1388

•HR 2491 RH

1 ‘‘(ii) BY A MANUFACTURER.—A man2 ufacturer may terminate its participation

3 in the MediGrant master rebate agreement

4 under this section for any reason. Any

5 such termination shall not be effective

6 until the calendar quarter beginning at

7 least 60 days after the date the manufac8 turer provides notice to the Secretary.

9 ‘‘(iii) EFFECTIVENESS OF TERMI10 NATION.—Any termination under this sub11 paragraph shall not affect rebates due

12 under the agreement before the effective

13 date of its termination.

14 ‘‘(iv) NOTICE TO STATES.—In the

15 case of a termination under this subpara16 graph, the Secretary shall provide notice of

17 such termination to the States within not

18 less than 30 days before the effective date

19 of such termination.

20 ‘‘(v) APPLICATION TO TERMINATIONS

21 OF OTHER AGREEMENTS.—The provisions

22 of this subparagraph shall apply to the ter23 minations of master agreements described

24 in section 8126(a) of title 38, United

25 States Code.
1389

•HR 2491 RH

1 ‘‘(C) DELAY BEFORE REENTRY.—In the

2 case of any rebate agreement with a manufac3 turer under this section which is terminated,

4 another such agreement with the manufacturer

5 (or a successor manufacturer) may not be en6 tered into until a period of 1 calendar quarter

7 has elapsed since the date of the termination,

8 unless the Secretary finds good cause for an

9 earlier reinstatement of such an agreement.

10 ‘‘(c) DETERMINATION OF AMOUNT OF REBATE.—

11 ‘‘(1) BASIC REBATE FOR SINGLE SOURCE

12 DRUGS AND INNOVATOR MULTIPLE SOURCE

13 DRUGS.—

14 ‘‘(A) IN GENERAL.—Except as provided in

15 paragraph (2), the amount of the rebate speci16 fied in this subsection with respect to a State

17 participating in the MediGrant master rebate

18 agreement for a rebate period (as defined in

19 subsection (i)(8)) with respect to each dosage

20 form and strength of a single source drug or an

21 innovator multiple source drug shall be equal to

22 the product of—

23 ‘‘(i) the total number of units of each

24 dosage form and strength paid for under
1390

•HR 2491 RH

1 the State plan in the rebate period (as re2 ported by the State); and

3 ‘‘(ii) the greater of—

4 ‘‘(I) the difference between the

5 average manufacturer price and the

6 best price (as defined in subparagraph

7 (C)) for the dosage form and strength

8 of the drug, or

9 ‘‘(II) the minimum rebate per10 centage (specified in subparagraph

11 (B)) of such average manufacturer

12 price,

13 for the rebate period.

14 ‘‘(B) MINIMUM REBATE PERCENTAGE.—

15 For purposes of subparagraph (A)(ii)(II), the

16 ‘minimum rebate percentage’ is 15.1 percent.

17 ‘‘(C) BEST PRICE DEFINED.—For pur18 poses of this section—

19 ‘‘(i) IN GENERAL.—The term ‘best

20 price’ means, with respect to a single

21 source drug or innovator multiple source

22 drug of a manufacturer, the lowest price

23 available from the manufacturer during the

24 rebate period to any wholesaler, retailer,

25 provider, health maintenance organization,
1391

•HR 2491 RH

1 nonprofit entity, or governmental entity

2 within the United States, excluding—

3 ‘‘(I) any prices charged on or

4 after October 1, 1992, to the Indian

5 Health Service, the Department of

6 Veterans Affairs, a State home receiv7 ing funds under section 1741 of title

8 38, United States Code, the Depart9 ment of Defense, the Public Health

10 Service, or a covered entity described

11 in section 340B(a)(4) of the Public

12 Health Service Act;

13 ‘‘(II) any prices charged under

14 the Federal Supply Schedule of the

15 General Services Administration;

16 ‘‘(III) any prices used under a

17 State pharmaceutical assistance pro18 gram; and

19 ‘‘(IV) any depot prices and single

20 award contract prices, as defined by

21 the Secretary, of any agency of the

22 Federal Government.

23 ‘‘(ii) SPECIAL RULES.—The term ‘best

24 price’—
1392

•HR 2491 RH

1 ‘‘(I) shall be inclusive of cash dis2 counts, free goods that are contingent

3 on any purchase requirement, volume

4 discounts, and rebates (other than re5 bates under this section);

6 ‘‘(II) shall be determined without

7 regard to special packaging, labeling,

8 or identifiers on the dosage form or

9 product or package;

10 ‘‘(III) shall not take into account

11 prices that are merely nominal in

12 amount; and

13 ‘‘(IV) shall exclude rebates paid

14 under this section or any other re15 bates paid to a State participating in

16 the MediGrant master rebate agree17 ment.

18 ‘‘(2) ADDITIONAL REBATE FOR SINGLE SOURCE

19 AND INNOVATOR MULTIPLE SOURCE DRUGS.—

20 ‘‘(A) IN GENERAL.—The amount of the re21 bate specified in this subsection with respect to

22 a State participating in the MediGrant master

23 rebate agreement for a rebate period, with re24 spect to each dosage form and strength of a

25 single source drug or an innovator multiple
1393

•HR 2491 RH

1 source drug, shall be increased by an amount

2 equal to the product of—

3 ‘‘(i) the total number of units of such

4 dosage form and strength dispensed after

5 December 31, 1990, for which payment

6 was made under the MediGrant plan for

7 the rebate period; and

8 ‘‘(ii) the amount (if any) by which—

9 ‘‘(I) the average manufacturer

10 price for the dosage form and

11 strength of the drug for the period,

12 exceeds

13 ‘‘(II) the average manufacturer

14 price for such dosage form and

15 strength for the calendar quarter be16 ginning July 1, 1990 (without regard

17 to whether or not the drug has been

18 sold or transferred to an entity, in19 cluding a division or subsidiary of the

20 manufacturer, after the first day of

21 such quarter), increased by the per22 centage by which the consumer price

23 index for all urban consumers (United

24 States city average) for the month be25 fore the month in which the rebate pe-
1394

•HR 2491 RH

1 riod begins exceeds such index for

2 September 1990.

3 ‘‘(B) TREATMENT OF SUBSEQUENTLY AP4 PROVED DRUGS.—In the case of a covered out5 patient drug approved by the Food and Drug

6 Administration after October 1, 1990, clause

7 (ii)(II) of subparagraph (A) shall be applied by

8 substituting ‘the first full calendar quarter after

9 the day on which the drug was first marketed’

10 for ‘the calendar quarter beginning July 1,

11 1990’ and ‘the month prior to the first month

12 of the first full calendar quarter after the day

13 on which the drug was first marketed’ for ‘Sep14 tember 1990’.

15 ‘‘(3) REBATE FOR OTHER DRUGS.—

16 ‘‘(A) IN GENERAL.—The amount of the re17 bate paid to a State participating in the

18 MediGrant master rebate agreement for a re19 bate period with respect to each dosage form

20 and strength of covered outpatient drugs (other

21 than single source drugs and innovator multiple

22 source drugs) shall be equal to the product of—

23 ‘‘(i) the applicable percentage (as de24 scribed in subparagraph (B)) of the aver25 age manufacturer price for the dosage
1395

•HR 2491 RH

1 form and strength for the rebate period,

2 and

3 ‘‘(ii) the total number of units of such

4 dosage form and strength dispensed after

5 December 31, 1990, for which payment

6 was made under the MediGrant plan for

7 the rebate period.

8 ‘‘(B) APPLICABLE PERCENTAGE DE9 FINED.—For purposes of subparagraph (A)(i),

10 the ‘applicable percentage’ is 11 percent.

11 ‘‘(4) LIMITATION ON AMOUNT OF REBATE TO

12 AMOUNTS PAID FOR CERTAIN DRUGS.—Upon request

13 of a manufacturer of a covered outpatient drug for

14 which a majority of the estimated number of units

15 of such dosage form and strength that are subject

16 to rebates under this section were dispensed to inpa17 tients of nursing facilities (including drugs which are

18 exempt from the requirements of the MediGrant

19 master rebate agreement under this section under

20 subsection (h)(1)(B)), the Secretary shall limit the

21 amount of the rebate under this subsection with re22 spect to a dosage form and strength of the drug for

23 a rebate period to the amount paid under the

24 MediGrant plan with respect to such dosage form
1396

•HR 2491 RH

1 and strength of the drug in the rebate period (with2 out consideration of any dispensing fees paid).

3 ‘‘(d) LIMITATIONS ON COVERAGE OF DRUGS BY

4 STATES PARTICIPATING IN MASTER AGREEMENT.—

5 ‘‘(1) PERMISSIBLE RESTRICTIONS.—A State

6 participating in the MediGrant master rebate agree7 ment under this section may—

8 ‘‘(A) subject to prior authorization under

9 its MediGrant plan any covered outpatient drug

10 so long as any such prior authorization pro11 gram complies with the requirements of para12 graph (5); and

13 ‘‘(B) exclude or otherwise restrict coverage

14 under its plan of a covered outpatient drug if—

15 ‘‘(i) the prescribed use is not for a

16 medically accepted indication (as defined in

17 subsection (i)(5));

18 ‘‘(ii) the drug is contained in the list

19 referred to in paragraph (2);

20 ‘‘(iii) the drug is subject to such re21 strictions pursuant to the MediGrant mas22 ter rebate agreement or any agreement de23 scribed in subsection (a)(4); or
1397

•HR 2491 RH

1 ‘‘(iv) the State has excluded coverage

2 of the drug from its formulary established

3 in accordance with paragraph (4).

4 ‘‘(2) LIST OF DRUGS SUBJECT TO RESTRIC5 TION.—The following drugs or classes of drugs, or

6 their medical uses, may be excluded from coverage

7 or otherwise restricted by a State participating in

8 the MediGrant master rebate agreement:

9 ‘‘(A) Agents when used for anorexia,

10 weight loss, or weight gain.

11 ‘‘(B) Agents when used to promote fertil12 ity.

13 ‘‘(C) Agents when used for cosmetic pur14 poses or hair growth.

15 ‘‘(D) Agents when used for the sympto16 matic relief of cough and colds.

17 ‘‘(E) Agents when used to promote smok18 ing cessation.

19 ‘‘(F) Prescription vitamins and mineral

20 products, except prenatal vitamins and fluoride

21 preparations.

22 ‘‘(G) Nonprescription drugs.

23 ‘‘(H) Covered outpatient drugs which the

24 manufacturer seeks to require as a condition of

25 sale that associated tests or monitoring services
1398

•HR 2491 RH

1 be purchased exclusively from the manufacturer

2 or its designee.

3 ‘‘(I) Barbiturates.

4 ‘‘(J) Benzodiazepines.

5 ‘‘(3) ADDITIONS TO DRUG LISTINGS.—The Sec6 retary shall, by regulation, periodically update the

7 list of drugs or classes of drugs described in para8 graph (2), or their medical uses, which the Secretary

9 has determined to be subject to clinical abuse or in10 appropriate use.

11 ‘‘(4) REQUIREMENTS FOR FORMULARIES.—A

12 State participating in the MediGrant master rebate

13 agreement may establish a formulary if the for14 mulary meets the following requirements:

15 ‘‘(A) The formulary is developed by a com16 mittee consisting of physicians, pharmacists,

17 and other appropriate individuals appointed by

18 the Governor of the State.

19 ‘‘(B) Except as provided in subparagraph

20 (C), the formulary includes the covered out21 patient drugs of any manufacturer which has

22 entered into and complies with the agreement

23 under subsection (a) (other than any drug ex24 cluded from coverage or otherwise restricted

25 under paragraph (2)).
1399

•HR 2491 RH

1 ‘‘(C) A covered outpatient drug may be ex2 cluded with respect to the treatment of a spe3 cific disease or condition for an identified popu4 lation (if any) only if, based on the drug’s label5 ing (or, in the case of a drug the prescribed use

6 of which is not approved under the Federal

7 Food, Drug, and Cosmetic Act but is a medi8 cally accepted indication, based on information

9 from the appropriate compendia described in

10 subsection (i)(5)), the excluded drug does not

11 have a significant, clinically meaningful thera12 peutic advantage in terms of safety, effective13 ness, or clinical outcome of such treatment for

14 such population over other drugs included in

15 the formulary and there is a written expla16 nation (available to the public) of the basis for

17 the exclusion.

18 ‘‘(D) The State plan permits coverage of a

19 drug excluded from the formulary (other than

20 any drug excluded from coverage or otherwise

21 restricted under paragraph (2)) pursuant to a

22 prior authorization program that is consistent

23 with paragraph (5).

24 ‘‘(E) The formulary meets such other re25 quirements as the Secretary may impose in
1400

•HR 2491 RH

1 order to achieve program savings consistent

2 with protecting the health of program bene3 ficiaries.

4 A prior authorization program established by a State

5 under paragraph (5) is not a formulary subject to

6 the requirements of this paragraph.

7 ‘‘(5) REQUIREMENTS OF PRIOR AUTHORIZATION

8 PROGRAMS.—The MediGrant plan of a State partici9 pating in the MediGrant master rebate agreement

10 may require, as a condition of coverage or payment

11 for a covered outpatient drug for which Federal fi12 nancial participation is available in accordance with

13 this section the approval of the drug before its dis14 pensing for any medically accepted indication (as de15 fined in subsection (i)(5)) only if the system provid16 ing for such approval—

17 ‘‘(A) provides response by telephone or

18 other telecommunication device within 24 hours

19 of a request for prior authorization; and

20 ‘‘(B) except with respect to the drugs on

21 the list referred to in paragraph (2), provides

22 for the dispensing of at least 72-hour supply of

23 a covered outpatient prescription drug in an

24 emergency situation (as defined by the Sec25 retary).
1401

•HR 2491 RH

1 ‘‘(6) OTHER PERMISSIBLE RESTRICTIONS.—A

2 State participating in the MediGrant master rebate

3 agreement may impose limitations, with respect to

4 all such drugs in a therapeutic class, on the mini5 mum or maximum quantities per prescription or on

6 the number of refills, if such limitations are nec7 essary to discourage waste, and may address in8 stances of fraud or abuse by individuals in any man9 ner authorized under this Act.

10 ‘‘(e) DRUG USE REVIEW.—

11 ‘‘(1) IN GENERAL.—A State participating in the

12 MediGrant master rebate agreement may provide for

13 a drug use review program to educate physicians

14 and pharmacists to identify and reduce the fre15 quency of patterns of fraud, abuse, gross overuse, or

16 inappropriate or medically unnecessary care, among

17 physicians, pharmacists, and patients, or associated

18 with specific drugs or groups of drugs, as well as po19 tential and actual severe adverse reactions to drugs.

20 ‘‘(2) APPLICATION OF STATE STANDARDS.—A

21 State with a drug use review program under this

22 subsection shall establish and operate the program

23 under such standards as it may establish.

24 ‘‘(f) ELECTRONIC CLAIMS MANAGEMENT.—In ac25 cordance with chapter 35 of title 44, United States Code
1402

•HR 2491 RH

1 (relating to coordination of Federal information policy),

2 the Secretary shall encourage each State to establish, as

3 its principal means of processing claims for covered out4 patient drugs under its MediGrant plan, a point-of-sale

5 electronic claims management system, for the purpose of

6 performing on-line, real time eligibility verifications,

7 claims data capture, adjudication of claims, and assisting

8 pharmacists (and other authorized persons) in applying

9 for and receiving payment.

10 ‘‘(g) ANNUAL REPORT.—

11 ‘‘(1) IN GENERAL.—Not later than May 1 of

12 each year, the Secretary shall transmit to the Com13 mittee on Finance of the Senate, the Committee on

14 Commerce of the House of Representatives, and the

15 Committee on Aging of the Senate a report on the

16 operation of this section in the preceding fiscal year.

17 ‘‘(2) DETAILS.—Each report shall include infor18 mation on—

19 ‘‘(A) ingredient costs paid under this title

20 for single source drugs, multiple source drugs,

21 and nonprescription covered outpatient drugs;

22 ‘‘(B) the total value of rebates received

23 and number of manufacturers providing such

24 rebates;
1403

•HR 2491 RH

1 ‘‘(C) the effect of inflation on the value of

2 rebates required under this section;

3 ‘‘(D) trends in prices paid under this title

4 for covered outpatient drugs; and

5 ‘‘(E) Federal and State administrative

6 costs associated with compliance with the provi7 sions of this title.

8 ‘‘(h) EXEMPTION FOR CAPITATED HEALTH CARE

9 ORGANIZATIONS, HOSPITALS, AND NURSING FACILI10 TIES.—

11 ‘‘(1) IN GENERAL.—Except as provided in para12 graph (2), the requirements of the MediGrant mas13 ter rebate agreement under this section shall not

14 apply with respect to covered outpatient drugs dis15 pensed by or through—

16 ‘‘(A) a capitated health care organization

17 (as defined in section 2114(c)(1)); or

18 ‘‘(B) a hospital or nursing facility that dis19 penses covered outpatient drugs using a drug

20 formulary system and bills the State no more

21 than the hospital’s purchasing costs for covered

22 outpatient drugs.

23 ‘‘(2) CONSTRUCTION IN DETERMINING BEST

24 PRICE.—Nothing in paragraph (1) shall be con25 strued as excluding amounts paid by the entities de-
1404

•HR 2491 RH

1 scribed in such paragraph for covered outpatient

2 drugs from the determination of the best price (as

3 defined in subsection (c)(1)(C)) for such drugs.

4 ‘‘(i) DEFINITIONS.—In the section—

5 ‘‘(1) AVERAGE MANUFACTURER PRICE.—The

6 term ‘average manufacturer price’ means, with re7 spect to a covered outpatient drug of a manufacturer

8 for a rebate period, the average price paid to the

9 manufacturer for the drug in the United States by

10 wholesalers for drugs distributed to the retail phar11 macy class of trade, after deducting customary

12 prompt pay discounts.

13 ‘‘(2) COVERED OUTPATIENT DRUG.—Subject to

14 the exceptions in subparagraph (D), the term ‘cov15 ered outpatient drug’ means—

16 ‘‘(A) of those drugs which are treated as

17 prescribed drugs for purposes of section

18 2171(a)(1)(H), a drug which may be dispensed

19 only upon prescription (except as provided in

20 paragraph (7)), and—

21 ‘‘(i) which is approved as a prescrip22 tion drug under section 505 or 507 of the

23 Federal Food, Drug, and Cosmetic Act;

24 ‘‘(ii)(I) which was commercially used

25 or sold in the United States before the
1405

•HR 2491 RH

1 date of the enactment of the Drug Amend2 ments of 1962 or which is identical, simi3 lar, or related (within the meaning of sec4 tion 310.6(b)(1) of title 21 of the Code of

5 Federal Regulations) to such a drug, and

6 (II) which has not been the subject of a

7 final determination by the Secretary that it

8 is a ‘new drug’ (within the meaning of sec9 tion 201(p) of the Federal Food, Drug,

10 and Cosmetic Act) or an action brought by

11 the Secretary under section 301, 302(a),

12 or 304(a) of such Act to enforce section

13 502(f) or 505(a) of such Act; or

14 ‘‘(iii)(I) which is described in section

15 107(c)(3) of the Drug Amendments of

16 1962 and for which the Secretary has de17 termined there is a compelling justification

18 for its medical need, or is identical, simi19 lar, or related (within the meaning of sec20 tion 310.6(b)(1) of title 21 of the Code of

21 Federal Regulations) to such a drug, and

22 (II) for which the Secretary has not issued

23 a notice of an opportunity for a hearing

24 under section 505(e) of the Federal Food,

25 Drug, and Cosmetic Act on a proposed
1406

•HR 2491 RH

1 order of the Secretary to withdraw ap2 proval of an application for such drug

3 under such section because the Secretary

4 has determined that the drug is less than

5 effective for some or all conditions of use

6 prescribed, recommended, or suggested in

7 its labeling;

8 ‘‘(B) a biological product, other than a

9 vaccine which—

10 ‘‘(i) may only be dispensed upon pre11 scription,

12 ‘‘(ii) is licensed under section 351 of

13 the Public Health Service Act, and

14 ‘‘(iii) is produced at an establishment

15 licensed under such section to produce

16 such product;

17 ‘‘(C) insulin certified under section 506 of

18 the Federal Food, Drug, and Cosmetic Act; and

19 ‘‘(D) a drug which may be sold without a

20 prescription (commonly referred to as an ‘over21 the-counter drug’), if the drug is prescribed by

22 a physician (or other person authorized to pre23 scribe under State law).

24 ‘‘(3) LIMITING DEFINITION.—The term ‘covered

25 outpatient drug’ does not include any drug, biologi-
1407

•HR 2491 RH

1 cal product, or insulin provided as part of, or as in2 cident to and in the same setting as, any of the fol3 lowing (and for which payment may be made under

4 a MediGrant plan as part of payment for the follow5 ing and not as direct reimbursement for the drug):

6 ‘‘(A) Inpatient hospital services.

7 ‘‘(B) Hospice services.

8 ‘‘(C) Dental services, except that drugs for

9 which the MediGrant plan authorizes direct re10 imbursement to the dispensing dentist are cov11 ered outpatient drugs.

12 ‘‘(D) Physicians’ services.

13 ‘‘(E) Outpatient hospital services.

14 ‘‘(F) Nursing facility services and services

15 provided by an intermediate care facility for the

16 mentally retarded.

17 ‘‘(G) Other laboratory and x-ray services.

18 ‘‘(H) Renal dialysis services.

19 Such term also does not include any such drug or

20 product for which a National Drug Code number is

21 not required by the Food and Drug Administration

22 or a drug or biological used for a medical indication

23 which is not a medically accepted indication. Any

24 drug, biological product, or insulin excluded from the

25 definition of such term as a result of this paragraph
1408

•HR 2491 RH

1 shall be treated as a covered outpatient drug for

2 purposes of determining the best price (as defined in

3 subsection (c)(1)(C)) for such drug, biological prod4 uct, or insulin.

5 ‘‘(4) MANUFACTURER.—The term ‘manufac6 turer’ means, with respect to a covered outpatient

7 drug, the entity holding legal title to or possession

8 of the National Drug Code number for such drug.

9 ‘‘(5) MEDICALLY ACCEPTED INDICATION.—The

10 term ‘medically accepted indication’ means any use

11 for a covered outpatient drug which is approved

12 under the Federal Food, Drug, and Cosmetic Act, or

13 the use of which is supported by one or more cita14 tions included or approved for inclusion in any of the

15 following compendia:

16 ‘‘(A) American Hospital Formulary Service

17 Drug Information.

18 ‘‘(B) United States Pharmacopeia-Drug

19 Information.

20 ‘‘(C) American Medical Association Drug

21 Evaluations.

22 ‘‘(D) The peer-reviewed medical literature.

23 ‘‘(6) MULTIPLE SOURCE DRUG; INNOVATOR

24 MULTIPLE SOURCE DRUG; NONINNOVATOR MUL25 TIPLE SOURCE DRUG; SINGLE SOURCE DRUG.—
1409

•HR 2491 RH

1 ‘‘(A) DEFINED.—

2 ‘‘(i) MULTIPLE SOURCE DRUG.—The

3 term ‘multiple source drug’ means, with

4 respect to a rebate period, a covered out5 patient drug (not including any drug de6 scribed in paragraph (2)(D)) for which

7 there are 2 or more drug products which—

8 ‘‘(I) are rated as therapeutically

9 equivalent (under the Food and Drug

10 Administration’s most recent publica11 tion of ‘Approved Drug Products with

12 Therapeutic Equivalence Evalua13 tions’),

14 ‘‘(II) except as provided in sub15 paragraph (B), are pharmaceutically

16 equivalent and bioequivalent, as de17 fined in subparagraph (C) and as de18 termined by the Food and Drug Ad19 ministration, and

20 ‘‘(III) are sold or marketed in

21 the State during the period.

22 ‘‘(ii) INNOVATOR MULTIPLE SOURCE

23 DRUG.—The term ‘innovator multiple

24 source drug’ means a multiple source drug

25 that was originally marketed under an
1410

•HR 2491 RH

1 original new drug application or product li2 censing application approved by the Food

3 and Drug Administration.

4 ‘‘(iii) NONINNOVATOR MULTIPLE

5 SOURCE DRUG.—The term ‘noninnovator

6 multiple source drug’ means a multiple

7 source drug that is not an innovator mul8 tiple source drug.

9 ‘‘(iv) SINGLE SOURCE DRUG.—The

10 term ‘single source drug’ means a covered

11 outpatient drug which is produced or dis12 tributed under an original new drug appli13 cation approved by the Food and Drug Ad14 ministration, including a drug product

15 marketed by any cross-licensed producers

16 or distributors operating under the new

17 drug application or product licensing appli18 cation.

19 ‘‘(B) EXCEPTION.—Subparagraph

20 (A)(i)(II) shall not apply if the Food and Drug

21 Administration changes by regulation the re22 quirement that, for purposes of the publication

23 described in subparagraph (A)(i)(I), in order

24 for drug products to be rated as therapeutically

25 equivalent, they must be pharmaceutically
1411

•HR 2491 RH

1 equivalent and bioequivalent, as defined in sub2 paragraph (C).

3 ‘‘(C) DEFINITIONS.—For purposes of this

4 paragraph—

5 ‘‘(i) drug products are pharmaceuti6 cally equivalent if the products contain

7 identical amounts of the same active drug

8 ingredient in the same dosage form and

9 meet compendial or other applicable stand10 ards of strength, quality, purity, and iden11 tity;

12 ‘‘(ii) drugs are bioequivalent if they do

13 not present a known or potential

14 bioequivalence problem, or, if they do

15 present such a problem, they are shown to

16 meet an appropriate standard of

17 bioequivalence; and

18 ‘‘(iii) a drug product is considered to

19 be sold or marketed in a State if it appears

20 in a published national listing of average

21 wholesale prices selected by the Secretary,

22 if the listed product is generally available

23 to the public through retail pharmacies in

24 that State.
1412

•HR 2491 RH

1 ‘‘(7) NONPRESCRIPTION DRUGS.—If the

2 MediGrant plan of a State participating in the

3 MediGrant master rebate agreement under this sec4 tion includes coverage of prescribed drugs as de5 scribed in section 2171(a)(1)(H) and permits cov6 erage of drugs which may be sold without a prescrip7 tion (commonly referred to as ‘over-the-counter’

8 drugs), if they are prescribed by a physician (or

9 other person authorized to prescribe under State

10 law), such a drug shall be regarded as a covered out11 patient drug for purposes of the State’s participation

12 in the agreement.

13 ‘‘(8) REBATE PERIOD.—The term ‘rebate pe14 riod’ means, with respect to an agreement under

15 subsection (a), a calendar quarter or other period

16 specified by the Secretary with respect to the pay17 ment of rebates under such agreement.’’.

18 SEC. 16002. TERMINATION OF CURRENT PROGRAM AND

19 TRANSITION.

20 (a) TERMINATION OF CURRENT PROGRAM; LIMITA21 TION ON MEDICAID PAYMENTS IN FISCAL YEAR 1996.—

22 Title XIX of the Social Security Act is amended—

23 (1) by redesignating section 1931 as section

24 1932; and
1413

•HR 2491 RH

1 (2) by inserting after section 1930 the following

2 new section:

3 ‘‘TERMINATION OF MEDICAID PROGRAM; LIMITATION ON

4 NEW OBLIGATION AUTHORITY

5 ‘‘SEC. 1931. (a) ELIMINATION OF INDIVIDUAL ENTI6 TLEMENT.—Effective on the date of the enactment of this

7 section—

8 ‘‘(1) except as provided in subsection (b), the

9 Federal Government has no obligation to provide

10 payment with respect to items and services provided

11 under this title, and

12 ‘‘(2) this title shall not be construed as provid13 ing for an entitlement, under Federal law in relation

14 to the Federal Government, in an individual or per15 son (including any provider) at the time of provision

16 or receipt of services.

17 ‘‘(b) LIMITATION ON OBLIGATION AUTHORITY.—

18 Notwithstanding any other provision of this title—

19 ‘‘(1) POST-ENACTMENT, PRE-MEDIGRANT.—

20 Subject to paragraph (2), the Secretary is author21 ized to enter into obligations with any State under

22 this title for expenses incurred after the date of the

23 enactment of this Act and during fiscal year 1996,

24 but not in excess of the obligation allotment for that

25 State for fiscal year 1996 under section 2121(b)(4).
1414

•HR 2491 RH

1 ‘‘(2) NONE AFTER MEDIGRANT.—The Secretary

2 is not authorized to enter into any obligation with

3 any State under this title for expenses incurred on

4 or after the earlier of—

5 ‘‘(A) October 1, 1996; or

6 ‘‘(B) the first day of the first quarter on

7 which the State plan under title XXI is first ef8 fective.

9 ‘‘(3) AGREEMENT.—A State’s submission of

10 claims for payment under section 1903 after the

11 date of the enactment of this title with respect to

12 which the limitation described in paragraph (1) ap13 plies is deemed to constitute the State’s acceptance

14 of the obligation limitation under such paragraph

15 (including the formula for computing the amount of

16 such obligation limitation).

17 ‘‘(c) REQUIREMENT FOR TIMELY SUBMITTAL OF

18 CLAIMS.—No payment shall be made to a State under this

19 title with respect to an obligation incurred before the date

20 of the enactment of this section, unless the State has sub21 mitted to the Secretary, by not later than June 30, 1996,

22 a claim for Federal financial participation for expenses

23 paid by the State with respect to such obligations. Nothing

24 in subsection (a) or (b) shall be construed as affecting the
1415

•HR 2491 RH

1 obligation of the Federal Government to pay claims de2 scribed in the previous sentence.’’.

3 (b) MEDICAID TRANSITION.—

4 (1) TREATMENT OF CERTAIN CAUSES OF AC5 TION.—No cause of action under title XIX of the

6 Social Security Act which seeks to require a State

7 to establish or maintain minimum payment rates

8 under such title and which has not become final as

9 of the date of the enactment of this Act shall be

10 brought or continued.

11 (2) TREATMENT OF CERTAIN DISALLOW12 ANCES.—Notwithstanding any provision of law, in

13 the case where payment has been made under sec14 tion 1903(a) of the Social Security Act to a State

15 before October 1, 1995, and for which a disallow16 ance has not been taken as of such date (or, if so

17 taken, has not been completed by such date), the

18 Secretary of Health and Human Services shall dis19 continue the disallowance proceeding and, if such

20 disallowance has been taken as of the date of the en21 actment of this Act, any payment reductions effected

22 shall be rescinded and the payments returned to the

23 State.

24 (3) EXTENSION OF MORATORIUM.—Section

25 6408(a)(3) of the Omnibus Budget Reconciliation
1416

•HR 2491 RH

1 Act of 1989, as amended by section 13642 of the

2 Omnibus Budget Reconciliation Act of 1993, is

3 amended by striking ‘‘December 31, 1995’’ and in4 serting ‘‘the first day of the first quarter on which

5 the MediGrant plan for the State of Michigan is

6 first effective under title XXI of such Act’’.

7 (c) NO APPLICATION OF PRIOR MEDICAID JUDG8 MENTS TO MEDIGRANT PROGRAM.—No judicial or admin9 istrative decision rendered regarding requirements im10 posed under title XIX of the Social Security Act with re11 spect to a State shall have any application to the

12 MediGrant plan of the State title XXI of such Act. A

13 State may, pursuant to the previous sentence, seek the

14 abrogation or modification of any such decision after the

15 date of termination of the State plan under title XIX of

16 such Act.

17 (d) TERMINATION OF PROGRAM FOR DISTRIBUTION

18 OF PEDIATRIC VACCINES

19 (1) IN GENERAL.—Subject to paragraph (2),

20 section 1928 of the Social Security Act (42 U.S.C.

21 1396s) is repealed, effective on the date of the en22 actment of this Act.

23 (2) TRANSITION.—(A) Such repeal shall not af24 fect the distribution of vaccines purchased and deliv-
1417

•HR 2491 RH

1 ered to the States before the date of the enactment

2 of this Act.

3 (B) No vaccine may be purchased after such

4 date by the Federal Government or any State under

5 any contract under section 1928(d) of the Social Se6 curity Act.

7 (e) ANTI-FRAUD PROVISIONS.—

8 (1) IN GENERAL.—Section 1128(h)(1) of the

9 Social Security Act (42 U.S.C. 1320a–7(h)(1)) is

10 amended by inserting ‘‘or a MediGrant plan under

11 title XXI’’ after ‘‘title XIX’’.

12 (2) CONTINUED ROLE OF INSPECTOR GEN13 ERAL.—The Inspector General in the Department of

14 Health and Human Services shall have the same re15 sponsibilities and duties in relation to fraud and

16 abuse and related matters under the MediGrant pro17 gram under title XXI of the Social Security Act as

18 such Inspector General has had in relation to the

19 medicaid program under title XIX of such Act be20 fore the date of the enactment of this Act.

21 TITLE XVII—DEPARTMENT OF

22 COMMERCE ABOLITION

23 SEC. 17001. SHORT TITLE; TABLE OF CONTENTS.

24 (a) SHORT TITLE.—This title may be cited as the

25 ‘‘Department of Commerce Dismantling Act’’.
1418

•HR 2491 RH

1 (b) TABLE OF CONTENTS.—The table of contents for

2 this title is as follows:

TITLE XVII—DEPARTMENT OF COMMERCE ABOLITION

Sec. 17001. Short title; table of contents.

Subtitle A—Abolishment of Department of Commerce

Sec. 17101. Reestablishment of Department as Commerce Programs Resolution

Agency.

Sec. 17102. Functions.

Sec. 17103. Deputy Administrator.

Sec. 17104. Continuation of service of Department officers.

Sec. 17105. Reorganization.

Sec. 17106. Abolishment of Commerce Programs Resolution Agency.

Sec. 17107. GAO report.

Sec. 17108. Conforming amendments.

Sec. 17109. Effective date.

Subtitle B—Disposition Of Particular Programs, Functions, and Agencies of

Department of Commerce

Sec. 17201. Economic development.

Sec. 17202. Technology Administration.

Sec. 17203. Terminated functions of NTIA.

Sec. 17204. Transfer of National Telecommunications and Information Administration.

Sec. 17205. National Oceanic and Atmospheric Administration.

Sec. 17206. Miscellaneous abolishments.

Sec. 17207. Privatization of travel functions.

Sec. 17208. Effective date.

Sec. 17209. Sense of Congress regarding user fees.

Subtitle C—Consolidation of Statistical Functions

Sec. 17301. Short title.

Sec. 17302. Definitions.

CHAPTER 1—ESTABLISHMENT OF FEDERAL STATISTICS AGENCY

Sec. 17311. Establishment.

Sec. 17312. Principal officers.

Sec. 17313. Transfers of functions and offices.

CHAPTER 2—ADMINISTRATIVE PROVISIONS

Sec. 17321. Personnel provisions.

Sec. 17322. General administrative provisions.

Sec. 17323. Contracts.

Sec. 17324. Regulations.

Sec. 17325. Seal.

Sec. 17326. Annual report.

CHAPTER 3—TRANSITIONAL, SAVINGS, AND CONFORMING PROVISIONS

Sec. 17331. Transfer and allocation of appropriations and personnel.
1419

•HR 2491 RH

Sec. 17332. Effect on personnel.

Sec. 17333. Incidental transfers.

Sec. 17334. Savings provisions.

Sec. 17335. References.

Sec. 17336. Conforming amendments.

Sec. 17337. Transition.

Sec. 17338. Interim appointments.

Subtitle D—United States Trade Administration

CHAPTER 1—GENERAL PROVISIONS

Sec. 17401. Findings.

Sec. 17402. Definitions.

CHAPTER 2—UNITED STATES TRADE ADMINISTRATION

Sec. 17411. Establishment of the Administration.

Sec. 17412. Functions of the USTR.

Sec. 17413. Deputy Administrator of the United States Trade Administration.

Sec. 17414. Deputy United States Trade Representatives.

Sec. 17415. Assistant Administrators.

Sec. 17416. General Counsel.

Sec. 17417. Inspector General.

Sec. 17418. Chief Financial Officer.

CHAPTER 3—TRANSFERS TO THE ADMINISTRATION

Sec. 17431. Office of the United States Trade Representative.

Sec. 17432. Transfers from the Department of Commerce.

Sec. 17433. Trade and Development Agency.

Sec. 17434. Functions with respect to textile agreements.

Sec. 17435. Plan for consolidation of trade activities.

CHAPTER 4—ADMINISTRATIVE PROVISIONS

Sec. 17441. Personnel provisions.

Sec. 17442. Delegation and assignment.

Sec. 17443. Succession.

Sec. 17444. Reorganization.

Sec. 17445. Rules.

Sec. 17446. Funds transfer.

Sec. 17447. Contracts, grants, and cooperative agreements.

Sec. 17448. Use of facilities.

Sec. 17449. Gifts and bequests.

Sec. 17450. Working capital fund.

Sec. 17451. Service charges.

Sec. 17452. Seal of department.

CHAPTER 5—RELATED AGENCIES

Sec. 17461. Interagency trade organization.

Sec. 17462. National Security Council.

Sec. 17463. International Monetary Fund.

CHAPTER 6—CONFORMING AMENDMENTS

Sec. 17471. Amendments to general provisions.
1420

•HR 2491 RH

Sec. 17472. Repeals.

Sec. 17473. Conforming amendments relating to Executive Schedule positions.

CHAPTER 7—TRANSITIONAL, SAVINGS, AND CONFORMING PROVISIONS

Sec. 17481. Additional transfers.

Sec. 17482. Incidental transfers.

Sec. 17483. Effect on personnel.

Sec. 17484. Savings provisions.

Sec. 17485. Reference.

Sec. 17486. Transition.

CHAPTER 8—MISCELLANEOUS

Sec. 17491. Effective date.

Sec. 17492. Interim appointments.

Sec. 17493. Funding reductions resulting from reorganization.

Sec. 17494. Authorization of appropriations.

Subtitle E—Patent And Trademark Office Corporation

Sec. 17501. Short title.

CHAPTER 1—PATENT AND TRADEMARK OFFICE

Sec. 17511. Establishment of Patent and Trademark Office as a corporation.

Sec. 17512. Powers and duties.

Sec. 17513. Organization and management.

Sec. 17514. Management Advisory Board.

Sec. 17515. Independence from Department of Commerce.

Sec. 17516. Trademark Trial and Appeal Board.

Sec. 17517. Board of Patent Appeals and Interferences.

Sec. 17518. Suits by and against the Corporation.

Sec. 17519. Annual report of Commissioner.

Sec. 17520. Suspension or exclusion from practice.

Sec. 17521. Funding.

Sec. 17522. Audits.

Sec. 17523. Transfer.

CHAPTER 2—EFFECTIVE DATE; TECHNICAL AMENDMENTS

Sec. 17531. Effective date.

Sec. 17532. Technical and conforming amendments.

Subtitle F—Miscellaneous Provisions

Sec. 17601. References.

Sec. 17602. Exercise of authorities.

Sec. 17603. Savings provisions.

Sec. 17604. Transfer of assets.

Sec. 17605. Delegation and assignment.

Sec. 17606. Authority of Administrator with respect to functions transferred.

Sec. 17607. Proposed changes in law.

Sec. 17608. Certain vesting of functions considered transfers.

Sec. 17609. Definitions.

Sec. 17610. Limitation on annual expenditures for continued functions.

Sec. 17611. User fees.
1421

•HR 2491 RH

Sec. 17612. Unobligated balances returned to Treasury.

Sec. 17613. Annual GAO report.

1 Subtitle A—Abolishment of

2 Department of Commerce

3 SEC. 17101. REESTABLISHMENT OF DEPARTMENT AS COM4 MERCE PROGRAMS RESOLUTION AGENCY.

5 (a) REESTABLISHMENT.—The Department of Com6 merce is hereby redesignated as the Commerce Programs

7 Resolution Agency, which shall be a free-standing agency

8 in the executive branch of the Government.

9 (b) ADMINISTRATOR.—

10 (1) IN GENERAL.—There shall be at the head

11 of the Agency an Administrator of the Agency, who

12 shall be appointed by the President, by and with the

13 advice and consent of the Senate. The Agency shall

14 be administered under the supervision and direction

15 of the Administrator. The Administrator shall re16 ceive compensation at the rate prescribed for level II

17 of the Executive Schedule under section 5313 of title

18 5, United States Code.

19 (2) INITIAL APPOINTMENT OF ADMINIS20 TRATOR.—Notwithstanding any other provision of

21 this title or any other law, the President may, at

22 any time after the date of the enactment of this

23 title, appoint an individual to serve as Administrator

24 of the Commerce Programs Resolution Agency (who
1422

•HR 2491 RH

1 may be the Secretary of Commerce), as such posi2 tion is established under paragraph (1). An appoint3 ment under this paragraph may not be construed to

4 affect the position of Secretary of Commerce or the

5 authority of the Secretary before the effective date

6 specified in section 17109(a).

7 (c) DUTIES.—The Administrator shall be responsible

8 for—

9 (1) the administration and wind-up, during the

10 wind-up period, of all functions of the Administrator

11 pursuant to section 17102 and the other provisions

12 of this title;

13 (2) the administration and wind-up, during the

14 wind-up period, of any outstanding obligations of the

15 Federal Government under any programs terminated

16 or repealed by this title; and

17 (3) taking such other actions as may be nec18 essary, before the termination date specified in sec19 tion 17106(d), to wind up any outstanding affairs of

20 the Department of Commerce.

21 SEC. 17102. FUNCTIONS.

22 Except to the extent a function is abolished or vested

23 in another official or agency by this title, the Adminis24 trator shall perform all functions that, immediately before

25 the effective date specified in section 17109(a), were func-
1423

•HR 2491 RH

1 tions of the Department of Commerce (or any office of

2 the Department) or were authorized to be performed by

3 the Secretary of Commerce or any other officer or em4 ployee of the Department in the capacity as such officer

5 or employee.

6 SEC. 17103. DEPUTY ADMINISTRATOR.

7 The Agency shall have a Deputy Administrator, who

8 shall—

9 (1) be appointed by and report to the Adminis10 trator; and

11 (2) shall perform such functions as may be del12 egated by the Administrator.

13 SEC. 17104. CONTINUATION OF SERVICE OF DEPARTMENT

14 OFFICERS.

15 (a) CONTINUATION OF SERVICE OF SECRETARY.—

16 The individual serving on the effective date specified in

17 section 17109(a) as the Secretary of Commerce may serve

18 and act as Administrator until the date an individual is

19 appointed under this title to the position of Administrator,

20 or until the end of the 120-day period provided for in sec21 tion 3348 of title 5, United States Code (relating to limita22 tions on the period of time a vacancy may be filled tempo23 rarily), whichever is earlier.

24 (b) CONTINUATION OF SERVICE OF OTHER OFFI25 CERS.—An individual serving on the effective date speci-
1424

•HR 2491 RH

1 fied in section 17109(a) as an officer of the Department

2 of Commerce other than the Secretary of Commerce may

3 continue to serve and act in an equivalent capacity in the

4 Agency until the date an individual is appointed under this

5 title to the position of Administrator, or until the end of

6 the 120-day period provided for in section 3348 of title

7 5, United States Code (relating to limitations on the pe8 riod of time a vacancy may be filled temporarily) with re9 spect to that appointment, whichever is earlier.

10 (c) COMPENSATION FOR CONTINUED SERVICE.—Any

11 person—

12 (1) who serves as the Administrator under sub13 section (a), or

14 (2) who serves under subsection (b),

15 after the effective date specified in section 17109(a) and

16 before the first appointment of a person as Administrator

17 shall continue to be compensated for so serving at the rate

18 at which such person was compensated before such effec19 tive date.

20 SEC. 17105. REORGANIZATION.

21 The Administrator may allocate or reallocate any

22 function of the Agency pursuant to this title among the

23 officers of the Agency, and may establish, consolidate,

24 alter, or discontinue in the Commerce Programs Resolu25 tion Agency any organizational entities that were entities
1425

•HR 2491 RH

1 of the Department of Commerce, as the Administrator

2 considers necessary or appropriate.

3 SEC. 17106. ABOLISHMENT OF COMMERCE PROGRAMS RES4 OLUTION AGENCY.

5 (a) IN GENERAL.—Effective on the termination date

6 specified in subsection (d), the Commerce Programs Reso7 lution Agency is abolished.

8 (b) ABOLITION OF FUNCTIONS.—Except for func9 tions transferred or otherwise continued by this title, all

10 functions that, immediately before the termination date

11 specified in subsection (d), were functions of the Com12 merce Programs Resolution Agency are abolished effective

13 on that termination date.

14 (c) PLAN FOR WINDING UP AFFAIRS.—Not later

15 than the effective date specified in section 17109(a), the

16 President shall submit to the Congress a plan for winding

17 up the affairs of the Agency in accordance with this title

18 and by not later than the termination date specified in

19 subsection (d).

20 (d) TERMINATION DATE.—The termination date

21 under this subsection is the date that is 3 years after the

22 date of the enactment of this title.

23 SEC. 17107. GAO REPORT.

24 Not later than 180 days after the date of enactment

25 of this title, the Comptroller General of the United States
1426

•HR 2491 RH

1 shall submit to the Congress a report which shall include

2 recommendations for the most efficient means of achiev3 ing, in accordance with this title—

4 (1) the complete abolishment of the Depart5 ment of Commerce; and

6 (2) the termination or transfer or other con7 tinuation of the functions of the Department of

8 Commerce.

9 SEC. 17108. CONFORMING AMENDMENTS.

10 (a) PRESIDENTIAL SUCCESSION.—Section 19(d)(1)

11 of title 3, United States Code, is amended by striking

12 ‘‘Secretary of Commerce,’’.

13 (b) EXECUTIVE DEPARTMENTS.—Section 101 of title

14 5, United States Code, is amended by striking the follow15 ing item:

16 ‘‘The Department of Commerce.’’.

17 (c) SECRETARY’S COMPENSATION.—Section 5312 of

18 title 5, United States Code, is amended by striking the

19 following item:

20 ‘‘Secretary of Commerce.’’.

21 (d) COMPENSATION FOR POSITIONS AT LEVEL III.—

22 Section 5314 of title 5, United States Code, is amended—

23 (1) by striking the following item:

24 ‘‘Under Secretary of Commerce, Under Sec25 retary of Commerce for Economic Affairs, Under
1427

•HR 2491 RH

1 Secretary of Commerce for Export Administration

2 and Under Secretary of Commerce for Travel and

3 Tourism.’’;

4 (2) by striking the following item:

5 ‘‘Under Secretary of Commerce for Oceans and

6 Atmosphere, the incumbent of which also serves as

7 Administrator of the National Oceanic and Atmos8 pheric Administration.’’; and

9 (3) by striking the following item:

10 ‘‘Under Secretary of Commerce for Tech11 nology.’’.

12 (e) COMPENSATION FOR POSITIONS AT LEVEL IV.—

13 Section 5315 of title 5, United States Code, is amended—

14 (1) by striking the following item:

15 ‘‘Assistant Secretaries of Commerce (11).’’;

16 (2) by striking the following item:

17 ‘‘General Counsel of the Department of Com18 merce.’’;

19 (3) by striking the following item:

20 ‘‘Assistant Secretary of Commerce for Oceans

21 and Atmosphere, the incumbent of which also serves

22 as Deputy Administrator of the National Oceanic

23 and Atmospheric Administration.’’;

24 (4) by striking the following item:
1428

•HR 2491 RH

1 ‘‘Director, National Institute of Standards and

2 Technology, Department of Commerce.’’;

3 (5) by striking the following item:

4 ‘‘Inspector General, Department of Com5 merce.’’;

6 (6) by striking the following item:

7 ‘‘Chief Financial Officer, Department of Com8 merce.’’; and

9 (7) by striking the following item:

10 ‘‘Director, Bureau of the Census, Department

11 of Commerce.’’.

12 (f) COMPENSATION FOR POSITIONS AT LEVEL V.—

13 Section 5316 of title 5, United States Code, is amended—

14 (1) by striking the following item:

15 ‘‘Director, United States Travel Service, De16 partment of Commerce.’’; and

17 (2) by striking the following item:

18 ‘‘National Export Expansion Coordinator, De19 partment of Commerce.’’.

20 (g) INSPECTOR GENERAL ACT OF 1978.—The In21 spector General Act of 1978 (5 U.S.C. App.) is amend22 ed—

23 (1) in section 9(a)(1), by striking subparagraph

24 (B);
1429

•HR 2491 RH

1 (2) in section 11(1), by striking ‘‘Commerce,’’;

2 and

3 (3) in section 11(2), by striking ‘‘Commerce,’’;

4 SEC. 17109. EFFECTIVE DATE.

5 (a) IN GENERAL.—Except as provided in subsection

6 (b), this subtitle shall take effect on the date that is 6

7 months after the date of the enactment of this subtitle.

8 (b) PROVISIONS EFFECTIVE ON DATE OF ENACT9 MENT.—The following provisions of this subtitle shall take

10 effect on the date of the enactment of this subtitle:

11 (1) Section 17101(b).

12 (2) Section 17106(c).

13 (3) Section 17107.

14 Subtitle B—Disposition of Particu15 lar Programs, Functions, and

16 Agencies of Department of Com17 merce

18 SEC. 17201. ECONOMIC DEVELOPMENT.

19 (a) TERMINATED FUNCTIONS.—The Public Works

20 and Economic Development Act of 1965 (42 U.S.C. 3121

21 et seq.) is repealed.

22 (b) TRANSFER OF FINANCIAL OBLIGATIONS OWED

23 TO THE DEPARTMENT.—There are transferred to the Sec24 retary of the Treasury the loans, notes, bonds, debentures,

25 securities, and other financial obligations owned by the
1430

•HR 2491 RH

1 Department of Commerce under the Public Works and

2 Economic Development Act of 1965, together with all as3 sets or other rights (including security interests) incident

4 thereto, and all liabilities related thereto. There are as5 signed to the Secretary of the Treasury the functions,

6 powers, and abilities vested in or delegated to the Sec7 retary of Commerce or the Department of Commerce to

8 manage, service, collect, sell, dispose of, or otherwise real9 ize proceeds on obligations owed to the Department of

10 Commerce under authority of such Act with respect to any

11 loans, obligations, or guarantees made or issued by the

12 Department of Commerce pursuant to such Act.

13 (c) SALE OF LOANS.—The Secretary of the Treasury

14 shall take such actions as may be necessary to ensure that

15 to the maximum extent practicable loans transferred to

16 the Secretary under subsection (b) are sold to the public.

17 The Secretary shall prescribe terms for the sale of such

18 loans to ensure that such sale will bring the highest pos19 sible rate of return to the Federal Government.

20 (d) AUDIT.—Not later than 18 months after the date

21 of the enactment of this title, the Comptroller General

22 shall conduct an audit of all grants made or issued by

23 the Department of Commerce under the Public Works and

24 Economic Development Act of 1965 in fiscal year 1995
1431

•HR 2491 RH

1 and all loans, obligations, and guarantees and shall trans2 mit to Congress a report on the results of such audit.

3 SEC. 17202. TECHNOLOGY ADMINISTRATION.

4 (a) TECHNOLOGY ADMINISTRATION.—

5 (1) GENERAL RULE.—Except as otherwise pro6 vided in this section, the Technology Administration

7 shall be terminated on the effective date specified in

8 section 17208(a).

9 (2) OFFICE OF TECHNOLOGY POLICY.—The Of10 fice of Technology Policy is hereby terminated.

11 (b) NATIONAL INSTITUTE OF STANDARDS AND

12 TECHNOLOGY.—

13 (1) GENERAL RULE.—Except as otherwise pro14 vided in this subsection, the National Institute of

15 Standards and Technology (in this subsection re16 ferred to as the ‘‘Institute’’) shall be transferred to

17 the United States Trade Administration.

18 (2) FUNCTIONS OF DIRECTOR.—Except as oth19 erwise provided in this subsection, upon the transfer

20 under paragraph (1), the Director of the Institute

21 shall perform all functions relating to the Institute

22 that, immediately before the effective date specified

23 in section 17208(a), were functions of the Secretary

24 of Commerce or the Under Secretary of Commerce

25 for Technology, including the administration of sec-
1432

•HR 2491 RH

1 tion 17 of the Stevenson-Wydler Technology Innova2 tion Act of 1980.

3 (3) LABORATORIES.—(A) The laboratories of

4 the Institute shall be transferred to the United

5 States Trade Administration.

6 (B) The United States Trade Administration

7 shall attempt to sell the property of the laboratories

8 of the Institute, within 18 months after the effective

9 date specified in section 17208(a), to a private sec10 tor entity intending to perform substantially the

11 same functions as were performed by the labora12 tories of the Institute immediately before such effec13 tive date.

14 (C) If no offer to purchase property under sub15 paragraph (B) is received within the 18-month pe16 riod described in such subparagraph, the United

17 States Trade Administration shall submit a report to

18 the Congress containing recommendations on the ap19 propriate disposition of the property and functions

20 of the laboratories of the Institute.

21 (4) PROVISION OF SERVICES BY PRIVATE SEC22 TOR.—The Director of the Institute shall consider

23 proposals from experienced and qualified private-sec24 tor entities to provide services that, immediately be25 fore the effective date specified in section 17208(a),
1433

•HR 2491 RH

1 were performed by the Technology Administration,

2 particularly foreign competitive technology assess3 ments. The Director shall require that proposals to

4 provide a service that are accepted under this para5 graph satisfy user needs better than, and provide

6 such service at a lower cost than, the service could

7 be provided by the Federal Government.

8 (c) NATIONAL TECHNICAL INFORMATION SERV9 ICE.—

10 (1) SALE OF PROPERTY.—The Commerce Pro11 grams Resolution Agency shall attempt to sell the

12 property of the National Technical Information

13 Service, within 18 months after the effective date

14 specified in section 17208(a), to a private sector en15 tity intending to perform substantially the same

16 functions as were performed by the National Tech17 nical Information Service immediately before such

18 effective date.

19 (2) RECOMMENDATIONS.—If no offer to pur20 chase property under paragraph (1) is received with21 in the 18-month period described in such paragraph,

22 the Commerce Programs Resolution Agency shall

23 submit a report to the Congress containing rec24 ommendations on the appropriate disposition of the
1434

•HR 2491 RH

1 property and functions of the National Technical In2 formation Service.

3 (3) FUNDING.—No Federal funds may be ap4 propriated for the National Technical Information

5 Service for any fiscal year after fiscal year 1995.

6 (4) ELECTRONIC REPORTING.—Each Federal

7 research report that is required to be submitted to

8 the National Technical Information Service after the

9 date of the enactment of this Act shall be submitted

10 in an electronic, standardized format in order to fa11 cilitate the availability of Federal research reports

12 on the Internet and the World Wide Web.

13 (d) AMENDMENTS.—

14 (1) NATIONAL INSTITUTE OF STANDARDS AND

15 TECHNOLOGY ACT.—The National Institute of

16 Standards and Technology Act (15 U.S.C. 271 et

17 seq.) is amended—

18 (A) in section 2(b), by striking paragraph

19 (1) and redesignating paragraphs (2) through

20 (11) as paragraphs (1) through (10), respec21 tively;

22 (B) in section 2(d), by striking ‘‘, including

23 the programs established under sections 25, 26,

24 and 28 of this Act’’;
1435

•HR 2491 RH

1 (C) in section 10, by striking ‘‘Advanced’’

2 in both the section heading and subsection (a),

3 and inserting in lieu thereof ‘‘Standards and’’;

4 and

5 (D) by striking sections 24, 25, 26, and

6 28.

7 (2) STEVENSON-WYDLER TECHNOLOGY INNOVA8 TION ACT OF 1980.—(A) The Stevenson-Wydler

9 Technology Innovation Act of 1980 (15 U.S.C. 3701

10 et seq.) is amended—

11 (i) in section 3, by striking paragraph (2)

12 and redesignating paragraphs (3) through (5)

13 as paragraphs (2) through (4), respectively;

14 (ii) in section 4, by striking paragraphs

15 (1), (4), and (13) and redesignating paragraphs

16 (2), (3), (5), (6), (7), (8), (9), (10), (11), and

17 (12) as paragraphs (1) through (10), respec18 tively;

19 (iii) by striking sections 5, 6, 7, 8, 9, and

20 10; and

21 (iv) in section 11—

22 (I) by striking ‘‘, the Federal Labora23 tory Consortium for Technology Transfer,’’

24 in subsection (c)(3);
1436

•HR 2491 RH

1 (II) by striking ‘‘and the Federal Lab2 oratory Consortium for Technology Trans3 fer’’ in subsection (d)(2);

4 (III) by striking ‘‘, and refer such re5 quests’’ and all that follows through ‘‘avail6 able to the Service’’ in subsection (d)(3);

7 and

8 (IV) by striking subsection (e).

9 (B) Section 17 of the Stevenson-Wydler Tech10 nology Innovation Act of 1980 (15 U.S.C. 3711a,

11 relating to the Malcolm Baldrige National Quality

12 Award) is repealed. It is the sense of the Congress

13 that a private-sector entity should continue the na14 tional quality award program established by such

15 section.

16 SEC. 17203. TERMINATED FUNCTIONS OF NTIA.

17 (a) REPEALS.—The following provisions of law are

18 repealed:

19 (1) Subpart A of part IV of title III of the

20 Communications Act of 1934 (47 U.S.C. 390 et

21 seq.), relating to assistance for public telecommuni22 cations facilities.

23 (2) Subpart B of part IV of title III of the

24 Communications Act of 1934 (47 U.S.C. 394 et
1437

•HR 2491 RH

1 seq.), relating to the Endowment for Children’s

2 Educational Television.

3 (3) Subpart C of part IV of title III of the

4 Communications Act of 1934 (47 U.S.C. 395 et

5 seq.), relating to Telecommunications Demonstration

6 grants.

7 (b) DISPOSAL OF NTIA LABORATORIES.—

8 (1) TRANSFER TO RESOLUTION AGENCY.—The

9 laboratories of the National Telecommunications and

10 Information Administration shall be transferred to

11 the Commerce Programs Resolution Agency.

12 (2) SALE OF LABORATORIES.—The Commerce

13 Programs Resolution Agency shall attempt to sell

14 the property of such laboratories, within 18 months

15 after the effective date specified in section 17208(a),

16 to a private sector entity intending to perform sub17 stantially the same functions as were performed by

18 such laboratories immediately before such effective

19 date.

20 (3) REPORT ON DISPOSITION.—If no offer to

21 purchase property under subparagraph (B) is re22 ceived within the 18-month period described in such

23 subparagraph, the Commerce Programs Resolution

24 Agency shall submit a report to the Congress con25 taining recommendations on the appropriate disposi-
1438

•HR 2491 RH

1 tion of the property and functions of such labora2 tories.

3 SEC. 17204. TRANSFER OF NATIONAL TELECOMMUNI4 CATIONS AND INFORMATION ADMINISTRA5 TION.

6 (a) TRANSFER TO USTA.—The National Tele7 communications and Information Administration shall be

8 transferred to the United States Trade Administration.

9 (b) ADMINISTRATOR.—The head of the National

10 Telecommunications and Information Administration shall

11 be an Administrator who shall be appointed by the Presi12 dent, by and with the advice and consent of the Senate.

13 The functions of the National Telecommunications and In14 formation Administration, and of the Secretary of Com15 merce and the Assistant Secretary for Communications

16 and Information of the Department of Commerce with re17 spect to the National Telecommunications and Informa18 tion Administration, are transferred to the Administrator.

19 (c) REFERENCES.—References in any provision of

20 law (including to the National Telecommunications and

21 Information Administration Organization Act) to the Sec22 retary of Commerce or the Assistant Secretary for Com23 munications and Information of the Department of Com24 merce with respect to a function vested pursuant to this

25 section in the Administrator of the National Telecommuni-
1439

•HR 2491 RH

1 cations and Information Administration shall be deemed

2 to refer to the Administrator of the National Tele3 communications and Information Administration.

4 SEC. 17205. NATIONAL OCEANIC AND ATMOSPHERIC AD5 MINISTRATION.

6 (a) TRANSFER TO DEPARTMENT OF AGRI7 CULTURE.—The National Oceanic and Atmospheric Ad8 ministration shall be transferred to the Department of Ag9 riculture.

10 (b) DEFINITIONS.—For the purposes of this section,

11 the term—

12 (1) ‘‘Act of 1890’’ means the Act entitled ‘‘An

13 Act to increase the efficiency and reduce the ex14 penses of the Signal Corps of the Army, and to

15 transfer the Weather Bureau to the Department of

16 Agriculture’’, approved October 1, 1890 (26 Stat.

17 653);

18 (2) ‘‘Act of 1947’’ means the Act entitled ‘‘An

19 Act to define the functions and duties of the Coast

20 and Geodetic Survey, and for other purposes’’, ap21 proved August 6, 1947 (33 U.S.C. 883a et seq.);

22 (3) ‘‘Act of 1970’’ means the Act entitled ‘‘An

23 Act to clarify the status and benefits of commis24 sioned officers of the National Oceanic and Atmos25 pheric Administration, and for other purposes’’, ap-
1440

•HR 2491 RH

1 proved December 31, 1970 (33 U.S.C. 857–1 et

2 seq.);

3 (4) ‘‘Administrator’’ means the Administrator

4 of the National Oceanic and Atmospheric Adminis5 tration; and

6 (5) ‘‘Secretary’’ means the Secretary of Agri7 culture.

8 (c) LEASING AND CONTRACTING.—

9 (1) CONTRACTING AUTHORITY.—Notwithstand10 ing any other provision of law, the Secretary of Agri11 culture is authorized to enter into contracts for data

12 or days-at-sea to fulfill the National Oceanic and At13 mospheric Administration missions of marine re14 search, climate research, fisheries research, hurri15 cane tracking, and mapping and charting services.

16 (2) UNOLS VESSEL AGREEMENTS.—In fulfill17 ing the National Oceanic and Atmospheric Adminis18 tration mission requirements described in paragraph

19 (1), the Secretary of Agriculture shall use excess ca20 pacity of University National Oceanographic Labora21 tory System vessels where appropriate, and may

22 enter into memoranda of agreement with operators

23 of those vessels to carry out those mission require24 ments.
1441

•HR 2491 RH

1 (d) ABOLITIONS.—The National Ocean Service and

2 the Office of Oceanic and Atmospheric Research are abol3 ished.

4 (e) TERMINATION OF THE NATIONAL OCEANIC AND

5 ATMOSPHERIC ADMINISTRATION CORPS OF COMMIS6 SIONED OFFICERS.—

7 (1) NUMBER OF OFFICERS.—Notwithstanding

8 section 8 of the Act of June 3, 1948 (33 U.S.C.

9 853g), no commissioned officers are authorized for

10 the National Oceanic and Atmospheric Administra11 tion for any fiscal year after fiscal year 1996.

12 (2) SEPARATION PAY.—The Secretary of Agri13 culture may separate commissioned officers from the

14 active list of the National Oceanic and Atmospheric

15 Administration, and may do so without providing

16 separation pay.

17 (3) TRANSFER.—(A) Subject to the approval of

18 the Secretary of Defense and under terms and con19 ditions specified by the Secretary, commissioned offi20 cers subject to paragraph (1) may transfer to the

21 armed services under section 716 of title 10, United

22 States Code.

23 (B) Subject to the approval of the Secretary of

24 Transportation and under terms and conditions

25 specified by the Secretary, commissioned officers
1442

•HR 2491 RH

1 subject to paragraph (1) may transfer to the United

2 States Coast Guard under section 716 of title 10,

3 United States Code.

4 (C) Subject to the approval of the Adminis5 trator and under terms and conditions specified by

6 the Administrator, commissioned officers subject to

7 paragraph (1) who on the date of enactment of this

8 section have been assigned for a period of one year

9 or more to the programs transferred to the Adminis10 tration by this Act (other than those associated with

11 the modernization of the National Oceanic and At12 mospheric Administration fleet or the operations of

13 the National Oceanic and Atmospheric Administra14 tion Corps of Commissioned Officers) may transfer

15 to the Administration as members of the civil serv16 ice.

17 (4) REPEALS.—(A) The following provisions of

18 law are repealed:

19 (i) The Coast and Geodetic Survey Com20 missioned Officers’ Act of 1948 (33 U.S.C.

21 853a–853o, 853p–853u).

22 (ii) The Act of February 16, 1929 (Chap23 ter 221, section 5; 45 Stat. 1187; 33 U.S.C.

24 852a).
1443

•HR 2491 RH

1 (iii) The Act of January 19, 1942 (Chap2 ter 6; 56 Stat. 6).

3 (iv) Section 9 of Public Law 87–649 (76

4 Stat. 495).

5 (v) The Act of May 22, 1917 (Chapter 20,

6 section 16; 40 Stat. 87; 33 U.S.C. 854 et seq.).

7 (vi) The Act of December 3, 1942 (Chap8 ter 670; 56 Stat. 1038).

9 (vii) Sections 1 through 5 of Public Law

10 91–621 (84 Stat. 1863; 33 U.S.C. 857–1 et

11 seq.).

12 (viii) The Act of August 10, 1956 (Chapter

13 1041, section 3; 70A Stat. 619; 33 U.S.C.

14 857a).

15 (ix) The Act of May 18, 1920 (Chapter

16 190, section 11; 41 Stat. 603; 33 U.S.C. 864).

17 (x) The Act of July 22, 1947 (Chapter

18 286; 61 Stat. 400; 33 U.S.C. 873, 874).

19 (xi) The Act of August 3, 1956 (Chapter

20 932; 70 Stat. 988; 33 U.S.C. 875, 876).

21 (xii) All other Acts inconsistent with this

22 subsection.

23 (B) The effective date of the repeals under sub24 paragraph (A) shall be September 30, 1997.
1444

•HR 2491 RH

1 (5) UNEXPENDED BALANCES.—Unexpended

2 balances of appropriations, allocations, and other

3 funds available or made available in connection with

4 the National Oceanic and Atmospheric Administra5 tion Corps of Commissioned officers may be used by

6 the Secretary for payments under section 8 of the

7 Act of June 3, 1948 (33 U.S.C. 853g).

8 (6) ABOLITION.—The Office of the National

9 Oceanic and Atmospheric Administration Corps of

10 Operations and the Commissioned Personnel Center

11 are abolished effective September 30, 1997.

12 (f) OTHER TERMINATIONS.—The following programs

13 of the National Oceanic and Atmospheric Administration

14 are terminated:

15 (1) The National Undersea Research Program.

16 (2) The Fleet Modernization, Shipbuilding, and

17 Construction Account.

18 (3) The Charleston, South Carolina, Special

19 Management Plan.

20 (4) Chesapeake Bay Observation Buoys.

21 (5) Federal/State Weather Modification Grants.

22 (6) The Southeast Storm Research Account.

23 (7) The Southeast United States Caribbean

24 Fisheries Oceanographic Coordinated Investigations

25 Program.
1445

•HR 2491 RH

1 (8) National Institute for Environmental Re2 newal.

3 (9) The Lake Champlain Study.

4 (10) The Maine Marine Research Center.

5 (11) The South Carolina Cooperative Geodetic

6 Survey Account.

7 (12) Pacific Island Technical Assistance.

8 (13) Sea Grant/Oyster Disease Account.

9 (14) National Coastal Research and Develop10 ment Institute Account.

11 (15) VENTS program.

12 (16) National Weather Service non-Federal,

13 non-wildfire Fire Weather Service.

14 (17) National Weather Service Regional Cli15 mate Centers.

16 (18) National Weather Service Samoa Weather

17 Forecast Office Repair and Upgrade Account.

18 (19) Dissemination of Weather Charts (Marine

19 Facsimile Service).

20 (20) The global climate change program.

21 (21) The Global Learning and Observations to

22 Benefit the Environment Program.

23 Any unobligated balances appropriated to carry out any

24 program referred to in this subsection shall be transferred

25 to the general fund of the Treasury.
1446

•HR 2491 RH

1 (g) REPEALS.—The following provisions of law are

2 repealed effective on the date of enactment of this Act:

3 (1) The Ocean Thermal Conversion Act of 1980

4 (42 U.S.C. 9101 et seq.).

5 (2) Title IV of the Marine Protection, Research,

6 and Sanctuaries Act of 1972 (16 U.S.C. 1447 et

7 seq.).

8 (3) Title V of the Marine Protection, Research,

9 and Sanctuaries Act of 1972 (33 U.S.C. 2801 et

10 seq.).

11 (4) Public Law 85–342 (72 Stat. 35; 16 U.S.C.

12 778 et seq.), relating to fish research and experi13 mentation.

14 (5) The first section of the Act of August 8,

15 1956 (70 Stat. 1126; 16 U.S.C. 760d), relating to

16 grants for commercial fishing education.

17 (6) Public Law 86–359 (16 U.S.C. 760e et

18 seq.), relating to the study of migratory marine

19 gamefish.

20 (7) The Act of August 15, 1914 (Chapter 253;

21 38 Stat. 692; 16 U.S.C. 781 et seq.), prohibiting the

22 taking of sponges in the Gulf of Mexico and the

23 Straits of Florida.

24 (h) TRANSFER OF FISHERIES PROGRAMS TO

25 MARAD.—
1447

•HR 2491 RH

1 (1) OPERATING DIFFERENTIAL SUBSIDY PRO2 GRAM.—Section 607(k)(9) of the Merchant Marine

3 Act, 1936 (46 App. U.S.C. 1177(k)(9)) is amended

4 to read as follows:

5 ‘‘(9) The term ‘Secretary’ means the Secretary of

6 Transportation.’’.

7 (2) SHIP MORTGAGE INSURANCE.—Section

8 1101(n) of the Merchant Marine Act, 1936 (46 App.

9 U.S.C. 1177(k)(9)) is amended to read as follows:

10 ‘‘(n) The term ‘Secretary’ means the Secretary of

11 Transportation.’’.

12 (3) OUTER CONTINENTAL SHELF.—Section

13 401(8) of the Outer Continental Shelf Lands Act

14 Amendments of 1978 (43 U.S.C. 1841 et seq.) is

15 amended to read as follows:

16 ‘‘(8) ‘Secretary’ means the Secretary of Trans17 portation.’’.

18 (4) FISHERMEN’S PROTECTIVE ACT OF 1967.—

19 Section 10(a) of the Fishermen’s Protective Act of

20 1967 (22 U.S.C 1980(a)) is amended—

21 (A) by amending paragraph (1) to read as

22 follows:

23 ‘‘(1) The terms ‘fishery’, ‘fishery conservation

24 zone’, ‘fishing’, ‘fishing vessel’, and ‘vessel of the

25 United States’ have the same meaning given to each
1448

•HR 2491 RH

1 of such terms in section 3 of the Magnuson Fishery

2 Conservation and Management Act (16 U.S.C.

3 1802).’’; and

4 (B) by adding at the end the following new

5 paragraph:

6 ‘‘(5) The term ‘Secretary’ means the Secretary

7 of Transportation.’’.

8 (i) TRANSFER OF MAPPING, CHARTING, AND GEOD9 ESY FUNCTIONS TO THE UNITED STATES GEOLOGICAL

10 SURVEY.—There are hereby transferred to the Director

11 of the United States Geological Survey the functions relat12 ing to mapping, charting, geodesy, observation, and pre13 diction of tides and sea level authorized under the Act of

14 August 7, 1947 (61 Stat. 787; 33 U.S.C. 883a).

15 (j) REPORT ON TERMINATION OF PROGRAMS.—Not

16 later than 60 days after the date of the enactment of this

17 Act, the Secretary shall submit to the Committee on

18 Science of the House of Representatives and the Commit19 tee on Commerce, Science, and Transportation of the Sen20 ate a report certifying that all the programs listed in sub21 section (f) will be terminated no later than September 30,

22 1995.

23 (k) COMPETITION WITH PRIVATE SECTOR.—The

24 National Weather Service shall not compete, or assist

25 other entities to compete, with the private sector when a
1449

•HR 2491 RH

1 service is currently provided or can be provided by com2 mercial enterprise, unless—

3 (1) the Secretary of Agriculture finds that the

4 private sector is unwilling or unable to provide the

5 services; and

6 (2) the service provides vital weather warnings

7 and forecasts for the protection of lives and property

8 of the general public.

9 (l) AMENDMENTS.—The Act of 1890 is amended—

10 (1) by striking section 3 (15 U.S.C. 313); and

11 (2) in section 9 (15 U.S.C. 317), by striking all

12 after ‘‘Department of Agriculture’’ and inserting in

13 lieu thereof a period.

14 (m) NWS REPORT.—Not later than 60 days after the

15 date of the enactment of this Act, the Secretary of Agri16 culture shall submit to the Committee on Science of the

17 House of Representatives and the Committee on Com18 merce, Science, and Transportation of the Senate a report

19 detailing all National Weather Service activities which do

20 not conform to the requirements of this section and outlin21 ing a timetable for their termination.

22 (n) PROHIBITION OF LOBBYING ACTIVITIES.—None

23 of the funds authorized by this section shall be available

24 for any activity whose purpose is to influence legislation

25 pending before the Congress, provided that this shall not
1450

•HR 2491 RH

1 prevent officers or employees of the United States or of

2 its departments or agencies from communicating to Mem3 bers of Congress on the request of any Member or to Con4 gress, through the proper channels, requests for legislation

5 or appropriations which they deem necessary for the effi6 cient conduct of the public business.

7 (o) REPORT ON LABORATORIES.—

8 (1) IN GENERAL.—No later than 120 days after

9 the date of the enactment of this Act, the Secretary

10 of Agriculture shall conduct a review of the labora11 tories operated by the National Oceanic and Atmos12 pheric Administration and submit a report to the

13 Committee on Science of the House of Representa14 tives and the Committee on Commerce, Science, and

15 Transportation of the Senate.

16 (2) REQUIREMENTS.—The report required by

17 paragraph (1) shall—

18 (A) address potential efficiencies and sav19 ings which could be achieved through closing or

20 consolidating laboratory facilities; and

21 (B) review each laboratory’s—

22 (i) mission and activities and their

23 correlation to the mission priorities of the

24 National Oceanic and Atmospheric Admin25 istration;
1451

•HR 2491 RH

1 (ii) physical assets, equipment, condi2 tion, and personnel resources;

3 (iii) organization and program man4 agement; and

5 (iv) address other issues the Inspector

6 General considers relevant.

7 (p) LIMITATION ON NOAA ANNUAL EXPENDI8 TURES.—Notwithstanding section 17610, the amount ex9 pended by the United States each fiscal year for the Na10 tional Oceanic and Atmospheric Administration may not

11 exceed 75 percent of the total amount expended by the

12 United States for the National Oceanic and Atmospheric

13 Administration during fiscal year 1994.

14 SEC. 17206. MISCELLANEOUS ABOLISHMENTS.

15 (a) ABOLISHMENTS.—The following agencies and

16 programs of the Department of Commerce are abolished,

17 and the functions of those agencies or programs are abol18 ished except to the extent otherwise provided in this title:

19 (1) The Economic Development Administration.

20 (2) The Minority Business Development Admin21 istration.

22 (3) The National Telecommunications and In23 formation Administration.
1452

•HR 2491 RH

1 (4) The Advanced Technology Program under

2 section 28 of the National Institute of Standards

3 and Technology Act (15 U.S.C. 278n).

4 (5) The Manufacturing Extension Programs

5 under sections 25 and 26 of the National Institute

6 of Standards and Technology Act (15 U.S.C. 278k

7 and 278l).

8 (b) SENSE OF THE CONGRESS.—It is the sense of

9 the Congress that the Congress should continue to explore

10 the prospects for the private sector to assume responsibil11 ity for many of the functions and responsibilities of the

12 Minority Business Development Administration.

13 SEC. 17207. PRIVATIZATION OF TRAVEL FUNCTIONS.

14 The Administrator shall abolish the United States

15 Travel and Tourism Administration effective August 1,

16 1996. Prior to this date the Administrator shall submit

17 to the Congress a recommendation for the privatization

18 of the functions of the United States Travel and Tourism

19 Administration. In making such a recommendation the

20 Administrator shall consider the results of the national re21 view conducted by the White House Conference on Travel

22 and Tourism, including the consideration of fees to sup23 port such functions.
1453

•HR 2491 RH

1 SEC. 17208. EFFECTIVE DATE.

2 (a) IN GENERAL.—Except as provided in subsection

3 (b), this subtitle shall take effect on the effective date

4 specified in section 17109(a).

5 (b) PROVISIONS EFFECTIVE ON DATE OF ENACT6 MENT.—The following provisions of this subtitle shall take

7 effect on the date of the enactment of this title:

8 (1) section 17201.

9 (2) section 17206.

10 SEC. 17209. SENSE OF CONGRESS REGARDING USER FEES.

11 It is the sense of the Congress that the head of each

12 agency that performs a function vested in the agency by

13 this title should, wherever feasible, explore and implement

14 user fees for the provision of services in the performance

15 of that function, to offset operating costs.

16 Subtitle C—Consolidation of

17 Statistical Functions

18 SEC. 17301. SHORT TITLE.

19 This subtitle may be cited as the ‘‘Federal Statistics

20 Agency Establishment Act’’.

21 SEC. 17302. DEFINITIONS.

22 As used in this subtitle:

23 (1) The term ‘‘Agency’’ means the Federal Sta24 tistics Agency.

25 (2) The term ‘‘Administrator’’ means the Ad26 ministrator of the Federal Statistics Agency.
1454

•HR 2491 RH

1 (3) The term ‘‘Deputy Administrator’’ means

2 the Deputy Administrator of the Federal Statistics

3 Agency.

4 (4) The term ‘‘function’’ includes any duty, ob5 ligation, power, authority, responsibility, right, privi6 lege, activity, or program.

7 (5) The term ‘‘office’’ includes any office, bu8 reau, institute, council, unit, or organizational en9 tity, or any component thereof.

10 CHAPTER 1—ESTABLISHMENT OF

11 FEDERAL STATISTICS AGENCY

12 SEC. 17311. ESTABLISHMENT.

13 The Federal Statistics Agency is hereby established

14 as a free-standing establishment in the executive branch

15 of the Government.

16 SEC. 17312. PRINCIPAL OFFICERS.

17 (a) ADMINISTRATOR.—(1) There shall be at the head

18 of the Agency an Administrator of the Agency, who shall

19 be appointed by the President, by and with the advice and

20 consent of the Senate.

21 (2) The Agency, including all functions and offices

22 transferred to it under this subtitle, shall be administered,

23 in accordance with the provisions of this subtitle, under

24 the supervision and direction of the Administrator.
1455

•HR 2491 RH

1 (3) The Administrator shall receive basic pay at the

2 rate payable for level II of the Executive Schedule under

3 section 5313 of title 5, United States Code.

4 (b) DEPUTY ADMINISTRATOR.—(1) There shall be in

5 the Agency a Deputy Administrator of the Agency who

6 shall be appointed by the President, by and with the advice

7 and consent of the Senate.

8 (2) During the absence or disability of the Adminis9 trator, or in the event of a vacancy in the office of the

10 Administrator, the Deputy Administrator shall act as Ad11 ministrator. The Deputy Administrator shall perform such

12 other duties and exercise such powers as the Adminis13 trator may from time to time prescribe.

14 (3) The Deputy Administrator shall receive basic pay

15 at the rate payable for level III of the Executive Schedule

16 under section 5314 of title 5, United States Code.

17 (c) AGENCY DIRECTORS.—(1) There shall be in the

18 Agency—

19 (A) a Director of the Census who shall, on the

20 transfer of functions and offices under section

21 17313, serve as the head of the Bureau of the Cen22 sus; and

23 (B) a Director of the Bureau of Economic

24 Analysis who shall, on the transfer of functions and
1456

•HR 2491 RH

1 offices under section 17313, serve as the head of the

2 Bureau of Economic Analysis.

3 (2) Each of the Directors shall be appointed by the

4 President, by and with the advice and consent of the Sen5 ate. The Director of the Census shall receive basic pay

6 at the rate payable for level IV of the Executive Schedule

7 under section 5315 of title 5, United States Code. The

8 Director of the Bureau of Economic Analysis shall receive

9 basic pay at the rate payable for level V of the Executive

10 Schedule under section 5316 of title 5, United States

11 Code.

12 (d) GENERAL COUNSEL.—There shall be in the

13 Agency a General Counsel who shall administer the Office

14 of General Counsel of the Agency. The General Counsel

15 shall be appointed by the President, by and with the advice

16 and consent of the Senate. The General Counsel shall re17 ceive basic pay at the rate payable for level V of the Exec18 utive Schedule under section 5316 of title 5, United States

19 Code.

20 SEC. 17313. TRANSFERS OF FUNCTIONS AND OFFICES.

21 (a) TRANSFER OF THE BUREAU OF THE CENSUS.—

22 There is transferred to the Agency the Bureau of the Cen23 sus of the Department of Commerce, along with all of its

24 functions and offices.
1457

•HR 2491 RH

1 (b) TRANSFER OF THE BUREAU OF ECONOMIC

2 ANALYSIS.—There is transferred to the Agency the Bu3 reau of Economic Analysis of the Department of Com4 merce, along with all of its functions and offices.

5 (c) TRANSFER OF STATISTICAL MANAGEMENT

6 FUNCTIONS OF OMB.—There are transferred to the Ad7 ministrator the functions of the Director of the Office of

8 Management and Budget relating to statistical policy and

9 coordination under chapter 35 of title 44, United States

10 Code (as in effect immediately before such transfer), in11 cluding such functions under sections 3504(a) and (d) and

12 3514(a)(10) of such chapter.

13 (d) TRANSFER DATE.—The transfers of functions

14 and offices under this section shall be effective 90 days

15 after the date of the enactment of this Act.

16 CHAPTER 2—ADMINISTRATIVE

17 PROVISIONS

18 SEC. 17321. PERSONNEL PROVISIONS.

19 (a) OFFICERS AND EMPLOYEES.—The Administrator

20 may appoint and fix the compensation of such officers and

21 employees as may be necessary to carry out the functions

22 of the Administrator and the Agency. Except as otherwise

23 provided by law, such officers and employees shall be ap24 pointed in accordance with the civil service laws and their
1458

•HR 2491 RH

1 compensation shall be fixed in accordance with title 5,

2 United States Code.

3 (b) EXPERTS AND CONSULTANTS.—The Adminis4 trator may as provided in appropriation Acts obtain the

5 services of experts and consultants in accordance with sec6 tion 3109 of title 5, United States Code, and may com7 pensate such experts and consultants at rates not to ex8 ceed the daily rate prescribed for level V of the Executive

9 Schedule under section 5316 of title 5, United States

10 Code.

11 (c) ACCEPTANCE OF VOLUNTARY SERVICES.—(1)

12 Notwithstanding section 1342 of title 31, United States

13 Code, the Administrator may accept, subject to regula14 tions issued by the Office of Personnel Management, vol15 untary services if the services—

16 (A) are to be uncompensated; and

17 (B) will not be used to displace any employee.

18 (2) Any individual who provides voluntary services

19 under this subsection shall not be considered a Federal

20 employee for any purpose other than for purposes of chap21 ter 81 of title 5, United States Code (relating to com22 pensation for injury) and sections 2671 through 2680 of

23 title 28, United States Code (relating to tort claims).
1459

•HR 2491 RH

1 SEC. 17322. GENERAL ADMINISTRATIVE PROVISIONS.

2 (a) GENERAL AUTHORITY.—In carrying out any

3 function transferred by this subtitle, the Administrator,

4 or any officer or employee of the Agency, may exercise

5 any authority available by law with respect to such func6 tion to the official or agency from which such function

7 is transferred, and the actions of the Administrator in ex8 ercising such authority shall have the same force and ef9 fect as when exercised by such official or agency.

10 (b) DELEGATION.—Except as otherwise provided in

11 this subtitle, the Administrator may delegate any function

12 to such officers and employees of the Agency as the Ad13 ministrator may designate, and may authorize such suc14 cessive redelegations of such functions within the Agency

15 as may be necessary or appropriate. No delegation of func16 tions by the Administrator under this section or under any

17 other provision of this Act shall relieve the Administrator

18 of responsibility for the administration of such functions.

19 (c) REORGANIZATION.—(1) Except as provided in

20 paragraph (2), the Administrator may allocate or reallo21 cate functions among the officers of the Agency, and may

22 establish, consolidate, alter, or abolish such offices or posi23 tions within the Agency as may be necessary or appro24 priate.

25 (2) The Administrator may not—
1460

•HR 2491 RH

1 (A) abolish any office or position transferred to

2 the Agency and established by statute, or any func3 tion vested by statute in such an office or an officer

4 of such an office;

5 (B) abolish any office or position established by

6 this subtitle; or

7 (C) alter the delegation of functions to any spe8 cific office or position required by this subtitle.

9 SEC. 17323. CONTRACTS.

10 (a) IN GENERAL.—Subject to the Federal Property

11 and Administrative Services Act of 1949 and other appli12 cable Federal law, the Administrator may make, enter

13 into, and perform such contracts, grants, leases, coopera14 tive agreements, and other similar transactions with Fed15 eral or other public agencies (including State and local

16 governments) and private organizations and persons, and

17 to make such payments, by way of advance or reimburse18 ment, as the Administrator may determine necessary or

19 appropriate to carry out functions of the Administrator

20 or the Agency.

21 (b) APPROPRIATION AUTHORITY REQUIRED.—No

22 authority to enter into contracts or to make payments

23 under this subtitle shall be effective except to such extent

24 or in such amounts as are provided in advance under ap25 propriation Acts.
1461

•HR 2491 RH

1 SEC. 17324. REGULATIONS.

2 The Administrator may prescribe such rules and reg3 ulations as the Administrator considers necessary or ap4 propriate to administer and manage the functions of the

5 Administrator or the Agency, in accordance with chapter

6 5 of title 5, United States Code.

7 SEC. 17325. SEAL.

8 The Administrator shall cause a seal of office to be

9 made for the Agency of such design as the Administrator

10 shall approve. Judicial notice shall be taken of such seal.

11 SEC. 17326. ANNUAL REPORT.

12 The Administrator shall, as soon as practicable after

13 the close of each fiscal year, make a single, comprehensive

14 report to the President for transmission to the Congress

15 on the activities of the Agency during such fiscal year.

16 CHAPTER 3—TRANSITIONAL, SAVINGS,

17 AND CONFORMING PROVISIONS

18 SEC. 17331. TRANSFER AND ALLOCATION OF APPROPRIA19 TIONS AND PERSONNEL.

20 Except as otherwise provided in this subtitle, the per21 sonnel employed in connection with, and the assets, liabil22 ities, contracts, property, records, and unexpended balance

23 of appropriations, authorizations, allocations, and other

24 funds employed, held, used, arising from, available to, or

25 to be made available in connection with, the functions and

26 offices, or portions thereof, transferred by this subtitle,
1462

•HR 2491 RH

1 subject to section 1531 of title 31, United States Code,

2 shall be transferred to the Administrator for appropriate

3 allocation. Unexpended funds transferred pursuant to this

4 subsection shall be used only for the purposes for which

5 the funds were originally authorized and appropriated.

6 SEC. 17332. EFFECT ON PERSONNEL.

7 (a) PRESERVATION OF GRADE AND COMPENSATION

8 FOR 1 YEAR.—Except as otherwise provided in this sub9 title, the transfer pursuant to this Act of full-time person10 nel (except special Government employees) and part-time

11 personnel holding permanent positions shall not cause any

12 such employee to be separated or reduced in grade or com13 pensation for 1 year after the date of transfer to the Agen14 cy.

15 (b) PRESERVATION OF COMPENSATION FOR EXECU16 TIVE SCHEDULE APPOINTEES.—Any person who, on the

17 day preceding the date of the transfer of functions and

18 offices under section 17313, held a position compensated

19 in accordance with the Executive Schedule prescribed in

20 chapter 53 of title 5, United States Code, and who, with21 out a break in service, is appointed in the Agency to a

22 position having duties comparable to the duties performed

23 immediately preceding such appointment shall continue to

24 be compensated in the new position at not less than the
1463

•HR 2491 RH

1 rate provided for the previous position, for the duration

2 of the service of such person in the new position.

3 SEC. 17333. INCIDENTAL TRANSFERS.

4 (a) IN GENERAL.—The Director of the Office of

5 Management and Budget, in conjunction with the Admin6 istrator, shall make such determinations as may be nec7 essary with regard to the functions, offices, or portions

8 thereof transferred by this subtitle, and make such addi9 tional incidental dispositions of personnel, assets, liabil10 ities, grants, contracts, property, records, and unexpended

11 balances of appropriations, authorizations, allocations,

12 and other funds held, used, arising from, available to, or

13 to be made available in connection with such functions,

14 offices, or portions thereof, as may be necessary to carry

15 out this subtitle. The Director of the Office of Manage16 ment and Budget shall provide for the termination of the

17 affairs of all entities terminated by this subtitle and, in

18 conjunction with the Administrator, for such further

19 measures and dispositions as may be necessary to effec20 tuate the purposes of this subtitle.

21 (b) ALLOCATION OF SES POSITIONS.—After con22 sultation with the Director of the Office of Personnel Man23 agement, the Director of the Office of Management and

24 Budget may make such determinations as may be nec25 essary with regard to the transfer of positions within the
1464

•HR 2491 RH

1 Senior Executive Service in connection with functions and

2 offices transferred by this subtitle.

3 SEC. 17334. SAVINGS PROVISIONS.

4 (a) CONTINUITY OF LEGAL FORCE AND EFFECT.—

5 All orders, determinations, rules, regulations, permits,

6 grants, contracts, certificates, licenses, and privileges—

7 (1) which have been issued, made, granted, or

8 allowed to become effective by the President, by any

9 Federal department or agency or official thereof, or

10 by a court of competent jurisdiction, in the perform11 ance of functions which are transferred under this

12 subtitle to the Administrator or the Agency; and

13 (2) which are in effect at the time of such

14 transfer,

15 shall continue in effect according to their terms until

16 modified, terminated, superseded, set aside, or revoked by

17 the President, the Administrator, or the authorized offi18 cial, a court of competent jurisdiction, or by operation of

19 law.

20 (b) PENDING PROCEEDINGS.—(1) This subtitle shall

21 not affect any proceedings, including notices of proposed

22 rulemaking, pending on the date of the transfer of func23 tions and offices under section 17313 before any depart24 ment, agency, commission, or component thereof, func25 tions of which are transferred by this subtitle. Such pro-
1465

•HR 2491 RH

1 ceedings, to the extent that they relate to functions so

2 transferred, shall be continued, except as provided in para3 graph (3).

4 (2) Orders may be issued in such proceedings, ap5 peals may be taken therefrom, and payments may be made

6 pursuant to such orders, as if this subtitle had not been

7 enacted. Orders issued in any such proceedings shall con8 tinue in effect until modified, terminated, superseded, or

9 revoked by the Secretary, by a court of competent jurisdic10 tion, or by operation of law.

11 (3) Nothing in this subsection shall be considered to

12 prohibit the discontinuance or modification of any such

13 proceeding under the same terms and conditions and to

14 the same extent that such proceeding could have been dis15 continued or modified if this subtitle had not been enacted.

16 (4) The Administrator may prescribe regulations pro17 viding for the orderly transfer of proceedings continued

18 under this subsection to the Agency.

19 (c) NO EFFECT ON JUDICIAL PROCEEDINGS.—Ex20 cept as provided in subsection (e)—

21 (1) the transfer of functions and offices under

22 section 17313 shall not affect suits commenced prior

23 to the date of such transfer; and

24 (2) in all such suits, proceedings shall be had,

25 appeals taken, and judgments rendered in the same
1466

•HR 2491 RH

1 manner and effect as if this subtitle had not been

2 enacted.

3 (d) NONABATEMENT OF PROCEEDINGS.—No suit,

4 action, or other proceeding commenced by or against any

5 officer in the official capacity of such individual as an offi6 cer of any department or agency, functions of which are

7 transferred by this subtitle, shall abate by reason of the

8 enactment of this subtitle. No cause of action by or

9 against any department or agency, functions of which are

10 transferred by this subtitle, or by or against any officer

11 thereof in the official capacity of such officer shall abate

12 by reason of the enactment of this subtitle.

13 (e) CONTINUATION OF PROCEEDING WITH SUBSTI14 TUTION OF PARTIES.—If, before the date of the transfer

15 of functions and offices under section 17313, any depart16 ment or agency, or officer thereof in the official capacity

17 of such officer, is a party to a suit, and under this subtitle

18 any function of such department, agency, or officer is

19 transferred to the Administrator or any other official of

20 the Agency, then such suit shall be continued with the Ad21 ministrator or other appropriate official of the Agency

22 substituted or added as a party.

23 (f) REVIEWABILITY OF ORDERS AND ACTIONS

24 UNDER TRANSFERRED FUNCTIONS.—Orders and actions

25 of the Administrator in the exercise of functions trans-
1467

•HR 2491 RH

1 ferred under this subtitle shall be subject to judicial review

2 to the same extent and in the same manner as if such

3 orders and actions had been by the agency or office, or

4 part thereof, exercising such functions immediately pre5 ceding their transfer. Any statutory requirements relating

6 to notice, hearings, action upon the record, or administra7 tive review that apply to any function transferred by this

8 subtitle shall apply to the exercise of such function by the

9 Administrator.

10 SEC. 17335. REFERENCES.

11 With respect to any function transferred by this sub12 title and exercised on or after the date of such transfer,

13 any reference in any other Federal law to any department,

14 commission, or agency or to any officer or office the func15 tions of which are so transferred is deemed to refer to

16 the Administrator, other official, or component of the

17 Agency to which this subtitle transfers such functions.

18 SEC. 17336. CONFORMING AMENDMENTS.

19 Chapter 35 of title 44, United States Code, is amend20 ed—

21 (1) in section 3504—

22 (A) in subsection (a) by striking ‘‘Federal

23 statistical activities,’’; and

24 (B) by striking subsection (d); and

25 (2) in section 3514(a)—
1468

•HR 2491 RH

1 (A) by adding ‘‘and’’ after the semicolon at

2 the end of paragraph (8);

3 (B) by striking ‘‘; and’’ at the end of para4 graph (9)(C) and inserting a period; and

5 (C) by striking paragraph (10).

6 SEC. 17337. TRANSITION.

7 (a) USE OF FUNDS.—Funds available to any depart8 ment or agency (or any official or component thereof), the

9 functions or offices of which are transferred to the Admin10 istrator or the Agency by this subtitle, may, with the ap11 proval of the Director of the Office of Management and

12 Budget, be used to pay the compensation and expenses

13 of any officer appointed pursuant to this subtitle and other

14 transitional and planning expenses associated with the es15 tablishment of the Agency or transfer of functions or of16 fices thereto until such time as funds for such purposes

17 are otherwise available.

18 (b) USE OF PERSONNEL.—With the consent of the

19 appropriate department or agency head concerned, the Ad20 ministrator may utilize the services of such officers, em21 ployees, and other personnel of the departments and agen22 cies from which functions or offices have been transferred

23 to the Administrator or the Agency, for such period of

24 time as may reasonably be needed to facilitate the orderly

25 implementation of this subtitle.
1469

•HR 2491 RH

1 SEC. 17338. INTERIM APPOINTMENTS.

2 (a) AUTHORITY TO APPOINT.—Notwithstanding any

3 other provision of law, in the event that one or more offi4 cers required by this subtitle to be appointed by and with

5 the advice and consent of the Senate shall not have en6 tered upon office on the date of the transfer of functions

7 and offices under section 17313, the President may des8 ignate an officer in the executive branch to act in such

9 office for 120 days or until the office is filled as provided

10 in this subtitle, whichever occurs first.

11 (b) COMPENSATION.—Any officer acting in an office

12 pursuant to subsection (a) shall receive compensation at

13 the rate prescribed for such office under this subtitle.

14 Subtitle D—United States Trade

15 Administration

16 CHAPTER 1—GENERAL PROVISIONS

17 SEC. 17401. FINDINGS.

18 The Congress finds that—

19 (1) principal national goals of the United States

20 are to—

21 (A) maintain United States leadership in

22 international trade liberalization and expansion

23 efforts;

24 (B) reinvigorate the ability of the United

25 States economy to compete in international
1470

•HR 2491 RH

1 markets and to respond flexibly to changes in

2 international competition; and

3 (C) expand United States participation in

4 international trade through aggressive pro5 motion and marketing of American products

6 and services;

7 (2) the economy of the United States is so inex8 tricably linked with the international economic sys9 tem that all domestic economic sectors are influ10 enced by the dynamics of global trade and invest11 ment;

12 (3) the expansion of United States participation

13 in international trade will improve the general wel14 fare of the people of the United States by increasing

15 demand for American products and services, creat16 ing jobs, and increasing the gross national product;

17 (4) business, labor, and all levels of government

18 must place the highest priority on developing meth19 ods and policies to achieve the goals described in

20 paragraph (1), and the achievement of such goals is

21 dependent on a marked improvement in the capabil22 ity of United States businesses to compete in foreign

23 markets;
1471

•HR 2491 RH

1 (5) the Federal Government can enhance the

2 capability of United States businesses to compete in

3 foreign markets by acting to—

4 (A) reduce trade barriers to sales and in5 vestments by such businesses;

6 (B) promote American goods and services

7 in foreign countries and encourage aggressive

8 participation by the private sector in the inter9 national marketplace; and

10 (C) promote and maintain an international

11 trade system that establishes open, transparent,

12 and fair trade rules and leads to the expansion

13 of United States trade;

14 (6) effective and efficient Government action to

15 enhance the capability of United States businesses

16 to compete in foreign markets requires coordination

17 of the development and implementation of Govern18 ment policies relating to the international trade in19 terests of the United States;

20 (7) effective and efficient Government action

21 with respect to international trade further requires

22 the employment of personnel consisting of individ23 uals who, like the personnel of the governments of

24 United States trading partners, are highly experi-
1472

•HR 2491 RH

1 enced and educated in international trade operations

2 and negotiations;

3 (8) the present organizational structure of Gov4 ernment administration of international trade activi5 ties is too diffuse and leads to inconsistent and con6 flicting policies and actions;

7 (9) such inconsistent and contradictory policies

8 and actions inhibit domestic trade interests, create

9 trade opportunities for our international competi10 tors, and discourage experienced Government per11 sonnel from career service in international trade ac12 tivities;

13 (10) United States performance in international

14 trade is fundamentally linked to the competitiveness

15 of American industry in the world economy;

16 (11) improvements in the competitiveness of

17 United States industry, products, and services can

18 be aided by reducing traditional antagonisms among

19 government, industry, labor, and the public;

20 (12) a lack of analytical capability and knowl21 edge concerning the competitive position of Amer22 ican industries and foreign industries greatly ham23 pers or delays the ability of the United States to for24 mulate responsible trade policies and policies that
1473

•HR 2491 RH

1 affect the international competitiveness of domestic

2 industries;

3 (13) the consolidation of Government functions

4 relating to international trade, including functions

5 relating to technical analysis, policymaking, inter6 national negotiation, and operational responsibilities,

7 into the United States Trade Administration shall

8 provide the needed elevation and coordination of

9 Government activity in international trade;

10 (14) the continued prosperity and overall com11 petitive posture of the United States calls for a deci12 sive and unified trade policy that vigorously pro13 motes an equitable international trade environment

14 in which the United States is able to compete fully

15 and fairly;

16 (15) continued United States leadership in the

17 world economy requires the formulation and imple18 mentation of a trade policy that is delineated and

19 understood by the rest of the world; and

20 (16) establishing a decisive and unified trade

21 policy has become a number one priority of the Unit22 ed States;

23 (17) enhancing the process of consultation and

24 advice between the executive branch, the Congress,

25 and the private sector will assist in developing the
1474

•HR 2491 RH

1 consensus on and support for the trade policy of the

2 United States;

3 (18) there is no one single agency or depart4 ment within the executive branch with overall re5 sponsibility for the development, coordination, imple6 mentation, and administration of the United States

7 trade policy, and the proliferation and division of

8 agencies within the executive branch have weakened

9 the overall leadership of the United States in inter10 national trade matters; and

11 (19) the economic well-being of the American

12 people will be substantially enhanced through the es13 tablishment of the United States Trade Administra14 tion.

15 SEC. 17402. DEFINITIONS.

16 For purposes of this subtitle, unless otherwise pro17 vided or indicated by the context—

18 (1) the term ‘‘Administration’’ means the Unit19 ed States Trade Administration;

20 (2) the term ‘‘Federal agency’’ has the meaning

21 given to the term ‘‘agency’’ by section 551(1) of title

22 5, United States Code;

23 (3) the term ‘‘function’’ means any duty, obli24 gation, power, authority, responsibility, right, privi25 lege, activity, or program;
1475

•HR 2491 RH

1 (4) the term ‘‘office’’ includes any office, ad2 ministration, agency, institute, unit, organizational

3 entity, or component thereof; and

4 (5) the term ‘‘USTR’’ means the United States

5 Trade Representative as provided for under section

6 17411.

7 CHAPTER 2—UNITED STATES TRADE

8 ADMINISTRATION

9 SEC. 17411. ESTABLISHMENT OF THE ADMINISTRATION.

10 (a) IN GENERAL.—There is established the United

11 States Trade Administration which shall be a free-stand12 ing establishment in the executive branch of Government

13 as defined under section 104 of title 5, United States

14 Code. The United States Trade Representative shall be

15 the Administrator of the United States Trade Administra16 tion and shall be appointed by the President, by and with

17 the advice and consent of the Senate.

18 (b) AMBASSADOR STATUS.—The USTR shall have

19 the rank and status of Ambassador and shall represent

20 the United States in all trade negotiations conducted by

21 the Administration.

22 (c) SUCCESSOR TO DEPARTMENT OF COMMERCE.—

23 The Administration shall be deemed to be the successor

24 to the Department of Commerce for the purposes of proto25 col in any trade-related matter.
1476

•HR 2491 RH

1 SEC. 17412. FUNCTIONS OF THE USTR.

2 (a) IN GENERAL.—In addition to the functions trans3 ferred to the USTR by this subtitle, such other functions

4 as the President may assign or delegate to the USTR, and

5 such other functions as the USTR may, after the effective

6 date of this subtitle, be required to carry out by law, the

7 USTR shall—

8 (1) serve as the principal advisor to the Presi9 dent on international trade policy and advise the

10 President on the impact of other policies of the

11 United States Government on international trade;

12 (2) exercise primary responsibility, with the ad13 vice of the interagency organization established

14 under section 242 of the Trade Expansion Act of

15 1962, for developing and implementing international

16 trade policy, including commodity matters and, to

17 the extent related to international trade policy, di18 rect investment matters and, in exercising such re19 sponsibility, advance and implement the goals de20 scribed in section 17401(1) as the primary mandate

21 of the Administration;

22 (3) exercise lead responsibility for the conduct

23 of international trade negotiations, including inter24 national negotiations relating to commodity matters,

25 intellectual property rights, services, and direct in-
1477

•HR 2491 RH

1 vestment negotiations, in which the United States

2 participates;

3 (4) exercise lead responsibility for the establish4 ment of a national export strategy, including policies

5 designed to implement such strategy;

6 (5) with the advice of the interagency organiza7 tion established under section 242 of the Trade Ex8 pansion Act of 1962, issue policy guidance to other

9 Federal agencies on international trade, commodity,

10 and direct investment functions to the extent nec11 essary to assure the coordination of international

12 trade policy;

13 (6) have general operational responsibility for

14 major nonagricultural international trade functions

15 under Reorganization Plan No. 3 of 1979;

16 (7) seek and promote new opportunities for

17 United States products and services to compete in

18 the world marketplace;

19 (8) assist small businesses in developing export

20 markets;

21 (9) enforce the laws of the United States relat22 ing to trade;

23 (10) analyze international economic trends and

24 developments;
1478

•HR 2491 RH

1 (11) report directly to the Congress on the ad2 ministration of, and matters pertaining to, the trade

3 agreements program under the Omnibus Trade and

4 Competitiveness Act of 1988, the Trade Act of

5 1974, the Trade Expansion Act of 1962, and section

6 350 of the Tariff Act of 1930;

7 (12) report directly to the Congress, on an an8 nual basis—

9 (A) the status of enforcement of inter10 national agreements to which the United States

11 is a party that provide for the protection of in12 tellectual property rights;

13 (B) analyses of the impact on United

14 States citizens and businesses of piracy of intel15 lectual property by foreign entities; and

16 (C) any recommendations for new inter17 national agreements to provide for the protec18 tion of intellectual property rights;

19 (13) keep each official adviser to the United

20 States delegations to international conferences,

21 meetings, and negotiation sessions relating to trade

22 agreements who is appointed by a committee of the

23 Senate or the House of Representatives under sec24 tion 161 of the Trade Act of 1974 currently in25 formed on United States negotiating objectives with
1479

•HR 2491 RH

1 respect to trade agreements, the status of negotia2 tions in progress with respect to such agreements,

3 and the nature of any changes in domestic law or

4 the administration thereof which the USTR may

5 recommend to the Congress to carry out any trade

6 agreement;

7 (14) consult and cooperate with State and local

8 governments and other interested parties on inter9 national trade matters of interest to such govern10 ments and parties, and to the extent related to inter11 national trade matters, on investment matters, and,

12 when appropriate, hold informal public hearings;

13 (15) serve as the principal advisor to the Presi14 dent in identifying and assessing the consequences

15 of any Government policies that adversely affect, or

16 have the potential to adversely affect, the inter17 national competitiveness of United States industries

18 and services;

19 (16) pursue the enforcement of international

20 agreements to which the United States is a party

21 that provide for the protection of intellectual prop22 erty rights, seek new international agreements to

23 minimize theft of intellectual property owned by

24 United States citizens and businesses, and otherwise

25 promote protection of intellectual property rights.
1480

•HR 2491 RH

1 (b) INTERAGENCY ORGANIZATION.—The USTR shall

2 chair the interagency organization established under sec3 tion 242 of the Trade Expansion Act of 1962.

4 (c) NATIONAL SECURITY COUNCIL.—The USTR

5 shall be a member of the National Security Council.

6 (d) ADVISORY COUNCIL.—The USTR shall be Dep7 uty Chairman of the National Advisory Council on Inter8 national Monetary and Financial Policies established

9 under Executive Order 11269, issued February 14, 1966.

10 (e) AGRICULTURE.—(1) The USTR shall consult

11 with the Secretary of Agriculture or the designee of the

12 Secretary of Agriculture on all matters that potentially in13 volve international trade in agricultural products.

14 (2) If an international meeting for negotiation or con15 sultation includes discussion of international trade in agri16 cultural products, the USTR or the designee of the USTR

17 shall be Chairman of the United States delegation to such

18 meeting and the Secretary of Agriculture or the designee

19 of such Secretary shall be Vice Chairman. The provisions

20 of this paragraph shall not limit the authority of the

21 USTR under subsection (h) to assign to the Secretary of

22 Agriculture responsibility for the conduct of, or participa23 tion in, any trade negotiation or meeting.

24 (f) TRADE PROMOTION.—The USTR shall be the

25 chairperson of the Trade Promotion Coordinating Com-
1481

•HR 2491 RH

1 mittee established under section 2312 of the Export En2 hancement Act of 1988 (15 U.S.C. 4727).

3 (g) NATIONAL ECONOMIC COUNCIL.—The USTR

4 shall be a member of the National Economic Council es5 tablished under Executive Order No. 12835, issued Janu6 ary 25, 1993.

7 (h) INTERNATIONAL TRADE NEGOTIATIONS.—Ex8 cept where expressly prohibited by law, the USTR, at the

9 request or with the concurrence of the head of any other

10 Federal agency, may assign the responsibility for conduct11 ing or participating in any specific international trade ne12 gotiation or meeting to the head of such agency whenever

13 the USTR determines that the subject matter of such

14 international trade negotiation is related to the functions

15 carried out by such agency.

16 SEC. 17413. DEPUTY ADMINISTRATOR OF THE UNITED

17 STATES TRADE ADMINISTRATION.

18 (a) ESTABLISHMENT.—There shall be in the Admin19 istration the Deputy Administrator of the United States

20 Trade Administration, who shall be appointed by the

21 President, by and with the advice and consent of the Sen22 ate.

23 (b) ABSENCE, DISABILITY, OR VACANCY OF

24 USTR.—The Deputy Administrator of the United States

25 Trade Administration shall act for and exercise the func-
1482

•HR 2491 RH

1 tions of the USTR during the absence or disability of the

2 USTR or in the event the office of the USTR becomes

3 vacant. The Deputy Administrator of the United States

4 Trade Administration shall act for and exercise the func5 tions of the USTR until the absence or disability of the

6 USTR no longer exists or a successor to the USTR has

7 been appointed by the President and confirmed by the

8 Senate.

9 (c) FUNCTIONS OF DEPUTY ADMINISTRATOR OF THE

10 UNITED STATES TRADE ADMINISTRATION.—The Deputy

11 Administrator of the United States Trade Administration

12 shall exercise all functions, under the direction of the

13 USTR, transferred to or established in the Administra14 tion, except those functions exercised by the Deputy Unit15 ed States Trade Representatives, the Inspector General,

16 and the General Counsel of the Administration, as pro17 vided by this subtitle.

18 SEC. 17414. DEPUTY UNITED STATES TRADE REPRESENTA19 TIVES.

20 (a) ESTABLISHMENT.—There shall be in the Admin21 istration 2 Deputy United States Trade Representatives,

22 who shall be appointed by the President, by and with the

23 advice and consent of the Senate. The Deputy United

24 States Trade Representatives shall exercise all functions

25 under the direction of the USTR, and shall include—
1483

•HR 2491 RH

1 (1) the Deputy United States Trade Represent2 ative for Negotiations; and

3 (2) the Deputy United States Trade Represent4 ative to the World Trade Organization.

5 (b) FUNCTIONS OF DEPUTY UNITED STATES TRADE

6 REPRESENTATIVES.—(1) The Deputy United States

7 Trade Representative for Negotiations shall exercise all

8 functions transferred under section 17431 and shall have

9 the rank and status of Ambassador.

10 (2) The Deputy United States Trade Representative

11 to the World Trade Organization shall exercise all func12 tions relating to representation to the World Trade Orga13 nization and shall have the rank and status of Ambas14 sador.

15 SEC. 17415. ASSISTANT ADMINISTRATORS.

16 (a) ESTABLISHMENT.—There shall be in the Admin17 istration 3 Assistant Administrators, who shall be ap18 pointed by the President, by and with the advice and con19 sent of the Senate. The Assistant Administrators shall ex20 ercise all functions under the direction of the Deputy Ad21 ministrator of the United States Trade Administration

22 and include—

23 (1) the Assistant Administrator for Export Ad24 ministration;
1484

•HR 2491 RH

1 (2) the Assistant Administrator for Import Ad2 ministration; and

3 (3) the Assistant Administrator for Trade and

4 Policy Analysis.

5 (b) FUNCTIONS OF ASSISTANT ADMINISTRATORS.—

6 (1) The Assistant Administrator for Export Administra7 tion shall exercise all functions transferred under section

8 17432(a)(1)(C).

9 (2) The Assistant Administrator for Import Adminis10 tration shall exercise all functions transferred under sec11 tion 17432(a)(1)(D).

12 (3) The Assistant Administrator for Trade and Policy

13 Analysis shall exercise all functions transferred under sec14 tion 17432(a)(1)(B) and all functions transferred under

15 section 17432(a)(2).

16 SEC. 17416. GENERAL COUNSEL.

17 There shall be in the Administration a General Coun18 sel, who shall be appointed by the President, by and with

19 the advice and consent of the Senate. The General Counsel

20 shall provide legal assistance to the USTR concerning the

21 activities, programs, and policies of the Administration.

22 SEC. 17417. INSPECTOR GENERAL.

23 There shall be in the Administration an Inspector

24 General who shall be appointed in accordance with the In-
1485

•HR 2491 RH

1 spector General Act of 1978, as amended by section

2 17471(b) of this Act.

3 SEC. 17418. CHIEF FINANCIAL OFFICER.

4 There shall be in the Administration a Chief Finan5 cial Officer who shall be appointed in accordance with sec6 tion 901 of title 31, United States Code, as amended by

7 section 17471(e) of this Act. The Chief Financial Officer

8 shall perform all functions prescribed by the Deputy Ad9 ministrator of the United States Trade Administration,

10 under the direction of the Deputy Administrator.

11 CHAPTER 3—TRANSFERS TO THE

12 ADMINISTRATION

13 SEC. 17431. OFFICE OF THE UNITED STATES TRADE REP14 RESENTATIVE.

15 There are transferred to the USTR of the United

16 States Trade Administration all functions of the United

17 States Trade Representative and the Office of the United

18 States Trade Representative in the Executive Office of the

19 President and all functions of any officer or employee of

20 such Office.

21 SEC. 17432. TRANSFERS FROM THE DEPARTMENT OF COM22 MERCE.

23 (a) IN GENERAL.—There are transferred to the

24 USTR the following functions:
1486

•HR 2491 RH

1 (1) All functions of, and all functions performed

2 under the direction of, the following officers and em3 ployees of the Department of Commerce:

4 (A) The Under Secretary of Commerce for

5 International Trade.

6 (B) The Assistant Secretary of Commerce

7 for International Economic Policy and the As8 sistant Secretary of Commerce for Trade Devel9 opment.

10 (C) The Under Secretary of Commerce for

11 Export Administration.

12 (D) The Assistant Secretary of Commerce

13 for Import Administration.

14 (2) All functions of the Secretary of Commerce

15 relating to the National Trade Data Bank.

16 (3) All functions of the Secretary of Commerce

17 under the Tariff Act of 1930, the Uruguay Round

18 Agreements Act, the Trade Act of 1974, and other

19 trade-related Acts for which responsibility is not oth20 erwise assigned under this title.

21 (b) UNITED STATES AND FOREIGN COMMERCIAL

22 SERVICE.—

23 (1) RENAMING AND ABOLITION OF CERTAIN

24 FUNCTIONS.—The United States and Foreign Com25 mercial Service shall, upon the effective date speci-
1487

•HR 2491 RH

1 fied in section 17109(a), be known as the ‘‘United

2 States Trade Service’’ (hereafter in this subsection

3 referred to as the ‘‘USTS’’). All operations of the

4 USTS in the United States (other than those per5 formed at the headquarters office referred to in sec6 tion 2301(c) of the Export Enhancement Act of

7 1988 (15 U.S.C. 4721(c)) with respect to the for8 eign operations of the USTS) are abolished.

9 (2) TRANSFER TO USTR.—The USTS and its

10 functions are transferred to the USTR. All functions

11 performed immediately before the effective date

12 specified in section 17109(a) by the Secretary of

13 Commerce or the Department of Commerce with re14 spect to the USTS are transferred to the USTR.

15 (3) DIRECTOR GENERAL.—(A) There shall be a

16 Director General of Trade who shall be appointed by

17 the President, by and with the advice and consent

18 of the Senate, who shall have the rank and status

19 of Ambassador, and who shall be the head of the

20 USTS and shall be responsible for other trade pro21 motion functions of the Administration. The Direc22 tor General of Trade shall report to the USTR.

23 (B) The individual serving as Assistant Sec24 retary of Commerce and Director General of Trade

25 immediately before the effective date specified in sec-
1488

•HR 2491 RH

1 tion 17109(a) may serve as the Director General of

2 Trade on and after such effective date until a suc3 cessor has taken office. Compensation for any serv4 ice under this subparagraph shall be at the rate at

5 which the individual was compensated immediately

6 before the effective date specified in section

7 17109(a).

8 (4) TRANSFER OF USTS OFFICERS.—The trans9 fer to the USTR pursuant to this section of any

10 Commercial Service Officer serving immediately be11 fore the effective date specified in section 17109(a)

12 shall not cause such officer to be reduced in rank,

13 grade, or compensation.

14 SEC. 17433. TRADE AND DEVELOPMENT AGENCY.

15 (a) ABOLITION OF AGENCY.—The Trade and Devel16 opment Agency is abolished.

17 (b) CONFORMING AMENDMENT.—Section 661 of the

18 Foreign Assistance Act of 1961 (22 U.S.C. 2421) is re19 pealed.

20 SEC. 17434. FUNCTIONS WITH RESPECT TO TEXTILE AGREE21 MENTS.

22 (a) TRANSFER OF FUNCTIONS.—Notwithstanding

23 the provisions of Executive Order 11651 and Executive

24 Order 12475 (7 U.S.C. 1854 note), the functions of the

25 Committee for the Implementation of Textile Agreements
1489

•HR 2491 RH

1 (hereafter in this section referred to as ‘‘CITA’’) are

2 transferred to the USTR, except for all functions related

3 to the determination of the existence of serious damage

4 or actual threat thereof to the domestic United States tex5 tile industry which are transferred to the International

6 Trade Commission.

7 (b) ABOLITION OF CITA.—CITA is abolished.

8 SEC. 17435. PLAN FOR CONSOLIDATION OF TRADE ACTIVI9 TIES.

10 Within 6 months after the date of the enactment of

11 this Act, the USTR shall transmit to the Congress a com12 prehensive plan to consolidate Federal trade programs and

13 activities. The plan shall provide for—

14 (1) an itemized summary of all Federal trade

15 programs and activities identified by authorizing

16 statute or executive order, including staff allocation

17 and resource expenditures;

18 (2) a unified budget for reallocating Federal

19 trade priorities;

20 (3) identification of and recommendations for

21 the elimination of overlapping and duplicative mis22 sions and functions among Federal trade programs

23 and activities; and

24 (4) identification of present cooperative activi25 ties among Federal, State, and private trade pro-
1490

•HR 2491 RH

1 grams, and recommendations for Federal priorities

2 and long-term opportunities for developing and in3 creasing such cooperation.

4 CHAPTER 4—ADMINISTRATIVE

5 PROVISIONS

6 SEC. 17441. PERSONNEL PROVISIONS.

7 (a) APPOINTMENTS.—The USTR may appoint and

8 fix the compensation of such officers and employees, in9 cluding investigators, attorneys, and administrative law

10 judges, as may be necessary to carry out the functions

11 of the USTR and the Administration. Except as otherwise

12 provided by law, such officers and employees shall be ap13 pointed in accordance with the civil service laws and their

14 compensation fixed in accordance with title 5, United

15 States Code.

16 (b) POSITIONS ABOVE GS–15.—(1) At the request

17 of the USTR, the Director of the Office of Personnel Man18 agement shall, under section 5108 of title 5, United States

19 Code, provide for the establishment in a grade level above

20 GS–15 of the General Service, and in the Senior Executive

21 Service, of a number of positions in the Administration

22 equal to the number of positions in that grade level which

23 were used primarily for the performance of functions and

24 offices transferred by this subtitle and which were as-
1491

•HR 2491 RH

1 signed and filled on the day before the effective date of

2 this subtitle.

3 (2) Appointments to positions provided for under this

4 subsection may be made without regard to the provisions

5 of section 3324 of title 5, United States Code, if the indi6 vidual appointed in such position is an individual who is

7 transferred in connection with the transfer of functions

8 and offices under this subtitle and, on the day before the

9 effective date of this subtitle, holds a position and has du10 ties comparable to those of the position to which appointed

11 under this subsection.

12 (3) The authority under this subsection with respect

13 to any position established at a grade level above GS–15

14 shall terminate when the person first appointed to fill such

15 position ceases to hold such position.

16 (4) For purposes of section 414(a)(3)(A) of the Civil

17 Service Reform Act of 1978, an individual appointed

18 under this subsection shall be deemed to occupy the same

19 position as the individual occupied on the day before the

20 effective date of this subtitle.

21 (c) EXPERTS AND CONSULTANTS.—The USTR may

22 obtain the services of experts and consultants in accord23 ance with section 3109 of title 5, United States Code, and

24 compensate such experts and consultants for each day (in25 cluding traveltime) at rates not in excess of the maximum
1492

•HR 2491 RH

1 rate of pay for a position at a grade level above GS–15

2 of the General Schedule under section 5332 of such title.

3 The USTR may pay experts and consultants who are serv4 ing away from their homes or regular place of business

5 travel expenses and per diem in lieu of subsistence at rates

6 authorized by sections 5702 and 5703 of such title for

7 persons in Government service employed intermittently.

8 (d) VOLUNTARY SERVICES.—(1)(A) The USTR is

9 authorized to accept voluntary and uncompensated serv10 ices without regard to the provisions of section 1342 of

11 title 31, United States Code, if such services will not be

12 used to displace Federal employees employed on a full13 time, part-time, or seasonal basis.

14 (B) The USTR is authorized to accept volunteer serv15 ice in accordance with the provisions of section 3111 of

16 title 5, United States Code.

17 (2) The USTR is authorized to provide for incidental

18 expenses, including but not limited to transportation, lodg19 ing, and subsistence for individuals who provide voluntary

20 services under subparagraph (A) or (B) of paragraph (1).

21 (3) An individual who provides voluntary services

22 under paragraph (1)(A) shall not be considered a Federal

23 employee for any purpose other than for purposes of chap24 ter 81 of title 5, United States Code, relating to com-
1493

•HR 2491 RH

1 pensation for work injuries, and chapter 171 of title 28,

2 United States Code, relating to tort claims.

3 (e) FOREIGN SERVICE POSITIONS.—In order to as4 sure United States representation in trade matters at a

5 level commensurate with the level of representation main6 tained by industrial nations which are major trade com7 petitors of the United States, the Secretary of State shall

8 classify certain positions at Foreign Service posts as com9 mercial minister positions and shall assign members of the

10 Foreign Service performing functions of the Administra11 tion, with the concurrence of the USTR, to such positions

12 in nations which are major trade competitors of the Unit13 ed States. The Secretary of State shall obtain and use the

14 recommendations of the USTR with respect to the number

15 of positions to be so classified under this subsection.

16 SEC. 17442. DELEGATION AND ASSIGNMENT.

17 Except where otherwise expressly prohibited by law

18 or otherwise provided by this subtitle, the USTR may dele19 gate any of the functions transferred to the USTR by this

20 subtitle and any function transferred or granted to the

21 USTR after the effective date of this subtitle to such offi22 cers and employees of the Administration as the USTR

23 may designate, and may authorize successive redelegations

24 of such functions as may be necessary or appropriate. No

25 delegation of functions by the USTR under this section
1494

•HR 2491 RH

1 or under any other provision of this subtitle shall relieve

2 the USTR of responsibility for the administration of such

3 functions.

4 SEC. 17443. SUCCESSION.

5 (a) ORDER OF SUCCESSION.—Subject to the author6 ity of the President, and except as provided in section

7 17413(b), the USTR shall prescribe the order by which

8 officers of the Administration who are appointed by the

9 President, by and with the advice and consent of the Sen10 ate, shall act for, and perform the functions of, the USTR

11 or any other officer of the Administration appointed by

12 the President, by and with the advice and consent of the

13 Senate, during the absence or disability of the USTR or

14 such other officer, or in the event of a vacancy in the office

15 of the USTR or such other officer.

16 (b) CONTINUATION.—Notwithstanding any other pro17 vision of law, and unless the President directs otherwise,

18 an individual acting for the USTR or another officer of

19 the Administration pursuant to subsection (a) shall con20 tinue to serve in that capacity until the absence or disabil21 ity of the USTR or such other officer no longer exists or

22 a successor to the USTR or such other officer has been

23 appointed by the President and confirmed by the Senate.
1495

•HR 2491 RH

1 SEC. 17444. REORGANIZATION.

2 (a) IN GENERAL.—Subject to subsection (b), the

3 USTR is authorized to allocate or reallocate functions

4 among the officers of the Administration, and to establish,

5 consolidate, alter, or discontinue such organizational enti6 ties in the Administration as may be necessary or appro7 priate.

8 (b) EXCEPTION.—The USTR may not exercise the

9 authority under subsection (a) to establish, consolidate,

10 alter, or discontinue any organizational entity in the Ad11 ministration or allocate or reallocate any function of an

12 officer or employee of the Administration that is inconsist13 ent with any specific provision of this subtitle.

14 SEC. 17445. RULES.

15 The USTR is authorized to prescribe, in accordance

16 with the provisions of chapters 5 and 6 of title 5, United

17 States Code, such rules and regulations as the USTR de18 termines necessary or appropriate to administer and man19 age the functions of the USTR or the Administration.

20 SEC. 17446. FUNDS TRANSFER.

21 The USTR may, when authorized in an appropriation

22 Act in any fiscal year, transfer funds from one appropria23 tion to another within the Administration, except that no

24 appropriation for any fiscal year shall be either increased

25 or decreased by more than 10 percent and no such trans-
1496

•HR 2491 RH

1 fer shall result in increasing any such appropriation above

2 the amount authorized to be appropriated therefor.

3 SEC. 17447. CONTRACTS, GRANTS, AND COOPERATIVE

4 AGREEMENTS.

5 (a) IN GENERAL.—Subject to the provisions of the

6 Federal Property and Administrative Services Act of

7 1949, the USTR may make, enter into, and perform such

8 contracts, leases, cooperative agreements, grants, or other

9 similar transactions with public agencies, private organiza10 tions, and persons, and make payments (in lump sum or

11 installments, and by way of advance or reimbursement,

12 and, in the case of any grant, with necessary adjustments

13 on account of overpayments and underpayments) as the

14 USTR considers necessary or appropriate to carry out the

15 functions of the USTR or the Administration.

16 (b) EXCEPTION.—Notwithstanding any other provi17 sion of this subtitle, the authority to enter into contracts

18 or to make payments under this subtitle shall be effective

19 only to such extent or in such amounts as are provided

20 in advance in appropriation Acts. This subsection does not

21 apply with respect to the authority granted under section

22 449.
1497

•HR 2491 RH

1 SEC. 17448. USE OF FACILITIES.

2 (a) USE BY USTR.—With their consent, the USTR,

3 with or without reimbursement, may use the research,

4 services, equipment, and facilities of—

5 (1) an individual,

6 (2) any public or private nonprofit agency or

7 organization, including any agency or instrumental8 ity of the United States or of any State, the District

9 of Columbia, the Commonwealth of Puerto Rico, or

10 any territory or possession of the United States,

11 (3) any political subdivision of any State, the

12 District of Columbia, the Commonwealth of Puerto

13 Rico, or any territory or possession of the United

14 States, or

15 (4) any foreign government,

16 in carrying out any function of the USTR or the Adminis17 tration.

18 (b) USE OF USTR FACILITIES.—The USTR, under

19 terms, at rates, and for periods that the USTR considers

20 to be in the public interest, may permit the use by public

21 and private agencies, corporations, associations or other

22 organizations, or individuals, of any real property, or any

23 facility, structure or other improvement thereon, under the

24 custody of the USTR. The USTR may require permittees

25 under this section to maintain or recondition, at their own
1498

•HR 2491 RH

1 expense, the real property, facilities, structures, and im2 provements used by such permittees.

3 SEC. 17449. GIFTS AND BEQUESTS.

4 (a) IN GENERAL.—The USTR is authorized to ac5 cept, hold, administer, and utilize gifts and bequests of

6 property, both real and personal, for the purpose of aiding

7 or facilitating the work of the Administration. Gifts and

8 bequests of money and the proceeds from sales of other

9 property received as gifts or bequests shall be deposited

10 in the United States Treasury in a separate fund and shall

11 be disbursed on order of the USTR. Property accepted

12 pursuant to this subsection, and the proceeds thereof,

13 shall be used as nearly as possible in accordance with the

14 terms of the gift or bequest.

15 (b) TAX TREATMENT.—For the purpose of Federal

16 income, estate, and gift taxes, and State taxes, property

17 accepted under subsection (a) shall be considered a gift

18 or bequest to or for the use of the United States.

19 (c) INVESTMENT.—Upon the request of the USTR,

20 the Secretary of the Treasury may invest and reinvest in

21 securities of the United States or in securities guaranteed

22 as to principal and interest by the United States any mon23 eys contained in the fund provided for in subsection (a).

24 Income accruing from such securities, and from any other

25 property held by the USTR pursuant to subsection (a),
1499

•HR 2491 RH

1 shall be deposited to the credit of the fund, and shall be

2 disbursed upon order of the USTR.

3 SEC. 17450. WORKING CAPITAL FUND.

4 (a) ESTABLISHMENT.—The USTR is authorized to

5 establish for the Administration a working capital fund,

6 to be available without fiscal year limitation, for expenses

7 necessary for the maintenance and operation of such com8 mon administrative services as the USTR shall find to be

9 desirable in the interest of economy and efficiency, includ10 ing—

11 (1) a central supply service for stationery and

12 other supplies and equipment for which adequate

13 stocks may be maintained to meet in whole or in

14 part the requirements of the Administration and its

15 components;

16 (2) central messenger, mail, and telephone serv17 ice and other communications services;

18 (3) office space and central services for docu19 ment reproduction and for graphics and visual aids;

20 (4) a central library service; and

21 (5) such other services as may be approved by

22 the Director of the Office of Management and Budg23 et.

24 (b) OPERATION OF FUND.—The capital of the fund

25 shall consist of any appropriations made for the purpose
1500

•HR 2491 RH

1 of providing working capital and the fair and reasonable

2 value of such stocks of supplies, equipment, and other as3 sets and inventories on order as the USTR may transfer

4 to the fund, less the related liabilities and unpaid obliga5 tions. The fund shall be reimbursed in advance from avail6 able funds of agencies and offices in the Administration,

7 or from other sources, for supplies and services at rates

8 which will approximate the expense of operation, including

9 the accrual of annual leave and the depreciation of equip10 ment. The fund shall also be credited with receipts from

11 sale or exchange of property and receipts in payment for

12 loss or damage to property owned by the fund. There shall

13 be covered into the United States Treasury as miscellane14 ous receipts any surplus of the fund (all assets, liabilities,

15 and prior losses considered) above the amounts trans16 ferred or appropriated to establish and maintain the fund.

17 There shall be transferred to the fund the stocks of sup18 plies, equipment, other assets, liabilities, and unpaid obli19 gations relating to those services which the USTR deter20 mines will be performed.

21 SEC. 17451. SERVICE CHARGES.

22 (a) AUTHORITY.—Notwithstanding any other provi23 sion of law, the USTR may establish reasonable fees and

24 commissions with respect to applications, documents,

25 awards, loans, grants, research data, services, and assist-
1501

•HR 2491 RH

1 ance administered by the Administration, and the USTR

2 may change and abolish such fees and commissions. Be3 fore establishing, changing, or abolishing any schedule of

4 fees or commissions under this section, the USTR may

5 submit such schedule to the Congress.

6 (b) DEPOSITS.—The USTR is authorized to require

7 a deposit before the USTR provides any item, information,

8 service, or assistance for which a fee or commission is re9 quired under this section.

10 (c) DEPOSIT OF MONEYS.—Moneys received under

11 this section shall be deposited in the Treasury in a special

12 account for use by the USTR and are authorized to be

13 appropriated and made available until expended.

14 (d) FACTORS IN ESTABLISHING FEES AND COMMIS15 SIONS.—In establishing reasonable fees or commissions

16 under this section, the USTR may take into account—

17 (1) the actual costs which will be incurred in

18 providing the items, information, services, or assist19 ance concerned;

20 (2) the efficiency of the Government in provid21 ing such items, information, services, or assistance;

22 (3) the portion of the cost that will be incurred

23 in providing such items, information, services, or as24 sistance which may be attributed to benefits for the

25 general public rather than exclusively for the person
1502

•HR 2491 RH

1 to whom the items, information, services, or assist2 ance is provided;

3 (4) any public service which occurs through the

4 provision of such items, information, services, or as5 sistance; and

6 (5) such other factors as the USTR considers

7 appropriate.

8 (e) REFUNDS OF EXCESS PAYMENTS.—In any case

9 in which the USTR determines that any person has made

10 a payment which is not required under this section or has

11 made a payment which is in excess of the amount required

12 under this section, the USTR, upon application or other13 wise, may cause a refund to be made from applicable

14 funds.

15 SEC. 17452. SEAL OF DEPARTMENT.

16 The USTR shall cause a seal of office to be made

17 for the Administration of such design as the USTR shall

18 approve. Judicial notice shall be taken of such seal.

19 CHAPTER 5—RELATED AGENCIES

20 SEC. 17461. INTERAGENCY TRADE ORGANIZATION.

21 Section 242(a)(3) of the Trade Expansion Act of

22 1962 (19 U.S.C. 1872(a)(3)) is amended to read as fol23 lows:

24 ‘‘(3)(A) The interagency organization estab25 lished under subsection (a) shall be composed of—
1503

•HR 2491 RH

1 ‘‘(i) the United States Trade Representa2 tive, who shall be the chairperson,

3 ‘‘(ii) the Secretary of Agriculture,

4 ‘‘(iii) the Secretary of the Treasury,

5 ‘‘(iv) the Secretary of Labor,

6 ‘‘(v) the Secretary of State, and

7 ‘‘(vi) the representatives of such other de8 partments and agencies as the United States

9 Trade Representative shall designate.

10 ‘‘(B) The United States Trade Representative

11 may invite representatives from other agencies, as

12 appropriate, to attend particular meetings if subject

13 matters of specific functional interest to such agen14 cies are under consideration. It shall meet at such

15 times and with respect to such matters as the Presi16 dent or the chairperson shall direct.’’.

17 SEC. 17462. NATIONAL SECURITY COUNCIL.

18 The fourth paragraph of section 101(a) of the Na19 tional Security Act of 1947 (50 U.S.C. 402(a)) is amend20 ed—

21 (1) by redesignating clauses (5), (6), and (7) as

22 clauses (6), (7), and (8), respectively; and

23 (2) by inserting after clause (4) the following

24 new clause:

25 ‘‘(5) the United States Trade Representative;’’.
1504

•HR 2491 RH

1 SEC. 17463. INTERNATIONAL MONETARY FUND.

2 Section 3 of the Bretton Woods Agreement Act is

3 amended by adding at the end the following new sub4 section:

5 ‘‘(e) The United States executive director of the Fund

6 shall consult with the United States Trade Representative

7 with respect to matters under consideration by the Fund

8 which relate to trade.’’.

9 CHAPTER 6—CONFORMING AMENDMENTS

10 SEC. 17471. AMENDMENTS TO GENERAL PROVISIONS.

11 (a) PRESIDENTIAL SUCCESSION.—Section 19(d)(1)

12 of title 3, United States Code, is amended by inserting

13 ‘‘the United States Trade Representative,’’ before ‘‘Sec14 retary of Labor,’’.

15 (b) INSPECTOR GENERAL.—The Inspector General

16 Act of 1978 is amended—

17 (1) in subsection 9(a)(1) by inserting after sub18 paragraph (W) the following:

19 ‘‘(X) of the United States Trade Rep20 resentative, all functions of the Inspector Gen21 eral of the Department of Commerce and the

22 Office of the Inspector General of the Depart23 ment of Commerce relating to the functions

24 transferred to the United States Trade Rep25 resentative by section 17432 of the Department

26 of Commerce Dismantling Act; and’’; and
1505

•HR 2491 RH

1 (2) in section 11—

2 (A) in paragraph (1) by inserting ‘‘the

3 United States Trade Representative;’’ after

4 ‘‘the Attorney General;’’; and

5 (B) in paragraph (2) by inserting ‘‘the

6 United States Trade Administration,’’ after

7 ‘‘Treasury;’’.

8 (c) AMENDMENT TO THE TRADE ACT OF 1974.—(1)

9 Chapter 4 of title I of the Trade Act of 1974 is amended

10 to read as follows:

11 ‘‘CHAPTER 4—REPRESENTATION IN

12 TRADE NEGOTIATIONS

13 ‘‘SEC. 141. FUNCTIONS OF THE UNITED STATES TRADE REP14 RESENTATIVE.

15 ‘‘The United States Trade Representative of the

16 United States Trade Administration established under

17 section 201 of the Trade Reorganization Act of 1995

18 shall—

19 ‘‘(1) be the chief representative of the United

20 States for each trade negotiation under this chapter

21 or chapter 1 of title III of this Act, or subtitle A of

22 title I of the Omnibus Trade and Competitiveness

23 Act of 1988, or any other provision of law enacted

24 after the Department of Commerce Dismantling Act;
1506

•HR 2491 RH

1 ‘‘(2) report directly to the President and the

2 Congress, and be responsible to the President and

3 the Congress for the administration of trade agree4 ments programs under this Act, the Omnibus Trade

5 and Competitiveness Act of 1988, the Trade Expan6 sion Act of 1962, section 350 of the Tariff Act of

7 1930, and any other provision of law enacted after

8 the Department of Commerce Dismantling Act;

9 ‘‘(3) advise the President and the Congress

10 with respect to nontariff barriers to international

11 trade, international commodity agreements, and

12 other matters which are related to the trade agree13 ments programs; and

14 ‘‘(4) be responsible for making reports to Con15 gress with respect to the matters set forth in para16 graphs (1) and (2).’’.

17 (2) The table of contents in the first section of the

18 Trade Act of 1974 is amended by striking the items relat19 ing to chapter 4 and section 141 and inserting the follow20 ing:

‘‘CHAPTER 4—REPRESENTATION IN TRADE NEGOTIATIONS

‘‘Sec. 141. Functions of the United States Trade Representative.’’.

21 (d) FOREIGN SERVICE PERSONNEL.—The Foreign

22 Service Act of 1980 is amended by striking paragraph (3)

23 of section 202(a) (22 U.S.C. 3922(a)) and inserting the

24 following:
1507

•HR 2491 RH

1 ‘‘(3) The United States Trade Representative of the

2 United States Trade Administration may utilize the For3 eign Service personnel system in accordance with this

4 Act—

5 ‘‘(A) with respect to the personnel performing

6 functions—

7 ‘‘(i) which were transferred to the Depart8 ment of Commerce from the Department of

9 State by Reorganization Plan No. 3 of 1979;

10 and

11 ‘‘(ii) which were subsequently transferred

12 to the United States Trade Representative by

13 section 17432 of the Department of Commerce

14 Dismantling Act; and

15 ‘‘(B) with respect to other personnel of the

16 United States Trade Administration to the extent

17 the President determines to be necessary in order to

18 enable the United States Trade Administration to

19 carry out functions which require service abroad.’’.

20 (e) CHIEF FINANCIAL OFFICERS.—Section 901(b)(1)

21 of title 31, United States Code, is amended by adding at

22 the end the following:

23 ‘‘(Q) The United States Trade Administra24 tion.’’.
1508

•HR 2491 RH

1 SEC. 17472. REPEALS.

2 Sections 1 and 2 of the Act of June 5, 1939 (15

3 U.S.C. 1502 and 1503; 53 Stat. 808), relating to the

4 Under Secretary of Commerce, are repealed.

5 SEC. 17473. CONFORMING AMENDMENTS RELATING TO EX6 ECUTIVE SCHEDULE POSITIONS.

7 (a) POSITIONS AT LEVEL I.—Section 5312 of title

8 5, United States Code, is amended by amending the item

9 relating to the United States Trade Representative to read

10 as follows:

11 ‘‘United States Trade Representative, United

12 States Trade Administration.’’.

13 (b) POSITIONS AT LEVEL II.—Section 5313 of title

14 5, United States Code, is amended by adding at the end

15 the following:

16 ‘‘Deputy Administrator of the United States

17 Trade Administration.

18 ‘‘Deputy United States Trade Representatives,

19 United States Trade Administration (2).

20 ‘‘Director General of Trade, United States

21 Trade Administration (2).’’.

22 (c) POSITIONS AT LEVEL III.—Section 5314 of title

23 5, United States Code, is amended by adding at the end

24 the following:

25 ‘‘Assistant Administrators, United States Trade

26 Administration (3).’’.
1509

•HR 2491 RH

1 (d) POSITIONS AT LEVEL IV.—Section 5315 of title

2 5, United States Code, is amended—

3 (1) by striking the item relating to the Assist4 ant Secretary of Commerce and Director General of

5 the United States and Foreign Commercial Service;

6 and

7 (2) by adding at the end the following:

8 ‘‘General Counsel, United States Trade Admin9 istration.

10 ‘‘Inspector General, United States Trade Ad11 ministration.

12 ‘‘Chief Financial Officer, United States Trade

13 Administration.’’.

14 CHAPTER 7—TRANSITIONAL, SAVINGS,

15 AND CONFORMING PROVISIONS

16 SEC. 17481. ADDITIONAL TRANSFERS.

17 Any function of the Secretary of Commerce or the

18 Department of Commerce which—

19 (1) is not transferred by this subtitle; and

20 (2) is incidental to, necessary for, or primarily

21 related to, the performance of a function transferred

22 by this subtitle,

23 is transferred to the head of the Federal agency to which

24 the related function is transferred by this subtitle.
1510

•HR 2491 RH

1 SEC. 17482. INCIDENTAL TRANSFERS.

2 After consultation with the Director of the Office of

3 Personnel Management, the Director of the Office of Man4 agement and Budget is authorized, at such times as the

5 Director of the Office of Management and Budget may

6 provide, to make such determinations as may be necessary

7 with regard to the transfer of positions within the Senior

8 Executive Service in connection with the functions and of9 fices transferred by this subtitle.

10 SEC. 17483. EFFECT ON PERSONNEL.

11 (a) IN GENERAL.—Except as otherwise provided by

12 this subtitle, the transfer pursuant to this subtitle of full13 time personnel (except special Government employees) and

14 part-time personnel holding permanent positions shall not

15 cause any such employee to be separated or reduced in

16 grade or compensation for one year after the date of trans17 fer of such employee under this subtitle.

18 (b) EXECUTIVE SCHEDULE POSITIONS.—Except as

19 otherwise provided by this subtitle, any person who, on

20 the day preceding the effective date of this subtitle, held

21 a position compensated in accordance with the Executive

22 Schedule prescribed in chapter 53 of title 5, United States

23 Code, and who, without a break in service, is appointed

24 in a Federal agency to which functions are transferred by

25 this subtitle to a position having duties comparable to the

26 duties performed immediately preceding such appointment
1511

•HR 2491 RH

1 shall continue to be compensated in such new position at

2 not less than the rate provided for such previous position,

3 for the duration of the service of such person in such new

4 position.

5 (c) TERMINATION OF CERTAIN POSITIONS.—Except

6 for members of the Foreign Service, positions whose in7 cumbents are appointed by the President, by and with the

8 advice and consent of the Senate, the functions of which

9 are transferred by this subtitle, shall terminate on the ef10 fective date of this subtitle.

11 SEC. 17484. SAVINGS PROVISIONS.

12 (a) ADMINISTRATIVE ACTIONS RELATING TO PRO13 MULGATION OF RULES.—Any administrative action relat14 ing to the preparation or promulgation of a regulation by

15 a Federal agency relating to a function transferred under

16 this subtitle may be continued by the Federal agency to

17 which such function is transferred with the same effect

18 as if this subtitle had not been enacted.

19 (b) FEDERAL OFFICIAL AS PARTY IN ACTION.—If,

20 before the date on which this subtitle takes effect, the Of21 fice of the United States Trade Representative, or any of22 ficer thereof in his or her official capacity, is a party to

23 an action with respect to a function transferred by this

24 subtitle to a Federal agency, then such action shall be con-
1512

•HR 2491 RH

1 tinued with the head of the agency substituted or added

2 as a party.

3 (c) JUDICIAL REVIEW.—Orders and actions of the

4 head of a Federal agency in the exercise of functions

5 transferred to the head of such agency by this subtitle

6 shall be subject to judicial review to the same extent and

7 in the same manner as if such orders and actions had been

8 by the Department of Commerce or the Office of the Unit9 ed States Trade Representative, or any office or officer

10 thereof, in the exercise of such functions immediately pre11 ceding their transfer. Any statutory requirements relating

12 to notice, hearings, action upon the record, or administra13 tive review that apply to any function transferred by this

14 subtitle shall apply to the exercise of such function by the

15 head of the Federal agency to which such function is

16 transferred by this subtitle.

17 SEC. 17485. REFERENCE.

18 With respect to any functions transferred by this sub19 title and exercised after the effective date of this subtitle,

20 reference in any other Federal law to—

21 (1) the Secretary of Commerce or the United

22 States Trade Representative; or

23 (2) the Department of Commerce or the Office

24 of the United States Trade Representative or any of25 ficer or office thereof,
1513

•HR 2491 RH

1 shall be considered to refer to the head of the Federal

2 agency to whom such functions were transferred by this

3 subtitle.

4 SEC. 17486. TRANSITION.

5 With the consent of the Secretary of Commerce or

6 the United States Trade Representative, as the case may

7 be, the head of each Federal agency to which functions

8 or offices are transferred by this subtitle is authorized to

9 utilize—

10 (1) the services of such officers, employees, and

11 other personnel of the Department of Commerce or

12 the Office of the United States Trade Representa13 tive, as the case may be, with respect to functions

14 or offices transferred to that agency by this subtitle;

15 and

16 (2) funds appropriated to such functions or of17 fices for such period of time as may reasonably be

18 needed to facilitate the orderly implementation of

19 this subtitle.

20 CHAPTER 8—MISCELLANEOUS

21 SEC. 17491. EFFECTIVE DATE.

22 (a) IN GENERAL.—This subtitle shall take effect on

23 the effective date specified in section 17109(a), except that

24 at any time after the date of the enactment of this Act
1514

•HR 2491 RH

1 the officers provided for in chapter 2 may be nominated

2 and appointed, as provided in such chapter.

3 (b) INTERIM COMPENSATION AND EXPENSES.—

4 Funds available to the Department of Commerce or the

5 Office of the United States Trade Representative (or any

6 official or component thereof), with respect to the func7 tions transferred by this subtitle, may be used, with ap8 proval of the Director of the Office of Management and

9 Budget, to pay the compensation and expenses of an offi10 cer appointed under subsection (a) who will carry out such

11 functions until funds for that purpose are otherwise avail12 able.

13 SEC. 17492. INTERIM APPOINTMENTS.

14 (a) IN GENERAL.—If one or more officers required

15 by this subtitle to be appointed by and with the advice

16 and consent of the Senate have not entered upon office

17 on the effective date of this subtitle and notwithstanding

18 any other provision of law, the President may designate

19 any officer who was appointed by and with the advice and

20 consent of the Senate, and who was such an officer on

21 the day before the effective date of this subtitle, to act

22 in the office until it is filled as provided by this subtitle.

23 (b) COMPENSATION.—Any officer acting in an office

24 pursuant to subsection (a) shall receive compensation at

25 the rate prescribed by this subtitle for such office.
1515

•HR 2491 RH

1 SEC. 17493. FUNDING REDUCTIONS RESULTING FROM RE2 ORGANIZATION.

3 (a) FUNDING REDUCTIONS.—Notwithstanding sec4 tion 17610, beginning in the first fiscal year that begins

5 on or after the effective date of this subtitle, the amount

6 expended by the United States in performing all functions

7 which, immediately before the effective date of this sub8 title, were performed by the Department of Commerce or

9 any agency, officer, or employee thereof and are trans10 ferred by this subtitle may not exceed 75 percent of the

11 total amount expended by the United States in performing

12 all such functions during fiscal year 1994.

13 (b) IMPLEMENTATION PLAN.—(1) Not later than 90

14 days after the date of the enactment of this Act, the Direc15 tor of the Office of Management and Budget shall submit

16 a report to the Congress on a plan that—

17 (A) provides for the implementation of the

18 funding reductions required under subsection (a);

19 and

20 (B) makes legislative recommendations for ad21 ditional authority necessary or useful in implement22 ing such funding reductions.

23 (2) In preparing the report, the Office of Manage24 ment and Budget shall consult with the USTR.
1516

•HR 2491 RH

1 SEC. 17494. AUTHORIZATION OF APPROPRIATIONS.

2 There are authorized to be appropriated such sums

3 as may be necessary to carry out the provisions of this

4 subtitle. Amounts appropriated under this section shall be

5 available until expended.

6 Subtitle E—Patent and Trademark

7 Office Corporation

8 SEC. 17501. SHORT TITLE.

9 This subtitle may be cited as the ‘‘Patent and Trade10 mark Office Corporation Act of 1995’’.

11 CHAPTER 1—PATENT AND TRADEMARK

12 OFFICE

13 SEC. 17511. ESTABLISHMENT OF PATENT AND TRADEMARK

14 OFFICE AS A CORPORATION.

15 Section 1 of title 35, United States Code, is amended

16 to read as follows:

17 ‘‘§ 1. Establishment

18 ‘‘(a) ESTABLISHMENT.—The Patent and Trademark

19 Office is established as a wholly owned Government cor20 poration subject to chapter 91 of title 31, except as other21 wise provided in this title.

22 ‘‘(b) OFFICES.—The Patent and Trademark Office

23 shall maintain an office in the District of Columbia, or

24 the metropolitan area thereof, for the service of process

25 and papers and shall be deemed, for purposes of venue

26 in civil actions, to be a resident of the District of Colum-
1517

•HR 2491 RH

1 bia. The Patent and Trademark Office may establish of2 fices in such other places as it considers necessary or ap3 propriate in the conduct of its business.

4 ‘‘(c) REFERENCE.—For purposes of this title, the

5 Patent and Trademark Office shall also be referred to as

6 the ‘Office’.’’.

7 SEC. 17512. POWERS AND DUTIES.

8 Section 2 of title 35, United States Code, is amended

9 to read as follows:

10 ‘‘§ 2. Powers and Duties

11 ‘‘(a) IN GENERAL.—The Patent and Trademark Of12 fice shall be responsible for—

13 ‘‘(1) the granting and issuing of patents and

14 the registration of trademarks;

15 ‘‘(2) conducting studies, programs, or ex16 changes of items or services regarding domestic and

17 international patent and trademark law or the ad18 ministration of the Office, including programs to

19 recognize, identify, assess, and forecast the tech20 nology of patented inventions and their utility to in21 dustry;

22 ‘‘(3) authorizing or conducting studies and pro23 grams cooperatively with foreign patent and trade24 mark offices and international organizations, in con-
1518

•HR 2491 RH

1 nection with the granting and issuing of patents and

2 the registration of trademarks; and

3 ‘‘(4) disseminating to the public information

4 with respect to patents and trademarks.

5 ‘‘(b) SPECIFIC POWERS.—The Office—

6 ‘‘(1) shall have perpetual succession;

7 ‘‘(2) shall adopt and use a corporate seal, which

8 shall be judicially noticed and with which letters pat9 ent, certificates of trademark registrations, and pa10 pers issued by the Office shall be authenticated;

11 ‘‘(3) may sue and be sued in its corporate name

12 and be represented by its own attorneys in all judi13 cial and administrative proceedings;

14 ‘‘(4) may indemnify the Commissioner of Pat15 ents and Trademarks, and other officers, attorneys,

16 agents, and employees (including members of the

17 Management Advisory Board established in section

18 5), of the Office for liabilities and expenses incurred

19 within the scope of their employment;

20 ‘‘(5) may adopt, amend, and repeal bylaws,

21 rules, and regulations, governing the manner in

22 which its business will be conducted and the powers

23 granted to it by law will be exercised, without regard

24 to chapter 35 of title 44;
1519

•HR 2491 RH

1 ‘‘(6) may acquire, construct, purchase, lease,

2 hold, manage, operate, improve, alter, and renovate

3 any real, personal, or mixed property, or any interest

4 therein, as it considers necessary to carry out its

5 functions, without regard to the provisions of the

6 Federal Property and Administrative Services Act of

7 1949;

8 ‘‘(7)(A) may make such purchases, contracts

9 for the construction, maintenance, or management

10 and operation of facilities, and contracts for supplies

11 or services, after advertising, in such manner and at

12 such times sufficiently in advance of opening bids, as

13 the Office determines is adequate to ensure notice

14 and an opportunity for competition, except that ad15 vertising shall not be required when the Office deter16 mines that the making of any such purchase or con17 tract without advertising is necessary, or that adver18 tising is not reasonably practicable;

19 ‘‘(B) may enter into and perform such pur20 chases and contracts for printing services, including

21 the process of composition, platemaking, presswork,

22 silk screen processes, binding, microform, and the

23 products of such processes, as it considers necessary

24 to carry out the functions of the Office, without re-
1520

•HR 2491 RH

1 gard to sections 501 through 517 and 1101 through

2 1123 of title 44; and

3 ‘‘(C) may enter into and perform such other

4 contracts, leases, cooperative agreements, or other

5 transactions with international, foreign, and domes6 tic public agencies and private organizations, and

7 persons as is necessary in the conduct of its business

8 and on such terms as it considers appropriate;

9 ‘‘(8) may use, with their consent, services,

10 equipment, personnel, and facilities of other depart11 ments, agencies, and instrumentalities of the Fed12 eral Government, on a reimbursable basis, and to co13 operate with such other departments, agencies, and

14 instrumentalities in the establishment and use of

15 services, equipment, and facilities of the Office;

16 ‘‘(9) may obtain from the Administrator of

17 General Services such services as the Administrator

18 is authorized to provide to other agencies of the

19 United States, on the same basis as those services

20 are provided to other agencies of the United States;

21 ‘‘(10) may use, with the consent of the agency,

22 government, or international organization concerned,

23 the services, records, facilities, or personnel of any

24 State or local government agency or instrumentality
1521

•HR 2491 RH

1 or foreign government or international organization

2 to perform functions on its behalf;

3 ‘‘(11) may determine the character of and the

4 necessity for its obligations and expenditures and

5 the manner in which they shall be incurred, allowed,

6 and paid, subject to the provisions of this title and

7 the Act of July 5, 1946 (commonly referred to as

8 the ‘Trademark Act of 1946’);

9 ‘‘(12) may retain and use all of its revenues

10 and receipts, including revenues from the sale, lease,

11 or disposal of any real, personal, or mixed property,

12 or any interest therein, of the Office, in carrying out

13 the functions of the Office, including for research

14 and development and capital investment, without ap15 portionment under the provisions of subchapter II

16 of chapter 15 of title 31;

17 ‘‘(13) shall have the priority of the United

18 States with respect to the payment of debts from

19 bankrupt, insolvent, and decedents’ estates;

20 ‘‘(14) may accept monetary gifts or donations

21 of services, or of real, personal, or mixed property,

22 in order to carry out the functions of the Office;

23 ‘‘(15) may execute, in accordance with its by24 laws, rules, and regulations, all instruments nec-
1522

•HR 2491 RH

1 essary and appropriate in the exercise of any of its

2 powers;

3 ‘‘(16) may provide for liability insurance and

4 insurance against any loss in connection with its

5 property, other assets, or operations either by con6 tract or by self-insurance; and

7 ‘‘(17) shall pay any settlement or judgment en8 tered against it from the funds of the Office and not

9 from amounts available under section 1304 of title

10 31.’’.

11 SEC. 17513. ORGANIZATION AND MANAGEMENT.

12 Section 3 of title 35, United States Code, is amended

13 to read as follows:

14 ‘‘§ 3. Officers and employees

15 ‘‘(a) COMMISSIONER.—

16 ‘‘(1) IN GENERAL.—The management of the

17 Patent and Trademark Office shall be vested in the

18 Commissioner of Patents and Trademarks (hereafter

19 in this title referred to as the ‘Commissioner’), who

20 shall be a citizen of the United States and who shall

21 be appointed by the President, by and with the ad22 vice and consent of the Senate. The Commissioner

23 shall be a person who, by reason of professional

24 background and experience in patent and trademark

25 law, is especially qualified to manage the Office.
1523

•HR 2491 RH

1 ‘‘(2) DUTIES.—

2 ‘‘(A) IN GENERAL.—The Commissioner

3 shall be responsible for the management and di4 rection of the Office, including the issuance of

5 patents and the registration of trademarks.

6 ‘‘(B) ADVISING THE PRESIDENT.—The

7 Commissioner shall advise the President of all

8 activities of the Patent and Trademark Office

9 undertaken in response to obligations of the

10 United States under treaties and executive

11 agreements, or which relate to cooperative pro12 grams with those authorities of foreign govern13 ments that are responsible for granting patents

14 or registering trademarks. The Commissioner

15 shall also recommend to the President changes

16 in law or policy which may improve the ability

17 of U.S. citizens to secure and enforce patent

18 rights or trademark rights in the United States

19 or in foreign countries.

20 ‘‘(C) CONSULTING WITH THE MANAGE21 MENT ADVISORY BOARD.—The Commissioner

22 shall consult with the Management Advisory

23 Board established in section 5 on a regular

24 basis on matters relating to the operation of the

25 Patent and Trademark Office, and shall consult
1524

•HR 2491 RH

1 with the Board before submitting budgetary

2 proposals to the Office of Management and

3 Budget or changing or proposing to change pat4 ent or trademark user fees or patent or trade5 mark regulations.

6 ‘‘(3) TERM.—The Commissioner shall serve a

7 term of six years, and may continue to serve until

8 a successor is appointed and assumes office. The

9 Commissioner may be reappointed to subsequent

10 terms.

11 ‘‘(4) OATH.—The Commissioner shall, before

12 taking office, take an oath to discharge faithfully the

13 duties of the Office.

14 ‘‘(5) COMPENSATION.—The Commissioner shall

15 receive compensation at the rate of pay in effect for

16 level II of the Executive Schedule under section

17 5313 of title 5.

18 ‘‘(6) REMOVAL.—The Commissioner may be re19 moved from office by the President only for cause.

20 ‘‘(7) DESIGNEE OF COMMISSIONER.—The Com21 missioner shall designate an officer of the Office who

22 shall be vested with the authority to act in the ca23 pacity of the Commissioner in the event of the ab24 sence or incapacity of the Commissioner.

25 ‘‘(b) OFFICERS AND EMPLOYEES OF THE OFFICE.—
1525

•HR 2491 RH

1 ‘‘(1) DEPUTY COMMISSIONERS.—The Commis2 sioner shall appoint a Deputy Commissioner for Pat3 ents and a Deputy Commissioner for Trademarks

4 for terms that shall expire on the date on which the

5 Commissioner’s term expires. The Deputy Commis6 sioner for Patents shall be a person with dem7 onstrated experience in patent law and the Deputy

8 Commissioner for Trademarks shall be a person with

9 demonstrated experience in trademark law. The

10 Deputy Commissioner for Patents and the Deputy

11 Commissioner for Trademarks shall be the principal

12 policy advisors to the Commissioner on all aspects of

13 the activities of the Office that affect the adminis14 tration of patent and trademark operations, respec15 tively.

16 ‘‘(2) OTHER OFFICERS AND EMPLOYEES.—The

17 Commissioner shall—

18 ‘‘(A) appoint an Inspector General and

19 such other officers, employees (including attor20 neys), and agents of the Office as the Commis21 sioner considers necessary to carry out its func22 tions;

23 ‘‘(B) fix the compensation of such officers

24 and employees, subject to the limits set forth in

25 subsection (c); and
1526

•HR 2491 RH

1 ‘‘(C) define the authority and duties of

2 such officers and employees and delegate to

3 them such of the powers vested in the Office as

4 the Commissioner may determine.

5 The Office shall not be subject to any administratively or

6 statutorily imposed limitation on positions or personnel,

7 and no positions or personnel of the Office shall be taken

8 into account for purposes of applying any such limitation,

9 except to the extent otherwise specifically provided by stat10 ute with respect to the Office.

11 ‘‘(c) LIMITS ON COMPENSATION.—Except as other12 wise provided in this title or any other provision of law,

13 the basic pay of an officer or employee of the Office for

14 any calendar year may not exceed the annual rate of basic

15 pay in effect for level III of the Executive Schedule under

16 section 5314 of title 5. The Commissioner shall by regula17 tion establish a limitation on the total compensation pay18 able to officers or employees of the Office, consistent with

19 the limitation under section 5307 of title 5.

20 ‘‘(d) INAPPLICABILITY OF TITLE 5 GENERALLY.—

21 Except as otherwise provided in this section, officers and

22 employees of the Office shall not be subject to the provi23 sions of title 5 relating to Federal employees.

24 ‘‘(e) CARRYOVER OF PERSONNEL.—
1527

•HR 2491 RH

1 ‘‘(1) TO THE OFFICE.—Effective as of the ef2 fective date of the Patent and Trademark Office

3 Corporation Act of 1995, all officers and employees

4 of the Patent and Trademark Office on the day be5 fore such effective date shall become officers and

6 employees of the Office, without a break in service.

7 ‘‘(2) CONTINUATION IN OFFICE OF CERTAIN

8 OFFICERS.—

9 ‘‘(A) COMMISSIONER OF PATENTS AND

10 TRADEMARKS.—The individual serving as the

11 Commissioner of Patents and Trademarks on

12 the day before the effective date of the Patent

13 and Trademark Office Corporation Act of 1995

14 may serve as the Commissioner for a period of

15 1 year beginning on such effective date or, if

16 earlier, until a Commissioner has been ap17 pointed under subsection (a).

18 ‘‘(B) ASSISTANT COMMISSIONER FOR PAT19 ENTS.—The individual serving as the Assistant

20 Commissioner for Patents on the day before the

21 effective date of the Patent and Trademark Of22 fice Corporation Act of 1995 may serve as the

23 Deputy Commissioner for Patents for a period

24 of 1 year beginning on such effective date or,
1528

•HR 2491 RH

1 if earlier, until a Deputy Commissioner for Pat2 ents has been appointed under subsection (b).

3 ‘‘(C) ASSISTANT COMMISSIONER FOR

4 TRADEMARKS.—The individual serving as the

5 Assistant Commissioner for Trademarks on the

6 day before the effective date of the Patent and

7 Trademark Office Corporation Act of 1995 may

8 serve as the Deputy Commissioner for Trade9 marks for a period of 1 year beginning on such

10 effective date or, if earlier, until a Deputy Com11 missioner for Trademarks has been appointed

12 under subsection (b).

13 ‘‘(f) EMPLOYEE PROTECTION.—Not later than the

14 effective date of the Patent and Trademark Office Cor15 poration Act of 1995, the Commissioner shall, notwith16 standing section 3531 of such Act, take appropriate meas17 ures to protect the employment interests of individuals

18 who become employees of the Office pursuant to sub19 section (e)(1). Such measures shall include provisions to

20 ensure that—

21 ‘‘(1) the Office will adopt labor agreements in

22 accordance with subsection (g);

23 ‘‘(2) no such individual shall, during the 2-year

24 period commencing on the effective date of the Pat25 ent and Trademark Office Corporation Act of 1995,
1529

•HR 2491 RH

1 be subject to separation or any reduction in com2 pensation by reason of the establishment of the Of3 fice as a Government corporation pursuant to such

4 Act;

5 ‘‘(3) all sick leave, annual leave, and compen6 satory time accrued or accumulated under title 5 be7 fore the start of such 2-year period shall be obliga8 tions of the Office during such period; and

9 ‘‘(4) there shall be made available to such em10 ployees not less than 1 life insurance program and

11 not less than 3 health insurance programs, during

12 such 2-year period, which shall be reasonably com13 parable, in terms of employee premium cost and cov14 erage, to the Federal health and life insurance pro15 grams available to such employees on the day before

16 the start of such period.

17 ‘‘(g) LABOR AGREEMENTS.—

18 ‘‘(1) ADOPTION OF EXISTING AGREEMENTS.—

19 The Office shall adopt all labor agreements which

20 are in effect, as of the day before the effective date

21 of the Patent and Trademark Office Corporation Act

22 of 1995, with respect to such Office (as then in ef23 fect). Each such agreement shall remain in effect for

24 the 2-year period commencing on such date, unless
1530

•HR 2491 RH

1 the agreement provides for a shorter duration or the

2 parties agree otherwise before such period ends.

3 ‘‘(2) CONTINUED APPLICABILITY OF CHAPTER 71.—

4 Chapter 71 of title 5 shall continue to apply with respect

5 to the Office after the Patent and Trademark Office Cor6 poration Act of 1995 takes effect.

7 ‘‘(h) TERMINATION RIGHTS.—Any employee referred

8 to in the first sentence of subsection (f) whose employment

9 with the Office is terminated during the 2-year period

10 commencing on the effective date of the Patent and Trade11 mark Office Corporation Act of 1995 shall be entitled to

12 rights and benefits, to be afforded by the Office, similar

13 to those such employee would have had under Federal law

14 if termination had occurred immediately before such date.

15 ‘‘(i) RETIREMENT.—

16 ‘‘(1) CONTINUED COVERAGE.—Any employee

17 referred to in the first sentence of subsection (f)

18 who, on the day before the effective date of the Pat19 ent and Trademark Office Corporation Act of 1995,

20 is subject to subchapter III of chapter 83 of title 5

21 or chapter 84 of such title shall, so long as such em22 ployee remains employed by the Office without a

23 break in service, remain subject to such subchapter

24 or chapter, as the case may be. Any employment

25 that satisfies the preceding sentence shall be consid-
1531

•HR 2491 RH

1 ered employment by the Government of the United

2 States for purposes of such subchapter or chapter.

3 During any such employment, the Office shall be

4 considered to be the employing agency of the em5 ployee and shall make all agency contributions re6 quired under such subchapter or chapter with re7 spect to such employee.

8 ‘‘(2) DEPOSIT REQUIREMENT.—Not later than

9 1 year after the effective date of the Patent and

10 Trademark Office Corporation Act of 1995, the Of11 fice shall pay into the Treasury of the United

12 States, to the credit of the Civil Service Retirement

13 and Disability Fund, an amount determined by the

14 Office of Personnel Management to represent the

15 present value of the difference between (A) the fu16 ture cost of benefits payable from the Fund and due

17 the employees referred to in the first sentence of

18 subsection (f) that are attributable to employment

19 on or after the effective date of the Patent and

20 Trademark Office Corporation Act of 1995, and (B)

21 the contributions made by such employees and the

22 Office under paragraph (1). In determining the

23 amount due, the Office of Personnel Management

24 shall take into consideration the actual interest such
1532

•HR 2491 RH

1 amount can be expected to earn when invested in the

2 Treasury.

3 ‘‘(j) COMPETITIVE STATUS.—For purposes of ap4 pointment to a position in the competitive service for

5 which an officer or employee of the Office is qualified,

6 such officer or employee—

7 ‘‘(1) shall not forfeit any competitive status, ac8 quired by such officer or employee before the effec9 tive date of the Patent and Trademark Office Cor10 poration Act of 1995, by reason of becoming an offi11 cer or employee of the Office pursuant to subsection

12 (e)(1); or

13 ‘‘(2) if not covered by paragraph (1), shall ac14 quire competitive status after completing at least 1

15 year of continuous service under a nontemporary ap16 pointment to a position within the Office (taking

17 into account any such service performed with the

18 former Patent and Trademark Office immediately

19 before such effective date).

20 ‘‘(k) SAVINGS PROVISIONS.—All orders, determina21 tions, rules, and regulations regarding compensation and

22 benefits and other terms and conditions of employment,

23 in effect for the Office and its officers and employees im24 mediately before the effective date of the Patent and

25 Trademark Office Corporation Act of 1995, shall continue
1533

•HR 2491 RH

1 in effect with respect to the Office and its officers and

2 employees until modified, superseded, or set aside by the

3 Office or a court of appropriate jurisdiction or by oper4 ation of law.’’.

5 SEC. 17514. MANAGEMENT ADVISORY BOARD.

6 Chapter 1 of part I of title 35, United States Code,

7 is amended by inserting after section 4 the following:

8 ‘‘§ 5. Patent and Trademark Office Management Advi9 sory Board

10 ‘‘(a) COMPENSATION.—

11 ‘‘(1) APPOINTMENT.—The Patent and Trade12 mark Office shall have a Management Advisory

13 Board (hereafter in this title referred to as the

14 ‘Board’) of 18 members, 6 of whom shall be ap15 pointed by the President, 6 of whom shall be ap16 pointed by the Speaker of the House of Representa17 tives, and 6 of whom shall be appointed by the

18 President pro tempore of the Senate. Not more than

19 4 of the 6 members appointed by each appointing

20 authority shall be members of the same political

21 party.

22 ‘‘(2) TERMS.—Members of the Board shall be

23 appointed for a term of 6 years each, except that of

24 the members first appointed by each appointing au25 thority, 1 shall be for a term of 1 year, 1 shall be
1534

•HR 2491 RH

1 for a term of 2 years, 1 shall be for a term of 3

2 years, 1 shall be for a term of 4 years, and 1 shall

3 be for a term of 5 years. No member may serve

4 more than 1 term.

5 ‘‘(3) CHAIR.—The President shall designate the

6 chair of the Board, whose term as chair shall be for

7 3 years.

8 ‘‘(4) TIMING OF APPOINTMENTS.—Initial ap9 pointments to the Board shall be made within 3

10 months after the effective date of the Patent and

11 Trademark Office Corporation Act of 1995, and va12 cancies shall be filled within 3 months after they

13 occur.

14 ‘‘(5) VACANCIES.—Vacancies shall be filled in

15 the manner in which the original appointment was

16 made under this subsection. Members appointed to

17 fill a vacancy occurring before the expiration of the

18 term for which the member’s predecessor was ap19 pointed shall be appointed only for the remainder of

20 that term. A member may serve after the expiration

21 of that member’s term until a successor is ap22 pointed.

23 ‘‘(b) BASIS FOR APPOINTMENTS.—Members of the

24 Board shall be citizens of the United States who shall be

25 chosen so as to represent the interests of diverse users
1535

•HR 2491 RH

1 of the Patent and Trademark Office, and shall include in2 dividuals with substantial background and achievement in

3 corporate finance and management.

4 ‘‘(c) APPLICABILITY OF CERTAIN ETHICS LAWS.—

5 Members of the Board shall be special Government em6 ployees within the meaning of section 202 of title 18.

7 ‘‘(d) MEETINGS.—The Board shall meet at the call

8 of the chair to consider an agenda set by the chair.

9 ‘‘(e) DUTIES.—The Board shall—

10 ‘‘(1) review the policies, goals, performance,

11 budget, and user fees of the Patent and Trademark

12 Office, and advise the Commissioner on these mat13 ters; and

14 ‘‘(2) within 60 days after the end of each fiscal

15 year, prepare an annual report on the matters re16 ferred to in paragraph (1), transmit the report to

17 the President and the Committees on the Judiciary

18 of the Senate and the House of Representatives, and

19 publish the report in the Patent and Trademark Of20 fice Official Gazette.

21 ‘‘(f) STAFF.—The Board shall employ a staff and

22 procure support services for the staff adequate to enable

23 the Board to carry out its functions, using funds available

24 to the Commissioner under section 42 of this title. Persons

25 employed by the Board shall receive compensation as de-
1536

•HR 2491 RH

1 termined by the Board, serve in accordance with terms

2 and conditions of employment established by the Board,

3 and be subject solely to the direction of the Board, not4 withstanding any other provision of law.

5 ‘‘(g) COMPENSATION.—Members of the Board may

6 accept reimbursement for expenses incurred in attending

7 meetings of the Board and compensation not to exceed

8 $1000 per day for each day in attendance at meetings of

9 the Board.

10 ‘‘(h) ACCESS TO INFORMATION.—Members of the

11 Board shall be provided access to records and information

12 in the Patent and Trademark Office, except for personnel

13 or other privileged information and information concern14 ing patent applications required to be kept in confidence

15 by section 122 of this title.

16 ‘‘(i) APPLICABILITY OF FEDERAL ADVISORY COM17 MITTEE ACT.—The provisions of the Federal Advisory

18 Committee Act (5 U.S.C. App.) shall not apply to meet19 ings of the Board, but all meetings of the Board shall be

20 announced in the Federal Register at least 30 days in ad21 vance and all meetings shall be open to the public unless

22 closed by the Board for good cause.’’.
1537

•HR 2491 RH

1 SEC. 17515. INDEPENDENCE FROM DEPARTMENT OF COM2 MERCE.

3 Section 6 of title 35, United States Code, is amend4 ed—

5 (1) by striking ‘‘, under the direction of the

6 Secretary of Commerce,’’ each place it appears; and

7 (2) by striking ‘‘, subject to the approval of the

8 Secretary of Commerce,’’.

9 SEC. 17516. TRADEMARK TRIAL AND APPEAL BOARD.

10 Section 17 of the Act of July 5, 1946 (commonly re11 ferred to as the ‘‘Trademark Act of 1946’’) (15 U.S.C.

12 1067) is amended to read as follows:

13 ‘‘SEC. 17. (a) In every case of interference, opposition

14 to registration, application to register as a lawful concur15 rent user, or application to cancel the registration of a

16 mark, the Commissioner shall give notice to all parties and

17 shall direct a Trademark Trial and Appeal Board to deter18 mine and decide the respective rights of registration.

19 ‘‘(b) The Trademark Trial and Appeal Board shall

20 include the Commissioner, the Deputy Commissioner for

21 Patents, the Deputy Commissioner for Trademarks, and

22 members competent in trademark law who are appointed

23 by the Commissioner.’’.
1538

•HR 2491 RH

1 SEC. 17517. BOARD OF PATENT APPEALS AND INTER2 FERENCES.

3 Section 7 of title 35, United States Code, is amended

4 to read as follows:

5 ‘‘§ 7. Board of Patent Appeals and Interferences

6 ‘‘(a) ESTABLISHMENT AND COMPOSITION.—There

7 shall be in the Patent and Trademark Corporation a

8 Board of Patent Appeals and Interferences. The Commis9 sioner, the Deputy Commissioner for Patents, the Deputy

10 Commissioner for Trademarks, the officer principally re11 sponsible for the examination of patents, the officer prin12 cipally responsible for the examination of trademarks, and

13 the examiners-in-chief shall constitute the Board. The ex14 aminers-in-chief shall be persons of competent legal knowl15 edge and scientific ability.

16 ‘‘(b) DUTIES.—The Board of Patent Appeals and

17 Interferences shall, on written appeal of an applicant, re18 view adverse decisions of examiners upon applications for

19 patents and shall determine priority and patentability of

20 invention in interferences declared under section 135(a)

21 of this title. Each appeal and interference shall be heard

22 by at least 3 members of the Board, who shall be des23 ignated by the Commissioner. Only the Board of Patent

24 Appeals and Interferences may grant rehearings.’’.
1539

•HR 2491 RH

1 SEC. 17518. SUITS BY AND AGAINST THE CORPORATION.

2 Chapter 1 of part I of title 35, United States Code,

3 is amended—

4 (1) by redesignating sections 8 through 14 as

5 sections 9 through 15; and

6 (2) by inserting after section 7 the following

7 new section:

8 ‘‘§ 8. Suits by and against the Corporation

9 ‘‘(a) IN GENERAL.—

10 ‘‘(1) ACTIONS UNDER UNITED STATES LAW.—

11 Any civil action, suit, or proceeding to which the

12 Patent and Trademark Office is a party is deemed

13 to arise under the laws of the United States. Exclu14 sive jurisdiction over all civil actions by or against

15 the Office is in the Federal courts as provided by

16 law.

17 ‘‘(2) CONTRACT CLAIMS.—Any action, suit, or

18 proceeding against the Office founded upon contract

19 shall be subject to the limitations and exclusive rem20 edy provided in section 1346(a)(2) and sections

21 1491 through 1509 of title 28, whether or not such

22 contract claims are cognizable under the sections

23 507, 1346, 1402, 1491, 1496, 1497, 1501, 1503,

24 2071, 2072, 2411, 2501, 2512 of title 28). For pur25 poses of the Contract Disputes Act of 1978 (41

26 U.S.C. 601 and following), the Commissioner shall
1540

•HR 2491 RH

1 be deemed to be the agency head with respect to

2 contract claims arising with respect to the Office.

3 ‘‘(3) TORT CLAIMS.—Any action, suit, or pro4 ceeding against the Office founded upon tort shall be

5 subject to the limitations and exclusive remedies pro6 vided in section 1346(b) and sections 2671 through

7 2680 of title 28, whether or not such tort claims are

8 cognizable under section 1346(b) of title 28.

9 ‘‘(4) PROHIBITION ON ATTACHMENT, LIENS,

10 ETC.—No attachment, garnishment, lien, or similar

11 process, intermediate or final, in law or equity, may

12 be issued against property of the Office.

13 ‘‘(5) SUBSTITUTION OF OFFICE AS PARTY.—

14 The Office shall be substituted as defendant in any

15 civil action, suit, or proceeding against an officer or

16 employee of the Office, if the Office determines that

17 the employee was acting within the scope of the offi18 cer or employee’s employment with the Office. If the

19 Office refuses to certify scope of employment, the of20 ficer or employee may at any time before trial peti21 tion the court to find and certify that the officer or

22 employee was acting within the scope of the officer

23 or employee’s employment. Upon certification by the

24 court, the Office shall be substituted as the party
1541

•HR 2491 RH

1 defendant. A copy of the petition shall be served

2 upon the Office.

3 ‘‘(b) RELATIONSHIP WITH JUSTICE DEPARTMENT.—

4 ‘‘(1) EXERCISE BY OFFICE OF ATTORNEY GEN5 ERAL’S AUTHORITIES.—Except as provided in this

6 section, in relation to all judicial proceedings in

7 which the Office or an officer or employee thereof is

8 a party or in which the officer or employee thereof

9 is interested and which arise from or relate to offi10 cers or employees thereof acting within the scope of

11 their employment, torts, contracts, property, reg12 istration of patent and trademark practitioners, pat13 ents or trademarks, or fees, the officer or employee

14 thereof may exercise, without prior authorization

15 from the Attorney General, the authorities and du16 ties that otherwise would be exercised by the Attor17 ney General on behalf of the officer or employee

18 thereof under title 28, and other laws. In all other

19 judicial or administrative proceedings in which the

20 Office or an officer or employee of the Office is a

21 party or is interested, the Office may exercise these

22 authorities and duties only after obtaining author23 ization from the Attorney General.

24 ‘‘(2) APPEARANCES BY ATTORNEY GENERAL.—

25 The Attorney General may file an appearance on be-
1542

•HR 2491 RH

1 half of the Office or an employee of the Office, with2 out the consent of the Office, in any suit in which

3 the Office is a party and represent the Office with

4 exclusive authority in the conduct, settlement, or

5 compromise of that suit.

6 ‘‘(3) CONSULTATIONS WITH AND ASSISTANCE

7 BY ATTORNEY GENERAL.—The Office may consult

8 with the Attorney General concerning any legal mat9 ter, and the Attorney General shall provide advice

10 and assistance to the Office, including representing

11 the Office in litigation, if requested by the Office.

12 ‘‘(4) REPRESENTATION BEFORE SUPREME

13 COURT.—The Attorney General shall represent the

14 Office in all cases before the United States Supreme

15 Court.

16 ‘‘(5) QUALIFICATIONS OF ATTORNEYS.—An at17 torney admitted to practice to the bar of the highest

18 court of at least one State in the United States or

19 the District of Columbia and appointed by the Office

20 may represent the Office in any legal proceeding in

21 which the Office or an officer or employee of the Of22 fice is a party or interested, regardless of whether

23 the attorney is a resident of the jurisdiction in which

24 the proceeding is held and notwithstanding any
1543

•HR 2491 RH

1 other prerequisites of qualification or appearance re2 quired by the court or administrative body.’’.

3 SEC. 17519. ANNUAL REPORT OF COMMISSIONER.

4 Section 15 of title 35, United States Code, as redesig5 nated by section 17518 of this Act, is amended to read

6 as follows:

7 ‘‘§ 15. Annual report to Congress

8 ‘‘The Commissioner shall report to the Congress, not

9 later than 90 days after the end of each fiscal year, the

10 moneys received and expended by the Office, the purposes

11 for which the moneys were spent, the quality and quantity

12 of the work of the Office, and other information relating

13 to the Office.’’.

14 SEC. 17520. SUSPENSION OR EXCLUSION FROM PRACTICE.

15 Section 32 of title 35, United States Code, is amend16 ed by inserting before the last sentence the following: ‘‘The

17 Commissioner shall have the discretion to designate any

18 officer or employee of the Patent and Trademark Office

19 to conduct the hearing required by this section.’’.

20 SEC. 17521. FUNDING.

21 Section 42 of title 35, United States Code, is amend22 ed to read as follows:
1544

•HR 2491 RH

1 ‘‘§ 42. Patent and Trademark Office funding

2 ‘‘(a) FEES PAYABLE TO THE OFFICE.—All fees for

3 services performed by or materials furnished by the Patent

4 and Trademark Office shall be payable to the Office.

5 ‘‘(b) USE OF MONEYS.—Moneys of the Patent and

6 Trademark Office not otherwise used to carry out the

7 functions of the Office shall be kept in cash on hand or

8 on deposit, or invested in obligations of the United States

9 or guaranteed by the United States, or in obligations or

10 other instruments which are lawful investments for fidu11 ciary, trust, or public funds. Fees available to the Commis12 sioner under this title shall be used exclusively for the

13 processing of patent applications and for other services

14 and materials relating to patents. Fees available to the

15 Commissioner under section 31 of the Act of July 5, 1946

16 (commonly referred to as the ‘Trademark Act of 1946’)

17 (15 U.S.C. 1113) shall be used exclusively for the process18 ing of trademark registrations and for other services and

19 materials relating to trademarks.

20 ‘‘(c) BORROWING AUTHORITY.—The Patent and

21 Trademark Office is authorized to issue from time to time

22 for purchase by the Secretary of the Treasury its deben23 tures, bonds, notes, and other evidences of indebtedness

24 (hereafter in this subsection referred to as ‘obligations’)

25 in an amount not exceeding $2,000,000 outstanding at

26 any one time, to assist in financing its activities. Such ob-
1545

•HR 2491 RH

1 ligations shall be redeemable at the option of the Office

2 before maturity in the manner stipulated in such obliga3 tions and shall have such maturity as is determined by

4 the Office with the approval of the Secretary of the Treas5 ury. Each such obligation issued to the Treasury shall

6 bear interest at a rate not less than the current yield on

7 outstanding marketable obligations of the United States

8 of comparable maturity during the month preceding the

9 issuance of the obligation as determined by the Secretary

10 of the Treasury. The Secretary of the Treasury shall pur11 chase any obligations of the Office issued under this sub12 section and for such purpose the Secretary of the Treasury

13 is authorized to use as a public-debt transaction the pro14 ceeds of any securities issued under chapter 31 of title

15 31, and the purposes for which securities may be issued

16 under that chapter are extended to include such purpose.

17 Payment under this subsection of the purchase price of

18 such obligations of the Patent and Trademark Office shall

19 be treated as public debt transactions of the United

20 States.’’.

21 SEC. 17522. AUDITS.

22 Chapter 4 of part I title 35, United States Code, is

23 amended by adding at the end the following new section:
1546

•HR 2491 RH

1 ‘‘§ 43. Audits

2 ‘‘(a) IN GENERAL.—Financial statements of the Pat3 ent and Trademark Office shall be prepared on an annual

4 basis in accordance with generally accepted accounting

5 principles. Such statements shall be audited by an inde6 pendent certified public accountant chosen by the Sec7 retary. The audit shall be conducted in accordance with

8 standards that are consistent with generally accepted Gov9 ernment auditing standards and other standards estab10 lished by the Comptroller General, and with the generally

11 accepted auditing standards of the private sector, to the

12 extent feasible.

13 ‘‘(b) REVIEW BY COMPTROLLER GENERAL.—The

14 Comptroller General may review any audit of the financial

15 statement of the Patent and Trademark Office that is con16 ducted under subsection (a). The Comptroller General

17 shall report to the Congress and the Office the results of

18 any such review and shall include in such report appro19 priate recommendations.

20 ‘‘(c) AUDIT BY COMPTROLLER GENERAL.—The

21 Comptroller General may audit the financial statements

22 of the Office and such audit shall be in lieu of the audit

23 required by subsection (a). The Office shall reimburse the

24 Comptroller General for the cost of any audit conducted

25 under this subsection.
1547

•HR 2491 RH

1 ‘‘(d) ACCESS TO OFFICE RECORDS.—All books, fi2 nancial records, report files, memoranda, and other prop3 erty that the Comptroller General deems necessary for the

4 performance of any audit shall be made available to the

5 Comptroller General.

6 ‘‘(e) APPLICABILITY IN LIEU OF TITLE 31 PROVI7 SIONS.—This section applies to the Office in lieu of the

8 provisions of section 9105 of title 31.’’.

9 SEC. 17523. TRANSFER.

10 (a) TRANSFER OF FUNCTIONS.—Except as otherwise

11 provided in this subtitle, there are transferred to, and

12 vested in, the Patent and Trademark Office all functions,

13 powers, and duties vested by law in the Secretary of Com14 merce or the Department of Commerce or in the officers

15 or components in the Department of Commerce with re16 spect to the authority to grant patents and register trade17 marks, and in the Patent and Trademark Office, as in

18 effect on the day before the effective date of this subtitle,

19 and in the officers and components of such Office.

20 (b) TRANSFER OF FUNDS AND PROPERTY.—The

21 Secretary of Commerce shall transfer to the Patent and

22 Trademark Office, on the effective date of this subtitle,

23 so much of the assets, liabilities, contracts, property,

24 records, and unexpended and unobligated balances of ap25 propriations, authorizations, allocations, and other funds
1548

•HR 2491 RH

1 employed, held, used, arising from, available to, or to be

2 made available to the Department of Commerce, including

3 funds set aside for accounts receivable which are related

4 to functions, powers, and duties which are vested in the

5 Patent and Trademark Office by this subtitle.

6 (c) TRANSFER OF SURCHARGE FUND.—On the effec7 tive date of this subtitle, there are transferred to the Pat8 ent and Trademark Office those residual and unappropri9 ated balances remaining as of the effective date within the

10 Patent and Trademark Office Surcharge Fund established

11 by section 10101(b) of the Omnibus Budget Reconciliation

12 Act of 1990 (35 U.S.C. 41 note).

13 CHAPTER 2—EFFECTIVE DATE;

14 TECHNICAL AMENDMENTS

15 SEC. 17531. EFFECTIVE DATE.

16 This subtitle shall take effect on the date that is 6

17 months after the date of the enactment of this Act.

18 SEC. 17532. TECHNICAL AND CONFORMING AMENDMENTS.

19 (a) AMENDMENTS TO TITLE 35.—

20 (1) The table of contents for part I of title 35,

21 United States Code, is amended by amending the

22 item relating to chapter 1 to read as follows:

‘‘1. Establishment, Officers and Employees, Functions ........................... 1’’.
1549

•HR 2491 RH

1 (2) The table of sections for chapter 1 of title

2 35, United States Code, is amended to read as fol3 lows:

4 ‘‘CHAPTER 1—ESTABLISHMENT, OFFICERS

5 AND EMPLOYEES, FUNCTIONS

‘‘Sec.

‘‘1. Establishment.

‘‘2. Powers and duties.

‘‘3. Officers and employees.

‘‘4. Restrictions on officers and employees as to interest in patents.

‘‘5. Patent and Trademark Office Management Advisory Board.

‘‘6. Duties of Commissioner.

‘‘7. Board of Patent Appeals and Interferences.

‘‘8. Suits by and against the Corporation.

‘‘9. Library.

‘‘10. Classification of patents.

‘‘11. Certified copies of records.

‘‘12. Publications.

‘‘13. Exchange of copies of patents with foreign countries.

‘‘14. Copies of patents for public libraries.

‘‘15. Annual report to Congress.’’.

6 (3) The table of contents for chapter 4 of part I of

7 title 35, United States Code, is amended by adding at the

8 end the following new item:

‘‘43. Audits.’’.

9 (b) OTHER PROVISIONS OF LAW.—

10 (1) Section 9101(3) of title 31, United States

11 Code, is amended by adding at the end the follow12 ing:

13 ‘‘(O) the Patent and Trademark Office.’’.

14 (2) Section 602(d) of the Federal Property and

15 Administrative Services Act of 1949 (40 U.S.C. 474)

16 is amended—
1550

•HR 2491 RH

1 (A) in paragraph (20) by striking ‘‘or’’

2 after the semicolon;

3 (B) in paragraph (21) by striking the pe4 riod and inserting ‘‘; or’’; and

5 (C) by adding at the end the following:

6 ‘‘(22) the Patent and Trademark Office.’’.

7 (3) Section 500(e) of title 5, United States

8 Code (5 U.S.C. 500(e)) is amended by striking

9 ‘‘Patent Office’’ and inserting ‘‘Patent and Trade10 mark Office’’.

11 (4) Section 5102(c)(23) of title 5, United

12 States Code, is amended by striking ‘‘, Department

13 of Commerce’’.

14 (5) Section 5316 of title 5, United States Code

15 (5 U.S.C. 5316) is amended by striking ‘‘Commis16 sioner of Patents, Department of Commerce.’’,

17 ‘‘Deputy Commissioner of Patents and Trade18 marks.’’, ‘‘Assistant Commissioner for Patents.’’,

19 and ‘‘Assistant Commissioner for Trademarks.’’.

20 (6) Section 12 of the Act of February 14, 1903

21 (15 U.S.C. 1511) is amended by striking ‘‘(d) Pat22 ent and Trademark Office;’’ and redesignating sub23 sections (a) through (g) as paragraphs (1) through

24 (6), respectively.
1551

•HR 2491 RH

1 (7) The Act of April 12, 1892 (27 Stat. 395;

2 20 U.S.C. 91) is amended by striking ‘‘Patent Of3 fice’’ and inserting ‘‘Patent and Trademark Office’’.

4 (8) Sections 505(m) and 512(o) of the Federal

5 Food, Drug, and Cosmetic Act (21 U.S.C. 355(m)

6 and 360b(o)) are each amended by striking ‘‘of the

7 Department of Commerce’’.

8 (9) Section 105(e) of the Federal Alcohol Ad9 ministration Act (27 U.S.C. 205(e)) is amended by

10 striking ‘‘Patent Office’’ and inserting ‘‘Patent and

11 Trademark Office’’.

12 (10) Section 1744 of title 28, United States

13 Code is amended—

14 (A) by striking ‘‘Patent Office’’ each place

15 it appears and inserting ‘‘Patent and Trade16 mark Office’’; and

17 (B) by striking ‘‘Commissioner of Patents’’

18 and inserting ‘‘Commissioner of Patents and

19 Trademarks’’.

20 (11) Section 1745 of title 28, United States

21 Code, is amended by striking ‘‘United States Patent

22 Office’’ and inserting ‘‘Patent and Trademark Of23 fice’’.
1552

•HR 2491 RH

1 (12) Section 1928 of title 28, United States

2 Code, is amended by striking ‘‘Patent Office’’ and

3 inserting ‘‘Patent and Trademark Office’’.

4 (13) Section 160 of the Atomic Energy Act of

5 1954 (42 U.S.C. 2190) is amended—

6 (A) by striking ‘‘Patent Office’’ and insert7 ing ‘‘Patent and Trademark Office’’; and

8 (B) by striking ‘‘Commissioner of Patents’’

9 and inserting ‘‘Commissioner of Patents and

10 Trademarks’’.

11 (14) Section 305(c) of the National Aeronautics

12 and Space Act of 1958 (42 U.S.C. 2457(c)) is

13 amended by striking ‘‘Commissioner of Patents’’ and

14 inserting ‘‘Commissioner of Patents and Trade15 marks’’.

16 (15) Section 12(a) of the Solar Heating and

17 Cooling Demonstration Act of 1974 (42 U.S.C.

18 5510(a)) is amended by striking ‘‘Commissioner of

19 the Patent Office’’ and inserting ‘‘Commissioner of

20 Patents and Trademarks’’.

21 (16) Section 1111 of title 44, United States

22 Code, is amended by striking ‘‘Commissioner of Pat23 ents’’ and inserting ‘‘Commissioner of Patents and

24 Trademarks’’.
1553

•HR 2491 RH

1 (17) Sections 1114 and 1123 of title 44, United

2 States Code, are each amended by striking ‘‘Com3 missioner of Patents’’.

4 (18) Section 1123 of title 44, United States

5 Code, is amended by striking ‘‘the Patent Office,’’.

6 (19) Sections 1337 and 1338 of title 44, United

7 States Code, and the items relating to those sections

8 in the table of contents for chapter 13 of such title,

9 are repealed.

10 (20) Section 10(i) of the Trading With the

11 Enemy Act (50 U.S.C. App. 10(i)) is amended by

12 striking ‘‘Commissioner of Patents’’ and inserting

13 ‘‘Commissioner of Patents and Trademarks’’.

14 (21) Section 8G(a)(2) of the Inspector General

15 Act of 1978 (5 U.S.C. App.) is amended by inserting

16 ‘‘the Patent and Trademark Office,’’, after ‘‘the

17 Panama Canal Commission,’’.

18 (22) Section 255(g)(1)(A) of the Balanced

19 Budget and Emergency Deficit Control Act of 1985

20 (2 U.S.C. 905(g)(1)(A)) is amended by inserting

21 after the item relating to the United States Enrich22 ment Corporation the following new item:

23 ‘‘Patent and Trademark Office;’’.

24 (23) Section 10101(b)(2)(B) of the Omnibus

25 Budget Reconciliation Act of 1990 (35 U.S.C. 41
1554

•HR 2491 RH

1 note) is amended by striking ‘‘, to the extent pro2 vided in appropriation Acts,’’ and inserting ‘‘without

3 appropriation’’.

4 SUBTITLE E—MISCELLANEOUS PROVISIONS

5 SEC. 17601. REFERENCES.

6 Any reference in any other Federal law, Executive

7 order, rule, regulation, or delegation of authority, or any

8 document of or pertaining to an office from which a func9 tion is transferred by this title—

10 (1) to the Secretary of Commerce or an officer

11 of the Department of Commerce, is deemed to refer

12 to the head of the department or office to which

13 such function is transferred; or

14 (2) to the Department of Commerce or an

15 agency in the Department of Commerce is deemed

16 to refer to the department or office to which such

17 function is transferred.

18 SEC. 17602. EXERCISE OF AUTHORITIES.

19 Except as otherwise provided by law, a Federal offi20 cial to whom a function is transferred by this title may,

21 for purposes of performing the function, exercise all au22 thorities under any other provision of law that were avail23 able with respect to the performance of that function to

24 the official responsible for the performance of the function
1555

•HR 2491 RH

1 immediately before the effective date of the transfer of the

2 function under this title.

3 SEC. 17603. SAVINGS PROVISIONS.

4 (a) LEGAL DOCUMENTS.—All orders, determinations,

5 rules, regulations, permits, grants, loans, contracts, agree6 ments, certificates, licenses, and privileges—

7 (1) that have been issued, made, granted, or al8 lowed to become effective by the President, the Sec9 retary of Commerce, any officer or employee of any

10 office transferred by this title, or any other Govern11 ment official, or by a court of competent jurisdic12 tion, in the performance of any function that is

13 transferred by this title, and

14 (2) that are in effect on the effective date of

15 such transfer (or become effective after such date

16 pursuant to their terms as in effect on such effective

17 date),

18 shall continue in effect according to their terms until

19 modified, terminated, superseded, set aside, or revoked in

20 accordance with law by the President, any other author21 ized official, a court of competent jurisdiction, or operation

22 of law.

23 (b) PROCEEDINGS.—This title shall not affect any

24 proceedings or any application for any benefits, service,

25 license, permit, certificate, or financial assistance pending
1556

•HR 2491 RH

1 on the date of the enactment of this title before an office

2 transferred by this title, but such proceedings and applica3 tions shall be continued. Orders shall be issued in such

4 proceedings, appeals shall be taken therefrom, and pay5 ments shall be made pursuant to such orders, as if this

6 title had not been enacted, and orders issued in any such

7 proceeding shall continue in effect until modified, termi8 nated, superseded, or revoked by a duly authorized official,

9 by a court of competent jurisdiction, or by operation of

10 law. Nothing in this subsection shall be considered to pro11 hibit the discontinuance or modification of any such pro12 ceeding under the same terms and conditions and to the

13 same extent that such proceeding could have been discon14 tinued or modified if this title had not been enacted.

15 (c) SUITS.—This title shall not affect suits com16 menced before the date of the enactment of this title, and

17 in all such suits, proceeding shall be had, appeals taken,

18 and judgments rendered in the same manner and with the

19 same effect as if this title had not been enacted.

20 (d) NONABATEMENT OF ACTIONS.—No suit, action,

21 or other proceeding commenced by or against the Depart22 ment of Commerce or the Secretary of Commerce, or by

23 or against any individual in the official capacity of such

24 individual as an officer or employee of an office trans-
1557

•HR 2491 RH

1 ferred by this title, shall abate by reason of the enactment

2 of this title.

3 (e) CONTINUANCE OF SUITS.—If any officer of the

4 Department of Commerce or the Commerce Programs

5 Resolution Agency in the official capacity of such officer

6 is party to a suit with respect to a function of the officer,

7 and under this title such function is transferred to any

8 other officer or office, then such suit shall be continued

9 with the other officer or the head of such other office, as

10 applicable, substituted or added as a party.

11 SEC. 17604. TRANSFER OF ASSETS.

12 Except as otherwise provided in this title, so much

13 of the personnel, property, records, and unexpended bal14 ances of appropriations, allocations, and other funds em15 ployed, used, held, available, or to be made available in

16 connection with a function transferred to an official or

17 agency by this title shall be available to the official or the

18 head of that agency, respectively, at such time or times

19 as the Director of the Office of Management and Budget

20 directs for use in connection with the functions trans21 ferred.

22 SEC. 17605. DELEGATION AND ASSIGNMENT.

23 Except as otherwise expressly prohibited by law or

24 otherwise provided in this title, an official to whom func25 tions are transferred under this title (including the head
1558

•HR 2491 RH

1 of any office to which functions are transferred under this

2 title) may delegate any of the functions so transferred to

3 such officers and employees of the office of the official as

4 the official may designate, and may authorize successive

5 redelegations of such functions as may be necessary or ap6 propriate. No delegation of functions under this section

7 or under any other provision of this title shall relieve the

8 official to whom a function is transferred under this title

9 of responsibility for the administration of the function.

10 SEC. 17606. AUTHORITY OF ADMINISTRATOR WITH RE11 SPECT TO FUNCTIONS TRANSFERRED.

12 (a) DETERMINATIONS.—If necessary, the Adminis13 trator shall make any determination of the functions that

14 are transferred under this title.

15 (b) INCIDENTAL TRANSFERS.—The Administrator,

16 at such time or times as the Administrator shall provide,

17 may make such determinations as may be necessary with

18 regard to the functions transferred by this title, and to

19 make such additional incidental dispositions of personnel,

20 assets, liabilities, grants, contracts, property, records, and

21 unexpended balances of appropriations, authorizations, al22 locations, and other funds held, used, arising from, avail23 able to, or to be made available in connection with such

24 functions, as may be necessary to carry out the provisions

25 of this title. The Administrator shall provide for the termi-
1559

•HR 2491 RH

1 nation of the affairs of all entities terminated by this title

2 and for such further measures and dispositions as may

3 be necessary to effectuate the purposes of this title.

4 SEC. 17607. PROPOSED CHANGES IN LAW.

5 Not later than one year after the date of the enact6 ment of this title, the Director of the Office of Manage7 ment and Budget shall submit to the Congress a descrip8 tion of any changes in Federal law necessary to reflect

9 abolishments, transfers, terminations, and disposals under

10 this title.

11 SEC. 17608. CERTAIN VESTING OF FUNCTIONS CONSIDERED

12 TRANSFERS.

13 For purposes of this title, the vesting of a function

14 in a department or office pursuant to reestablishment of

15 an office shall be considered to be the transfer of the func16 tion.

17 SEC. 17609. DEFINITIONS.

18 For purposes of this title, the following definitions

19 apply:

20 (1) ADMINISTRATOR.—The term ‘‘Adminis21 trator’’ means the Administrator of the Commerce

22 Programs Resolution Agency.

23 (2) AGENCY.—The term ‘‘Agency’’ means the

24 Commerce Programs Resolution Agency.
1560

•HR 2491 RH

1 (3) FUNCTION.—The term ‘‘function’’ includes

2 any duty, obligation, power, authority, responsibility,

3 right, privilege, activity, or program.

4 (4) OFFICE.—The term ‘‘office’’ includes any

5 office, administration, agency, bureau, institute,

6 council, unit, organizational entity, or component

7 thereof.

8 (5) WIND-UP PERIOD.—The term ‘‘wind-up pe9 riod’’ means the period beginning on the effective

10 date specified in section 17109(a) and ending on the

11 termination date specified in section 17106(d).

12 SEC. 17610. LIMITATION ON ANNUAL EXPENDITURES FOR

13 CONTINUED FUNCTIONS.

14 (a) IN GENERAL.—The amount expended by the

15 United States each fiscal year for an agency, or for per16 formance of a transferred function which immediately be17 fore the effective date specified in section 17109(a) was

18 performed by an agency, officer, or employee of the De19 partment of Commerce, may not exceed 75 percent of the

20 total amount expended by the United States for that agen21 cy or for performance of that function during fiscal year

22 1994.

23 (b) EXEMPTIONS.—Subsection (a) shall not apply to

24 the performance of a function which immediately before

25 the effective date specified in section 17109(a) was per-
1561

•HR 2491 RH

1 formed by the Bureau of the Census or the Patent and

2 Trademark Office.

3 SEC. 17611. USER FEES.

4 Within 6 months after the date of the enactment of

5 this Act, the head of each agency that performs a function

6 vested in the agency by this title shall report to Congress

7 its recommendations for implementing user fees to offset

8 operating costs for the provision of services in the per9 formance of that function.

10 SEC. 17612. UNOBLIGATED BALANCES RETURNED TO

11 TREASURY.

12 Any unobligated balances appropriated to carry out

13 any program referred to in this Act shall be transferred

14 to the general fund of the Treasury.

15 SEC. 17613. ANNUAL GAO REPORT.

16 (a) REPORT.—Not later than 1 year after the effec17 tive date specified in section 17109(a), and not later than

18 the end of each 1-year period thereafter, the Comptroller

19 General of the United States shall submit to the Congress

20 a report describing the costs, if any, during the 1-year pe21 riod preceding the submission of the report, that were in22 curred by United States exporters as a result of the trans23 fer of the functions of the Bureau of Export Administra24 tion of the Department of Commerce under this title, or

25 as a result of the limitation on expenditures required by
1562

•HR 2491 RH

1 section 17493. Each such report shall cover, but not be

2 limited to, costs incurred by exporters as a result of—

3 (1) delays in the processing of export license

4 applications;

5 (2) a reduction in outreach activities of the

6 Government that educate exporters on complying

7 with exporting requirements under United States

8 law;

9 (3) delays in the processing of commodity clas10 sification requests by exporters regarding the appli11 cability of export controls to specific products and

12 technical data; and

13 (4) delays in the processing of requests by ex14 porters for advisory opinions by the Government re15 garding whether specific transactions are likely to be

16 approved or denied by the Government.

17 (b) TERMINATION OF PROVISIONS.—If, in any report

18 submitted under subsection (a), the Comptroller General

19 determines that costs described in such subsection were

20 incurred by United States exporters, then sections

21 17610(a) and 17493(a) shall cease to apply to the func22 tions of the Bureau of Export Administration of the De23 partment of Commerce transferred under this title.

24 TITLE XVIII—WELFARE REFORM

[Text to be supplied.]
1563

•HR 2491 RH

1 TITLE XIX—CONTRACT TAX

2 PROVISIONS

[Text to be supplied.]

3 TITLE XX—BUDGET PROCESS

[Text to be supplied.]

Æ